<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934 For the quarterly period ended March 31, 1997
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file number 0-27934
KATZ DIGITAL TECHNOLOGIES, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
<TABLE>
<S> <C>
Delaware 13-3871120
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No)
</TABLE>
Twenty One Penn Plaza, New York, New York 10001
(Address of Principal Executive Offices)
(212) 594-4800
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
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State the number of shares outstanding of each of the issuer's classes
of common equity, as of the last practicable date: 4,425,000 as of April 30,
1997
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<S> <C>
Class Number of Shares
Common Stock, $.001 par value 4,425,000
</TABLE>
Transitional Small Business Disclosure Format (check one):
Yes No X
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KATZ DIGITAL TECHNOLOGIES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
QUARTER ENDED MARCH 31, 1997
ITEMS IN FORM 10-QSB
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<CAPTION>
Facing Page Page
<S> <C> <C>
Part I
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II
Item 1. Legal Proceedings None
Item 2. Changes in Securities None
Item 3. Default Upon Senior Securities None
Item 4. Submission of Matters to a Vote of Security Holders None
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
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PART I
Item 1. Financial Statements
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KATZ DIGITAL TECHNOLOGIES, INC.
BALANCE SHEETS
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<CAPTION>
March 31, 1997
(Unaudited) December 31, 1996
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,808,748 $ 3,428,175
Accounts receivable, net of allowance for doubtful accounts of $103,738
and $94,738 at March 31, 1997 and December 31, 1996, respectively 3,915,769 3,216,386
Work-in-process inventory 85,112 69,328
Prepaid expenses and other current assets 113,336 163,514
----------- -----------
Total Current Assets 6,922,965 6,877,403
PROPERTY AND EQUIPMENT - NET 3,791,453 3,568,853
OTHER ASSETS 104,332 80,333
GOODWILL - NET 1,468,711 1,140,819
----------- -----------
$12,287,461 $11,667,408
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 1,496,713 $ 1,160,254
Current portion of notes payable 117,206
Current portion of obligations under capital leases 667,959 699,029
Income taxes payable 66,151
Deferred taxes payable 114,000 114,000
Due to stockholders 68,670 339,912
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Total Current Liabilities 2,464,548 2,379,346
DEFERRED CREDITS 302,094 265,520
DEFERRED TAXES PAYABLE 265,000 265,000
PENSION LIABILITY 191,258 191,258
NOTES PAYABLE 234,413
OBLIGATIONS UNDER CAPITAL LEASES, NET OF
CURRENT PORTION 1,582,987 1,490,323
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Total Liabilities 5,040,300 4,591,447
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; 5,000 shares authorized;
no shares issued -- --
Common stock, $.001 par value; 25,000,000 shares authorized;
4,425,000 issued and outstanding at March 31, 1997 and
December 31, 1996, respectively 4,425 4,425
Additional paid-in capital 6,860,267 6,860,267
Retained earnings 382,469 211,269
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Total Stockholders' Equity 7,247,161 7,075,961
----------- -----------
$12,287,461 $11,667,408
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</TABLE>
The accompanying notes are an integral part of these statements.
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KATZ DIGITAL TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
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<CAPTION>
Three Months Ended
March 31,
----------------------------
1997 1996
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<S> <C> <C>
Net sales $4,447,164 $ 3,343,114
Cost of goods sold 1,926,980 1,390,812
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Gross profit 2,520,184 1,952,302
Operating expenses
Selling, general and administrative 2,152,254 1,592,492
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Total Operating Expenses 2,152,254 1,592,492
Operating income 367,930 359,810
Interest expense (net) 17,542 32,534
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Earnings before provision for income taxes 350,388 327,276
Provision for income taxes 179,187 775,000
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Net earnings (loss) $ 171,201 $ (447,724)
========== ===========
Pro forma data
Historical earnings before provision for income taxes $ 350,388 $ 327,276
Provision for income taxes 179,187 165,563
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Net earnings $ 171,201 $ 161,713
========== ===========
Net earnings per share $ 0.04 $ 0.05
========== ===========
Weighted average number of shares outstanding 4,503,745 3,051,224
========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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KATZ DIGITAL TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
Three Months Ended
March 31,
------------------------------
1997 1996
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<S> <C> <C>
Cash flows from operating activities
Net earnings (loss) $ 171,201 $ (447,724)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization 299,785 224,007
Deferred credits 36,573 107,934
Deferred taxes 723,000
Increase (decrease) in cash flows from changes in operating assets
and liabilities:
Accounts receivable (699,383) (670,962)
Work-in-process inventory (15,784) (43,713)
Prepaid expenses and other current assets 50,178 (4,918)
Other assets (23,999) (84,895)
Accounts payable and accrued expenses 319,022 412,784
Income taxes payable (66,151) 10,789
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Net cash provided by operating activities 71,442 226,302
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment - net (256,015) (258,423)
----------- -----------
Net cash used in investing activities (256,015) (258,423)
----------- -----------
Cash flows from financing activities:
Distributions to stockholders (271,242) (395,467)
Payments of obligations under capital leases (163,612) (161,860)
Note payable-bank 532,800
Net proceeds from public offering 6,374,314
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Net cash provided by (used in) financing activities (434,854) 6,349,787
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (619,427) 6,317,666
Cash and cash equivalents - beginning of period 3,428,175 200,729
----------- -----------
Cash and cash equivalents - end of period $ 2,808,748 $ 6,518,395
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for
Interest $ 51,591 $ 36,369
Income taxes $ 162,820 $ 86,164
</TABLE>
Supplemental disclosures of noncash investing and financing activities:
Capital lease obligations of $437,276 and $1,699,272 were incurred in the
quarters ended March 31, 1997 and 1996, respectively, as a result of the
Company entering into new equipment leases.
In conjunction with the 1996 acquisition of The Sarabande Press, Inc.,
notes payable and accrued interest totaling $369,056 with a corresponding
amount of goodwill, was recorded in the quarter ended March 31, 1997
The accompanying notes are an integral part of these statements.
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KATZ DIGITAL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The summarized financial information included herein does not include all
disclosures required in a complete set of financial statements prepared in
conformity with generally accepted accounting principles. Such disclosures were
included with the financial statements of the Company at December 31, 1996 and
for the year then ended in the Company's Form 10K as filed with the Securities
and Exchange Commission. These statements should be read in conjunction with the
data therein.
The financial information included herein contains all adjustments (consisting
of normal recurring accruals) which, in the opinion of management, are deemed
necessary for a fair presentation of the results for the interim period. The
results for the interim periods are not necessarily indicative of results that
may be expected for the full fiscal year. Certain reclassifications have been
made to the prior year statements to conform to the current year presentation.
NOTE B - TERMINATION OF S CORPORATION STATUS AND PRO FORMA
INFORMATION
Prior to the consummation of the Company's initial public offering, The Company
filed its Federal and state income tax returns under the provisions of
Subchapter S of the Internal Revenue Code. Accordingly, no provision had been
made in the accompanying financial statements for Federal and certain state
income taxes for the S Corporation periods, since income of the Company was
taxable directly to its stockholders. The Company was however, liable for
certain state and local taxes, which are reflected in the accompanying financial
statements. Upon closing of the public offering, the Company's income tax status
as an S Corporation terminated. The Company converted to a C Corporation,
adopted the accrual basis of accounting and is subject to both Federal and state
corporate income taxes. Accordingly, $723,000 additional Federal and state
income taxes, applicable to temporary differences in the recognition of income
and expenses for financial accounting and income tax reporting purposes existing
at March 26, 1996 (the date of the initial public offering), have been recorded
and charged to operations for the three months ended March 31, 1996. Pro forma
income taxes in 1996 reflect an additional provision for income taxes at the
effective Federal, state and local rates applied to the Company's financial
statement income.
Pro forma earnings per share are based on the weighted average number of common
and common equivalent shares outstanding during the period. The shares
outstanding for the period ending March 31, 1996, give retroactive effect to the
merger and recapitalization of the Company as well as 154,443 shares deemed to
be outstanding, which represent the approximate number of shares deemed to be
sold by the Company (at an assumed public offering price of $5.00 per share) to
fund the portion as distribution in excess of 1995 undrawn earnings.
NOTE C - NEW ACCOUNTING PRONOUNCEMENT
In February 1997, The Financial Accountingm Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share, which is effective
for financial statements for both interim and annual periods ending after
December 15, 1997. The new Standard eliminates primary and fully diluted
earnings per share and requires presentation of basic and, if applicable,
diluted earnings per share. Basic earnings per share is computed by dividing
income available to common shareholders by the weighted average common shares
outstanding for the period. Diluted earnings per share reflects the weighted
average common shares outstanding and dilutive potential common shares such as
stock options. The pro forma effect of adopting the new standard would be basic
earnings per share of $.04 and $.06, and diluted earnings per share of $.04 and
$.05 for the quarters ended March 31, 1997 and 1996, respectively.
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<PAGE> 8
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, the
percentage of net sales represented by certain items reflected in the Company's
statements of operations. The statements of operations contained in the
Company's financial statements and the following table include pro forma
adjustments for income taxes.
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<CAPTION>
Three Months Ended
March 31,
---------------------
1997 1996
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<S> <C> <C>
Net sales 100.0% 100.0%
===== =====
Cost of goods sold 43.3% 41.5%
Gross profit 56.7% 58.5%
Selling, general and administrative expenses 48.4% 47.6%
Net earnings (loss) 3.8% (13.4%)
Pro forma net earnings 3.8% 4.8%
</TABLE>
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996
Net sales for the three months ended March 31, 1997 were $4,447,164, an
increase of $1,104,050 or 33.0%, compared to $3,343,114 for the three months
ended March 31, 1996. The increase in net sales was primarily attributable to
increased volume of services which includes sales from The Sarabande Press,
Inc., acquired in August 1996, and a 50% increase in the sales of digital short
run printing.
Cost of goods sold for the three months ended March 31, 1997 was
$1,926,980, an increase of $536,168, or 38.6%, compared to $1,390,812 for the
three months ended March 31, 1996. The increase in cost of goods sold was
primarily attributable to greater costs of production personnel and related
supplies reflecting the increased volume in the current quarter. In addition,
depreciation increased 63% reflecting significant capital additions over the
last twelve months.
Gross profit for the three months ended March 31, 1997 was $2,520,184,
an increase of $567,882, or 29.1%, compared to $1,952,492 for the three months
ended March 31, 1996. Gross profit as a percent of net sales decreased to 56.7%
for the three months ended March 31, 1997 from 58.5% in the prior year. The
lower gross profit percentage in 1997 was attributable to the continuing change
in the Company's product mix favoring digital printing which generates a lower
gross profit rate plus increases in production equipment depreciation as a
result of major equipment acquisitions over the last twelve months.
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<PAGE> 9
Selling, general and administrative expenses for the three months ended
March 31, 1997 were $2,152,254, an increase of $559,762, or 35.2%, compared to
$1,592,492 for the three months ended March 31, 1996. The increase was primarily
attributable to greater costs for management, sales personnel, and commissions,
resulting from the increased size of the Company.
Net interest expense for the three months ended March 31, 1997 was
$17,542, a decrease of $14,992 or 46.1% compared to $32,534 for the three months
ended March 31, 1996. The decrease was due to increased interest income from the
investment of the unused proceeds from the Company's March 1996 initial public
offering.
Included in the 1996 provision for income taxes is a non-recurring
charge of $723,000 for additional Federal and state income taxes resulting from
the termination of the Company's S Corporation tax status.
As a result of the foregoing, net earnings (loss) increased to $171,201 for
the three months ended March 31, 1997 from a loss of $447,724 for the prior
comparable period, an increase of $618,925. Net earnings, after giving effect to
a pro forma adjustment for income tax provisions in 1996, would have been
$171,201 ($.04 per share) and $161,713 ($.05 per share) for the three months
ended March 31, 1997 and 1996, respectively. The lower "per share" earnings in
1997 resulted from a 48% increase in the average number of shares outstanding in
that period. The increase in the number of shares outstanding was primarily due
to the Company's Initial Public Offering.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had working capital of $4,458,417,
substantially unchanged from working capital of $4,498,057 at December 31, 1996.
Net cash provided by operating activities totaled $71,442 for the three
months ended March 31, 1997 compared to $226,302 in the prior year. The decrease
in cash from operating activities in the first quarter of 1997 compared to the
first quarter of 1996 resulted principally from (i) the absence of the large
increase in deferred taxes and deferred credits recorded in the prior year and
(ii) the decrease in the change in accounts payable and accrued expenses in the
first quarter of 1997, which together more than offset the improvement in net
earnings (loss) in the first quarter of 1997. The deferred taxes in the first
quarter of 1996 related to the Company's change in tax status from an S
corporation to a C corporation. Cash flows from investing activities were
related to purchases of property and equipment and were substantially unchanged
from 1996's first quarter. Cash provided from financing activities decreased
$6,784,641 in the first quarter of 1997 as a result of the Company's Initial
Public Offering and the repayment of a bank note in the 1996
quarter. The net effect of cash flows from operating activities, investing
activities and financing activities was a net decrease in cash during the first
quarter of 1997 of $619,427 to an ending balance of $2,808,748.
The Company maintains a $2,000,000 line of credit with a commercial
bank. At March 31, 1997 there were no outstanding borrowings under the line. The
Company believes that
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<PAGE> 10
current cash balances, current borrowing capacity and cash generated by
operations, will provide sufficient cash to meet its operating requirements for
the next twelve months. See "Forward Looking Information".
FORWARD LOOKING INFORMATION
This quarterly report on Form 10-QSB contains certain forward-looking
statements and information relating to the Company that are based on the beliefs
of management, as well as assumptions made by and information currently
available to the Company. When used in this document, the words "anticipate,"
"believe," "estimate," and "expect" and similar expressions, as they relate to
the Company, are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions,
including those described in this quarterly report on Form 10-QSB. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated or expected. The Company
does not intend to update these forward-looking statements.
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<PAGE> 11
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
3.1 Certificate of Incorporation (1)
3.2 By-Laws (1)
10.1 Lease of the Company's offices at 611 Broadway, New York, NY*
27 Financial Data Schedule*
</TABLE>
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* Filed herewith.
(1) Filed as an exhibit to the Issuer's Registration Statement on
Form SB-2 (File No. 333-11960) and amendments thereto and
incorporated herein by reference.
(b) Reports on Form 8K
The Company filed no reports on Form 8K during the first
quarter ended March 31, 1997.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
KATZ DIGITAL TECHNOLOGIES, INC.
----------------------------------------------
(Registrant)
Date: May 7, 1997 /s/ Gary Katz
----------------------------------------------
Gary Katz
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: May 7, 1997 /s/ Donald L. Flamm
----------------------------------------------
Donald L. Flamm
Vice President-Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
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<PAGE> 1
STANDARD FORM OF OFFICE LEASE The
Real Estate Board of New York, Inc.
AGREEMENT OF LEASE, made as of this 15th day of July, 1996, between
CABLE BUILDING ASSOCIATES, having an address c/o CABLE BUILDING ASSOCIATES,
58-47 Francis Lewis Boulevard, Bayside, New York 11364, party of the first part,
hereinafter referred to as OWNER, and KATZ DIGITAL TECHNOLOGIES, INC., having
their principal place of business located at 21 Penn Plaza, 8th Floor, New York,
New York 10001, party of the second part, hereinafter referred to as TENANT.
WITNESSETH: Owner hereby leases to Tenant and Tenant hereby hires from
Owner Suite #2092, a portion of the 2nd floor, substantially as shown by
outlining and cross- hatching on Schedule A annexed hereto and made a part
hereof, in the building known as 611 Broadway, in the Borough of Manhattan, City
of New York, for the term of six (6) years (or until such term shall sooner
cease and expire as hereinafter provided) to commence on the 1st day of
February, 1996, and to end on the 31st day of January, 2002, both dates
inclusive, at an annual rate set forth in Article 37 of the Rider annexed hereto
and made a part hereof and additional charges consisting of all other sums of
money as shall become due and payable by Tenant to Owner hereunder, which Tenant
agrees to pay in lawful money of the United States which shall be legal tender
in payment of all debts and dues, public and private, at the time of payment, in
equal monthly installments in advance on the first day of each month during said
term, at the office of Owner or such other place as Owner may designate, without
any set off or deduction whatsoever, except that Tenant shall pay the first
monthly installment(s) on the execution hereof (unless this lease be a
renewal).
In the event that, at the commencement of the term of this lease, or
thereafter, Tenant shall be in default in the payment of rent to Owner pursuant
to the terms of another lease with Owner or with Owner's predecessor in
interest, Owner may at Owner's option and without notice to Tenant add the
amount of such arrears to any monthly installment of rent payable hereunder and
the same shall be payable to Owner as additional rent.
The parties hereto, for themselves, their heirs, distributees,
executors, administrators, legal representatives, successors and assigns, hereby
covenant as follows:
Rent; Occupancy:
a. Tenant shall pay the rent as above and hereinafter provided.
b. Tenant shall use and occupy demised premises for OFFICE/COPY CENTER.
Tenant Alterations:
<PAGE> 2
c. Tenant shall make no changes in or to the demised premises of any
nature without Owner's prior written consent. Subject to the prior written
consent of Owner, and to the provisions of this article, Tenant, at Tenant's
expense, may make alterations, installations, additions or improvements which
are non-structural and which do not affect utility services or plumbing and
electrical lines, in or to the interior of the demised premises by using
contractors or mechanics first approved by Owner. Tenant shall, before making
any alterations, additions, installations or improvements, at its expense,
obtain all permits, approvals and certificates required by any governmental or
quasi-governmental bodies and (upon completion) certificates of final approval
thereof and shall deliver promptly duplicates of all such permits, approvals and
certificates to Owner and Tenant agrees to carry and will cause Tenant's
contractors and subcontractors to carry such workman's compensation, general
liability, personal and property damage insurance as Owner may require. If any
mechanic's lien is filed against the demised premises, or the building of which
the same forms a part, for work claimed to have been done for, or materials
furnished to Tenant, whether or not done pursuant to this article, the same
shall be discharged by Tenant within thirty days thereafter, at Tenant's
expense, by filing the bond required by law. All fixtures and all paneling,
partitions, railings and like installations, installed in the premises at any
time, either by Tenant or by Owner in Tenant's behalf, shall, upon installation,
become the property of Owner and shall remain upon and be surrendered with the
demised premises. Nothing in this Article shall be construed to give Owner title
to or to prevent Tenant's removal of trade fixtures, moveable office furniture
and equipment, but upon removal of any such from the premise or upon removal of
other installations as may be required by Owner, Tenant shall immediately and at
its expense repair and restore the premises to the condition existing prior to
installation and repair any damage to the demised premises or the building due
to such removal. All property permitted or required to be removed by Tenant at
the end of the term remaining in the premises after Tenant's removal shall be
deemed abandoned and may, at the election of Owner, either be retained as
Owner's property or may be removed from the premises by Owner, at Tenant's
expense.
Maintenance and Repairs:
4. Tenant shall, throughout the term of this lease, take good care of
the demised premises and the fixtures and appurtenances therein. Tenant shall be
responsible for all damage or injury to the demised premises or any other part
of the building and the systems and equipment thereof, whether requiring
structural or nonstructural repairs caused by or resulting from carelessness,
omission, neglect or improper conduct of Tenant, Tenant's subtenants, agents,
employees, invitees or licensees, or which arise out of any work, labor, service
or equipment done for or supplied to Tenant or any subtenant or arising out of
the installation, use or operation of the property or equipment of Tenant or and
subtenant. Tenant shall also repair all damage to the building and the demised
premises caused by the moving of Tenant's fixtures, furniture and equipment.
Tenant shall promptly make, at Tenant's expense, all repairs in and to the
demised premises for which Tenant is responsible, using only the contractor for
the trade or trades in question, selected from a list of at least two
contractors per trade submitted by Owner. Any other repairs in or to the
building or the
2
<PAGE> 3
facilities and systems thereof for which Tenant is responsible shall be
performed by Owner at the Tenant's expense. Owner shall maintain in good working
order and repair the exterior and the structural portions of the building
interior and the building plumbing, electrical, heating and ventilating systems
(to the extent such systems presently exist) serving the demised premises.
Tenant agrees to give prompt notice of any defective condition in the premises
for which Owner may be responsible hereunder/ There shall be no allowance to
Tenant for diminution of rental value and no liability on the part of Owner by
reason of inconvenience, annoyance or injury to business arising from Owner or
others making repairs, alterations, additions or improvements in or to any
portion of the building or the demised premises or in and to the fixtures,
appurtenances or equipment thereof. It is specifically agreed that Tenant shall
not be entitled to any setoff or reduction of rent by reason of any failure of
Owner to comply with the covenants of this or any other article of this Lease.
Tenant agrees that Tenant's sole remedy at law in such instance will be by way
of an action for damages for breach of contract. The provisions of this Article
4 shall not apply in the case of fire or other casualty which are dealt with in
Article 9 hereof.
Window Cleaning:
5. Tenant will not clean nor require, permit, suffer or allow any
window in the demised premises to be cleaned from the outside in violation of
Section 202 of the Labor Law or any other applicable law or of the Rules of the
Board of Standards and Appeals, or of any other Board or body having or
asserting jurisdiction.
Requirements of Law, Fire Insurance, Floor Loads:
6. Prior to the commencement of the lease term, if Tenant is then in
possession, and at all times thereafter, Tenant, at Tenant's sole cost and
expense, shall promptly comply with all present and future laws, orders and
regulations of all state, federal, municipal and local governments, departments,
commissions and boards and any direction of any public officer pursuant to law,
and all orders, rules and regulations of the New York Board of Fire
Underwriters, Insurance Services Office, or any similar body which shall impose
any violation, order or duly upon Owner or Tenant with respect to the demised
premises, whether or not arising out of Tenant's use or manner of use thereof,
(including Tenant's permitted use) or, with respect to the building if arising
out of Tenant's use or manner of use of the premises or the building (including
the use permitted under the lease). Nothing herein shall require Tenant to make
structural repairs or alterations unless Tenant has, by its manner of use of the
demised premises or method of operation therein, violated any such laws,
ordinances, orders, rules, regulations or requirements with respect thereto.
Tenant may, after securing Owner to Owner's satisfaction against all damages,
interest, penalties and expenses, including, but not limited to, reasonable
attorney's fees, by cash deposit or by surety bond in an amount and in a company
satisfactory to Owner, contest and appeal any such laws, ordinances, orders,
rules, regulations or requirements provided same is done with all reasonable
promptness and provided such appeal shall not subject Owner to prosecution for a
criminal offense or constitute a default under any lease or mortgage under which
Owner
3
<PAGE> 4
may be obligated, or cause the demised premises or any part thereof to be
condemned or vacated. Tenant shall not do or permit any act or thing to be done
in or to the demised premises which is contrary to law, or which will invalidate
or be in conflict with public liability, fire or other policies of insurance at
any time carried by or for the benefit of Owner with respect to the demised
premises or the building of which the demised premises form a part, or which
shall or might subject Owner to any liability or responsibility to any person or
property damage. Tenant shall not keep anything in the demised premises except
as now or hereafter permitted by the Fire Department, Board of Fire
Underwriters, Fire Insurance Rating Organization or other authority having
jurisdiction, and then only in such manner and such quantity so as not to
increase the rate for fire insurance applicable to the building, nor use the
premises in a manner which will increase the insurance rate for the building or
any property located therein over that in effect. Tenant shall pay all cost,
expenses, fines, penalties, or damages, which may be imposed upon Owner by
reason of Tenant's failure to comply with the provisions of this article and if
by reason of such failure the fire insurance rate shall, at the beginning of
this lease or at any time thereafter, be higher than it otherwise would be, then
Tenant shall reimburse Owner, as additional rent hereunder, for that portion of
all fire insurance premiums thereafter paid by Owner which shall have been
charged because of such failure by Tenant. In any action or proceeding wherein
Owner and Tenant are parties, a schedule or "make-up" of rate for the building
or demised premises issued by the New York Fire Insurance Exchange, or other
body making fire insurance rates applicable to said premises shall be conclusive
evidence of the facts therein stated and of the several items and charges in the
fire insurance rates then applicable to said premises. Tenant shall not place a
load upon any floor of the demised premises exceeding the floor load per square
foot area which it was designed to carry and which is allowed by law. Owner
reserves the right to prescribe the weight and position of all safes, business
machines and mechanical equipment. Such installations shall be place and
maintained by Tenant, at Tenant's expense, in settings sufficient, in Owner's
judgement, to absorb and prevent vibration, noise and annoyance.
Subordination:
7. this lease is subject and subordinate to all ground or underlying
leases and to all mortgages which may now or hereafter affect such leases or the
real property of which demised premises are a part and to all renewals,
modifications, consolidations, replacements and extensions of any such
underlying leases and mortgages. This clause shall be self-operative and no
further instrument of subordination shall be required by any ground or
underlying lessor or by any mortgagee, affecting any lease or the real property
of which the demised premises are a part. In confirmation of such subordination,
Tenant shall execute promptly any certificate that Owner may request.
Property-Loss, Damage, Reimbursement, Indemnity:
8. Owner or its agents shall not be liable for any damage to property
of Tenant or of others entrusted to employees of the building, nor for loss of
or damage to any
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property of Tenant by theft or otherwise, nor for any injury or damage to
persons or property resulting from any cause of whatsoever nature, unless caused
by or due to the negligence of Owner, its agent, servants or employees. Owner or
its agents will not be liable for any such damage caused by other tenants or
persons in, upon or about said building or caused by operations in construction
of any private, public or quasi public work. If at any time any windows of the
demised premises are temporarily closed, darkened or bricked up (or permanently
closed, darkened or bricked up, if required by law) for any reason whatsoever
including, but not limited to Owner's own acts, Owner shall not be liable for
any damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation therefor nor abatement or diminution of rent nor shall the same
release Tenant from its obligations hereunder nor constitute an eviction. Tenant
shall indemnify and save harmless Owner against and from all liabilities,
obligations, damages, penalties, claims, costs and expenses for which Owner
shall not be reimbursed by insurance, including reasonable attorney's fees,
paid, suffered or incurred as a result of any breach by Tenant's agents,
contractors, employees, invitees or licensees, of any covenant or condition of
this lease or the carelessness, negligence or improper conduct of the Tenant,
Tenant's agents, contractors, employees, invitees or licensees. Tenant's
liability under this lease extends to the acts and omission of any subtenant,
and any agent, contractor, employee, invitee or licensee of any subtenant. In
case any action or proceeding is brought against Owner by reason of any such
claim, Tenant, upon written notice from Owner, will, at Tenant's expense, resist
or defend such action or proceeding by counsel approved by Owner in writing,
such approval not to be unreasonably withheld.
Destruction, Fire and Other Casualty:
9. (a) If the demised premises or any part thereof shall be damaged by
fire or other casualty, Tenant shall give immediate notice thereof to Owner and
this lease shall continue in full force and effect except as hereinafter set
forth. (b) If the demised premises are partially damaged or rendered partially
unusable by fire or other casualty, the damages thereto shall be repaired by and
at the expense of Owner and the rent, until such repair shall be substantially
completed, shall be apportioned from the day following the casualty according to
the part of the premises which is usable. (c) If the demised premises are
totally damaged or rendered wholly unusable by fire or other casualty, then the
rent shall be proportionately paid up to the time of the casualty and
thenceforth shall cease until the date when the premises shall have been
repaired and restored by Owner, subject to Owner's right to elect not to restore
the same as hereinafter provided. (d) If the demised premises are rendered
wholly unusable or (whether or not the demised premises are damaged in whole or
in part) if the building shall be so damaged that Owner shall decide to demolish
it or to rebuild it, then, in any of such events, Owner may elect to terminate
this lease by written notice to Tenant, given within 45 days after such fire or
casualty, specifying a date for the expiration of the lease, which date shall
not be more than 60 days after the giving of such notice, and upon the date
specified in such notice the term of this lease shall expire as fully and
completely as if such date were the date set forth above for the termination of
this lease and Tenant shall forthwith quit, surrender and vacate the premises
without prejudice
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however, to Landlord's rights and remedies against Tenant under the lease
provisions in effect prior to such termination, and any rent owing shall be paid
up to such date and any payments of rent made by Tenant which were on account of
any period subsequent to such date shall be returned to Tenant. Unless Owner
shall make the repairs and restorations under the conditions of (b) and (c)
hereof, with all reasonable expedition. subject to delays due to adjustment of
insurance claims, labor troubles and causes beyond Owner's control. After any
such casualty, Tenant shall cooperate with Owner's restoration by removing from
the premises as promptly as reasonably possible, all of Tenant's salvageable
inventory and movable equipment, furniture and other property. Tenant's
liability for rent shall resume three (3) days after written notice from Owner
that the premises are substantially ready for Tenant's occupancy. (e) Nothing
contained hereinabove shall relieve Tenant from liability that may exist as a
result of damage from fire or other casualty. Notwithstanding the foregoing,
each party shall look first to any insurance in its favor before making any
claim against the other party for recovery for loss or damage resulting from
fire or other casualty, and to the extent that such insurance is in force and
collectible and to the extent permitted by law, Owner and Tenant each hereby
releases and waives all right of recovery against the other or any one claiming
through or under each of them by way of subrogation or otherwise. The foregoing
release and waiver shall be in force only if both releasors' insurance policies
contain a clause providing that such a release or waiver shall not invalidate
the insurance. If, and to the extent that such waiver can be obtained only by
the payment of additional premiums, then the party benefitting from the waiver
shall pay such premium within ten days after written demand or shall be deemed
to have agreed that the party obtaining insurance coverage shall be free of any
further obligation under the provisions hereof with respect to waiver of
subrogation. Tenant acknowledges that Owner will not carry insurance on Tenant's
furniture and/or furnishings or any fixtures or equipment, improvements, or
appurtenances removable by Tenant and agrees that the Owner will not be
obligated to repair any damage thereto or to replace the same. (f) Tenant hereby
waives the provisions of Section 227 of the Real Property Law and agrees that
the provisions of this article shall govern and control in lieu thereof/
Eminent Domain:
10. If the whole or any part of the demised premises shall be acquired
or condemned by Eminent Domain for any public or quasi public use or purpose,
then and in that event, the term of this lease shall cease and terminate from
the date of title vesting in such proceeding and Tenant shall have no claim for
the value of any unexpired term of said lease and assigns to Owner, Tenant's
entire interest in any such award.
Assignment, Mortgage, Etc.:
11. Tenant, for itself, its heirs, distributees, executors,
administrators, legal representatives, successors and assigns, expressly
covenants that it shall not assign, mortgage or encumber this agreement, nor
underlet or suffer or permit the demised premises or any part thereof to be used
by others, without the prior written consent of Owner in each
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instance. Transfer of the majority of the stock of a corporate Tenant shall be
deemed an assignment. If this lease is assigned, or if the demised premises or
any part thereof be underlet or occupied by anybody other than Tenant, Owner
may, after default by Tenant, collect rent from the assignee, under-tenant or
occupant, and apply the net amount collected to the rent herein reserved, but no
such assignment, underletting, occupancy or collection shall be deemed a waiver
of this covenant, or the acceptance of the assignee, under-tenant or occupant as
tenant, or release of Tenant from the further performance by Tenant of covenants
on the part of Tenant herein contained. The consent by Owner to an assignment or
underletting shall not in any wise be construed to relieve Tenant from obtaining
the express consent in writing of Owner to any further assignment or
underletting.
Electric Current:
12. Rates and conditions in respect to submetering or rent inclusion,
as the case may be, to be added in RIDER attached hereto. Tenant covenants and
agrees that at all time its use of electric current shall not exceed the
capacity of existing feeders to the building or the risers or wiring
installation and Tenant may not use any electrical equipment which, in Owner's
opinion, reasonably exercised, will overload such installations or interfere
with the use thereof by other tenants of the building.
Access to Premises:
13. Owner or Owner's agents shall have the right (but shall not be
obligated to enter the demised premises in any emergency at any time, and, at
other reasonable times, to examine the same and to make such repairs,
replacements and improvements as Owner may deem necessary and reasonably
desirable to the demised premises or to any other portion oft he building or
which Owner may elect to perform. Tenant shall permit Owner to use and maintain
and replace pipes and conduits in and through the demised premises and to erect
new pipes and conduits therein provided they are concealed within the walls,
floor, or ceiling. Owner may, during the progress of any work in the demised
premises, take all necessary materials into said premises without the same
constituting an eviction nor shall the Tenant be entitled to any abatement of
rent while such work is in progress nor to any damages by reason of loss or
interruption of business or otherwise. Throughout the term hereof, Owner shall
have the right to enter the demised premises at reasonable hours for the purpose
of showing the same to prospective purchasers or mortgagees of the building, and
during the last six months of the term for the purpose of showing the same to
prospective tenants. If Tenant is not present to open and permit an entry into
the premises, Owner or Owner's agents may enter the same whenever such entry may
be necessary or permissible by master key or forcibly and provided reasonable
care is exercised to safeguard Tenant's property, such entry shall not render
Owner or its agents liable therefor, nor in any event shall the obligations of
Tenant hereunder be affected. If during the last month of the term Tenant shall
have removed all or substantially all of Tenant's property therefrom, Owner may
immediately enter, alter, renovate or redecorate the demised premises without
limitation
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or abatement of rent, or incurring liability to Tenant for any compensation and
such act shall have no effect on this lease or Tenant's obligations hereunder.
Vault, Vault Space, Area:
14. No Vaults, vault space or area, whether or not enclosed or covered,
not within the property line of the building is leased hereunder, anything
contained in or indicated on any sketch, blue print or plan, or anything
contained elsewhere in this lease to the contrary notwithstanding. Owner makes
no representation as to the location of the property line of the building. All
vaults and vault space and all such areas not within the property line of the
building plan Tenant may be permitted to use and/or occupy, is to be used and/or
occupied under a revocable license, and if any such license be revoked, or if
the amount of such space or area be diminished or required by any federal, state
or municipal authority or public utility, Owner shall not be subject to any
liability nor shall Tenant be entitled to any compensation or diminution or
abatement of rent, nor shall such revocation, diminution or requisition be
deemed constructive or actual eviction. Any tax, fee or charge of municipal
authorities for such vault or area shall be paid by Tenant.
Occupancy:
15. Tenant will not at any time use or occupy the demised premises in
violation of the certificate of occupancy issued for the building of which the
demised premises are a part. Tenant has inspected the premises and accepts them
as is, subject to the riders annexed hereto with respect to Owner's work, if
any. In any event, Owner makes no representation as to the condition of the
premises and Tenant agrees to accept the same subject to violations, whether or
not of record.
Bankruptcy:
16. (a) Anything elsewhere in this lease to the contrary
notwithstanding, this lease may be cancelled by Owner by the sending of a
written notice to Tenant within a reasonable time after the happening of any one
or more of the following events: (1) the commencement of a case in bankruptcy or
under the laws of any state naming Tenant as the debtor; or (2) the making by
Tenant of an assignment or any other arrangement for the benefit of creditors
under any state statute. Neither Tenant nor any person claiming through or under
Tenant, or by reason of any statute or order of court, shall thereafter be
entitled to possession of the premises demised but shall forthwith quit and
surrender the premises. If this lease shall be assigned in accordance with its
terms, the provisions of this Article 16 shall be applicable only to the party
then owning Tenant's interest in this lease.
(b) It is stipulated and agreed that in the event of the
termination of this lease pursuant to (a) hereof, Owner shall forthwith,
notwithstanding any other provisions of this lease to the contrary, be entitled
to recover from Tenant as and for liquidated damages an amount equal to the
difference between the rent reserved hereunder for the unexpired portion
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<PAGE> 9
of the term demised and the fair and reasonable rental value of the demised
premises for the same period. In the computation of such damages the difference
between any installment of rent becoming due hereunder after the date of
termination and the fair and reasonable rental value of the demised premises for
the period for which such installment was payable shall be discounted to the
date of termination oat the rate of four percent (4%) per annum. If such
premises or any part thereof, before presentation of proof of such liquidated
damages to any court, commission or tribunal, the amount of rent reserved upon
such reletting shall be deemed to be the fair and reasonable rental value for
the part or the whole of the premises so re-let during the term of the
re-letting. nothing herein contained shall limit or prejudice the right of the
Owner to prove for and obtain as liquidated damages by reason of such
termination, an amount equal to the maximum allowed by any statute or rule of
law in effect at the time when, and governing the proceedings in which, such
damages are to be proved, whether or not such amount be greater, equal to, or
less than the amount of the difference referred to above.
Default:
17. If the notice provided for hereof shall have been given, and the
terms shall expire as aforesaid; or if Tenant shall make default in the payment
of the rent reserved herein or any item of additional rent herein mentioned or
any part of either or in making any other payment herein required; then and in
any of such events Owner may without notice, re-enter the demised premises
either by force or otherwise, and dispossess Tenant by summary proceedings or
otherwise, and the legal representative of Tenant or other occupant of demise
premises and remove their effects and hold the premises as if this lease had not
been made, and Tenant hereby waives the service of notice of intention to
re-enter or to institute legal proceedings to that end. If Tenant shall make
default hereunder prior to the date fixed as the commencement of any renewal or
extension of this lease, Owner may cancel and terminate such renewal or
extension agreement by written notice.
Remedies of Owner and Waiver of Redemption:
18. In case of any such default, re-entry, expiration and/or dispossess
by summary proceedings or otherwise, (a) the rent shall become due thereupon and
be paid up to the time of such re-entry, dispossess and/or expiration, (b) Owner
may re-let the premises or any part or parts thereof, either in the name of
Owner or otherwise, for a term or terms, which may at Owner's option be less
than or exceed the period which would otherwise have constituted the balance of
the term of this lease and may grant concessions or free rent or charge a higher
rental than that in this lease, and/or (c) Tenant or the legal representatives
of Tenant shall also pay Owner as liquidated damages for the failure of Tenant
shall also pay Owner as liquidated damages for the failure of Tenant to observe
and perform said Tenant's covenants herein contained, any deficiency between the
rent hereby reserved and/or covenanted to be paid and the net amount, if any, of
the rents collected on account of the lease or leases of the demised premises
for each month of the period which would otherwise have constituted the balance
of the term of this lease. The failure of Owner to re-let the premises or any
part or
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parts thereof shall not release or affect Tenant's liability for damages. In
computing such liquidated damages there shall be added to the said deficiency
such expenses as Owner may incur in connection with re-letting, such as legal
expenses, attorneys' fees, brokerage, advertising and for keeping the demised
premises in good order or for preparing the same for re-letting. Any such
liquidated damages shall be paid in monthly installments by Tenant on the rent
day specified in this lease and any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the rights of Owner to
collect the deficiency for any subsequent month by a similar proceeding. Owner
in putting the demised premises in good order or preparing the same for
re-rental may, at Owner's option, make such alterations, repairs, replacements,
and/or decorations in the demised premises as Owner, in Owner's judgement,
considers advisable and necessary for the purpose of reletting the demised
premises, and the making of such alteration, repairs, replacements, and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Owner shall in no event be liable in any way whatsoever
for failure to re-let the demised premises, or in the event that the demised
premises are re-let, for failure to collect the rent thereof under such
re-letting, and in event shall Tenant be entitled to receive any excess, if any,
of such net rents collected over the sums payable by Tenant to Owner hereunder.
In the event of a breach or threatened breach by Tenant of any of the covenants
or provisions hereof, Owner shall have the right of injunction and the right to
invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner form any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws in the event of Tenant
being evicted or dispossessed for any cause, or in the event of Owner obtaining
possession of demised premises, by reason of the violation by Tenant of any of
the covenants and conditions of this lease, or otherwise.
Fees and Expenses:
19. If Tenant shall default in the observance or performance of any
term or covenant on Tenant's part to be observed or performed under or by virtue
of any of the terms or provisions in any article of this lease, then, unless
otherwise provided elsewhere in this lease, Owner may immediately or at any time
thereafter and without notice perform the obligation of Tenant thereunder. If
Owner, in connection with the foregoing or in connection with any default by
Tenant in the covenant to pay rent hereunder, makes any expenditures or incurs
any obligations for the payment of money, including but not limited to
attorney's fees, in instituting, prosecuting or defending any action or
proceeding, then Tenant will reimburse Owner for such sums so paid or
obligations incurred with interest and costs. The foregoing expenses incurred by
reason of Tenant's default shall be deemed to be additional rent hereunder and
shall be paid by Tenant to Owner within five (5) days of rendition of any bill
or statement to Tenant therefor. If Tenant's lease term shall have expired at
the time of making of such expenditures or incurring of such obligations, such
sums shall be recoverable by Owner as damages.
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Building Alterations and Management:
20. Owner shall have the right at any time without the same
constituting an eviction and without incurring liability to Tenant therefor to
change the arrangement and/or location of public entrances, passageways, doors,
doorways, corridors, elevators, stairs, toilets or other public parts of the
building and to change the name, number or designation by which the building may
be known. There shall be no allowance to Tenant for diminution of rental value
and no liability on the part of Owner by reason of inconvenience, annoyance or
injury to business arising from Owner or other Tenants making any repairs in the
building or any such alterations, additions and improvements. Furthermore,
Tenant shall not have any claim against Owner by reason of Owner's imposition of
such controls of the manner of access to the building by Tenant's social or
business visitors as the Owner may deem necessary for the security of the
building and its occupants.
No Representations by Owner:
21. Neither Owner nor Owner's agents have made any representations or
promises with respect to the physical condition of the building, the land upon
which it is erected on the demised premises, the rents, leases, expenses of
operation or any other matter or thing affecting or related to the premises
except as herein expressly set forth and no rights, easements or licenses are
acquired by Tenant by implication or otherwise except as expressly set forth in
the provisions of this lease. Tenant has inspected the building and the demised
premises and is thoroughly acquainted with their condition and agrees to take
the same "as is" and acknowledges that the taking of possession of the demised
premises by Tenant shall be conclusive evidence that the said premises and the
building of which the same form a part were in good and satisfactory condition
at the time such possession was so taken, except as to latent defects. All
understandings and agreements heretofore made between the parties hereto are
merged in this contract, which alone fully and completely expresses the
agreement between Owner and Tenant and any executory agreement hereafter made
shall be ineffective to change, modify, discharge or effect an abandonment of it
in whole or in part, unless such executory agreement is in writing and signed by
the party against whom enforcement of the change, modification, discharge or
abandonment is sought.
End of Term:
22. Upon the expiration or other termination of the term of this lease,
Tenant shall quit and surrender to Owner the demised premises, broom clean, in
good order and condition, ordinary wear and damages which Tenant is not required
to repair as provided elsewhere in this lease excepted, and Tenant shall remove
all its property. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this lease. If the last day of
the term of this Lease or any renewal thereof, falls on Sunday, this lease shall
expire at noon on the preceding Saturday unless it be a legal holiday in which
case it shall expire at noon on the preceding business day.
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Quiet Enjoyment:
23. Owner covenants and agrees with Tenant that upon Tenant paying the
rent and additional rent and observing and performing all the terms, covenants
and conditions, on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the premises hereby demised, subject, nevertheless,
to the terms and conditions of this lease including, but not limited to, Article
31 hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
Failure to Give Possession:
24. If Owner is unable to give possession of the demised premises on
the date of the commencement of the term hereof, because of the holding-over or
retention of possession of any tenant, undertenant or occupants or if the
demised premises are located in a building being constructed, because such
building has not been sufficiently completed to make the premises ready for
occupancy or because of the fact that a certificate of occupancy has not been
procured or for any other reason, Owner shall not be subject to any liability
for failure to give possession on said date and the validity of the lease shall
not be impaired under such circumstances, nor shall the same be construed in any
wise to extend the term of this lease, but the rent payable hereunder shall be
abated (provided Tenant is not responsible for Owner's inability to obtain
possession) until after Owner shall have given Tenant written notice that the
premises are substantially ready for Tenant's occupancy. If permission is given
to Tenant to enter into the possession of the demised premises or to occupy
premises other than the demised premises prior to the date specified as the
commencement of the term of this lease, Tenant covenants and agrees that such
occupancy shall be deemed to be under all terms, covenants, conditions and
provisions of this lease, except as to the covenant to pay rent. The provisions
of this article are intended to constitute "an express provision to the
contrary" within the meaning of Section 223-a of the New York Real Property Law.
No Waiver:
25. The failure of Owner to seek redress for violation of, or to insist
upon the strict performance of any covenant or condition of this lease or of any
of the Rules or Regulations, set forth or hereafter adopted by Owner, shall not
prevent a subsequent act which would have originally constituted a violation
from having all force and effect of an original violation. The receipt by Owner
of rent with knowledge of the breach of any covenant of this lease shall not be
deemed a waiver of such breach and no provision of this lease shall be deemed to
have been waived by Owner unless such waiver be in writing signed by Owner. No
payment by Tenant or receipt by Owner of a lesser amount than the monthly rent
herein stipulated shall be deemed to be other than on account of the earliest
stipulated rent, nor shall any endorsement or statement of any check or any
letter accompanying any check or payment as rent be deemed an accord and
satisfaction, and Owner may accept such check or payment without prejudice to
Owner's right to recover the balance of such rent or pursue any other remedy in
this lease provided. No act or thing done by Owner or Owner's
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agents during the term hereby demised shall be deemed an acceptance of a
surrender of said premises, and no agreement to accept such surrender shall be
valid unless in writing signed by Owner. No employee of Owner or Owner's agent
shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
Inability to Perform:
27. (1)This lease and the obligation to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in no wise be affected, impaired or excused because Owner is
unable to fulfill any of his obligations under this lease or to supply or is
delayed in supplying any service expressly or impliedly to be supplied or is
unable to make, or is delayed in making any repair, additions, alterations or
decorations or is unable to supply or is delayed in supplying any equipment or
fixtures if Owner is prevented or delayed from so doing by reason of strike or
labor troubles or any cause whatsoever including, but not limited to, government
preemption in connection with a National Emergency or by reason of any rule,
order or regulation of any department or subdivision thereof of any government
agency or by reason of the conditions of supply and demand which have been or
are affected by war or other emergency.
Bills and Notices:
28. Except as otherwise in this lease provided, a bill, statement,
notice or communication which Owner may desire or be required to give to Tenant,
shall be deemed sufficiently given or rendered if, in writing, delivered to
Tenant personally or sent by registered or certified mail addressed to Tenant at
the building of which the demised premises form a part or at the last known
residence address or business address of Tenant, mailed, or left at the premises
as herein provided. Any notice by Tenant to Owner must be served by registered
or certified mail addressed to Owner at the address first hereinabove given or
at such other address as Owner shall designate by written notice.
Services Provided by Owners:
29. As long as Tenant is not in default under any of the covenants of
this lease, Owner shall provide: (a) necessary elevator facilities on business
days from 8 a.m. to 6 p.m. and on Saturdays from 8 a.m. to 1 p.m. and have one
elevator subject to call at all other times; (b) heat to the demised premises
when and as required by law, on business days from 8 a.m. to 6 p.m. and on
Saturdays from 8 a.m. to 1 p.m.; (c)water for ordinary lavatory purposes, but if
Tenant uses or consumes water for any other purposes or in unusual quantities of
which fact Owner shall be the sole judge), Owner may install a water meter at
- --------
(1)Rider to be added if necessary.
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Tenant's expense in good working and repair to register such water consumption
and Tenant shall pay for water consumed as shown on said meter as additional
rent as and when bills are rendered; If, however, said premises are to be kept
clean by Tenant, it shall be done at Tenant's sole expense, in a manner
satisfactory to Owner and no one other than persons approved by Owner shall be
permitted to enter said premises or the building of which they are a part for
such purpose; (e) If the demised premises are serviced by Owner's air
condition/cooling and ventilating system, air conditioning/cooling will be
furnished to Tenant from May 15th through September 30th on business days
(Mondays through Fridays, holidays excluded) from 8:00 a.m. to 6:00 p.m., and
ventilation will be furnished on business days during the aforesaid hours except
when air conditioning/cooling is being furnished as aforesaid; (f) Owner
reserves the right to stop services of the heating, elevators, plumbing,
air-conditioning, power systems or cleaning or other services, if any, when
necessary by reason of accident or for repairs, alterations, replacements or
improvements necessary or desirable in the judgment of Owner for as long as may
be reasonably required by reason thereof. If the building of which the demise
premises are a part supplies manually-operated elevator service, Owner at any
time may substitute automatic-control elevator service and upon ten days'
written notice to Tenant, proceed with alterations necessary therefor without in
any wise affecting this lease or the obligation of Tenant hereunder. The same
shall be done with a minimum of inconvenience to Tenant and Owner shall pursue
the alteration with due diligence.
Captions:
30. The Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this lease nor
the intent of any provisions thereof.
Definitions:
31. The term "office", or "offices", wherever used in this lease, shall
not be construed to mean premises used as a store or stores, for the sale or
display, at any time, of goods, wares or merchandise, of any kind, or as a
restaurant, shop, booth, bootblack or other stand, barber shop, or for other
similar purposes or for manufacturing. The term "Owner" means a landlord or
lessor, and as used in this lease means only the owner, or the mortgagee in
possession, for the time being of the land and building (or the owner of a lease
of the building or of the land and building) of which the demised premises form
a part, so that in the event of any sale or sales of said land and building, or
of the land and building, the said Owner shall be and hereby is entirely freed
and relieved of all covenants and obligations of Owner hereunder, and it shall
be deemed and construed without further agreement between the parties or their
successors in interest, or between the parties and the purchaser, at any such
sale, or the said lessee of the building, or of the land and building, that the
purchaser or the lessee of the building has assumed and agreed to carry out any
and all covenants and obligations of Owner, hereunder. The words "re-enter" and
"re-entry" as used in this lease are not restricted to their technical legal
meaning. The term "business
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<PAGE> 15
days" as used in this lease shall exclude Saturdays (except such portion thereof
as is covered by specific hours in Article 29 hereof), Sundays and all days
observed by the State or Federal Government as legal holidays and those
designated as holidays by the applicable building service union employees
service contract or by the applicable Operating Engineers contract with respect
to HVAC service.
Adjacent Excavation - Shoring:
32. If an excavation shall be made upon land adjacent to the demised
premises, or shall be authorized to be made, Tenant shall afford to the person
causing or authorized to cause such excavation, license to enter upon the
demised premises for the purpose of doing such work as said person shall deem
necessary to preserve the wall or the building of which demised premises form a
part from injury or damage and to support the same by proper foundations without
any claim for damages or indemnity against Owner, or diminution or abatement of
rent.
Rules and Regulations:
33. Tenant and Tenant's servants, employees, agents, visitors and
licensees shall observe faithfully, and comply strictly with, the Rules and
Regulations and such other and further reasonable Rules and Regulations as Owner
or Owner's agents may from time to time adopt. Notice of any additional rules or
regulations shall be given in such manner as Owner may elect. In case Tenant
disputes the reasonableness of such Rule or Regulation or decision to the New
York office of the American Arbitration Association, whose determination shall
be final and conclusive upon the parties hereto. The right to dispute the
reasonableness of any additional Rule or Regulation upon Tenant's part shall be
deemed waived unless the same shall be asserted by service of a notice, in
writing, upon the Owner within ten (10) days after the giving of notice thereof.
Nothing in this lease contained shall be construed to impose upon Owner any duty
or obligation to enforce the Rules and Regulations or terms, covenants or
conditions in any other lease, as against any other tenant and Owner shall not
be liable to Tenant for violation of the same by any other tenant, its servants,
employees, agents, visitors or licensees.
Security:
34. Tenant has deposited with Owner the sum of $14,231.26 as security
for the faithful performance and observance by Tenant of the terms provisions
and conditions of this lease. It is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which Tenant is in default or for any sum which Owner may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the re-letting of the
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<PAGE> 16
premises, whether such damages or deficiency accrued before or after summary
proceedings or other re-entry by Owner. In the event that Tenant shall fully and
faithfully comply with all of the terms, provisions, covenants and conditions of
this Lease and after delivery of entire possession of the demised premises to
Owner. In the event of a sale of the land and building or leasing of the
building, of which the demised premises form a part, Owner shall have the right
to transfer the security to the vendee or lessee and Owner shall thereupon be
released by Tenant from all liability for the return of said security, and it is
agreed that the provisions hereof shall apply to every transfer or assignment
made of the security to a new Owner. Tenant further covenants that it will not
assign or encumber or attempt to assign or encumber the monies deposited herein
as security and that neither Owner nor its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
Estoppel Certificate:
35. Tenant, at any time, and from time to time, upon at least 10 days'
prior notice by Owner, shall execute, acknowledge and deliver to Owner and/or to
any other person, firm or corporation specified by Owner, a statement certifying
that this Lease is unmodified and in full force and effect as modified and
stating the modifications), stating the dates to which the rent and additional
rent have been paid, and stating whether or not there exists any default by
Owner under this Lease, and, if so, specifying each such default.
Successors and Assigns:
36. The covenants, conditions and agreements contained in this lease
shall bind and inure to the benefit of Owner and Tenant and their respective
heirs, distributes, executors, administrators, successors, and except as
otherwise provided in this lease, their assigns.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
CABLE BUILDING ASSOCIATES
By: M.D. Carlisle Realty Corp., as managing agent /s/ , Vice President
_____________________________
Katz Digital Technologies, Inc. /s/ Mitchell Cohen, C.F.O.
__________________________
CORPORATE OWNER
State of New York
County of ss:
On this _____ day of ________, 19__, before me personally came
_____________________, to me known and by me being duly sworn, did depose and
say that he resides at _________, that he is the ______________ of
_____________________, the corporation described in an
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<PAGE> 17
which executed the foregoing instrument as OWNER: that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation,
and that he signed his name thereto by like order.
_________________________________
CORPORATE TENANT
State of New York
County of ss:
On this _____ day of ________, 19__, before me personally came
_____________________, to me known and by me being duly sworn, did depose and
say that he resides at _________, that he is the ______________ of
_____________________, the corporation described in an which executed the
foregoing instrument as TENANT: that he knows the seal of said corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation, and that he
signed his name thereto by like order.
_________________________________
INDIVIDUAL OWNER
State of New York
County of ss:
On this _____ day of ________, 19__, before me personally came
_____________________, to me known and known to me to be the individual
described in, and who as OWNER executed the foregoing instrument and
acknowledged to me that he executed the same.
_________________________________
INDIVIDUAL TENANT
State of New York
County of ss:
On this _____ day of ________, 19__, before me personally came
_____________________, to me known and known to me to be the individual
described in, and who as TENANT executed the foregoing instrument and
acknowledged to me that he executed the same.
_________________________________
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<PAGE> 18
GUARANTY
FOR VALUE RECEIVED, and in consideration for, and as an inducement to
Owner making the within lease with Tenant, the undersigned guarantees to Owner,
Owner's successors and assigns, the full performance and observance of all
covenants, conditions and agreements, therein provided to be performed and
observed by Tenant, including the "Rules and Regulations" as therein provided,
without requiring any notice of non-payment, non-performance, or non-observance,
or proof, or notice, or demand, whereby to charge the undersigned therefor, all
of which the undersigned hereby expressly waives and expressly agrees that the
validity of this agreement and the obligations of the guarantor hereunder shall
in no wise be terminated, affected or impaired by reason of the assertion by
Owner against Tenant of any of the rights or remedies reserved to Owner pursuant
to the provisions of the within Lease. The undersigned further covenants and
agrees that this guaranty shall remain and continue in full force and effect as
to any renewal, modification or extension of this Lease and during any period
when Tenant is occupying the premises as a "statutory tenant." As a further
inducement to Owner to make this Lease and in consideration thereof, Owner and
the undersigned covenant and agree that in any action or proceeding brought by
either Owner or the undersigned against the other on any matters whatsoever
arising out of, under or by virtue of the terms of this Lease or of this
guarantee that Owner and the undersigned shall and do hereby waive trial by
jury.
Dated: __________________19_____
________________________________
Guarantor
________________________________
Witness
________________________________
Guarantor's Residence
________________________________
Business Address
________________________________
Firm Name
State of New York
County of ss:
On this _____ day of ________, 19__, before me personally came
_____________________, to me known and known to me to be the individual
described in, and who executed the foregoing Guaranty and acknowledged to me
that he executed the same.
________________________________
Notary Public
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<PAGE> 19
IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS
LEASE IN ACCORDANCE WITH ARTICLE 33.
1. The sidewalks, entrances, driveways, passages, courts, elevators, vestibules,
stairways, corridors or halls shall not be obstructed or encumbered by any
Tenant or used for any purpose other than for ingress and egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
2. The water and wash closets and plumbing fixtures shall not be used for any
purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids, or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any window of
the building; and no Tenant shall sweep or throw or permit to be swept or thrown
from the demised premises any dirt or other substances into any of the corridors
or halls, elevators, or out of the doors or windows or stairways of the building
and Tenants shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the demised premises, or permit or suffer the demised
premises to be occupied or used in a manner offensive or objectionable to Owner
or other occupants of the building by reason of noise, odors, and/or vibrations,
or interfere in any way with other Tenants or those having business therein, nor
shall any animals or birds be kept in or about the building. Smoking or carrying
lighted cigars or cigarettes in the elevators of the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls of the
building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside of the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability, and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Interior signs on
doors
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<PAGE> 20
and directory tablet shall be inscribed, painted or affixed for each Tenant by
Owner at the expense of such Tenant, and shall be of a size, color and style
acceptable to Owner.
6. No Tenant shall mark, paint, drill into, or in any way deface any part of the
demises premises or the building of which they form a part. No boring, cutting
or stringing of wires shall be permitted, except with the prior written consent
of Owner, and as Owner may direct. No Tenant shall lay linoleum, or other
similar floor covering, so that the same shall come in direct contact with the
floor of the demised premises, and, if linoleum or other similar floor covering
is desired to be used an interlining of builder's deadening felt shall be first
affixed to the floor, by a paste or other material, soluble in water, the use of
cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant, nor shall any changes be made in existing locks
or mechanism thereof. Each Tenant must, upon the termination of his Tenancy,
restore to Owner all keys of stores, offices and toilet rooms, either furnished
to, or otherwise procured by, such Tenant, and in the event of the loss of any
keys, so furnished, such Tenant shall pay to Owner the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter of any
description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these Rules and Regulations of the
Lease or which these Rules and Regulations are a part.
9. Canvassing, soliciting and peddling in the building is prohibited and each
Tenant shall cooperate to prevent same.
10. Owner reserves the right to exclude from the building between the hours of 6
P.M. and 8 A.M. and at all hours on Sunday, and legal holidays all persons who
do not present a pass to the building signed by Owner. Owner will furnish passes
to persons for whom any Tenant requests same in writing. Each Tenant shall be
responsible for all persons for whom he requests such passes and shall be liable
to Owner for all acts of such persons.
11. Owner shall have the right to prohibit any advertising by any Tenant which
in Owner's opinion, tends to impair the reputation of the building or its
desirability as a building for offices, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the demised
premises, any flammable, combustible or explosive fluid, material, chemical or
substance, or cause or permit any odors of cooking or other processes, or any
unusual or other objectionable odors to permeate in or emanate from the demised
premises.
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13. Omitted.
14. Tenant shall not move any safe, heavy machinery, heavy equipment, bulky
matter, or fixtures into or out of the building with Owner's prior written
consent. If such safe, machinery, equipment, bulky matter, or fixtures requires
special handling, all work in connection therewith shall comply with the
Administrative Code of the City of New York and all other laws and regulations
applicable thereto and shall be done during such hours as Owner may designate.
STANDARD FORM OF OFFICE LEASE
The Real Estate Board of New York, Inc. Copyright 1983. All rights reserved.
Reproduction in whole or in part prohibited.
Dated:
Rent per year:
Rent per month:
Term
From
To
Initials /s/ /s/
--- ---
21
<PAGE> 22
ADDENDUM
SARABANDE PRESS
Suite #202
Paragraph 6
1. as if Tenant were not using the demised premises for its particular use or
manner of use.
2. Notwithstanding the foregoing, Owner represents and warrants that the floor
for the demised premises will support an Indigo E-Print digital Press weighing
approximately three thousand two hundred and fifty (32,50) pounds if spread over
approximately thirty six (36) square feet and suspended approximately six (6)
inches above the finished floor with steel plates. Owner agrees to the placement
of such press in the position indicated on Schedule A.
Paragraph 15
1. Owner represents that the Certificate of Occupancy covering the demised
premises and the Building permits the use set forth in Article 2 of this Lease
and that it shall not be modified by Owner so as to prohibit such use.
2. except as otherwise provided in this lease, provided, however, that Owner
shall correct any violations affecting the demised premises prior to the
commencement of this Lease.
Paragraph 18
1. * reasonable
2. * reasonable
Paragraph 19
1. * reasonable
2. * reasonable
Paragraph 27
1. Except as expressly provided for herein
Paragraph 29
1. material
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<PAGE> 23
Annexed to and forming part of lease dated July 15, 1996, between CABLE BUILDING
ASSOCIATES, Owner/Landlord, and KATZ DIGITAL TECHNOLOGIES, INC., as Tenant,
covering number 202 at the building known as 611 Broadway, New York, New York
10012.
37. Rent
The annual base rent for the premises which shall be paid in monthly
installments, in advance on the first day of each month shall be as follows:
Commencing February 1, 1996, through January 31, 1997, Eighty five thousand
three hundred eighty seven dollars and fifty cents ($85,387.50) annually,
payable in monthly installments of Seven thousand one hundred fifteen dollars
and sixty three cents ($7,115.63) per month;
Commencing February 1, 1997, through January 31, 1998, Eighty eight thousand
eight hundred three dollars ($88,803.50) annually, payable in monthly
installments of Seven thousand four dollars and twenty five cents ($7,400.25)
per month;
Commencing February 1, 1998, through January 31, 1999, Ninety two thousand three
hundred fifty five dollars and twelve cents ($92,355.12) annually, payable in
monthly installments of Seven thousand six hundred ninety six dollars and twenty
six cents ($7,696.26) per month;
Commencing February 1, 1999, through January 31, 2000, Ninety six thousand forty
nine dollars and thirty two cents ($96,049.32) annually, payable in monthly
installments of Eight thousand four dollars and eleven cents ($8,004.11) per
month;
Commencing February 1, 2000, through January 31, 2001, Ninety nine thousand
eight hundred ninety one dollars and thirty cents ($99,891.30) annually, payable
in monthly installments of Eight thousand three hundred twenty four dollars and
twenty seven cents ($8,324.27) per month;
Commencing February 1, 1996, through January 31, 1997, Eighty five thousand
three hundred eighty seven dollars and fifty cents ($85,387.50) annually,
payable in monthly installments of Seven thousand one hundred fifteen dollars
and sixty three cents ($7,115.63) per month;
Commencing February 1, 2001, through January 31, 2002, One hundred three
thousand eight hundred eight six dollars and eighty nine cents ($103,886.89)
annually, payable in monthly installments of Eight thousand six hundred fifty
seven dollars and twenty four cents ($7,115.63) per month;
The base rent is subject to adjustments as set forth in this rider.
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<PAGE> 24
38. Rent Escalation for Taxes
Tenant agrees to pay additional rent 2 1/8% of any and all increases in Real
Estate Taxes above the Real Estate Taxes for the 1996 calendar year (hereinafter
referred to as the "Base Tax Year") imposed on the Property with respect to
every Tax Year or part thereof during the term of this lease, whether any such
increase results from a higher tax rate or an increase in the assessed valuation
of the property or both. "Property" shall mean the land and building including
any "air rights", of which the demised premises are a part. "Real Estate Taxes"
shall mean taxes and assessments imposed upon the Property including any special
assessment imposed thereon for any purpose whatsoever and also including taxes
payable by Owner to a ground lessor with respect thereto. If due to a change in
the method of taxation any franchise, income, profit, or other tax, however
designated, shall be levied against Owner's interest in the property in whole or
in part for or in lieu of any tax which would otherwise constitute Real Estate
Taxes, such change in method of taxation shall be included in the term "Real
Estate Taxes" for purposes hereof. "Tax Year" shall mean each period of twelve
(12) months commencing on the first (1st) day of January subsequent to the Base
Tax Year, in which occurs any part of the term of this lease or such other
period of twelve (12) months occurring during the term of this lease as
hereafter may be duly adopted as the calendar year for real estate tax purposes
of the City of New York. All such payments shall be pro-rated for any partial
Tax Year occurring during the last year of the term of this lease. A copy of the
Tax Bill of the City of New York shall be sufficient evidence of the amount of
Real Estate Taxes and for calculation of the amount to be paid by Tenant.
Only Owner shall be eligible to institute tax reduction or other proceedings to
reduce the assessed valuation. Should Owner be successful in any such reduction
proceedings and obtain a rebate for periods during which Tenant has paid
Tenant's share of increases, Owner shall, after deducting Owner's expenses in
connection therewith including without limitation attorney's fees and
disbursements, return to Tenant's pro-rata share of such rebate except that
Tenant may not obtain any portion of the benefits which may accrue to Owner from
any reduction in Real Estate Taxes below the tax imposed in the Base Tax Year.
In no event shall Tenant's base rent be reduced as a Consequence of any
reduction in taxes.
The amounts due under subdivision 38, "TAXES" hereunder shall be
collected as additional rent without set off or deduction, and shall be paid in
the following manner:
(A) Any adjustment in rent occurring by reason of subdivision 38
"TAXES" shall be effective as of the first (1st) day of the TAX YEAR concerned
and, after Owner shall have furnished Tenant with a statement setting forth the
Real Estate Taxes for the Base Tax Year and the Real Estate Taxes for the Tax
year concerned. All payments are to be paid in full within ten (10) days of
billing. any adjustments in rent payable pursuant to this Rider by reason of
changes in the Real Estate Taxes for the Base Year or any Tax Year prior to the
then current Tax Year, if any, shall be paid by Tenant to Owner within thirty
(30) days after the statement covering such period is delivered to Tenant or a
credit given by Owner towards the next ensuing rent installments until the
credit is exhausted, as the case may be.
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<PAGE> 25
If any such Tax statement is furnished to Tenant after the commencement
of the effective date of any such adjustment, there shall be promptly paid by
Tenant to Owner an amount equal to the portion of such adjustment allocable to
that part of or Tax year, which shall have elapsed prior to the first (1st) day
of the calendar month, next succeeding the calendar month in which said
statement was furnished to Tenant.
Owner's failure during the lease term to prepare and deliver any of the
foregoing tax bills, statements or bills, or Owner's failure to make a demand,
shall not in any way waive or cause Owner to forfeit or surrender its rights to
collect any of the items of additional rent which may have become due during the
term of this lease. Tenant's liability for the amounts due under this article
shall survive the expiration of the term.
In no event shall any rent adjustment hereunder result in a decrease in
the fixed annual rent.
39. ELECTRIC
If electric current is supplied by Landlord, Tenant covenants and agrees to
purchase the same from Landlord or Landlord's designated agent at charges, terms
and rates set, from time to time, during the term of this lease by Landlord
based upon those specified in the service classification S.C.4 rate schedule set
by the public utility corporation serving the part of the city where the
Building is located plus an additional twenty percent (20%) thereof. Where more
than one (1) meter measures the service of Tenant in the building, the service
rendered through each meter may be computed and billed separately in accordance
with the rates herein. Bills therefore shall be rendered at such times as
Landlord may elect. Landlord shall not in any way be liable or responsible to
Tenant for loss, damage or expense which Tenant may sustain or incur if either
the quantity or character of electric service is changed or is not longer
available or suitable for Tenant's requirements other than what is specified in
Rider B. Any riser or risers to supply Tenant's electrical requirements, upon
written request of Tenant, will be installed by Landlord at the sole cost and
expense of Tenant, if, in Landlord's sole judgement, the same are necessary and
will not cause permanent damage or injury to the building or demised premises or
cause or create a dangerous or hazardous condition or entail excessive or
unreasonable alterations, repairs or expense or interfere with or disturb other
Tenants or occupants. In addition to the installation of such riser or risers
Landlord will also, at the sole cost and expense of Tenant, install all other
equipment deemed proper and necessary in landlord's sole discretion in
connection therewith subject to the aforesaid terms and conditions. Tenant
covenants and agrees that at all times its use of electric current shall not
exceed the capacity of the existing feeders to the building or the risers of
wiring installations. It is further covenanted and agreed by Tenant that all of
the aforesaid costs and expenses shall be paid by Tenant to Landlord within five
(5) days after rendition of any bill or statement to Tenant therefore.
Landlord may discontinue any of the aforesaid services at any time for
structural repair or installations for three (3) consecutive business days,
without being liable to Tenant therefore
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<PAGE> 26
or without in any way affecting this lease or the liability of Tenant hereunder
and without entitling Tenant to a diminution of rent, and the same shall not be
deemed to be the lessening or diminution of services within the meaning of any
principle of law, rule or regulation now or hereafter enacted, promulgated or
issued, and Tenant shall have no "constructive eviction" claims against Landlord
for the same. In the event the Landlord discontinues services, Landlord shall
permit Tenant to receive such service direct from said public utility
corporation, in which event the Tenant will at its own cost and expense furnish
and install all risers, service wiring, and switches that may be necessary for
such installation or required by the public utility company, and will at its own
cost and expense maintain and keep in good repair all such risers, wiring and
switches. Tenant shall make no alteration or additions to the electric equipment
and/or appliances without the prior written consent of Landlord in each
instance. Rigid conduit only will be allowed. If any tax is imposed upon
Landlord's receipt from sale or resale of electrical energy or gas or telephone
service to Tenant by any Federal, State or Municipal Ordinance, rule or
regulation, Tenant covenants and agrees that, where permitted by law, Tenant's
pro-rata share of such taxes shall be passed on to and included in the bill and
paid Tenant to Landlord.
40. FUEL
In addition to the annual rent called for herein, the Tenant agrees to pay a
share equal to 2-1.8% per annum of the increased cost of fuel oil which shall
be calculated by multiplying the total gallons of fuel oil supplied to the
building during the term of the within lease by the difference between the
actual cost per gallon of the fuel oil over the base cost of .75 per gallon.
Payment to the Landlord shall be due and payable as and when bills are rendered
and shall be deemed additional rent and collectible as such. bills to be
rendered for periods at Landlord's discretion.
In the event Landlord, at its option, elects to change the fuel presently used
for the building to any other type of fuel, then the Tenant shall pay a share
equal to 2-1/8% per annum of the increased cost of such other fuel supplied to
the building for the term of the within lease of which the demised premises form
a part. this increased cost shall be based upon the cost of fuel for the period
of July 1st of the first (1st) year that the fuel type is changed to June 30th
of the following year, as compared to the cost of the former fuel oil type for
the last year it was used. Payment to the Landlord shall be due and payable as
and when bills are rendered and shall be deemed additional rent and collectible
as such.
Bills received by Landlord from fuel suppliers shall be conclusive evidence of
the amount of fuel consumed for the calculation of the amount to be paid by
Tenant pursuant to this paragraph 40.
41. WATER AND SEWER CHARGES AND METER
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<PAGE> 27
Tenant shall pay as additional rent $50.00 of all water and sewer taxes assessed
against the premises. Such water and sewer charges shall be payable on the first
(1st) day of each month.
In addition, the Landlord may at its option install water meters for the
premises occupied by Tenant. In the event the Landlord exercises this option,
the Tenant shall bear one hundred percent (100%) of the total cost of the
installation of the water meter. Such sum shall be payable immediately upon the
Landlord displaying to Tenant a bill or bills from the vendors or contractors
who perform the work. Such bill shall be sufficient proof of Tenant's obligation
and shall be admissible evidence of same in the event of any legal proceeding or
action is needed to enforce this lease provision. The Tenant shall maintain the
water meter at its own cost and expense and pay for all water charges assessed
per said meter. If such water meter is maintained in the name of Landlord or if,
at the option of Landlord meter is maintained in the name of Tenant, then Tenant
shall punctually pay all charges as they come due directly to the appropriate
agency. Without waiving Tenant's obligation to make timely payment, Tenant shall
also pay any penalties, interest or other charges asserted as a consequence of
late payment assessed.
Water bills of the City of New York or its agencies shall be prima facie
evidence of the amount of any assess rent of taxes as shown on such bill.
any and all sums due pursuant to this provision shall be additional rent which
may be the subject of non-payment summary proceedings or other remedies as
provided for elsewhere in this document.
42. SPRINKLERS
Anything elsewhere in this lease to the contrary notwithstanding, if the New
York Board of Fire Underwriters or the New York Fire Insurance Exchange or any
bureau, department or official of the federal, state or city government require
or recommend the installation of a sprinkler system or that any changes,
modifications, alterations or additional sprinkler heads or other equipment be
made or supplied in an existing sprinkler system by reason of tenant's business,
or the location of partitions, trade fixtures, or other contents of the demised
premises, or for any other reason, or if any such sprinkler system
installations, changes, modifications, alterations, additional sprinkler heads
or other such equipment become necessary to prevent the imposition of a penalty
or charge against the full allowance for a sprinkler system in the first (1st)
insurance rate set by any said Exchange or by any fire insurance company, Tenant
shall, at Tenant's expense, promptly make such sprinkler system installations,
changes, modifications, alterations, and supply additional sprinkler heads or
other equipment as required whether the work involved shall be structural or
non-structural in nature. Tenant shall pay to the Landlord as additional rent
the sum of $50.00 on the first (1st) day of each month during the term of this
lease, as Tenant's portion of the contract price for sprinkler supervisory
services.
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43. NO HOLDING OVER
There shall be no holding over by Tenant after expiration or earlier termination
of the Lease Term and the failure by Tenant to deliver possession of the
premises to Landlord shall be an unlawful holdover. During any period in which
Tenant so holds over, at Landlord's option, the rental value of the premises,
calculated as a monthly rental, payable from the date immediately following the
date on which Tenant was to deliver the premises through and including the last
day of the calendar month in which Tenant so delivers the premises, shall be
deemed to be equal to two hundred percent (200$) of the Base Rent (the "Hold
Over Rate") payable immediately preceding the expiration or earlier termination
of the Lease Term, together with all other items of Additional Rent that would
have been otherwise payable hereunder had the Lease Term not expired or been
terminated, to be established as follows:
(a) One twelfth (1/12) of the net increase, if any, in annual fixed
rental due solely to increase in the cost of the value of electric service,
furnished to the premises in effect on the last day of the term of the lease,
plus
(b) One twelfth (1/12) of all other items of annual additional rental,
which additional rental would have been payable pursuant to this lease had this
lease not expired, plus
(c) Those other items of additional rent (not annual additional rent)
which would have been payable monthly pursuant to this lease, had this lease not
expired,
Which total sum Tenant agrees to pay Landlord promptly upon demand, in full,
without set off.
Acceptance by Landlord of the Hold Over Rate and any Additional Rent during the
period which Tenant so holds over shall not cure or waive Tenant's default, be
deemed to extend the term or renew the lease, nor prevent Landlord from
exercising, before or after such acceptance, any of the remedies provided by
this lease or at law or in equity. Payment of the Hold Over Rate and other sums
during any period in which Tenant holds over shall not excuse Tenant's
obligation to vacate and surrender the premises on the date, and in the manner
and condition, required under this Lease. Tenant shall not interpose any
counterclaim in a summary proceeding or other action based on such holdover.
44. SECURITY
Tenant has deposited $14,231.26 security with Landlord upon the execution of
this Lease. Landlord agrees that the security deposit made by Tenant hereunder
shall be placed in an interest-bearing savings account, and the interest
thereon, less the portion thereof Landlord is permitted by law to retain, shall
be paid annually, to Tenant, provided Tenant is not then in material default of
any of the terms, conditions, and covenants of the within lease.
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Tenant shall at all times throughout the duration of this lease maintain the
security in an amount equivalent to two (2) months base rent, including
increases as set forth in paragraph 37 hereof.
45. REMOVAL, SORTING AND SEPARATION OF REFUSE AND TRASH
(1) It is mutually agreed between landlord and Tenant that every
business day a portion will pick up your rubbish at the subject premises, once
in the morning and once in the afternoon, and deliver the collected rubbish to
the loading dock where an independent private carting service will remove same.
In connection with the foregoing, Tenant shall pay directly to Landlord
the sum of $222.75 per month, as additional rent, said sum to be paid at such
time as Tenant pays the monthly installments of fixed rent. In the event that
the fees presently charged by said carting service are increased from time to
time, or in the event of a change of carting service contractor at a higher fee,
upon notice from Landlord, Tenant agrees to pay as additional rent 2-1/8% of any
and all increases imposed.
(2) Compliance by Tenant. Tenant covenants and agrees, at its sole cost
and expense, to comply with all present and future laws, orders, and regulations
of all state, federal, municipal, and local governments, departments,
commissions, and boards regarding the collection, sorting, separation, and
recycling of waste products, garbage, refuse, and trash. Tenant shall sort and
separate such waste products, garbage, refuse, and trash into such categories as
provided by law. Each separately sorted category of waste products, garbage,
refuse, and trash shall be placed in separate receptacles reasonably approved by
Owner. Such separate receptacle may at Owner's option, be removed from the
demised premises in accordance with a collection schedule prescribed by law.
(3) Owner's rights in event of noncompliance. Tenant shall pay all
costs, expenses, fines, penalties, or damages that may be imposed on Owner or
Tenant by reason of Tenant's failure to comply with the provisions of this
article, and, at Tenant's sole cost and expense, shall indemnify, defend and
hold Owner harmless (including legal fees and expenses) from and against any
actions, claims, and suits arising from such noncompliance, utilizing counsel
reasonably satisfactory to Owner. Owner, at its option, may treat any costs
incurred by Owner pursuant to this paragraph as additional rent which may be the
subject of a nonpayment proceeding, or in the alternative to treat material
noncompliance as a breach of lease and grounds for termination.
46. INSURANCE COVERAGE
Tenant shall forthwith furnish Landlord with and continue to keep in effect on
the demised premises and any future improvements the following insurance
coverage by recognized carriers licensed to do business in New York.
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(a) In addition to such obligations of the Tenant with respect hereto
as otherwise provided in this lease, and not in limitation thereof, the Tenant
covenants to provide and keep in force during the term of this lease for the
benefit of the Landlord, general liability policies of insurance in standard
form, protecting the Landlord against any liability whatsoever, occasioned by
accident or disaster on or about the demised premises, or any appurtenances
thereto. Such policies are to be written by good and solvent insurance companies
satisfactory to the Landlord in amounts of one million ($1,000,000.00) dollars
in respect to any one accident and in the amount of one million ($1,000,000.00)
dollars in respect to injuries to any one person, and fifty thousand
($50,000.00) dollars property damage. The original policies or copies and
renewals thereof, together with proof of payment of all premiums, shall be
deposited with the Landlord, upon the commencement date of this lease. In
addition, Tenant shall name the Landlord and its managing agent, if any, and
Landlord's mortgagee(s) whose names and addresses shall previously have been
furnished to Tenant, as additional insured lessor and provide Landlord with a
Certificate of Insurance to that effect along with other documents required
under this paragraph.
(b) Tenant further agrees to carry water damage insurance to protect
itself and the Landlord from any possible water damage and Tenant shall pay the
premiums for this insurance. The original policies or copies thereof; together
with proof of payment of all premiums, shall be deposited with the Landlord
within twenty (20) days after the commencement of this lease.
(c) The Tenant shall pay to the Landlord, in addition to the rent
reserved herein, the difference between the amount of fire insurance premiums
required to be paid because of Tenant's occupancy and the amount which would be
required to be paid if the premises were occupied by the lowest rated
non-hazardous business. Such difference, if any, shall be paid by the Tenant to
the Landlord upon presentation by the Landlord to the Tenant of a bill for such
difference, if any.
(d) Tenant further agrees to pay any and all increases in Landlord's
insurance premiums attributable to Tenant's occupancy of the demised premises.
Such additional insurance shall be payable within five (5) days of Landlord
rendering to Tenant a copy of the current year's insurance bill for the premises
along with the preceding year's insurance bill with an explanation from the
insurer attributing the increase to Tenant's establishment.
(e) In the event of the failure of Tenant to procure or pay for any
insurance required by the terms of this lease, Owner may, in addition to any
other remedies it may have, procure the same and pay the premiums therefore, and
any sums expended by Owner for this purpose shall be and become due and payable
to Owner as additional rent and shall be paid to Landlord on demand. Landlord
shall have the same remedies for the nonpayment therefore as for the nonpayment
of Fixed Rent.
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(f) If Tenant shall fail to furnish the aforesaid policies or fail to
abide by the provisions of paragraphs (a) through (e), then Landlord at its
option may exercise its remedies under Article 73.
47. NO PERSONAL LIABILITY OF LANDLORD
Wherever in this lease there is reference to obligations and covenants of
Landlord, it is understood that any Tenant pursuant to this lease will look
solely to the real property being let hereunder for enforcement thereof and that
no personal liability on behalf of the Landlord or assigns shall accrue in favor
of the Tenant hereunder. The Tenant waives the right to seek any monetary
damages or other legal relief personally against the Landlord hereunder.
48. ABANDONMENT OF TENANT'S PROPERTY
Landlord may consider items of Tenant's property that remain in the premises
after the expiration or earlier termination of the Leased Term to have been
abandoned. In that event, Landlord may, at its option, either (a) retain such
items as its property or dispose of them without accountability in such manner
as Landlord shall determine, all at Tenant's expense or (b) remove and store
such items for Tenant, at Tenant's expense.
49. BROKER
Tenant covenants, and represents that no broker was instrumental in bringing
about or consummating this Lease and that Tenant had no conversations or
negotiations with any broker concerning the leasing of the premises. Tenant
agrees to indemnify, defend and hold Landlord harmless against any claims for
any brokerage commissions or finder's fees by any person or organization, and
all costs, expenses and liabilities, incurred in connection with such claims,
including attorneys' fees and disbursements.
50. DEMAND FOR RENT
Notwithstanding anything to the contrary contained in this lease, the Landlord
shall not be required to give any preliminary notice to the Tenant prior to
initiating a non-payment summary proceeding except such notice or notices as may
be required by law. Any DEMAND for rent may be made only in writing.
51. PARTIAL PAYMENT
No payment by Tenant or receipt or acceptance by Landlord of a lesser amount
than the full rents due shall be deemed to be other than a payment on account,
nor shall any endorsement or statement on any check or any letter accompanying
any check or payments be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord's right to recover
the balance, treat such partial payment as a default or pursue any other remedy
provided in this lease or at law or in equity.
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52. LATE CHARGE
Tenant hereby acknowledges that the late payment of rents will cause Landlord to
incur damages, including administrative costs, loss of use of the overdue funds
and other costs, the exact amount of which would be impractical and difficult to
ascertain. Therefore, if Landlord does not receive payments of rents within five
(5) days after the date that such payment is due, Tenant shall pay to Landlord,
as additional rent, a late charge (the "Late Charge") of either an twenty five
dollars ($25.00) per month fee or six cents ($.06) for each dollar so overdue,
whichever is greater. Acceptance of the late charge by Landlord shall not cure
or waive Tenant's default, nor prevent Landlord from exercising, before or after
such acceptance, any of the remedies for a default provided by this lease.
Payment of late charge is not an alternative means of performance of Tenant's
obligation to pay rents at the times specified in this lease.
53. RETURNED CHECKS
In the event that any check is returned for insufficient funds or for any other
reason, Landlord shall, in addition to all other remedies be entitled to collect
a charge of Twenty ($20.00) Dollars. In the event the Tenant fails to pay the
above charge, Landlord shall, in addition to all other remedies, have the right
to deduct such charge from Tenant's security deposit.
54. LIENS
(a) The Tenant shall not suffer nor permit, during the term hereby granted, any
mechanic's or other liens for work, labor, services or materials rendered,
furnished to or for the account of the Tenant upon or in connection with the
demised premises or to any portion thereof or to any improvements erected or to
be erected upon the same, or any portion thereof. Tenant shall hold the landlord
and the demised premises harmless from all liens or charges, of whatever nature
or description, arising from, or in consequence of, any alterations or
improvements that the Tenant shall make, or cause to be made, upon the demised
premises.
(b) Any mechanic's liens placed on the premised relating or pertaining to work
performed or allegedly performed with respect to the premises to be occupied by
Tenant must be removed by Tenant within thirty (30) days of Notice from Landlord
or a bond posted therefore. In the event of failure to timely remove such lien
or liens the Landlord may do any or all of the following:
1. Terminate the lease on five (5) days written notice to Tenant; and/or
2. Remove the lien at the cost of the Tenant. The cost of removal, including
legal fees shall be additional rent and may be the subject of an action or
non-payment proceeding.
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55. NO WARRANTIES BY LANDLORD
Subject to Schedule "B" the Tenant accepts the building improvements and
personalty on the leased premises "as is" in their present state. Landlord rents
only bare walls and floors. The Landlord shall not be responsible for any latent
defect or change of condition in such building, improvements, and personalty,
and the rent hereunder shall in no event be withheld or diminished on account of
any defect in such property, and change in the condition thereof, any damage
occurring thereto, or the existence with respect thereto of any violations of
the laws or regulations of any governmental authority, unless the same is caused
by the Landlord, its agents, servants or employees.
56. REPAIRS
Tenant shall make all its own repairs to the interior and exterior (exterior
only if caused by Tenant) of the demised premises.
57. LIMITATIONS ON USE
The Tenant understands and agrees that the business activity of the Tenant is
confined to the space herein leased. The sale and/or display of merchandise by
the Tenant outside of the confines of the demised premises is prohibited. In
addition, the Tenant agrees not to use any flashing lights, music, radio,
television or other attention getting equipment which are visible from or
audible to the street.
58. ORAL AGREEMENT
It is agreed that this instrument cannot be changed orally.
59. FAILURE TO DELIVER POSSESSION
In the event the Landlord is unable to give possession by the commencement date
of this lease for any reason, including but not limited to the failure of the
present occupant to vacate timely:
1. The landlord shall not be liable for any loss sustained by the Tenant as a
result of the present occupant's failure to vacate said premises at the
expiration of its lease;
2. All of the terms of the lease shall remain in full force and effect except
that the commencement date shall be as of the first (1st) date of the month,
following the date of present occupant vacates. However, the termination date of
the lease shall not be extended.
3. Tenant hereby acknowledges that this paragraph 60 constitutes an agreement
which shall bind the parties hereto notwithstanding anything to the contrary
contained in RPL Section 223A or any other state or local law, rule or
ordinance.
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60. INDEMNIFICATION
Except as otherwise provided herein Tenant shall indemnify and save harmless
Landlord from and against any and all liabilities, obligations, damages,
penalties, claims, costs, charges and expenses including reasonable attorney's
fees, which may be imposed upon or incurred or asserted against the landlord by
reason of any of the following occurring during the term of this lease, which
Owner shall not be reimbursed by insurance.
1. any work or thing done by Tenant, or any agent, employee, licensee, or
invitee of Tenant, in or about the demised premises or any part thereof.
2. any use, non-use possession, occupation, operation, maintenance or management
of the demised premises or any part thereof;
3. all fines, suits, proceedings, claims, demands and actions of any kind or
nature whatsoever brought by anyone whomsoever arising out Tenant's use and
occupancy of said premises;
4. any negligence of Tenant or any agent, contractor, employee, licensee or
invitee of Tenant;
5. any accident, injury or damage to any person or property occurring in, on or
about the demises premises unless resulting from the active or passive
negligence of Landlord;
6. any failure on the part of Tenant to perform or comply with any of the
agreements, terms or conditions contained in this lease on its part to be
performed or complied with. In the event that any action or proceedings shall be
brought against Landlord by reason of any claim covered by this article, Tenant
upon written notice from Landlord, will at Tenant's sole cost and expense resist
or defend the same, by Counsel approved by the Landlord (Owner) in writing.
61. PLATE AND OTHER GLASS
Tenant shall replace, at the sole cost and expense of Tenant, any and all plate
and other glass damaged or broken from any cause whatsoever in and about the
demised premises. Should Tenant fail to replace broken glass, Landlord may cause
same to be replaced and bill Tenant for such replacement and repair. Cost
thereof shall be deemed as additional rent and collectible as additional rent.
62. LOADING DOCK
There is presently an interior loading dock area on the Mercer Street side of
the building of which the demises premises are a part. Owner reserves the right,
at any time and without notice, to dismantle, close, remove or eliminate the use
by the Tenant of all or any part of
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said loading dock or area. Tenant shall not be entitled to any reduction or
abatement of rent by reason thereof and said dismantling, closing, removal or
elimination of said loading dock shall have no effect on this lease and Tenant's
obligations thereunder.
63. AIR CONDITIONING
Window air-conditioning units are not permitted to be installed.
64. FIRE EXTINGUISHER
Tenant shall install and maintain at its own cost and expense at lease one (1)
Board of Fire Underwriters approved fire extinguisher in the office as required
by government agencies, the Fire Underwriters and/or Landlord's insurer.
Extinguisher shall be an approved type and shall be maintained according to the
rules and regulation of the Fire Department.
65. FIXTURES
No fixtures of any kind are included in this lease, except for those specified
in Schedule "B". Any fixtures not removed by previous tenant is the property of
the Landlord and may be used and maintained by Tenant at his own cost and
expense.
66. BASEMENT SPACE
There is no basement space included in this lease.
67. INSTALLATION OF PIPES AND WIRES
Landlord retains the privilege of installing pipes and wires through Tenant's
premises for any purpose, but said work shall be done in a reasonable manner.
Tenant shall grant access on 24 (twenty four) hours notice.
68. LANDLORD'S RIGHT TO CURE DEFAULT
Landlord may, but shall not be obligated to, cure any default by Tenant under
this lease at any time after expiration of any applicable cure period, without
notice. Whenever Landlord so elects all costs and expenses incurred by Landlord
in curing any such default, including attorneys's fees and disbursements shall
be paid by Tenant to Landlord on demand, as Additional rent.
69. PAYMENT OF LANDLORD'S EXPENSES
Any expense incurred by Landlord in connection with any performance by it for
the account of Tenant and all costs and expenses, including reasonable
attorneys's fees (whether or not legal proceedings are instituted), involved in
collecting rents or enforcing the obligations of
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Tenant under this lease, including the cost and expense of instituting and
prosecuting legal proceedings or recovering possession of the premises after
default by Tenant or upon expiration or sooner termination of this lease, shall
be due and payable by Tenant, on demand, as Additional Rent.
70. NO RECORDING
Tenant shall not record this lease or any memorandum thereof.
71. SMOKING IN HALLWAYS
Also defined in Section 72, PROHIBITED USES, Tenant shall not at any time use or
allow themselves, employees, guests, or any affiliate to smoke in any public
corridor, bathroom, or elevator, throughout the entire property located at 611
Broadway. Any violation of this section will result in a one hundred dollar
(100.00) fine, and any three (3) such violations will be deemed as Tenant
default, as specified in Section 73, and Landlord shall have grounds to evict
expeditiously and without leniency.
72. PROHIBITED USES
Tenant shall not at any time use or occupy or allow any person to use or occupy
the premises, or permit anything to be done or kept in or about the premises or
the building that: (a) violates any Certificate of Occupancy in force for the
building; (b) causes or is likely to cause damage to the building, the Premises
or any equipment, facilities or other systems therein; (c) constitutes a
violation of law; (d) violates a requirement or condition of the standard fire
insurance policy issued for residential and/or commercial buildings in the City
of New York or the Rules and Regulations of the New York Board of Fire
Underwriters or Insurance Services Office (or similar bodies) or any
requirements set by Owner's insurance carrier; (e) involves the storage, use,
manufacture or sale of flammable or hazardous substance; (f) impairs the
character, reputation, image or appearance of the building; (g) impairs the
proper and economic maintenance, operation and repair of the building or
equipment, facilities or systems; (h) constitutes a nuisance, annoyance or
inconvenience to other lessees or occupants of the building or interferes with
or disrupts the use or occupancy of any area of the building (other than the
premises leased by the Tenant) by other lessees or occupancy; (i) constitutes an
unlawful, immoral or objectionable occurrence or condition; (j) results in
demonstrations, bomb threats or other events that require evacuation of the
building or otherwise disrupts the use, occupancy or quiet enjoyment of the
building by other lessees and occupants; or (k) interferes with the transmission
or reception of microwave, television, radio or other communication signals.
Tenants shall not use or allow another person to use any part of the premises
for storage, manufacture or sale of drugs or hazardous substances, or for
immoral purposes. No noise, vibration or odor shall be permitted to escape from
the premises.
73. DEFAULT
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A. This lease and Tenant's right to occupancy may be terminated on five (5) days
written notice to Tenant:
a) in the event that the Tenant engages in any of the proscribed activities set
forth in paragraph 72 (Prohibited Uses); or
b) in the event that the Tenant breaches a covenant other than a "Prohibited
Use" and other than the covenant to pay rent and fails to cure such breach after
ten (10) days notice from the Owner or his agent to effect such cure; or
c) if the demises premises became vacant or deserted; or
d) if any execution or attachment shall be issued against Tenant or any of
Tenant's property whereupon the demised premises shall be taken or occupied by
someone other than Tenant; or
e) if this lease be rejected under Section 365 of Title II of the U.S. Code
(Bankruptcy Code); or
f) if Tenant shall fail to move into or take possession of the premises within
fifteen (15) days after the commencement of the term of this lease, or which
fact owner shall be the sole judge.
Any notice given pursuant to this paragraph shall be deemed effective, good and
sufficient on the date of mailing thereof or in the event that it is personally
delivered on the date of delivery. Upon expiration of the term as set forth in
the termination notice this lease shall end and expire and the Tenant shall quit
and surrender the demised premises to the Owner but Tenant shall remain liable
as provided in paragraph 18 of the preprinted portion of this lease.
B. if the notice provided for in (A) hereof shall have been given, and the term
shall expire as aforesaid; or if Tenant shall make default in the payment of the
rent reserved herein or any item of additional rent herein mentioned or any part
of either or in making any other payment herein required; then and in any of
such events Owner may without notice, re-enter the demised premises either by
force or otherwise, and dispossess Tenant by summary proceedings otherwise, and
the legal representative of Tenant or other occupant of demised premises and
remove their effects and hold the premises as if this lease had not been made,
and Tenant hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to that end.
74. HAZARDOUS SUBSTANCES
a) Hazardous Substances. The term "Hazardous Substances," as in this lease,
shall include, without limitation, flammables, explosives, radioactive
materials, asbestos, polychlorinated
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byphenyls (PCB's), Chlorofluro Carbons (CFC's), chemicals known to cause cancer
or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic
substances or related materials, petroleum and petroleum products, automotive
lubricants and substances declared to be hazardous or toxic under any law or
regulations now or hereafter enacted or promulgated by any governmental
authority.
b) Tenant's Restrictions. Tenant shall not cause or permit to occur:
(1) Any violation of any federal, state, or local law, ordinance, or
regulation now or hereafter enacted, related to environmental conditions on,
under or about the Premises, or arising from Tenant's use or occupancy of the
Premises, including, but not limited to, soil and ground water conditions; or
(2) The use, generation, releases, manufacture, refining, production,
processing, storage, or disposal of any hazardous Substance on, under, or about
the Premises, or the transportation to or from the Premises of any Hazardous
Substance.
c) Environmental Clean-up.
(1) Tenant shall, at Tenant's own expense, comply with all laws
regulating the use, generation, storage, transportation or disposal of Hazardous
Substances.
(2) Tenant shall, at Tenant's own expense, make all submissions to,
provide all information required by, and comply with all requirements of all
governmental authorities under the Laws.
(3) Should any Authority or any third party demand that a clean-up plan
be prepared and that a clean-up be undertaken because of any deposit, spill,
discharge, or other release of Hazardous Substances that occurs during the term
of this Lease, at or from he Premises, or which arises at any time from the
Premises, or which arises at any time from Tenant's use and occupancy of the
Premises, then Tenant shall, at Tenant's own expense, prepare and submit the
required plans and all related bonds and other financial assurances; and Tenant
shall carry out all such clean-up plans.
(4) Tenant shall promptly provide all information regarding the use,
generation, storage, transportation, or disposal of Hazardous Substances that is
requested by Owner. If Tenant fails to fulfill any duty imposed under this
Paragraph (3) within a reasonable time, Owner may do so; and in such case,
Tenant shall cooperate with Owner in order to prepare all documents Owner deems
necessary or appropriate to Tenant's use thereof, and for compliance therewith,
and Tenant shall execute all documents promptly upon Owner's request. No such
action by Owner and no attempt made by Owner to mitigate damages under any Law
shall constitute a waiver of any of Tenant's obligations under this paragraph.
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(5) Tenant hereby acknowledges that the subject building may employ
Chlorofluro carbons (CFC's), including but not limited to freon, in the
building's heating, ventilation and/or air conditioning systems(s), and that
present or future law may require the removal, alteration, and/or replacement of
said system(s). In the event that the subject building is served by the use of
Chlorofluro carbons (CFC's) in the heating, ventilation and/or air conditioning
system(s), including but not limited to freon, Landlord may for any reason
whatsoever, at its option, convert, replace or repair the system(s) at any time
throughout this lease term. Tenant may use the equipment at its own cost and
shall maintain the equipment. Tenant, at its own cost, will comply with all laws
and regulations which apply to the use and maintenance of the equipment.
(6) In the event that the Landlord exercises its option to convert,
replace, repair any system(s) within or about the subject building as is
hereinabove set forth, Tenant shall provide access to Landlord or Landlord's
agents, contractors and/or employees immediately upon oral demand for the same.
It is hereby understood and agreed that any conversion, replacement or repair of
the building's heating, ventilation and/or air conditioning system(s) and/or the
disposal and/or removal and/or replacement of freon may require extensive
disruptions and/or alterations, including, without limitation, the cessation of
heating, ventilation and/or air conditioning. In the event that Landlord, at its
sole option and its sole discretion, deems it impractical or impossible to
repair, replace or improve the building's heating or ventilation in a manner
consistent with any Federal, State or Local rule, law or regulation, the
Landlord may permanently cease providing said service and the Tenant shall be
entitled to no rent abatement and the Tenant shall have no "constructive
eviction" claims against Landlord for the same.
d) Tenant's Indemnity
(a) Tenant shall indemnify, defend, and hold harmless Owner, the
manager of the property, and their respective officers, directors,
beneficiaries, shareholders, partners, agents and employees from all fines,
suits, procedures, claims and actions of every kind, and all costs associated
therewith (including attorneys' and consultants' fees) arising out of or in any
way connected with any deposit, spill, discharge, or other release of Hazardous
Substances that occurs during the term of this Lease, at or from the Premises,
or from Tenant's failure to provide all information, make all submissions, and
take all steps required by all Authorities under the Laws and all other
environmental laws.
e) Tenant's obligations and liabilities under this Paragraph (3) shall survive
the expiration of this Lease.
75. COMPLIANCE WITH LAWS
The Lessee agrees promptly to comply with any and all laws, ordinances, or
orders of any an all municipal, state and federal authorities, boards,
commissions, and other governmental agencies with respect to the demises
premises and any improvements thereto. The Lessee
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will at its own costs and expense, promptly comply with any such orders or
ordinances involving and including all alterations or additions to the demised
premises except structural repairs of whatever size or description. The Lessee
further agrees to comply with and immediately execute the rules, order,
regulations and recommendations, wherever issued, of the New York Board of Fire
Underwriters or any other similar board or organization which may now or
hereafter exercise similar power for the prevention of fires, or the orders or
recommendations whenever made or given of any insurance company which insures or
participates in insuring the demises premises against loss by fire.
76. SUBLET/ASSIGNMENT
Notwithstanding anything contained in paragraph 11 or elsewhere in this lease,
Tenant for itself, its successors and any person or entity claiming any interest
in or on behalf of Tenant, expressly covenants that it shall not assign,
mortgage, or encumber this agreement. Tenant may not sublet without Landlord's
approval. In the event there is a transfer of shares or of ownership in a
corporate Tenant, such transfer shall be deemed an assignment for the purposes
of this paragraph.
77. EXECUTION OF LEASE
In order to avoid delay this Lease has been prepared and submitted to the Tenant
for signature with the understanding that it shall not bind the Landlord until
it is executed and delivered by the Landlord to the Tenant.
78. NEW YORK STATE LAWS
This Lease shall be interpreted under the laws of the State of New York.
79. CAPTIONS
The captions are intended only for convenience in finding the subject matter and
do not constitute part of the text of this agreement and shall not be considered
in the interpretation of this agreement or any of its provisions.
80. TERMS OF RIDER CONTROL
THE TERMS OF THIS RIDER AND SCHEDULE B SHALL BE CONTROLLING IN THE
EVENT THERE IS ANY DISPARITY BETWEEN THE RIDER AND PRINTED
PORTION OF THIS LEASE.
81. ENTIRE AGREEMENT
This lease contains all of the agreements and understandings related to the
leasing of the premises and the respective obligations of Landlord and Tenant in
connection therewith. All
40
<PAGE> 41
prior agreements and understandings, if any, between the parties have merged
into this Lease.
82. SURRENDER AGREEMENT
No agreement to accept a surrender for all or any part of the premises or this
Lease shall be valid unless in writing and signed by the Landlord. No delivery
of keys shall operate as a termination of this Lease or a surrender of the
premises or this Lease.
83. OWNER'S INITIAL WORK
A. Owner shall proceed diligently to substantially complete the Owner's
Initial Construction in a good and workmanlike manner; provided, however, that
Owner shall have the right to make any changes therefore required by any
governmental department or bureau having jurisdiction over the demised premises.
Said Owner's Initial Construction shall be performed by Owner only once, it
being understood that Owner's obligation to perform the work is a single,
non-recurring obligation. All items of Owner's Initial Construction shall be of
material, manufacture, design, capacity, finish and color of the standard
adopted by Owner for the Building.
B. Owner agrees, at its own sole cost and expense to perform the
following work and installations in the demised premises: See Schedule "B"
84. Notwithstanding anything to the contrary contained in this Lease, Owner
shall not permit the reduction of electrical service to the demised premises
which Owner warrants and represents to be 208 volts, three-phase, with a total
of 350 amps on each phase and that all risers, wiring, switches and other
equipment necessary to provide such power exist and are in good working
condition. If Tenant shall be unable to conduct its business, or a material
portion thereof, for at least three (3) consecutive business days in any
calendar year as a result of Owner's reduction of such electrical service,
Tenant shall be entitled to a rent abatement with respect to fixed annual rent
and additional rent under this Lease for the period of time and the portion of
the demised premises rendered unusable.
85. Landlord shall provide Tenant twenty-four (24) hour access.
86. Expenditures for capital improvements, alterations or replacements to the
Building or demised premises or fixtures or personalty therein which are
Tenant's obligation pursuant to this Lease shall be made by Owner. When
completed and paid for by owner, Tenant shall be liable for 2-1/8% of such
expenditure multiplied by the ratio of the number of years remaining in the
Lease term divided by the economically useful life of such improvement,
alteration or replacement; provided, however, that Tenant shall not be
responsible for any payments for such improvements, alterations or replacements
made during the last year of this Lease.
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<PAGE> 42
87. If the expiration date or earlier date upon which the term of this Lease
shall expire or terminate shall be a date other than the last day of a year used
for comparison purposes for any additional rent due hereunder, then Tenant's
additional rent for such year in which this Lease expires shall be prorated.
88. Whenever Owner's approval, consent, instructions, discretion, judgment,
prescription, decision or direction is required, it will not be unreasonably
withheld, delayed, conditioned or exercised.
89. WAIVER OF SCHEDULE "B"
Tenant acknowledges and agrees that all commitments detailed in "SCHEDULE B" and
all provisions that refer to such paragraph are non-applicable in this
assignment. Tenant agrees that all commitments have been completed and there are
no outstanding obligations further required by Landlord. Katz Digital
Technologies, Inc. shall not be entitled to any of the work or guarantees as
provided by "SCHEDULE B" or any provisions in this Lease that shall reference
said paragraphs.
Katz Digital Technologies, Inc. has visually inspection demised premises and
accepts space in "as is" condition. Landlord shall not be responsible for any
additional work, and all costs shall be the sole responsibility of Tenant.
CABLE BUILDING ASSOCIATES
BY: M.D. CARLISLE REALTY CORP.
as Managing Agent
/s/ Vice President
- -------------------------------
Landlord's Signature
Katz Digital Technologies, Inc
By: /s/
- -------------------------------
Tenant's Signature
Mitchell Cohen, C.F.O.
- -------------------------------
Print name Title
SCHEDULE "A"
(floor plan of suite)
SCHEDULE "B"
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<PAGE> 43
- -New oak flooring will be installed throughout the entire space.
- -The window which has access to fire escape via a gate which shall open and
close.
- -Cable Building Associates shall supply no less than 20 tons of air conditioning
with a supplementary circulating pump. The supplementary circulating pump will
be certified as capable of effectively cooling the space to an average of 65 to
75 degrees at all times The air-conditioning unit and all ductwork will be filed
with the Fire Department and meet all of its legal requirements. The Filing and
all of its attendant costs will be the sole responsibility of Cable Building
Associates.
- -Ductwork shall be installed as per Sarabande's diagram dated _____ . Landlord
shall have final say on all mechanical schemes.
- -A fire rated double door, in accordance with New York City Fire Code will be
installed at the entrance to the space.
- -Electrical service will be 208 volts, three-phase, with a total of 350 amps on
each phase.
- -Electrical service will be distributed throughout the space as per Sarabande
diagram. Landlord shall have the final decision on all electrical layouts.
Elements that are marked as dedicated circuits will be direct line to a; circuit
breaker box located in Sarabande's space. All wiring will be done at Cable
Building Associates expense by licensed electricians. All work will conform to
New York City electrical codes.
- -All outlets will contain the necessary NEMA receptacles as marked on the
diagram, or where NEMA numbers are not available, as determined by a site survey
of Sarabande's existing service.
- -KENDI, or equivalent, Burglar gates will be installed to a height of 4 feet on
every windows that opens onto the fire escape or its parts.
- -Florescent lighting will be installed throughout the entire space at the
expense of Cable Building Associates as per Sarabande's design.
- -Cold domestic water will be installed into the space and connected to
Sarabande's hot water heater, which shall be provided and moved by Sarabande.
Sarabande's existing stainless steel sink will be moved by Cable Building
Associates and connected to the hot and cold running water. Additionally, there
will be one hot and one cold hose bip connected to the running water near the
sink.
- -Landlord has been informed of the planned installation of an Indigo E-print
digital press. This press weighs 3,250 pounds. Cable Building Associates
warranties that the floor will
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<PAGE> 44
support this load if spread over 36 square feet by using steel plates and is
suspended 6 inches above the finished floor.
- -Landlord will have all substantially work completed by January 15, 1996.
- -All electrical service shall be metered by one individual meter.
44
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