1011-00007 · Whitfield, Barr & Calloway LLP · Correspondence

letter-to-wbc-site-plan-concerns.docx DOCUMENT Real Estate

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CALDERWOOD & HARKNESS LLP Attorneys at Law

1285 Avenue of the Americas, 40th Floor New York, New York 10019

Angela Fontaine Partner, Real Estate Direct Dial: (212) 458-7120 Email: afontaine@calderwoodharkness.com

September 28, 2022

Thomas R. Calloway, Esq. Partner Whitfield, Barr & Calloway LLP 1700 Market Street, Suite 3200 Philadelphia, PA 19103

Re: Lease Negotiation — Building 4, Cranbury Commerce Center, 200 Prospect Plains Road, Cranbury, New Jersey 08512 (Block 24, Lot 17.04, Township of Cranbury, Middlesex County)

Tenant: Meridian Consumer Brands LLC Landlord: Stonebridge Industrial Realty Trust, LP LOI Reference: LOI-2022-CCC-B4 (dated June 22, 2022, as extended) Our Matter No.: 1011-00007

Via Email (tcalloway@wbclaw.com) and First-Class Mail

Dear Mr. Calloway:

I. Introduction and Purpose

We write on behalf of our client, Meridian Consumer Brands LLC ("MCB"), in connection with the ongoing negotiation of a lease for approximately 297,500 rentable square feet — comprising approximately 285,000 square feet of warehouse and distribution space and approximately 12,500 square feet of finished office and mezzanine space — at Building 4, Cranbury Commerce Center, located at 200 Prospect Plains Road, Cranbury, New Jersey 08512 (Block 24, Lot 17.04, Township of Cranbury, Middlesex County) (the "Premises"), with Stonebridge Industrial Realty Trust, LP ("Stonebridge") as landlord.

As you are aware, this transaction is governed by that certain Letter of Intent dated June 22, 2022 and bearing reference number LOI-2022-CCC-B4 (the "LOI"), which was executed by Kevin Driscoll, Vice President, Supply Chain & Logistics of MCB, and Rebecca Hartwell, Senior Vice President, Leasing of Stonebridge. The LOI originally provided for an exclusivity period and lease execution deadline of September 30, 2022. By mutual written agreement of the parties, that deadline has been extended to November 15, 2022.

The parties have made meaningful progress in the lease drafting process to date. Your firm delivered Stonebridge's initial draft lease on July 18, 2022. Our firm delivered MCB's first comprehensive markup on August 12, 2022. Your firm then delivered Stonebridge's revised draft lease (the "Second Landlord Draft") on September 2, 2022. Our firm was in the course of preparing MCB's second markup of the Second Landlord Draft when the revised site plan described below was disclosed.

The purpose of this letter is to formally communicate MCB's significant concerns arising from the revised site plan for Building 4 that Stonebridge delivered to MCB on September 14, 2022 (the "Revised Site Plan"), and to identify the specific information and deliverables that MCB requires before lease negotiations can meaningfully resume. As set forth in greater detail below, the changes reflected in the Revised Site Plan are substantial and materially adverse to MCB's intended use of the Premises, and MCB is not in a position to proceed to lease execution under the currently proposed revised configuration.

II. Background — The Revised Site Plan

On September 14, 2022, Stonebridge provided MCB with the Revised Site Plan for Building 4, reflecting substantial changes to the Premises' configuration, site layout, and building specifications. These changes were disclosed without prior notice to MCB or to this firm, and were not contemplated by the LOI or any prior draft of the lease.

It is MCB's understanding, based on information provided by Stonebridge and its representatives, that the changes reflected in the Revised Site Plan were driven by conditions imposed by the Township of Cranbury Planning Board (the "Planning Board") in connection with Stonebridge's parallel application for preliminary site plan approval for a new speculative industrial building designated as "Building 5" on the adjacent parcel identified as Block 24, Lot 17.05 (the "Building 5 Application"). MCB was not a party to, nor was it consulted in connection with, the Building 5 Application or the Planning Board proceedings.

As MCB understands the Planning Board's conditions, they include the following:

(a) Realignment of Shared Internal Access Drive. The shared internal access drive serving Buildings 4 and 5 is to be realigned, affecting ingress, egress, and circulation patterns for both parcels.

(b) Expansion of Stormwater Detention Basin. The stormwater detention basin located on the west side of Building 4 is to be expanded by approximately 1.8 acres, significantly increasing the impervious coverage constraints and reducing the developable area adjacent to Building 4.

(c) Relocation of Building 4 Truck Court. Building 4's truck court is to be relocated from the south side of the building to the east side of the building, fundamentally altering the loading dock configuration, trailer staging area, and vehicular circulation for Building 4.

While MCB appreciates that Stonebridge may have legitimate development objectives with respect to Building 5, the conditions imposed by the Planning Board on the Building 5 Application have had direct and material adverse effects on the configuration, capacity, and utility of Building 4 — the very premises that are the subject of MCB's lease negotiation. These are not minor adjustments or cosmetic refinements; they represent a fundamental reconfiguration of the facility that MCB was preparing to lease.

III. Summary of Adverse Impacts on Building 4

MCB and its logistics, engineering, and supply chain consultants have conducted a preliminary review of the Revised Site Plan. That review has identified the following material adverse impacts on Building 4, each of which is discussed below.

A. Reduction in Warehouse/Distribution Space

Under the original site plan and building specifications upon which the LOI and all prior lease drafts were predicated, Building 4 provided approximately 285,000 square feet of warehouse and distribution space, plus approximately 12,500 square feet of finished office and mezzanine space, for a total of approximately 297,500 square feet of rentable area.

The Revised Site Plan reduces the warehouse and distribution space to approximately 261,000 square feet, with the office and mezzanine component remaining at approximately 12,500 square feet, yielding a total revised rentable area of approximately 273,500 square feet. This represents a reduction of approximately 24,000 square feet of warehouse space from the original plan.

This reduction results primarily from the reconfigured loading dock apron, which, as a consequence of the truck court relocation from the south side to the east side of the building, encroaches into the building's southeast corner, consuming space that was previously available for warehouse storage and operations.

The loss of approximately 24,000 square feet of warehouse space — representing approximately 8.4% of the original warehouse area — is substantial by any measure. This reduction directly and adversely impacts MCB's planned storage capacity, operational throughput, and the economic efficiency of the facility. MCB's facility planning for the Cranbury location was predicated on the full 285,000 square feet of warehouse space, and the reduction undermines the fundamental business rationale for consolidating MCB's East Coast distribution operations at this location.

B. Reduction in Loading Dock Doors

The original building configuration provided forty-eight (48) dock-high loading doors and four (4) drive-in doors, for a combined total of fifty-two (52) loading positions. This configuration was a material factor in MCB's selection of Building 4 and was expressly referenced in the LOI and the building specifications attached to each draft of the lease.

The Revised Site Plan reduces the dock-high loading doors to thirty-eight (38) and the drive-in doors to two (2) — a loss of ten (10) dock-high doors (representing an approximately 21% reduction) and two (2) drive-in doors (representing a 50% reduction).

This deficiency is of critical concern. MCB's logistics modeling, which has been developed in consultation with its third-party logistics partners and supply chain engineering consultants and is based on MCB's peak-season throughput requirements during the Q4 holiday season (October through December), establishes a minimum operational requirement of forty-two (42) dock-high loading doors for the Cranbury facility. The revised configuration of thirty-eight (38) dock-high doors falls four (4) doors below this operationally determined minimum.

The shortfall in dock-high doors materially impairs the facility's ability to serve MCB's East Coast fulfillment operations, particularly during the holiday peak when inbound receiving and outbound shipping volumes increase by approximately 180% over baseline levels. Dock door availability is a binding constraint on facility throughput, and a deficiency of this magnitude cannot be readily mitigated through scheduling adjustments or extended operating hours alone.

C. Reduction in Trailer Parking

The original site plan provided eighty-five (85) trailer parking spaces, a figure that was consistent with industry standards for a facility of this size and configuration and that met MCB's operational requirements.

The Revised Site Plan reduces trailer parking to sixty-two (62) spaces — a loss of twenty-three (23) spaces, representing an approximately 27% reduction from the original configuration. This reduction appears to be attributable to the combined effects of the truck court relocation, the expanded stormwater detention basin, and the realigned access drive, all of which have consumed land area that was previously allocated to trailer staging.

MCB's operational minimum for trailer parking at the Cranbury facility is seventy-five (75) spaces. The revised configuration falls thirteen (13) spaces short of this minimum. Adequate trailer staging capacity is essential for MCB's inbound and outbound logistics operations, particularly during peak shipping periods when trailers are pre-loaded or staged for carrier pickup and when inbound trailers must be held pending dock availability. Insufficient trailer parking leads to congestion, increased dwell times, carrier detention charges, and potential disruption to MCB's supply chain.

D. Potential Clear-Height Reduction

The original building specifications provided for thirty-six (36) feet of clear height throughout the warehouse portion of Building 4. This clear height specification was a key factor in MCB's facility selection, as it supports the implementation of modern high-bay racking systems and potential future automation — both of which are central objectives of MCB's Cranbury facility consolidation strategy.

The revised structural and architectural drawings included with the Revised Site Plan indicate a potential reduction in clear height to thirty-two (32) feet in certain eastern bays of the warehouse. MCB understands that this reduction may result from structural modifications associated with the truck court relocation and the reconfiguration of the loading dock area on the east side of the building, including the addition of structural steel and bracing necessary to support the revised dock door openings and associated canopy structures.

A four-foot reduction in clear height in these bays — from 36 feet to 32 feet — would materially reduce vertical racking capacity in the affected areas. Depending on the number and location of the affected bays, this could result in the loss of one or more levels of pallet racking, significantly diminishing the effective cubic storage capacity of the facility. Moreover, the clear height reduction would limit MCB's ability to implement the high-bay racking and automation systems that constitute a key objective of the Cranbury facility consolidation. MCB requires confirmation from a qualified structural engineer of the precise clear heights in all bays of the revised building configuration before it can fully assess this impact.

IV. Impact on Negotiated Lease Economics

The lease economics negotiated in the LOI and reflected in the draft lease documents exchanged between the parties were predicated entirely on the original site plan and the original approximately 297,500 square feet of rentable area. The material reduction in building size, capacity, and functionality described above requires a comprehensive reexamination of all economic terms. Specifically:

Base Rent. The aggregate base rent of $12,000,000 over the ten-year initial lease term (approximately $1,200,000 per year, escalating at 2.5% per annum on a compounding basis) was calculated based on a rate of approximately $4.03 per rentable square foot per year on a triple-net (NNN) basis, applied to the original 297,500 square feet. With the reduced rentable area of approximately 273,500 square feet, the aggregate rent, per-square-foot rate, and escalation schedule all require revision.

Tenant Improvement Allowance. The tenant improvement allowance was calculated at $15.00 per rentable square foot multiplied by 297,500 square feet, yielding a total TI allowance of $4,462,500. Applying the same per-square-foot rate to the revised 273,500 square feet would reduce the allowance to $4,102,500 — a reduction of $360,000. However, MCB may in fact require the same or even a greater total investment to optimize a smaller, operationally constrained space, particularly if modifications are needed to compensate for reduced dock doors, diminished clear heights, and other deficiencies. Accordingly, a simple proportional reduction in the TI allowance would not be appropriate from MCB's perspective.

Landlord's Work Scope. The landlord's work scope, which was estimated at a cost of approximately $1,850,000, was designed for the original building configuration. This scope included, among other items, installation of new LED lighting throughout the warehouse, upgrade of the ESFR sprinkler system, replacement of levelers at all dock doors, refresh of the office and mezzanine space, and installation of electric vehicle (EV) charging stations. The reconfigured building will necessarily require a revised scope of landlord's work — for example, the LED lighting plan must be redesigned for the revised warehouse footprint, the ESFR sprinkler layout must be reengineered, and the number and location of dock levelers will change. The cost and scope of landlord's work must be reassessed in light of these changes.

Other Economic Terms. In addition to the foregoing, MCB reserves the right to seek adjustments to all other economic terms of the lease that are affected by the materially altered Premises, including without limitation the free rent period, the amount of the security deposit, the amount and burn-down schedule of any letter of credit, the guaranty cap, and the calculation of MCB's proportionate share of operating expenses, real estate taxes, and common area maintenance charges.

Each of these economic terms requires substantial revision if the reduced and reconfigured Building 4 is to form the basis of a lease between the parties.

V. MCB's Position — Inability to Proceed Under Current Revised Configuration

Based on the foregoing, MCB wishes to state clearly and unequivocally that MCB cannot proceed to lease execution under the currently proposed Revised Site Plan configuration.

The revised configuration fails to meet MCB's minimum operational requirements in at least two critical respects: dock-high loading doors (42 required versus 38 available) and trailer parking spaces (75 required versus 62 available). These shortfalls render the facility operationally deficient for MCB's intended use as a consolidated East Coast distribution center. The additional concerns regarding reduced warehouse square footage and potential clear-height diminishment in certain bays further compound the operational deficiencies.

MCB entered into this lease negotiation — and has invested substantial time, internal resources, and professional fees over the course of more than three months — in reliance on the original building specifications and site plan as presented by Stonebridge and reflected in the LOI and all prior drafts of the lease. The unilateral revision of the site plan to accommodate Stonebridge's separate speculative development on the adjacent parcel (Building 5, Block 24, Lot 17.05) constitutes a material change of circumstances that was neither anticipated by MCB nor within MCB's control.

Accordingly, Calderwood & Harkness LLP has paused work on MCB's second markup of the Second Landlord Draft (received September 2, 2022) pending resolution of the issues identified in this letter. We do not believe it would be productive or appropriate to continue the detailed drafting of lease provisions — including exhibits addressing the premises description, building specifications, landlord's work letter, site plan, and rules and regulations — when the fundamental physical configuration of the building remains in flux and the current revised configuration does not meet MCB's operational requirements.

VI. Required Deliverables Before Negotiations Can Resume

In order for MCB to reassess the operational viability of Building 4 under the revised configuration and to determine whether a basis exists for resuming lease negotiations, MCB respectfully requests that Stonebridge provide the following deliverables:

A. Final Civil Engineering Drawings

MCB requests final civil engineering drawings for Building 4, including without limitation the revised truck court layout, loading dock apron configuration, stormwater detention basin (including the approximately 1.8-acre expansion), shared internal access drive alignment, utility connections, grading and drainage plans, and all related site improvements, as approved by the Township of Cranbury Planning Board.

These drawings must be stamped and sealed by a licensed professional engineer registered in the State of New Jersey and must reflect the final, as-approved configuration — not preliminary, conceptual, or schematic-level plans. If the Planning Board's approval is subject to conditions that may result in further modifications to the site plan, MCB requests that those conditions be identified and their potential impact on Building 4 be described in writing.

B. Structural Engineer's Report on Clear Heights

MCB requests a report from a licensed structural engineer confirming the clear heights in all bays of Building 4 under the revised configuration. This report should specifically identify any bays in which the clear height will be reduced below the original thirty-six (36) foot specification, state the precise clear height in each such bay, and describe the structural modifications or conditions that give rise to each such reduction. The report should be prepared by a licensed professional engineer with relevant structural engineering credentials and should be sufficiently detailed to allow MCB's racking and automation consultants to evaluate the impact on MCB's proposed storage and handling systems.

C. Revised Landlord's Work Scope and Cost Estimate

MCB requests a revised scope of landlord's work that has been updated to reflect the reconfigured building, including at a minimum the following elements:

(i) The number and location of dock-high and drive-in doors to be installed or retained in the revised configuration;

(ii) The ESFR sprinkler system layout for the revised warehouse footprint, including the design basis, system capacity, and commodity classification assumptions;

(iii) The LED lighting plan for the revised warehouse and office space, including foot-candle specifications;

(iv) Dock leveler specifications for all loading positions in the revised configuration;

(v) A description of any structural modifications required as a result of the truck court relocation and loading dock reconfiguration; and

(vi) An updated cost estimate for landlord's work, with a line-item breakdown by trade or scope category, so that MCB can evaluate the adequacy and completeness of Stonebridge's commitment to building out the revised Premises.

D. Stonebridge's Position on Economic Term Adjustments

MCB requests Stonebridge's written position on the adjustment of economic terms to reflect the reduced rentable area and diminished building capacity, including at a minimum the following:

(a) Stonebridge's proposed base rent for the revised approximately 273,500 square foot Premises, stated on an annual basis, a per-square-foot basis, and an aggregate basis over the initial lease term, together with the applicable escalation schedule;

(b) Stonebridge's proposed recalculation of the tenant improvement allowance, including the per-square-foot rate and the aggregate allowance amount;

(c) Any proposed modifications to the free rent period, the security deposit amount, the letter of credit amount and burn-down schedule, or the guaranty cap to reflect the revised Premises;

(d) Stonebridge's position on whether and how it can restore the number of dock-high loading doors to a minimum of forty-two (42) and the number of trailer parking spaces to a minimum of seventy-five (75), or, in the alternative, what operational accommodations, concessions, or other mitigation measures Stonebridge is prepared to offer to address these deficiencies.

MCB regards the information described in this Section VI as essential to its evaluation of whether the revised Building 4 can serve MCB's operational requirements and whether there is a basis for the parties to arrive at mutually acceptable lease terms. MCB cannot resume active lease negotiations until these deliverables have been received and reviewed by MCB and its advisors.

VII. LOI Status and Timeline

As noted above, the original LOI (LOI-2022-CCC-B4) provided for an exclusivity period and lease execution deadline of September 30, 2022. That deadline has now passed. By mutual written agreement of the parties, the LOI expiration has been extended to November 15, 2022.

MCB desires to proceed expeditiously if a viable path forward can be identified. MCB has no interest in unnecessary delay, and its preference remains to consummate a lease at Cranbury Commerce Center if the facility can meet MCB's operational requirements on commercially reasonable terms. However, MCB's ability to evaluate the transaction and determine whether to proceed depends entirely on Stonebridge's timely delivery of the information and materials described in Section VI above.

MCB respectfully requests that Stonebridge provide the requested deliverables no later than October 21, 2022. This timeline is designed to allow sufficient time for MCB's internal review, assessment by MCB's logistics and engineering consultants, and, if warranted, the resumption and completion of lease negotiations before the extended LOI expiration date of November 15, 2022. Any delay in Stonebridge's delivery of the requested materials beyond October 21, 2022 will correspondingly reduce the time available for MCB's evaluation and may jeopardize the parties' ability to conclude a transaction within the current LOI period.

VIII. Reservation of Rights / No Waiver

MCB expressly states that nothing in this letter, nor MCB's continued engagement in discussions with Stonebridge or its representatives, shall be deemed a waiver of any of MCB's rights, claims, or remedies, whether arising under the LOI, at law, or in equity.

MCB expressly reserves all of its rights, including without limitation the right to terminate negotiations and pursue alternative facilities if the revised configuration of Building 4 cannot be satisfactorily resolved. MCB has been and continues to evaluate alternative distribution facilities in the central New Jersey corridor, and while MCB's preference is to reach an agreement at Cranbury Commerce Center, MCB will not forego viable alternatives pending an uncertain outcome here.

MCB further does not waive any claims it may have arising from the material change in building specifications, including without limitation any claims for reimbursement of costs and expenses incurred in reliance on the original site plan and building configuration, including professional fees, engineering and consulting fees, logistics modeling expenses, and internal allocation of management time and resources.

Finally, MCB reiterates that the LOI remains non-binding with respect to the obligation to execute a lease, as expressly stated in Section 12 of the LOI, and MCB's willingness to continue discussions with Stonebridge should not be construed as a commitment to proceed on revised terms or as a waiver of MCB's right to decline to enter into a lease for any reason or no reason.

IX. Request for Prompt Response

We respectfully request that you confirm receipt of this letter at your earliest convenience and communicate Stonebridge's anticipated timeline for delivering the materials and information described in Section VI above.

MCB and its advisors — including this firm, MCB's logistics consultants, and MCB's engineering team — remain available to discuss these matters with you and your client and are committed to a constructive and professional process. We are hopeful that a mutually satisfactory resolution can be reached. However, we wish to reiterate that MCB cannot resume active lease drafting until the requested deliverables have been provided and MCB's operational review of the revised configuration is complete.

We look forward to hearing from you.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Angela Fontaine Partner, Real Estate

Direct Dial: (212) 458-7120 Direct Fax: (212) 458-7121

Email: afontaine@calderwoodharkness.com

cc: (via email)

Kevin Driscoll, Vice President, Supply Chain & Logistics, Meridian Consumer Brands LLC

Martin Solberg, Principal, Halcyon Ridge Capital Partners, LP

Cynthia Ho, Associate, Calderwood & Harkness LLP

Jennifer Pace, Esq., Whitfield, Barr & Calloway LLP

Enclosures: None

CALDERWOOD & HARKNESS LLP Attorneys at Law
1285 Avenue of the Americas, 40th Floor New York, New York 10019
Angela Fontaine Partner, Real Estate Direct Dial: (212) 458-7120 Email: afontaine@calderwoodharkness.com
September 28, 2022
Thomas R. Calloway, Esq. Partner Whitfield, Barr & Calloway LLP 1700 Market Street, Suite 3200 Philadelphia, PA 19103
Re: Lease Negotiation — Building 4, Cranbury Commerce Center, 200 Prospect Plains Road, Cranbury, New Jersey 08512 (Block 24, Lot 17.04, Township of Cranbury, Middlesex County)
Tenant: Meridian Consumer Brands LLC Landlord: Stonebridge Industrial Realty Trust, LP LOI Reference: LOI-2022-CCC-B4 (dated June 22, 2022, as extended) Our Matter No.: 1011-00007
Via Email (tcalloway@wbclaw.com) and First-Class Mail
Dear Mr. Calloway:
I. Introduction and Purpose
We write on behalf of our client, Meridian Consumer Brands LLC ("MCB"), in connection with the ongoing negotiation of a lease for approximately 297,500 rentable square feet — comprising approximately 285,000 square feet of warehouse and distribution space and approximately 12,500 square feet of finished office and mezzanine space — at Building 4, Cranbury Commerce Center, located at 200 Prospect Plains Road, Cranbury, New Jersey 08512 (Block 24, Lot 17.04, Township of Cranbury, Middlesex County) (the "Premises"), with Stonebridge Industrial Realty Trust, LP ("Stonebridge") as landlord.
As you are aware, this transaction is governed by that certain Letter of Intent dated June 22, 2022 and bearing reference number LOI-2022-CCC-B4 (the "LOI"), which was executed by Kevin Driscoll, Vice President, Supply Chain & Logistics of MCB, and Rebecca Hartwell, Senior Vice President, Leasing of Stonebridge. The LOI originally provided for an exclusivity period and lease execution deadline of September 30, 2022. By mutual written agreement of the parties, that deadline has been extended to November 15, 2022.
The parties have made meaningful progress in the lease drafting process to date. Your firm delivered Stonebridge's initial draft lease on July 18, 2022. Our firm delivered MCB's first comprehensive markup on August 12, 2022. Your firm then delivered Stonebridge's revised draft lease (the "Second Landlord Draft") on September 2, 2022. Our firm was in the course of preparing MCB's second markup of the Second Landlord Draft when the revised site plan described below was disclosed.
The purpose of this letter is to formally communicate MCB's significant concerns arising from the revised site plan for Building 4 that Stonebridge delivered to MCB on September 14, 2022 (the "Revised Site Plan"), and to identify the specific information and deliverables that MCB requires before lease negotiations can meaningfully resume. As set forth in greater detail below, the changes reflected in the Revised Site Plan are substantial and materially adverse to MCB's intended use of the Premises, and MCB is not in a position to proceed to lease execution under the currently proposed revised configuration.
II. Background — The Revised Site Plan
On September 14, 2022, Stonebridge provided MCB with the Revised Site Plan for Building 4, reflecting substantial changes to the Premises' configuration, site layout, and building specifications. These changes were disclosed without prior notice to MCB or to this firm, and were not contemplated by the LOI or any prior draft of the lease.
It is MCB's understanding, based on information provided by Stonebridge and its representatives, that the changes reflected in the Revised Site Plan were driven by conditions imposed by the Township of Cranbury Planning Board (the "Planning Board") in connection with Stonebridge's parallel application for preliminary site plan approval for a new speculative industrial building designated as "Building 5" on the adjacent parcel identified as Block 24, Lot 17.05 (the "Building 5 Application"). MCB was not a party to, nor was it consulted in connection with, the Building 5 Application or the Planning Board proceedings.
As MCB understands the Planning Board's conditions, they include the following:
(a) Realignment of Shared Internal Access Drive. The shared internal access drive serving Buildings 4 and 5 is to be realigned, affecting ingress, egress, and circulation patterns for both parcels.
(b) Expansion of Stormwater Detention Basin. The stormwater detention basin located on the west side of Building 4 is to be expanded by approximately 1.8 acres, significantly increasing the impervious coverage constraints and reducing the developable area adjacent to Building 4.
(c) Relocation of Building 4 Truck Court. Building 4's truck court is to be relocated from the south side of the building to the east side of the building, fundamentally altering the loading dock configuration, trailer staging area, and vehicular circulation for Building 4.
While MCB appreciates that Stonebridge may have legitimate development objectives with respect to Building 5, the conditions imposed by the Planning Board on the Building 5 Application have had direct and material adverse effects on the configuration, capacity, and utility of Building 4 — the very premises that are the subject of MCB's lease negotiation. These are not minor adjustments or cosmetic refinements; they represent a fundamental reconfiguration of the facility that MCB was preparing to lease.
III. Summary of Adverse Impacts on Building 4
MCB and its logistics, engineering, and supply chain consultants have conducted a preliminary review of the Revised Site Plan. That review has identified the following material adverse impacts on Building 4, each of which is discussed below.
A. Reduction in Warehouse/Distribution Space
Under the original site plan and building specifications upon which the LOI and all prior lease drafts were predicated, Building 4 provided approximately 285,000 square feet of warehouse and distribution space, plus approximately 12,500 square feet of finished office and mezzanine space, for a total of approximately 297,500 square feet of rentable area.
The Revised Site Plan reduces the warehouse and distribution space to approximately 261,000 square feet, with the office and mezzanine component remaining at approximately 12,500 square feet, yielding a total revised rentable area of approximately 273,500 square feet. This represents a reduction of approximately 24,000 square feet of warehouse space from the original plan.
This reduction results primarily from the reconfigured loading dock apron, which, as a consequence of the truck court relocation from the south side to the east side of the building, encroaches into the building's southeast corner, consuming space that was previously available for warehouse storage and operations.
The loss of approximately 24,000 square feet of warehouse space — representing approximately 8.4% of the original warehouse area — is substantial by any measure. This reduction directly and adversely impacts MCB's planned storage capacity, operational throughput, and the economic efficiency of the facility. MCB's facility planning for the Cranbury location was predicated on the full 285,000 square feet of warehouse space, and the reduction undermines the fundamental business rationale for consolidating MCB's East Coast distribution operations at this location.
B. Reduction in Loading Dock Doors
The original building configuration provided forty-eight (48) dock-high loading doors and four (4) drive-in doors, for a combined total of fifty-two (52) loading positions. This configuration was a material factor in MCB's selection of Building 4 and was expressly referenced in the LOI and the building specifications attached to each draft of the lease.
The Revised Site Plan reduces the dock-high loading doors to thirty-eight (38) and the drive-in doors to two (2) — a loss of ten (10) dock-high doors (representing an approximately 21% reduction) and two (2) drive-in doors (representing a 50% reduction).
This deficiency is of critical concern. MCB's logistics modeling, which has been developed in consultation with its third-party logistics partners and supply chain engineering consultants and is based on MCB's peak-season throughput requirements during the Q4 holiday season (October through December), establishes a minimum operational requirement of forty-two (42) dock-high loading doors for the Cranbury facility. The revised configuration of thirty-eight (38) dock-high doors falls four (4) doors below this operationally determined minimum.
The shortfall in dock-high doors materially impairs the facility's ability to serve MCB's East Coast fulfillment operations, particularly during the holiday peak when inbound receiving and outbound shipping volumes increase by approximately 180% over baseline levels. Dock door availability is a binding constraint on facility throughput, and a deficiency of this magnitude cannot be readily mitigated through scheduling adjustments or extended operating hours alone.
C. Reduction in Trailer Parking
The original site plan provided eighty-five (85) trailer parking spaces, a figure that was consistent with industry standards for a facility of this size and configuration and that met MCB's operational requirements.
The Revised Site Plan reduces trailer parking to sixty-two (62) spaces — a loss of twenty-three (23) spaces, representing an approximately 27% reduction from the original configuration. This reduction appears to be attributable to the combined effects of the truck court relocation, the expanded stormwater detention basin, and the realigned access drive, all of which have consumed land area that was previously allocated to trailer staging.
MCB's operational minimum for trailer parking at the Cranbury facility is seventy-five (75) spaces. The revised configuration falls thirteen (13) spaces short of this minimum. Adequate trailer staging capacity is essential for MCB's inbound and outbound logistics operations, particularly during peak shipping periods when trailers are pre-loaded or staged for carrier pickup and when inbound trailers must be held pending dock availability. Insufficient trailer parking leads to congestion, increased dwell times, carrier detention charges, and potential disruption to MCB's supply chain.
D. Potential Clear-Height Reduction
The original building specifications provided for thirty-six (36) feet of clear height throughout the warehouse portion of Building 4. This clear height specification was a key factor in MCB's facility selection, as it supports the implementation of modern high-bay racking systems and potential future automation — both of which are central objectives of MCB's Cranbury facility consolidation strategy.
The revised structural and architectural drawings included with the Revised Site Plan indicate a potential reduction in clear height to thirty-two (32) feet in certain eastern bays of the warehouse. MCB understands that this reduction may result from structural modifications associated with the truck court relocation and the reconfiguration of the loading dock area on the east side of the building, including the addition of structural steel and bracing necessary to support the revised dock door openings and associated canopy structures.
A four-foot reduction in clear height in these bays — from 36 feet to 32 feet — would materially reduce vertical racking capacity in the affected areas. Depending on the number and location of the affected bays, this could result in the loss of one or more levels of pallet racking, significantly diminishing the effective cubic storage capacity of the facility. Moreover, the clear height reduction would limit MCB's ability to implement the high-bay racking and automation systems that constitute a key objective of the Cranbury facility consolidation. MCB requires confirmation from a qualified structural engineer of the precise clear heights in all bays of the revised building configuration before it can fully assess this impact.
IV. Impact on Negotiated Lease Economics
The lease economics negotiated in the LOI and reflected in the draft lease documents exchanged between the parties were predicated entirely on the original site plan and the original approximately 297,500 square feet of rentable area. The material reduction in building size, capacity, and functionality described above requires a comprehensive reexamination of all economic terms. Specifically:
Base Rent. The aggregate base rent of $12,000,000 over the ten-year initial lease term (approximately $1,200,000 per year, escalating at 2.5% per annum on a compounding basis) was calculated based on a rate of approximately $4.03 per rentable square foot per year on a triple-net (NNN) basis, applied to the original 297,500 square feet. With the reduced rentable area of approximately 273,500 square feet, the aggregate rent, per-square-foot rate, and escalation schedule all require revision.
Tenant Improvement Allowance. The tenant improvement allowance was calculated at $15.00 per rentable square foot multiplied by 297,500 square feet, yielding a total TI allowance of $4,462,500. Applying the same per-square-foot rate to the revised 273,500 square feet would reduce the allowance to $4,102,500 — a reduction of $360,000. However, MCB may in fact require the same or even a greater total investment to optimize a smaller, operationally constrained space, particularly if modifications are needed to compensate for reduced dock doors, diminished clear heights, and other deficiencies. Accordingly, a simple proportional reduction in the TI allowance would not be appropriate from MCB's perspective.
Landlord's Work Scope. The landlord's work scope, which was estimated at a cost of approximately $1,850,000, was designed for the original building configuration. This scope included, among other items, installation of new LED lighting throughout the warehouse, upgrade of the ESFR sprinkler system, replacement of levelers at all dock doors, refresh of the office and mezzanine space, and installation of electric vehicle (EV) charging stations. The reconfigured building will necessarily require a revised scope of landlord's work — for example, the LED lighting plan must be redesigned for the revised warehouse footprint, the ESFR sprinkler layout must be reengineered, and the number and location of dock levelers will change. The cost and scope of landlord's work must be reassessed in light of these changes.
Other Economic Terms. In addition to the foregoing, MCB reserves the right to seek adjustments to all other economic terms of the lease that are affected by the materially altered Premises, including without limitation the free rent period, the amount of the security deposit, the amount and burn-down schedule of any letter of credit, the guaranty cap, and the calculation of MCB's proportionate share of operating expenses, real estate taxes, and common area maintenance charges.
Each of these economic terms requires substantial revision if the reduced and reconfigured Building 4 is to form the basis of a lease between the parties.
V. MCB's Position — Inability to Proceed Under Current Revised Configuration
Based on the foregoing, MCB wishes to state clearly and unequivocally that MCB cannot proceed to lease execution under the currently proposed Revised Site Plan configuration.
The revised configuration fails to meet MCB's minimum operational requirements in at least two critical respects: dock-high loading doors (42 required versus 38 available) and trailer parking spaces (75 required versus 62 available). These shortfalls render the facility operationally deficient for MCB's intended use as a consolidated East Coast distribution center. The additional concerns regarding reduced warehouse square footage and potential clear-height diminishment in certain bays further compound the operational deficiencies.
MCB entered into this lease negotiation — and has invested substantial time, internal resources, and professional fees over the course of more than three months — in reliance on the original building specifications and site plan as presented by Stonebridge and reflected in the LOI and all prior drafts of the lease. The unilateral revision of the site plan to accommodate Stonebridge's separate speculative development on the adjacent parcel (Building 5, Block 24, Lot 17.05) constitutes a material change of circumstances that was neither anticipated by MCB nor within MCB's control.
Accordingly, Calderwood & Harkness LLP has paused work on MCB's second markup of the Second Landlord Draft (received September 2, 2022) pending resolution of the issues identified in this letter. We do not believe it would be productive or appropriate to continue the detailed drafting of lease provisions — including exhibits addressing the premises description, building specifications, landlord's work letter, site plan, and rules and regulations — when the fundamental physical configuration of the building remains in flux and the current revised configuration does not meet MCB's operational requirements.
VI. Required Deliverables Before Negotiations Can Resume
In order for MCB to reassess the operational viability of Building 4 under the revised configuration and to determine whether a basis exists for resuming lease negotiations, MCB respectfully requests that Stonebridge provide the following deliverables:
A. Final Civil Engineering Drawings
MCB requests final civil engineering drawings for Building 4, including without limitation the revised truck court layout, loading dock apron configuration, stormwater detention basin (including the approximately 1.8-acre expansion), shared internal access drive alignment, utility connections, grading and drainage plans, and all related site improvements, as approved by the Township of Cranbury Planning Board.
These drawings must be stamped and sealed by a licensed professional engineer registered in the State of New Jersey and must reflect the final, as-approved configuration — not preliminary, conceptual, or schematic-level plans. If the Planning Board's approval is subject to conditions that may result in further modifications to the site plan, MCB requests that those conditions be identified and their potential impact on Building 4 be described in writing.
B. Structural Engineer's Report on Clear Heights
MCB requests a report from a licensed structural engineer confirming the clear heights in all bays of Building 4 under the revised configuration. This report should specifically identify any bays in which the clear height will be reduced below the original thirty-six (36) foot specification, state the precise clear height in each such bay, and describe the structural modifications or conditions that give rise to each such reduction. The report should be prepared by a licensed professional engineer with relevant structural engineering credentials and should be sufficiently detailed to allow MCB's racking and automation consultants to evaluate the impact on MCB's proposed storage and handling systems.
C. Revised Landlord's Work Scope and Cost Estimate
MCB requests a revised scope of landlord's work that has been updated to reflect the reconfigured building, including at a minimum the following elements:
(i) The number and location of dock-high and drive-in doors to be installed or retained in the revised configuration;
(ii) The ESFR sprinkler system layout for the revised warehouse footprint, including the design basis, system capacity, and commodity classification assumptions;
(iii) The LED lighting plan for the revised warehouse and office space, including foot-candle specifications;
(iv) Dock leveler specifications for all loading positions in the revised configuration;
(v) A description of any structural modifications required as a result of the truck court relocation and loading dock reconfiguration; and
(vi) An updated cost estimate for landlord's work, with a line-item breakdown by trade or scope category, so that MCB can evaluate the adequacy and completeness of Stonebridge's commitment to building out the revised Premises.
D. Stonebridge's Position on Economic Term Adjustments
MCB requests Stonebridge's written position on the adjustment of economic terms to reflect the reduced rentable area and diminished building capacity, including at a minimum the following:
(a) Stonebridge's proposed base rent for the revised approximately 273,500 square foot Premises, stated on an annual basis, a per-square-foot basis, and an aggregate basis over the initial lease term, together with the applicable escalation schedule;
(b) Stonebridge's proposed recalculation of the tenant improvement allowance, including the per-square-foot rate and the aggregate allowance amount;
(c) Any proposed modifications to the free rent period, the security deposit amount, the letter of credit amount and burn-down schedule, or the guaranty cap to reflect the revised Premises;
(d) Stonebridge's position on whether and how it can restore the number of dock-high loading doors to a minimum of forty-two (42) and the number of trailer parking spaces to a minimum of seventy-five (75), or, in the alternative, what operational accommodations, concessions, or other mitigation measures Stonebridge is prepared to offer to address these deficiencies.
MCB regards the information described in this Section VI as essential to its evaluation of whether the revised Building 4 can serve MCB's operational requirements and whether there is a basis for the parties to arrive at mutually acceptable lease terms. MCB cannot resume active lease negotiations until these deliverables have been received and reviewed by MCB and its advisors.
VII. LOI Status and Timeline
As noted above, the original LOI (LOI-2022-CCC-B4) provided for an exclusivity period and lease execution deadline of September 30, 2022. That deadline has now passed. By mutual written agreement of the parties, the LOI expiration has been extended to November 15, 2022.
MCB desires to proceed expeditiously if a viable path forward can be identified. MCB has no interest in unnecessary delay, and its preference remains to consummate a lease at Cranbury Commerce Center if the facility can meet MCB's operational requirements on commercially reasonable terms. However, MCB's ability to evaluate the transaction and determine whether to proceed depends entirely on Stonebridge's timely delivery of the information and materials described in Section VI above.
MCB respectfully requests that Stonebridge provide the requested deliverables no later than October 21, 2022. This timeline is designed to allow sufficient time for MCB's internal review, assessment by MCB's logistics and engineering consultants, and, if warranted, the resumption and completion of lease negotiations before the extended LOI expiration date of November 15, 2022. Any delay in Stonebridge's delivery of the requested materials beyond October 21, 2022 will correspondingly reduce the time available for MCB's evaluation and may jeopardize the parties' ability to conclude a transaction within the current LOI period.
VIII. Reservation of Rights / No Waiver
MCB expressly states that nothing in this letter, nor MCB's continued engagement in discussions with Stonebridge or its representatives, shall be deemed a waiver of any of MCB's rights, claims, or remedies, whether arising under the LOI, at law, or in equity.
MCB expressly reserves all of its rights, including without limitation the right to terminate negotiations and pursue alternative facilities if the revised configuration of Building 4 cannot be satisfactorily resolved. MCB has been and continues to evaluate alternative distribution facilities in the central New Jersey corridor, and while MCB's preference is to reach an agreement at Cranbury Commerce Center, MCB will not forego viable alternatives pending an uncertain outcome here.
MCB further does not waive any claims it may have arising from the material change in building specifications, including without limitation any claims for reimbursement of costs and expenses incurred in reliance on the original site plan and building configuration, including professional fees, engineering and consulting fees, logistics modeling expenses, and internal allocation of management time and resources.
Finally, MCB reiterates that the LOI remains non-binding with respect to the obligation to execute a lease, as expressly stated in Section 12 of the LOI, and MCB's willingness to continue discussions with Stonebridge should not be construed as a commitment to proceed on revised terms or as a waiver of MCB's right to decline to enter into a lease for any reason or no reason.
IX. Request for Prompt Response
We respectfully request that you confirm receipt of this letter at your earliest convenience and communicate Stonebridge's anticipated timeline for delivering the materials and information described in Section VI above.
MCB and its advisors — including this firm, MCB's logistics consultants, and MCB's engineering team — remain available to discuss these matters with you and your client and are committed to a constructive and professional process. We are hopeful that a mutually satisfactory resolution can be reached. However, we wish to reiterate that MCB cannot resume active lease drafting until the requested deliverables have been provided and MCB's operational review of the revised configuration is complete.
We look forward to hearing from you.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Angela Fontaine Partner, Real Estate
Direct Dial: (212) 458-7120 Direct Fax: (212) 458-7121
Email: afontaine@calderwoodharkness.com
cc: (via email)
Kevin Driscoll, Vice President, Supply Chain & Logistics, Meridian Consumer Brands LLC
Martin Solberg, Principal, Halcyon Ridge Capital Partners, LP
Cynthia Ho, Associate, Calderwood & Harkness LLP
Jennifer Pace, Esq., Whitfield, Barr & Calloway LLP
Enclosures: None

CALDERWOOD & HARKNESS LLP Attorneys at Law

CALDERWOOD & HARKNESS LLP

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