DEBTORS MOTION FOR AUTHORIZATION TO ASSUME OR REJECT UNEXPIRED LEASES OF NONRESIDENTIAL REAL PROPERTY

Transcription

1 DAVIS POLK & WARDWELL LLP 450 Lexington Avenue New York, New York Telephone (212) Facsimile (212) Marshall S. Huebner Timothy E. Graulich Lynn I. Poss Counsel to the Debtors and Debtors in Possession Objection Deadline August 3, 2009 at 400 p.m. (prevailing Eastern Time) Hearing Date and Time August 12, 2009 at 1000 a.m. (prevailing Eastern Time) UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re STAR TRIBUNE HOLDINGS CORPORATION, et al., Debtors x Chapter 11 Case No (RDD) (Jointly Administered) DEBTORS MOTION FOR AUTHORIZATION TO ASSUME OR REJECT UNEXPIRED LEASES OF NONRESIDENTIAL REAL PROPERTY Star Tribune Holdings Corporation ( Star Tribune Holdings ) and The Star Tribune Company ( Star Tribune and, together with Star Tribune Holdings, the Debtors ) respectfully represent 1 The Debtors are Star Tribune Holdings Corporation and The Star Tribune Company. The employer tax identification numbers and addresses for each of the Debtors are set forth in the Debtors chapter 11 petitions.

2 Background 1. On January 15, 2009 (the Petition Date ), each Debtor commenced with this Court a voluntary case under chapter 11 of title 11 of the United States Code (the Bankruptcy Code ). The Debtors are authorized to operate their businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. These chapter 11 cases are being jointly administered pursuant to rule 1015(b) of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ). 2. Additional information about the Debtors businesses and the events leading up to the Petition Date can be found in the Affidavit of David W. Montgomery [Docket No. 14], which is incorporated herein by reference. 3. On June 18, 2009, the Debtors filed their disclosure statement for the Debtors joint plan of reorganization. The Court has scheduled a hearing to consider the adequacy of the disclosure statement for July 29, 2009, and a hearing to consider confirmation of the plan of reorganization is scheduled for September 17, Jurisdiction 4. The Court has subject matter jurisdiction to consider this matter pursuant to 28 U.S.C This is a core proceeding pursuant to 28 U.S.C. 157(b)(2) and may be determined by the Bankruptcy Court. Venue is proper before this Court pursuant to 28 U.S.C and Relief Requested 5. Pursuant to section 365 of the Bankruptcy Code and Bankruptcy Rule 6006, the Debtors hereby seek the entry of an order (a) authorizing the assumption of certain of the Debtors unexpired leases of nonresidential real property (in some cases, as 2

3 modified); (b) authorizing the rejection of certain of the Debtors unexpired leases of nonresidential real property; and (c) granting related relief. The Unexpired Leases 6. In connection with the conduct of their businesses, the Debtors are lessees or sublessees under approximately 23 unexpired leases and subleases of nonresidential real property (collectively, the Unexpired Leases ). As of the date hereof, each of the Unexpired Leases are pre-petition leases that remain subject to assumption or rejection pursuant to section 365 of the Bankruptcy Code. 7. The Unexpired Leases relate to, among other things, office space and storage space in various locations in Minnesota and Washington, D.C. The Deadline to Assume or Reject 8. Section 365(d)(4) of the Bankruptcy Code provides debtors with an initial 120-day period to assume or reject unexpired leases of nonresidential real property. In these chapter 11 cases, this initial 120-day period ended on May 15, Given the size of the Debtors businesses and their need to retain financial, operational and network planning flexibility in the initial months of these cases, the Debtors believed it was necessary to seek an extension of this initial 120-day deadline, as permitted by section 365(d)(4) of the Bankruptcy Code. 9. Accordingly, on April 20, 2009, the Debtors filed the Debtors Motion for an Extension of the Time to Assume or Reject Unexpired Leases of Nonresidential Real Property (the Motion to Extend ) [Docket No. 214]. Pursuant to the Motion to Extend, the Debtors sought the maximum extension of an additional 90 days through and until August 13, 2009 (the Extended Assumption Deadline ) to determine whether to 3

4 assume or reject the Unexpired Leases. The Motion to Extend was approved by this Court by order dated May 6, 2009 (the Extension Order ) [Docket No. 235]. 10. Pursuant to section 365(d)(4)(B)(ii) of the Bankruptcy Code, the Extended Assumption Deadline may only be further extended with respect to an Unexpired Lease with the consent of the applicable lessor. Absent such an extension, any Unexpired Lease not assumed (or deemed assumed) as of the Extended Assumption Deadline will be deemed rejected. The Debtors Efforts in Connection with the Unexpired Leases 11. Since the Petition Date, the Debtors have expended substantial effort to review the Unexpired Leases to determine which Unexpired Leases should be assumed and which should be rejected by the Extended Assumption Deadline. Among other things, this process has involved (a) reviewing the terms of each of the Unexpired Leases; (b) assessing the market value of the Unexpired Leases; (c) evaluating the feasibility and cost of moving certain of the Debtors operations and the potential impact of such relocation on the Debtors businesses; (d) evaluating the potential economic impact of assumption or rejection; and (e) evaluating the Unexpired Leases in the context of the ongoing development of the Debtors modifications to their distribution networks and overall business plan. 12. Through these efforts, the Debtors have determined, in their business judgment and to the best of their ability at this juncture of their chapter 11 cases, which of the Unexpired Leases to assume and which to reject based on available information and the current circumstances of these cases, as set forth below. 4

5 The Assumed Leases 13. In connection with the Debtors review of the Unexpired Leases, the Debtors have determined to assume the Unexpired Leases identified on Schedule 1 to the proposed order (the Proposed Order ) and incorporated herein by reference (collectively, the Assumed Leases ), 2 effective as of the Extended Assumption Deadline. 14. In addition, pursuant to section 365(b)(1)(A) of the Bankruptcy Code, the Debtors propose to pay to each lessor the applicable amount identified on Schedule 1 to the Proposed Order (each, a Cure Amount ) to cure any and all defaults under each Assumed Lease, as required by section 365(b) of the Bankruptcy Code The Debtors have determined, in their business judgment and to the best of their ability based on the information currently available, that the assumption of the Assumed Leases is appropriate, and represents the best available alternative under the circumstances. The premises subject to the Assumed Leases currently are necessary to the Debtors business operations and, based on the available information at this stage of the restructuring process, are essential to the Debtors future business operations and 2 Each Assumed Lease includes any modifications, amendments, addenda and/or supplements thereto and/or restatements thereof, including certain amendments negotiated in connection with the assumption of these leases. 3 For each Assumed Lease, Schedule 1 to the Proposed Order includes (a) the name and address of the lessor for the Assumed Lease; (b) a description of the Assumed Lease; and (c) the proposed Cure Amount to be paid in connection with the assumption of such lease. Due to their voluminous nature, copies of the Assumed Leases are not attached hereto, but are available upon request to the Debtors counsel. The terms of the Assumed Leases included in Schedule 1 to the Proposed Order are provided for convenience only and are not intended to modify, or to represent the Debtors interpretation of, the terms of any Assumed Lease. The Debtors reserve the right to amend Schedule 1 to the Proposed Order to add, remove, or otherwise modify the list of Assumed Leases through the date of the Hearing. Should the Debtors amend the list of Assumed Leases, the Debtors shall serve upon the affected lessor(s) a Redesignation Notice (defined below) and the Objection Deadline (defined below) in respect of any affected Assumed Lease shall be eight (8) days from the date of such amendment. 5

6 restructuring efforts. In addition, certain of the Assumed Leases may have realizable value for the Debtors in the market. To preserve and maximize this potential market value, the Debtors expressly reserve the right to sell and assign each Assumed Lease at a future date pursuant to sections 363 and 365(f) of the Bankruptcy Code. The Rejected Leases 16. In connection with the Debtors review of the Unexpired Leases, the Debtors have determined to reject the Unexpired Leases identified on Schedule 2 to the Proposed Order and incorporated herein by reference (collectively, the Rejected Leases ), 4 effective as of the applicable date listed on Schedule 2 for each of the Rejected Leases (the Rejection Effective Date ) The Debtors have determined that the Rejected Leases are not or will not be necessary to their ongoing business operations or restructuring efforts. Moreover, the Debtors have surrendered, or intend to surrender by the applicable Rejection Effective Date, possession of the premises leased pursuant to the Rejected Leases to the respective lessor. 4 Each Rejected Lease includes any modifications, amendments, addenda and/or supplements thereto and/or restatements thereof. 5 For each Rejected Lease, Schedule 2 to the Proposed Order includes (a) the name and address of the lessor for the Rejected Lease; (b) a description of the Rejected Lease; and (c) the Rejection Effective Date. Due to their voluminous nature, copies of the Rejected Leases are not attached hereto, but are available upon request to the Debtors counsel. The terms of the Rejected Leases included in Schedule 2 to the Proposed Order are provided for convenience only and are not intended to modify, or to represent the Debtors interpretation of, the terms of any Rejected Lease. The Debtors reserve the right to amend Schedule 2 to the Proposed Order to add, remove, or otherwise modify the list of Rejected Leases through the date of the Hearing. Should the Debtors amend the list of Rejected Leases, the Debtors shall serve upon the affected lessor(s) a Redesignation Notice (defined below) and the Objection Deadline (defined below) in respect of any affected Rejected Lease shall be eight (8) days from the date of such amendment. 6

7 A. Applicable Legal Standards Basis for Relief Requested Assumption and Rejection Are Appropriate Where They Are Based on the Proper Exercise of the Debtors Business Judgment 18. Section 365(a) of the Bankruptcy Code provides that a debtor, subject to the court s approval, may assume or reject any executory contract or unexpired lease. 11 U.S.C. 365(a). Courts routinely approve motions to assume or reject executory contracts or unexpired leases upon a showing that the debtor s decision to take such action will benefit the debtor s estate and is an exercise of sound business judgment. See Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures Corp.), 4 F.3d 1095, 1099 (2d Cir. 1993) (stating that section 365 of the Bankruptcy Code permits the trustee or debtor-in-possession, subject to the approval of the bankruptcy court, to go through the inventory of executory contracts of the debtor and decide which ones it would be beneficial to adhere to and which ones it would be beneficial to reject ); see also NLRB v. Bildisco & Bildisco, 465 U.S. 513, 523 (1984) (stating that the traditional standard applied by courts under section 365 is that of business judgment ); In re Gucci, 193 B.R. 411, 415 (S.D.N.Y. 1996) ( A bankruptcy court reviewing a trustee s decision to assume or reject an executory contract should apply its business judgment to determine if it would be beneficial or burdensome to the estate to assume it. ). 19. Courts generally will not second-guess a debtor s business judgment concerning the assumption, assumption and assignment or rejection of an executory contract or unexpired lease. See In re Riodizio, Inc., 204 B.R. 417, 424 (Bankr. S.D.N.Y. 1997) ( [A] court will ordinarily defer to the business judgment of the debtor s management ); accord Phar-Mor, Inc. v. Strouss Bldg. Assocs., 204 B.R. 948,

8 (Bankr. N.D. Ohio 1997) ( Whether an executory contract is favorable or unfavorable is left to the sound business judgment of the debtor.... Courts should generally defer to a debtor s decision whether to reject an executory contract. ). 20. The business judgment test is not a strict standard; it merely requires a showing that either assumption or rejection of the executory contract or unexpired lease will benefit the debtor s estate. See, e.g., Westbury Real Estate Ventures, Inc. v. Bradlees, Inc. (In re Bradlees Stores, Inc.), 194 B.R. 555, 558 n.1 (Bankr. S.D.N.Y. 1996) ( In reviewing a debtor s decision to assume or reject an executory contract, the court must examine the contract and circumstances and apply its best business judgment to determine if the assumption or rejection would be beneficial or burdensome to the estate. ). Further, nothing prevents the parties to a contract from agreeing to postpetition modifications to the contract prior to its assumption. See City of Covington v. Covington Landing Ltd. P ship, 71 F.3d 1221, 1227 (6th Cir. 1995) ( Nothing in the Code suggests that the debtor may not modify its contracts when all parties to the contract consent. ). The Bankruptcy Code Contemplates an Assignment after Assumption 21. As set forth above, the Debtors intend to assume each of the Assumed Leases now and may, in their discretion, assign them to a third party at a later time, pursuant to section 365(f) of the Bankruptcy Code. Courts have recognized the right of a debtor to assume a lease while maintaining the right to later assign the lease pursuant to the provisions of section 365 of the Bankruptcy Code, which permits assignment notwithstanding an otherwise applicable nonassignability restriction. See In re Bricker Sys., Inc., 44 B.R. 952 (Bankr. E.D. Wis. 1984); see also In re Federated Dep t Stores, 135 B.R. 941, 945 (Bankr. S.D. Ohio 1991) (allowing a one year lapse of time between 8

9 assumption and assignment pursuant to section 365(f) of the Bankruptcy Code and stating that Bricker Systems lends clear support to the proposition that an assumed contract may be assigned at a later date ). 6 B. Application of Relevant Standards The Debtors Have Determined That Assumption of the Assumed Leases Is Appropriate. 22. The proposed assumption by the Debtors of the Assumed Leases is an appropriate exercise of the Debtors business judgment based upon the information available to the Debtors at this juncture in their chapter 11 cases. Specifically, with respect to each of the Assumed Leases, the Debtors have assessed the relevant market and their business operations in light of the current status of their reorganization efforts. 23. Based on an analysis of relevant market conditions, the Debtors have determined that the premises leased under the Assumed Leases are necessary to their current business operations and that the immediate rejection of these leases and turnover of the underlying properties would be disruptive and costly. For example, the Debtors have evaluated the feasibility and cost of moving or consolidating certain of the Debtors operations at these leased locations. The Debtors therefore have determined in their business judgment that the costs and potential disruptions of any such relocations would outweigh any potential benefits at this time. 24. As such, the Debtors have made the decision, based on the information available and their business judgment, that the assumption of the Assumed Leases at this 6 Accord L.R.S.C. Co. v. Rickel Home Ctrs., Inc. (In re Rickel Home Ctrs., Inc.), 209 F.3d 291, 295 (3d Cir. 2000) (allowing an eight month lapse of time between assumption and assignment ); In re Serv. Merchandise Co., Inc., 297 B.R. 675, (Bankr. M.D. Tenn. 2002) (in a case where the debtor assumed a lease of nonresidential real property and sought to assign the lease 14 months later, the lessor s objections to assignment based on certain lease provisions granting a right of first refusal were overruled as violations of section 365(f) of the Bankruptcy Code). 9

10 time is appropriate and represents a better alternative than immediate rejection of these leases. Based on evolving circumstances and/or any Objection(s) (defined below) timely filed in these cases, the Debtors may reach a different conclusion about the affected Assumed Lease(s). Therefore, the Debtors reserve the right to modify any of their assumption decisions set forth herein prior to the date of the hearing to consider this motion (the Hearing ). In particular, if the Debtors determine that it is appropriate in light of additional information, further analyses or changing market conditions, they may redesignate any of the Assumed Leases for rejection (a Redesignated Assumed Lease ) by filing with the Court and serving on the applicable Assumed Party a written notice of such decision on or prior to the Extended Assumption Deadline (a Redesignation Notice ). If a Redesignation Notice is timely filed and served, the applicable Redesignated Assumed Lease will not be assumed and instead will be rejected effective as of the Rejection Effective Date identified in the Redesignation Notice. 25. In addition, if an Assumed Lease is not redesignated for rejection by the date of the Hearing, the Debtors nevertheless reserve the right to later reject such Assumed Lease if they determine that such a result is appropriate at the time based on their business judgment. If the Debtors later reject any leases previously assumed hereunder, the resulting damages that may be asserted by lessors will be limited by the provisions of applicable law, including section 503(b)(7) of the Bankruptcy Code. 7 7 Section 503(b) of the Bankruptcy Code provides, in relevant part [a]fter notice and a hearing, there shall be allowed administrative expenses, other than claims allowed under section 502(f) of this title, including (7) with respect to a nonresidential real property lease previously assumed under section 365, and subsequently rejected, a sum equal to all monetary obligations due, excluding those arising from or relating to a failure to operate or a penalty provision, for the period of 2 years following the later of the rejection date or the date of actual turnover of the premises, without reduction or setoff for any reason whatsoever except for sums actually received or to be received from an entity other than the debtor, and the claim for remaining sums due for the balance of the term of the lease shall be a claim under section 502(b)(6). 11 U.S.C. 503(b)(7). 10

11 26. For all of these reasons and subject to the reservations of rights described above, the Debtors believe that the assumption of the Assumed Leases is proper under the circumstances and should be approved. Moreover, the Debtors submit that the payment of the Cure Amounts will fully satisfy the Debtors obligations to cure outstanding defaults under the Assumed Leases, pursuant to section 365(b) of the Bankruptcy Code, and should be approved. The Debtors Have Determined That Rejection of the Rejected Leases Is Appropriate. 27. Application of the standards set forth above demonstrate that the lease rejections sought by this Motion are an appropriate exercise of the Debtors business judgment and should be approved. Specifically, based on currently available information, it does not appear that the Rejected Leases are or will be necessary to the Debtors ongoing business operations or restructuring efforts. As such, the Debtors ongoing obligations under the Rejected Leases would impose an undue burden on their estates. The Debtors, therefore, believe that maintaining the Rejected Leases under these circumstances would unnecessarily deplete the assets of the Debtors estates to the direct detriment of their creditors. Moreover, the Debtors have determined that the Rejected Leases do not have any realizable value in the marketplace. Accordingly, in the sound exercise of their business judgment based on the information available at this time, the Debtors have determined that the rejection of the Rejected Leases, pursuant to section 365 of the Bankruptcy Code, effective as of the Rejection Effective Date for each Rejected Leases, is in the best interests of their estates. 28. The Debtors reserve the right to modify any of their rejection decisions set forth herein prior to the date of the Hearing. In particular, if the Debtors determine that it 11

12 is appropriate in light of additional information, further analyses or changing market conditions, they may redesignate any of the Rejected Leases for assumption (a Redesignated Rejected Lease ) by filing with the Court and serving on the applicable lessor on or prior to the date of the Hearing a Redesignation Notice. If a Redesignation Notice is timely filed and served, the applicable Redesignated Rejected Lease will not be rejected and instead will be assumed, pursuant to section 365 of the Bankruptcy Code, as of the Extended Assumption Deadline. Objections 29. Any party in interest, including without limitation a counterparty to an Unexpired Lease, may object to the proposed lease assumptions and lease rejections requested by this Motion by filing a written objection (an Assumption/Rejection Objection ) on or before 400 p.m. prevailing Eastern Time on August 3, 2009 (the Objection Deadline ); provided, however, that the Objection Deadline shall be extended as to any affected Unexpired Lease until 400 p.m. prevailing Eastern Time on the eighth day following the filing of an applicable Redesignation Notice. Any such Assumption/Rejection Objection must set forth with specificity the legal and factual basis for such objection. 30. Additionally, any counterparty to an Assumed Lease may object to a proposed Cure Amount by filing a written objection (a Cure Objection and, together with an Assumption/Rejection Objection, each an Objection ) on or before the Objection Deadline. Any Cure Objection must set forth with specificity (i) the Assumed Lease to which the Cure Objection pertains; (ii) the basis for the Cure Objection; (iii) the provision(s) of the Assumed Lease or any other agreement under which the objecting 12

13 party contends any uncured default exists, if any; and (iv) the amount that the objecting party asserts as the Cure Amount. 31. An Objection shall be considered timely only if, on or before the Objection Deadline, it is filed with the Court and served upon each of the following parties (i) the attorneys for the Debtors, Davis Polk & Wardwell LLP, 450 Lexington Avenue, New York, New York 10017, Attn Marshall S. Huebner and Timothy E. Graulich, (ii) the attorneys to the agent for the Debtors first lien pre-petition lenders, Latham & Watkins LLP, 885 Third Avenue, New York, New York 10022, Attn Mark A. Broude and (iii) the attorneys for the statutory committee of unsecured creditors, Lowenstein Sandler PC, 65 Livingston Avenue, Roseland, New Jersey 07068, Attn Sharon L. Levine and Scott Cargill. 32. With respect to each Assumed Lease as to which an Objection is timely filed and properly served and that is not otherwise resolved by the parties after a reasonable period of time, the Debtors, in consultation with the Bankruptcy Court, shall schedule a hearing on such Objection and provide at least 14-calendar-days notice of such hearing to the relevant lessor; provided, however, that the filing of any such Objection shall not delay the entry of an order granting the relief requested herein for which no Objection has been timely filed. 33. The Debtors request that any assumption of an Assumed Lease approved by the Bankruptcy Court notwithstanding an Objection (and regardless of the date of such approval) shall be effective as of the Extended Assumption Deadline. 13

14 Notice 34. Pursuant to the Order Establishing Certain Notice, Case Management and Administrative Procedures (the Case Management Order ) entered by the Court on January 16, 2009, the Debtors will serve notice of this Motion on each of (a) the Core Parties (as defined in the Case Management Order), (b) the Non-ECF Service Parties (as defined in the Case Management Order) and (c) the Debtors real property lessors. In addition, all parties who have requested electronic notice of filings in these cases through the Court s ECF system will automatically receive notice of this motion no later than the day after its filing with the Court. Moreover, a copy of this Motion and any Order approving it will be made available on the Debtors Case Information Website (located at In light of the relief requested, the Debtors submit that no further notice is necessary. The Debtors submit that the foregoing satisfies Local Bankruptcy Rules (a) and No Previous Request 35. No previous request for the relief sought herein has been made by the Debtors to this or any other court. 14

15 WHEREFORE the Debtors respectfully request that the Court (a) enter an order substantially in the form attached hereto as Exhibit A, granting the relief requested herein; and (b) grant such other and further relief to the Debtors as the Court may deem proper. Dated New York, New York July 24, 2009 By /s/ Timothy E. Graulich Marshall S. Huebner Timothy E. Graulich Lynn I. Poss DAVIS POLK & WARDWELL LLP 450 Lexington Avenue New York, New York Telephone (212) Facsimile (212) Counsel to the Debtors and Debtors in Possession 15

16 Exhibit A

17 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK x In re STAR TRIBUNE HOLDINGS CORPORATION, et al., Debtors x Chapter 11 Case No (RDD) (Jointly Administered) ORDER AUTHORIZING DEBTORS TO ASSUME OR REJECT UNEXPIRED LEASES OF NONRESIDENTIAL REAL PROPERTY Upon the motion (the Motion ) 2 of Star Tribune Holdings Corporation ( Star Tribune Holdings ) and The Star Tribune Company (together with Star Tribune Holdings, the Debtors ), for entry of an order pursuant to section 365 of the Bankruptcy Code and Bankruptcy Rule 6006 authorizing them to (i) assume certain of their unexpired leases of nonresidential real property and (ii) reject certain of their unexpired leases of nonresidential real property; and the Court having jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C and the Standing Order of Referral of Cases to Bankruptcy Court Judges of the District Court for the Southern District of New York dated July 10, 1984 (Ward, Acting C.J.); and consideration of the Motion and the requested relief being a core proceeding the Bankruptcy Court can determine pursuant to 28 U.S.C. 157(b); and venue being proper before this Court 1 The Debtors are Star Tribune Holdings Corporation and The Star Tribune Company. The employer tax identification numbers and addresses for each of the Debtors are set forth in the Debtors chapter 11 petitions. 2 Unless otherwise defined herein, each capitalized term shall have the meaning ascribed to it in the Motion.

18 pursuant to 28 U.S.C and 1409; and due and proper notice of the Motion having been provided in accordance with the Case Management Order; and it appearing that no other or further notice need be provided; and the relief requested in the Motion being in the best interests of the Debtors and their estates and creditors; and the Court having reviewed the Motion [and having held a hearing with appearances of parties in interest noted in the transcript thereof (the Hearing )]; and the Court having determined that the legal and factual bases set forth in the Motion [and at the Hearing] establish just cause for the relief granted herein; and upon all of the proceedings had before the Court and after due deliberation and sufficient cause appearing therefore, it is ORDERED that the relief requested in the Motion is granted on the terms set forth herein; and it is further ORDERED that subject to the reservations of rights set forth in this Order, the Debtors are authorized to assume the Assumed Leases identified on the attached Schedule 1, which is incorporated herein by reference, 3 and the Assumed Leases are deemed assumed, pursuant to section 365 of the Bankruptcy Code, effective as of the Extended Assumption Deadline; and it is further ORDERED that the Debtors maintain the statutory right to later reject any Assumed Lease, even following the occurrence of the Extended Assumption Deadline. If the Debtors later reject any leases previously assumed hereunder, the resulting damages that may be asserted by lessors will be limited by sections 503(b)(7) and 502(b)(6) of the Bankruptcy Code and any other applicable law; and it is further 3 Each Assumed Lease identified on Schedule 1 includes any modifications, amendments, addenda and/or supplements thereto and/or restatements thereof. The terms of the Assumed Leases included in Schedule 1 are provided for convenience only and are not intended to modify, or to represent the Debtors interpretation of or a Court determination regarding, the terms of any Assumed Leases. 2

19 ORDERED that the Debtors right to assign any of the Assumed Leases, pursuant to section 365(f) of the Bankruptcy Code is expressly reserved, and the Debtors may assign any Assumed Lease in the future notwithstanding any provision of such Assumed Lease that prohibits, restricts or conditions the assignment of such Assumed Lease, provided that the conditions of section 365(f)(2)(B) of the Bankruptcy Code are satisfied; and it is further ORDERED that the cure amount to be paid to cure all pre-petition defaults under each Assumed Lease pursuant to section 365(b) of the Bankruptcy Code shall be the applicable Cure Amount set forth on the attached Schedule 1 or such other amount as may be agreed by the parties; and it is further ORDERED that the Debtors shall expedite review, processing and payment of any currently past due postpetition amounts owed in connection with the Assumed Leases; and it is further ORDERED that with respect to each Assumed Lease as to which an Objection is timely filed and properly served as provided for in the Motion and that is not otherwise resolved by the parties after a reasonable period of time, the Debtors, in consultation with this Court, shall schedule a hearing on such Objection and provide at least 14-calendardays notice of such hearing to the relevant lessor; and it is further ORDERED that any assumption of an Assumed Lease approved by the Bankruptcy Court notwithstanding an Objection shall be effective as of the Extended Assumption Deadline (regardless of the date of the resolution of such Objection); and it is further 3

20 ORDERED that the Debtors are authorized to reject the Rejected Leases identified on the attached Schedule 2, which is incorporated herein by reference, 4 and the Rejected Leases are deemed rejected, pursuant to section 365 of the Bankruptcy Code, effective as of the Rejection Effective Date identified for each Rejected Lease identified on Schedule 1; and it is further ORDERED that pursuant to the Order Establishing Deadline for Filing Proofs of Claim and Approving the Form and Manner of Notice Thereof (the Bar Date Order ) [Docket No. 210], any lessor under a Rejected Lease must file a proof of claim for any damages resulting from the rejection of the Rejected Lease (a Rejection Damages Claim ) no later than 30 days after notice by the Debtors of the entry of this Order (the Rejection Damages Bar Date ). All such proofs of claims shall be filed by Rejection Damages Bar Date in accordance with the requirements of the Bar Date Order. If a lessor fails to timely and properly file a Rejection Damages Claim by the Rejection Damages Bar Date, such party shall be forever barred, estopped and enjoined from asserting such Rejection Damages Claim against the Debtors or voting or receiving distributions under any plan of reorganization in these cases on account of such Rejection Damages Claim. See Bar Date Order; and it is further ORDERED that the Motion satisfied Bankruptcy Rules 6006, 6007 and 9014 and Local Bankruptcy Rules (a) and ; and it is further ORDERED that the Debtors are authorized to take all such actions as are necessary or appropriate to implement the terms of this Order; and it is further 4 Each Rejected Lease identified on Schedule 2 includes any modifications, amendments, addenda and/or supplements thereto and/or restatements thereof. The terms of the Rejected Leases included in Schedule 2 are provided for convenience only and are not intended to modify, or to represent the Debtors interpretation of or a Court determination regarding, the terms of any Rejected Leases. 4

21 ORDERED that this Court shall retain jurisdiction to resolve all matters relating to the implementation of this Order. Dated New York, New York, 2009 THE HONORABLE ROBERT D. DRAIN UNITED STATES BANKRUPTCY JUDGE 5

22 SCHEDULE 1 (Assumed Leases)

23 Lessor Description and Location Legal Notice Information Cure Amount 1 Duke Realty Limited Partnership Lease and First Lease Amendment Eagan, MN Duke Realty Limited Partnership 1600 Utica Avenue S, Suite 250 Minneapolis, MN $0 2 RIC Property Management, Inc. Lease, Second Amendment to Lease, Third Amendment to Lease, and Fourth Amendment to Lease RIC Property Management 355 South Garfield Cambridge, MN $0 Cambridge, MN 3 Premier Radisson LLC Office / Warehouse Lease Blaine, MN Premier Radisson LLC th Lane NW Ramsey, MN $0 4 Affordable Storage Solutions LLC Lease and Amendment to Lease Princeton, MN Affordable Storage Solutions th Avenue Zimmerman, MN ATTN Leroy Anderson $0 5 R&R Properties Lease Northfield, MN Ramon Mjelde P.O. Box 277 Dundas, MN $ R&S Winter Corp Lease, First Amendment to Lease, and Second Amendment to Lease R&S Winter Corp th Avenue Mapleton, MN $ Mankato, MN 7 8th Street Owatonna LLC Lease Agreement Owatonna, MN 8th Street Owatonna 6915 West 146th Street Apple Valley, MN $0 8 Darrell/Vicki Pearson Lease Wadena, MN Darrell & Vicki Pearson 707 Lincoln Avenue SW Wadena, MN $0 9 TW Properties Lease Willmar, MN TW Properties c/o Jon Ter Wisscha 9011 North Shore Drive Spicer, MN $1,929.54

24 Lessor Description and Location Legal Notice Information Cure Amount W Burnsville Partnership Lease Agreement Burnsville, MN 101 West Burnsville Pkwy Partnership, LLP c/o Pinehurst Properties 4999 France Avenue, Suite 245 Minneapolis, MN $0 11 Scripps Howard Publishing Sublease Washington D.C. Scripps Howard Publishing 1090 Vermont Avenue NW Washington D.C $1, MN Dept of Admin State of Minnesota Lease St Paul. MN Department of Administration Real Estate Management Division 50 Sherburne Avenue, Room 309 St. Paul, MN $0 13 MN Dept of Admin State of Minnesota Amendment of Lease Amendment No. 4 St. Paul. MN Department of Administration Real Estate Management Division 50 Sherburne Avenue, Room 309 St. Paul, MN $1,

25 SCHEDULE 2 (Rejected Leases)

26 Lessor Description and Location 1 LMA Partners Lease Agreement and Amendment Number 1 to Lease Agreement Burnsville, MN Legal Notice Information LMA Partners Portland Avenue S. Suite 138 Burnsville, MN Proposed Rejection Effective Date 7/31/ MJK Properties LLC Lease Agreement Bloomington, MN MJK Properties LLC 9112 Altman Court Inver Grove Heights, MN /13/ CSM Investors Inc Second Amendment of Lease Chanhassen, MN CSM Investors, Inc. c/o CSM Corporation 500 Washington Ave, Suite 3000 Minneapolis, MN ATTN VP, Property Mgmt Copy to CSM Corporation ATTN General Counsel 8/13/ Steiner Development, Inc. Lease Agreement Fridley, MN Trustee Group Realty Partners LLP c/o Steiner Development, Inc County Road 101 Wayzata, MN ATTN David L. Kordonowy 7/31/ Winpark One Two LLC Office / Warehouse Lease New Hope, MN Winpark One Two LLC ATTN Roger G. Finke th Avenue S Hopkins, MN /31/ Nash & Carlson LLC Lease Plymouth, MN Nash and Carlson LLC 5736 Lakeland Avenue Crystal, MN ATTN Ken Nash 7/31/ Lowell R. Thorud Estate Lease, First Amendment to Lease, and Second Amendment to Lease Lowell R. Thorud Estate Morris Road Bloomington, MN Attn Ronald Thorud 8/13/2009 St. Louis Park, MN

27 Lessor Description and Location Legal Notice Information Proposed Rejection Effective Date 8 Duke Realty Limited Partnership Lease Agreement Brooklyn Park, MN Duke Realty Limited Partnership 1600 Utica Ave S., Suite 250 Minneapolis, MN /31/ Wayzata Properties LLC Lease Maple Plain, MN 5130 Industrial LLC c/o Wayzata Properties LLC 294 Grove Lane E Wayzata, MN /13/ Progress Valley Park Lease and First Amendment to Lease Shakopee, MN Progress Valley Park ATTN Gary Gabrielson 5605 Code Avenue Edina, MN /13/