Exhibit 10.6
ADDENDUM NO. 3 TO AMENDED
AND RESTATED GROUND LEASE
This ADDENDUM NO. 3. TO AMENDED AND RESTATED GROUND LEASE (this
"ADDENDUM") is made as of May 19, 2003, by and between THE IRVINE COMPANY, a
Delaware corporation ("LANDLORD"), and XXXXX NURSERIES, INC., a California
corporation, formerly known as Xxxxx Horticulture, Inc. ("TENANT").
RECITALS
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A. Landlord and Tenant are parties to that certain Amended and Restated
Ground Lease dated September 1, 1996 (the "ORIGINAL LEASE"), as amended by
Addendum No. 1 to Amended and Restated Ground Lease dated as of October 26, 1996
("ADDENDUM NO. 1") and Addendum No. 2 to Amended and Restated Ground Lease dated
as of December 18, 1997 ("ADDENDUM NO. 2"). The Original Lease, Addendum No. 1
and Addendum No. 2 are sometimes hereinafter collectively referred to as the
"LEASE." Pursuant to the Lease, Tenant leases certain premises from Landlord as
more particularly described therein (the "LEASED PREMISES").
B. Landlord and Tenant desire to implement a new plan for early
termination of portions of the leased premises, as set forth in this Addendum.
C. Capitalized terms used in this Addendum but not defined herein shall
have the same meaning given in the Lease.
AGREEMENT
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In consideration of the foregoing recitals and the mutual covenants and
conditions set forth in this Addendum, Landlord and Tenant hereby amend the
Lease as follows:
1. ADDITION OF PROPERTY TO THE LEASED PREMISES.
(a) ADDITION OF 63 ACRE PARCEL.
(i) Subject to satisfaction of the conditions set
forth in subparagraph 1(a)(ii) below, that certain real property shown on
EXHIBIT "A" attached hereto as the "63 Acre Parcel" (the "63 ACRE PARCEL") shall
automatically be added to the leased premises as provided in this Section 1(a),
for the remainder of the term of the Lease.
(ii) The 63 Acre Parcel is currently leased to B & E
Farms, a California corporation ("B & E") pursuant to a Standard Form Farming
Lease dated July 1, 2002 (the "FARMING LEASE"). The term of the Farming Lease
expires June 30, 2003. Landlord has given B & E notice that the Farming Lease
will not be extended and that B & E must vacate the 63 Acre Parcel promptly upon
the expiration of the term of the Farming Lease. It is a condition to the
addition of the 63 Acre Parcel to the leased premises under the Lease that B & E
shall have vacated the 63 Acre Parcel and Landlord shall have delivered to
Tenant written notice thereof. Landlord shall use commercially best efforts to
cause B & E to vacate the 63 Acre Parcel as described above, but in no event
shall Landlord be liable to Tenant for damages or any other remedy in equity or
in law arising from or due to any delay or failure of B & E to vacate the 63
Acre Parcel (and Tenant waives all claims and demands with regard thereto).
(iii) Landlord shall give Tenant written notice
promptly upon vacation of the 63 Acre Parcel by B & E, and upon receipt by
Tenant of such notice, the 63 Acre Parcel shall be added to the leased premises
in its "AS-IS" condition; provided that, except as may have been caused by Xxxxx
or any of the Xxxxx' Representatives, Tenant shall not be responsible for any
Hazardous Materials located on the 63 Acre Parcel or violations of Hazardous
Material Laws existing prior to the date the 63 Acre Parcel is added to the
leased premises. Landlord shall not have any obligation to improve the 63 Acre
Parcel in any manner. If Tenant discovers any Hazardous Materials on the 63 Acre
Parcel, Tenant shall promptly give Landlord written notice thereof. If Tenant
discovers Hazardous Materials on the 63 Acre Parcel (A) existing prior to the
date the 63 Acre Parcel is (or could have been) added to the leased premises,
(B) not caused by Xxxxx or any of the Xxxxx' Representatives, and (C) requiring
remediation by governmental authorities, then Tenant shall have the right to
delete from the leased premises the portion of the 63 Acre Parcel so
contaminated, provided Tenant gives written notice of such contamination to
Landlord, together with Tenant's written election to delete the same from the
leased premises, on or before December 31, 2003. Any such deletion shall be
effective immediately upon receipt by Landlord of such notice. If Tenant does
not so exercise its right to delete the contaminated portion from the leased
premises, then Landlord shall be responsible for addressing such Hazardous
Materials as required by law.
(iv) Notwithstanding anything to the contrary above,
if B & E fails to vacate the 63 Acre Parcel on or before December 31, 2003, or
if Tenant deletes all or a portion of the 63 Acre Parcel from the leased
premises as provided in subparagraph (iii) above on or before December 31, 2003,
then the following shall apply:
(A) The 63 Acre Parcel or portion thereof
deleted due to Hazardous Materials, as applicable, shall not be added to the
leased premises as contemplated in this paragraph 1(a);
(B) Substitute acreage equivalent in acreage
(the "SUBSTITUTE ACREAGE") in that portion of the leased premises within the
area described as "C/220 ac" on EXHIBIT "A" attached hereto shall not be removed
from the leased premises early pursuant to paragraph 2 below, but instead shall
remain a part of the leased premises as set forth in the Original Lease for a
term expiring December 31, 2010 (subject to earlier termination pursuant to
paragraph 4 below); and
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(C) The location of the Substitute Acreage to
remain in the leased premises shall be as designated by Landlord and approved in
writing by Tenant, which approval shall not be unreasonably withheld. The
Substitute Acreage shall be equivalent in acreage to the 63 Acre Parcel or the
portion thereof deleted by Tenant due to Hazardous Materials, as applicable.
Landlord and Tenant shall cooperate to approve the location of the Substitute
Acreage in writing on or before March 1, 2004.
(b) ADDITION OF SCHOOL PROPERTY.
(i) Subject to satisfaction of the conditions set
forth in subparagraph 1(b)(iii) below, that certain real property described on
EXHIBIT "A" attached hereto as the "IUSD/20 ac" property (the "SCHOOL PROPERTY")
shall automatically be added to the leased premises as provided in this Section
1(b), for the remainder of the term of the Lease.
(ii) The School Property was included within the
leased premises under that certain Ground Lease dated October 27, 1968 by and
between The Irvine Company, a West Virginia corporation, predecessor in interest
to Landlord, and Xxxxx X. Xxxxx, Xxxxx X. Xxxxx, Xx., and Xxxxx X. Xxxxxx,
predecessor in interest to Tenant, as amended (the "1968 LEASE"). The 1968 Lease
replaced that certain Lease dated January 1, 1958 and that certain Farming Lease
dated May 26, 1967 between the same parties. Pursuant to the terms of Addendum
No. 18 to Ground Lease, which amended the 1968 Lease, the School Property was
deleted from the leased premises under the 1968 Lease and was instead leased
from Landlord to Tenant under the terms of that certain School Site Nursery
Lease dated as of June 26, 1992 (the "SCHOOL SITE LEASE"). Landlord sold the
School Property to Irvine Unified School District ("IUSD") subject to the terms
of the School Site Lease, and Tenant has continued its nursery operations on the
School Property under the lease with IUSD. Thus, Tenant or its predecessor in
interest has been leasing and using the School Property continuously since 1958.
(iii) ***
(iv) ***
2. REMOVAL OF PORTIONS OF LEASED PREMISES.
(a) RECISION OF REMOVAL PROVISIONS. Pursuant to Section 8.1 of
the Original Lease, Landlord has previously given Tenant notice of its election
to remove "Area B" of the leased premises pursuant to correspondence from Xxxxx
Xxxxxxxx dated March 17, 2000 (as such letter was modified by certain
correspondence from Xxxxx Xxxxxxxx dated October 12, 2000) and to remove the
"Open Space Spine" along Xxxxxxx Road pursuant to correspondence from Xxxxx
Xxxxxxxx dated July 17, 2002 (collectively, the "REMOVAL NOTICES"). Section 8.1
of the Original Lease is hereby deleted, and Landlord's Removal Notices are
hereby rescinded and shall be of no effect.
(b) REMOVAL OF AREA C. Subject to subparagraph 1(a)(iv) above,
that portion of the leased premises described on EXHIBIT "A" attached hereto as
area "C/220 ac" ("AREA C") (which Area C includes that property described in the
Lease generally as the Open Space Spine and shown on EXHIBIT "A" as "Open
Space") shall automatically be removed from the leased premises as follows:
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*** Information omitted and filed separately with the Commission for
confidential treatment.
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(i) AREA 1. That portion of Area C shown on EXHIBIT
"A" as area "1" shall automatically and without further notice be removed from
the leased premises, and the Lease shall automatically and without further
notice terminate as to such area, effective 5:00 PM on June 30, 2006.
(ii) AREA 2. The remainder of Area C (i.e., that
portion of Area C described on EXHIBIT "A" as area "2" together with that
property described in the Lease generally as the Open Space Spine and shown on
EXHIBIT "A" as "Open Space") shall automatically and without further notice be
removed from the leased premises, and the Lease shall automatically and without
further notice terminate as to such area, effective 5:00 PM on December 31,
2006.
3. MINIMUM ANNUAL RENTAL. Section 5(a) of the Original Lease is hereby
amended to provide that effective July 1, 2003, the "minimum annual rental"
shall be *** per year, payable quarterly in advance on or before the tenth
(10th) day of January, April, July and October of each and every calendar year
of the term. The minimum annual rental shall not be adjusted by reason of the
removal or addition of any property from the leased premises, and shall be said
fixed amount for the remainder of the term of the Lease.
4. ALTERNATE MCAS EL TORO SITE. Landlord and Tenant acknowledge that
Tenant intends to pursue an alternate site of approximately 250 acres for use as
a commercial nursery within the property commonly known as the Marine Corps Air
Station El Toro (the "ALTERNATE SITE"). Tenant agrees to use commercially best
efforts to negotiate and acquire such Alternate Site from the City of Irvine
and/or other owners or ground lessors of property within such Air Station, on
terms satisfactory to Tenant in its sole and absolute discretion. If Tenant is
successful in acquiring the Alternate Site (whether by lease, purchase of fee or
other means), then the term of the Lease as to the entire leased premises then
covered by the Lease shall terminate upon the earlier of (a) the date specified
in Section 3.1 of the Original Lease for expiration of the term (i.e., December
31, 2010), (b) two (2) years after the date upon which Tenant has acquired the
Alternate Site and received the necessary governmental approvals for conducting
and constructing its nursery operations on the Alternate Site, or (c) two (2)
years after the date upon which Tenant has commenced any significant work on the
Alternate Site (as used in the foregoing, "significant work" shall include
grading or the installation of irrigation improvements but shall exclude
conducting soils, engineering and other tests and surveys). Landlord shall
cooperate with and assist Tenant in working with the City of Irvine to acquire
the Alternate Site, provided that in no event shall Landlord be at any expense
or liability in connection therewith. Nothing herein is intended or shall be
deemed to extend, amend or modify the expiration date (i.e., December 31, 2010)
for the term of the Lease.
5. REIMBURSEMENT OF EXPENSES. Tenant shall be entitled to the following
payments and credits from Landlord, up to a total of Four Million Dollars
($4,000,000.00):
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*** Information omitted and filed separately with the Commission for
confidential treatment.
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(a) FIRST PAYMENT. Landlord shall pay to Tenant One Million
Dollars ($1,000,000.00) thirty (30) days after that date (the "EFFECTIVE DATE")
upon which Landlord has received (i) a fully executed copy of this Addendum and
(ii) the "Lender Consents" (as defined in Section 6 below);
(b) SECOND PAYMENT. Landlord shall pay to Tenant One Million
Dollars ($1,000,000.00) one hundred twenty (120) days after the Effective Date;
and
(c) PERCENTAGE RENT CREDIT. Tenant shall be entitled to a
credit of Two Million Dollars ($2,000,000.00), to be applied against any and all
percentage rental payments due from Tenant under Section 5(b) of the Original
Lease from and after the Effective Date (including any percentage rental
attributable to periods prior to the Effective Date, but not due from Tenant
until after the Effective Date - e.g. percentage rent for calendar year 2003),
until such credit is used in full. In no event shall Landlord be required to pay
Tenant out of pocket for any portion of this percentage rent credit.
6. LENDER APPROVAL. As soon as possible after the date hereof, Tenant
shall use commercially best efforts to obtain and deliver to Landlord an
approval in form attached hereto as EXHIBIT "B" executed by Deutsche Bank Trust
Company Americas, and other approvals in such other form as may be approved by
Landlord as to any other "encumbrancer" (as defined in Article XIV of the
General Conditions of the Original Lease) which holds a lien upon Tenant's
interest under the Lease, pursuant to which Deutsche Bank Trust Company Americas
and any other encumbrancer approves this Addendum and agrees to reconvey,
release and quitclaim that property which is removed from the leased premises as
provided in the Lease or this Addendum (the "LENDER CONSENTS").
7. AUTHORITY. Each of the parties executing this Addendum on behalf of
a corporation as indicated below represents and warrants that he/she is duly
authorized to execute and deliver this Addendum on behalf of such corporation,
that such execution and delivery has been approved by such corporation's Board
of Directors, and that this Addendum is binding upon said corporation in
accordance with its terms.
8. CONTINUED EFFECT. The Lease, as specifically modified by this
Addendum, shall continue in full force and effect.
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IN WITNESS WHEREOF, this Addendum No. 3 to Amended and Restated Ground
Lease is executed as of the day and year first above written.
THE IRVINE COMPANY, XXXXX NURSERIES, INC.,
a Delaware corporation a California corporation
By: /S/ XXX XXXXXXXX
By: /S/ XXXXXX X. XXXXX -----------------
----------------------------- Name: Xxx Xxxxxxxx
Xxxxxx X. Xxxxx, Title: Chief Executive Officer
Executive Vice President
By:
By: /S/ XXXX X. XXXXXXXXX
----------------------------- Name:
Xxxx X. Xxxxxxxxx, Title:
Vice President
"LANDLORD" "TENANT"
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