<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
-------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________________ to ______________________
Commission file number: 1-8356
DVL, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 13-2892858
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
70 East 55th Street, New York, New York 10022
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (212) 350-9900
--------------
24 River Road, Bogota, New Jersey
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Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 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:
---- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Class Outstanding at November 12, 1998
- ----------------------------- --------------------------------
Common Stock, $.01 par value 16,560,450
DVL, INC. AND SUBSIDIARIES
INDEX
Part I. Item 1 - Financial Information: Page No.'s
----------
Consolidated Balance Sheets -
September 30, 1998 (unaudited) and December 31, 1997 1-2
Consolidated Statements of Operations -
Three Months Ended September 30, 1998 (unaudited)
and 1997 (unaudited) 3
Nine Months Ended September 30, 1998 (unaudited) and
1997 (unaudited) 4
Consolidated Statement of Shareholders' Equity for
the nine months ended September 30, 1998 (unaudited) 5
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1998 (unaudited)
and 1997 (unaudited) 6-7
Notes to Consolidated Financial Statements (unaudited) 8-12
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 13-18
Part II. Other Information:
Item 6 - Exhibits and Reports on Form 8-K 18
Signatures 19
Exhibit Index 20
<PAGE>
Part I - Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31,
1998 1997
------------- ------------
ASSETS (unaudited)
- ------
<S> <C> <C>
Loans receivable, including amounts maturing
after one year - principally pledged
Affiliates:
Wrap around and other mortgages due from
affiliated partnerships (net of underlying
liens of $41,911 and $45,306, respectively) $ 27,091 $ 30,815
Unearned interest (7,973) (8,350)
-------- --------
Net mortgage loans receivable from affiliated
partnerships (including $1,180 and $2,711 of
non-performing loans, respectively) 19,118 22,465
Others:
Non-performing loans collateralized by limited
partnership interests due from limited partners 904 1,690
-------- --------
Total loans receivable 20,022 24,155
Allowance for loan losses (8,289) (10,142)
-------- --------
Net loans receivable 11,733 14,013
Cash (including restricted cash of $77 for 1998
and 1997) 592 496
Due from affiliated partnerships (net of an allowance
for loss of $1,727 for 1998 and 1997) 131 142
Investments
Real estate at cost - pledged (net of an allowance
for loss of $208 for 1998 and 1997) 289 289
Real estate lease interests 1,519 1,621
Affiliated limited partnerships (net of an allowance
for loss of $1,159 and $1,246, respectively) 1,536 1,461
Other investments (net of an allowance for loss
of $400 for 1998 and 1997) 648 648
Prepaid financing and other assets 808 966
-------- --------
Total assets $ 17,256 $ 19,636
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
1
<TABLE>
<CAPTION>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share data)
September 30, December 31,
1998 1997
------------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited)
- ------------------------------------
<S> <C> <C>
Liabilities:
Long-term debt - NPM Capital LLC $ 3,757 $ 5,310
Long-term debt - Other 1,986 2,773
Notes payable - litigation settlement 3,991 4,060
Accounts payable and accrued liabilities 2,056 1,918
Deferred income 169 -
-------- --------
Total liabilities 11,959 14,061
-------- --------
Deferred credits 256 296
-------- --------
Commitments and contingencies - -
Shareholders' equity:
Preferred stock $10.00 par value, authorized -
100 shares, issued 100 shares 1 1
Common stock, $.01 par value, authorized -
40,000,000 shares, issued and outstanding -
16,560,450 and 16,232,450, respectively 166 162
Additional paid-in capital 95,288 95,240
Deficit (90,414) (90,124)
-------- --------
Total shareholders' equity 5,041 5,279
-------- --------
Total liabilities and shareholders'
equity $ 17,256 $ 19,636
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
2
<TABLE>
<CAPTION>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share data)
(unaudited)
Three Months Ended
September 30,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Income from affiliates
Interest on mortgage loans $ 300 $ 199
Gain on satisfaction of mortgage loans 173 -
Partnership management fees 85 95
Transaction and other fees from partnerships 169 157
Distributions from investments 40 -
Rent and other income 10 9
Income from others
Rent income 72 -
Distributions from investments 31 -
Other interest 3 2
Other income 33 2
---------- ----------
916 464
---------- ----------
Operating expenses
Recovery of provision for losses (21) -
General and administrative 293 383
Asset servicing fee - NPO Management LLC 150 150
Legal and professional fees 30 66
Interest expense
NPM Capital LLC 285 254
Litigation settlement notes 149 298
Others 131 68
---------- ----------
1,017 1,219
---------- ----------
Net loss $ (101) $ (755)
========== ==========
Loss per share - basic and diluted:
Net loss $ (.01) $ (.05)
========== ==========
Weighted average shares outstanding 16,426,554 15,679,450
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
3
<TABLE>
<CAPTION>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except share data)
(unaudited)
Nine Months Ended
September 30,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Income from affiliates
Interest on mortgage loans $ 818 $ 794
Gain on satisfaction of mortgage loans 173 -
Partnership management fees 272 307
Transaction and other fees from partnerships 493 423
Distributions from investments 139 -
Rent and other income 27 50
Income from others
Rent income 219 -
Distributions from investments 31 -
Other interest 7 6
Other income 90 38
---------- ----------
2,269 1,618
---------- ----------
Operating expenses
Recovery of provision for losses (152) -
General and administrative 867 1,127
Asset servicing fee - NPO Management LLC 450 450
Legal and professional fees 93 178
Interest expense
NPM Capital LLC 677 780
Litigation settlement notes 429 858
Others 397 344
---------- ----------
2,761 3,737
---------- ----------
Loss before extraordinary gain (492) (2,119)
Extraordinary gain on the settlement of
indebtedness 202 1,104
---------- ----------
Net loss $ (290) $ (1,015)
========== ==========
Loss per share - basic and diluted:
Loss before extraordinary gain $ (.03) $ (.13)
Extraordinary gain on the settlement of
indebtedness .01 .07
---------- ----------
Net loss $ (.02) $ (.06)
========== ==========
Weighted average shares outstanding 16,426,554 15,679,450
========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
4
<TABLE>
<CAPTION>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(in thousands except share data)
(unaudited)
Preferred Stock Common Stock Additional
--------------- -------------------- paid-in
Shares Amount Shares Amount capital Deficit Total
-------- ------ ----------- -------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance-January 1, 1998 100 $ 1 16,232,450 $ 162 $ 95,240 $(90,124) $ 5,279
Issuance of common stock in connection
with the Loan from Blackacre Bridge
Capital, LLC 328,000 4 48 52
Net loss (290) (290)
-------- ------ ---------- ------- -------- -------- -------
Balance-September 30, 1998 100 $ 1 16,560,450 $ 166 $ 95,288 $(90,414) $ 5,041
======== ====== ========== ======= ======== ======== =======
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
5
<TABLE>
<CAPTION>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended
September 30,
---------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net loss before extraordinary gain $ (492) $ (2,119)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities
Recovery of provision for losses (152) -
Accrued interest added to indebtedness 338 284
Amortization of unearned interest on
loan receivable 35 (104)
Amortization of real estate lease interests 102 -
Net (decrease) in deferred credits (40) -
Imputed interest on notes and debentures 429 858
Amortization of debt discount 109 158
Net increase in deferred income 169 -
Net decrease (increase) in other assets 158 (10)
Net decrease (increase) in due from
affiliated partnerships 11 (47)
Net increase (decrease) in accounts payable
and accrued liabilities 190 (53)
-------- --------
Net cash provided by (used in)
operating activities 857 (1,033)
-------- --------
Cash flows from investing activities
Collections on loans receivable (net of
payments on underlying loans) 2,345 5,660
Investments in limited partnerships (23) -
Net reductions in real estate lease
interests - 356
Distributions received on affiliated
limited partnership interests and
other investments - 1,269
-------- --------
Net cash provided by investing
activities $ 2,322 $ 7,285
-------- --------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
6
<TABLE>
<CAPTION>
DVL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
(continued)
Nine Months Ended
September 30,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from financing activities
Proceeds from new borrowings $ 513 $ 2,625
Repayment of indebtedness (3,300) (8,328)
Payments related to debt tender offer (296) -
Payments on subordinated debentures - (334)
Payments on guaranteed indebtedness - (115)
-------- --------
Net cash (used in) financing activities (3,083) (6,152)
-------- --------
Net increase in cash 96 100
Cash - beginning of period 496 355
-------- --------
Cash - end of period $ 592 $ 455
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest,
excluding amounts paid on underlying loans $ 224 $ 488
======== ========
Cash paid for income taxes $ 10 $ 11
======== ========
Supplemental disclosure of non-cash
investing and financing activities:
Net reduction in indebtedness pursuant
to creditor settlements $ - $ 1,104
======== ========
Reduction in accrued liabilities upon
issuance of common stock $ 52 $ 22
======== ========
Common stock issued in creditor settlement $ - $ 8
======== ========
Net reduction of Notes Payable - Debt
Tender Offer $ 202 $ -
======== ========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
7
DVL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation and Financial Condition
(A) In the opinion of DVL, Inc. ("DVL"), the accompanying financial
statements contain all adjustments (consisting of only normal accruals)
necessary for a fair presentation of the financial position and the results
of operations for the periods presented. The results of operations for the
nine months ended September 30, 1998 should not be regarded as necessarily
indicative of the results that may be expected for the full year. Certain
amounts from the three and nine months ended September 30, 1997 have been
reclassified to conform to the three and nine months ended September 30,
1998 presentation. For further information, refer to the consolidated
financial statements and the accompanying notes included in DVL's Annual
Report on Form 10-K for the year ended December 31, 1997.
(B) DVL continues to experience liquidity problems primarily as a result
of the limited cash flow generated by its restructured mortgage portfolio,
as the mortgage debt service is currently used to pay liens senior to DVL's,
and any excess is used to fund principal and interest payments required by
the NPM Loan (as defined in Note 2 herein), based on the collateral interest
of NPM Capital LLC ("NPM") in the mortgages, and to pay certain other
creditors. DVL's cash flow provided by current operations is insufficient
to meet its cash requirements, and DVL continues to liquidate and/or
refinance its assets in order to meet its operating cash flow deficiency.
There can be no assurance that the cash flow generated by DVL's potential
asset liquidations or refinancings will be sufficient to meet any future
operating cash flow deficiencies.
DVL's ability to continue as a going concern is dependent upon (1) the
sale or refinancing of certain assets to improve its cash position in order
to meet operating expenses and mandatory debt payments, (2) the realization
of the estimated value of its loan portfolio over an extended period of time
rather than the value of the assets on a liquidation basis, (3) the return
to profitable operations and (4) availability of additional borrowings. The
financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
2. Loans Receivable/Long Term Debt
During the first quarter of 1998, DVL as the general partner of a
certain limited partnership, negotiated the sale of that partnership's
property which resulted in net proceeds of approximately $619,000 to DVL in
satisfaction of the partnership's mortgage indebtedness. During the second
quarter of 1998, DVL, as the general partner of a certain limited
partnership, negotiated the sale of that partnership's property which
resulted in net proceeds of approximately $500,000 to DVL in satisfaction
of the partnership's mortgage indebtedness. During the third quarter of
1998, DVL, as the general partner of three separate limited partnerships,
8
negotiated the sale of these partnerships' properties which resulted in
aggregate net proceeds of $1,125,000 to DVL in satisfaction of the
partnerships' mortgage indebtedness. All of the proceeds from the sales
were paid to NPM and other creditors and were applied to interest and
principal on their loans.
During the second quarter of 1998, DVL as the mortgagee of various real
estate properties, received an aggregate amount of approximately $425,000
as additional debt service from tenant percentage rent payments. All of
these proceeds were paid to NPM and were applied to interest and principal,
as required.
In May 1998, DVL repaid at maturity a loan which had been collaterized
by the Company's limited partner interests in certain affiliated limited
partnerships for which it also serves as general partner. The total
payment, including principal and accrued interest, was $227,111.
During the third quarter of 1998, DVL refinanced a mortgage obligation
which generated approximately $40,000 of cash proceeds in excess of the
underlying mortgage loan. These proceeds were paid to NPM and were applied
to interest and principal on its loan.
In April, July and October of 1998, NPM advanced to DVL the aggregate
sum of $262,500 to fund three quarterly payments to another DVL creditor.
These advances were not required under the original loan transaction with
NPM, in the principal amount of $8,382,000, consummated in September 1996
(the "Original Loan"). These advances bear interest at 15% per annum and
will be paid pari passu with the Original Loan, and with the additional
advances aggregating $200,000 made in March and April 1997. The Original
Loan, together with the 1997 and 1998 advances, are referred to in the
aggregate herein as the "NPM Loan".
3. Note Payable - Litigation Settlement/Debt Tender Offer
In December 1995, DVL issued notes (the "Notes") in the aggregate
principal amount of $10,386,851 as a series in conjunction with the
settlement agreed upon in the DVL stockholder class action matter entitled
IN RE DEL-VAL FINANCIAL CORP. SECURITIES LITIGATION. The Notes, which are
general unsecured obligations of DVL, accrue interest at the rate of ten
(10%) percent per annum, with principal under the Notes, together with all
accrued and unpaid interest thereunder, due on December 31, 2005. Pursuant
to the terms of the Notes, accrued and unpaid interest payable on any of the
first five anniversary dates following the issuance of the Notes is payable,
at the option of DVL, by the issuance of similar additional Notes with a
principal amount equal to the accrued and unpaid interest obligation then
due. On the two anniversary dates following the issuance of the Notes, the
Company satisfied its interest obligations thereunder by issuing such
additional Notes in lieu of the payment of any cash. The Company currently
intends to issue additional Notes, rather than make payments in cash, to
satisfy its interest obligations under the Notes.
9
At any time after January 1, 1999, DVL may satisfy principal and
interest obligations under the Notes by issuing, in lieu of the payment of
cash, shares of its Common Stock with a then current market value equal to
110% of the principal and/or interest obligation in question. In addition,
after January 1, 1999, DVL may redeem the Notes in whole by issuing shares
of its Common Stock with a current market value as of the date of notice of
redemption equal to 110% of the face value of the Notes plus any accrued and
unpaid interest thereon. It is therefore not possible to ascertain
currently the precise number of shares of Common Stock that would be issued
by DVL upon redemption of the Notes. DVL currently intends to exercise its
redemption option and issue to noteholders shares of DVL's Common Stock, in
lieu of the payment of any cash, in exchange for the Notes.
From October 27, 1997 through February 27, 1998 (the "Expiration
Date"), the Company conducted a cash tender offer (the "Offer") for the
Notes at a price of $.12 per $1.00 principal amount of Notes. The Company
purchased and retired a total of $6,224,532 principal amount of Notes in the
Offer ($5,818,540 through December 31, 1997, and an additional $405,992
through the Expiration Date). An additional $392,750 principal amount
($322,796 through December 31, 1997, and $69,954 thereafter), representing
15% of the Notes tendered in excess of $3,998,000, were purchased by the
Lender (as defined below) based on the Lender's commitment to participate
in the Offer to that extent. A total of $6,166,381 principal amount of
Notes remained outstanding as of December 31, 1997, and $5,760,389 face
amount of Notes were outstanding at the Expiration Date. The outstanding
Notes include those purchased by the Lender.
The Offer effected a reduction in DVL's long-term debt and resulted in
an extraordinary gain for the year ended December 31, 1997 of $2,906,000,
after costs of $211,000, and an extraordinary gain of $202,000 for the
quarter ended March 31, 1998, after costs of $17,000.
DVL entered into a financing arrangement (the "BC Loan") with Blackacre
Bridge Capital, LLC, an unaffiliated entity (the "Lender"), permitting DVL
to borrow up to $1,760,000 to fund the purchase of Notes, and to pay related
costs and expenses. A total of $810,000 had been borrowed as of December
31, 1997, and an additional $250,000 had been borrowed through the
Expiration Date. There were no additional borrowings subsequent to the
Expiration Date. As further consideration for the Lender's providing DVL
with the BC Loan, DVL issued to the Lender 653,000 shares of Common Stock.
The BC Loan matures on September 30, 2002 and bears interest at the rate of
12% per annum. The effective rate to DVL for financial reporting purposes,
including DVL's costs associated with the BC Loan, and the value of the
653,000 shares issued to the Lender is approximately 15%. Interest payable
in connection with the BC Loan will be payable in the form of the issuance
of additional notes until DVL satisfies all of its obligations owing to NPM
and NPO Management LLC ("NPO"). Thereafter, interest and principal will be
paid from 100% of the proceeds then available to DVL from the mortgage
collateral held as security for the BC Loan.
10
4. Shareholders' Equity
As part of the consideration for the Lender's providing DVL with the
loan referred to in Note 3, DVL issued to the Lender on February 27, 1998
(the Expiration Date of the Offer) 328,000 shares of Common Stock, based on
a formula contained in the applicable loan documents, resulting in an
increase from 16,232,450 to 16,560,450 in the number of shares of
outstanding Common Stock. For the year ended December 31, 1997, the Company
had recorded a cost of $52,000 for the 328,000 shares (together with a cost
of $29,000 for the 325,000 shares issued to the Lender upon execution of the
loan documents in October 1997), based on the market value of such shares
as of the respective dates of issuance, discounted to reflect the fact that
they constitute "restricted securities", within the meaning of Rule 144
under the Securities Act of 1933, as amended. The shares were issued
pursuant to the exemption afforded by Section 4(2) of said Act, for
transactions by an issuer not involving a public offering.
5. Legal Proceedings
The sole case which is currently outstanding arises from an action
entitled VANGUARD CAPITAL V. KENBEE MANAGEMENT, INC. ET AL., which was filed
in 1994 in the Superior Court of the State of California, and, included DVL
as a defendant. Vanguard sought to be indemnified for an investor's claim
for $350,000 filed against it in said Court. Vanguard voluntarily dismissed
its action against DVL without prejudice. On March 22, 1996, the investor
in the underlying matter against VANGUARD filed, a motion to vacate an NASD
Arbitration award made in July 1995 in favor of VANGUARD and has named DVL
as an additional respondent in that Petition. There has been no further
activity in this case since March 1996.
6. Other Transactions.
(A) In May 1998, PBD Holdings, LP ("PBD"), a limited partnership
controlled by certain affiliates of NPM and NPO, and of Blackacre Capital
Group, LLC, acquired Major Realty Corporation ("MAJR") through a merger
transaction. The assets of MAJR, which had been a public company prior to
the merger, consist primarily of land for development located in Orlando,
Florida.
PBD and the Company have entered into a Management Agreement under
which the Company will render financial, consulting and other administrative
services to PBD. The Company will receive a base fee of $5,000 per month,
plus additional compensation in an amount equal to 25% of all profits after
the partners of PBD have received the return of their capital contributions
and a 20% internal rate of return. There can be no assurance as to the
amount or timing of any such additional compensation.
(B) In June and July 1998, the Opportunity Fund purchased certain
wraparound mortgages encumbering properties owned by limited partnerships
for which DVL serves as general partner. The seller of the mortgages is a
party unaffiliated with any member of the Opportunity Fund.
11
As previously reported in DVL's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997, the Opportunity Fund is a joint venture
whose members are DVL and certain affiliates of NPM and NPO, and of
Blackacre Capital Group, LLC.
7. Lease
In August, 1998, DVL entered into a lease of premises comprising 5,679
square feet at 70 East 55th Street, New York, New York. DVL anticipates it
will move its corporate headquarters from their current location in Bogota,
New Jersey to the new space in November of 1998.
12
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This September 30, 1998, Quarterly Report on Form 10-Q contains
statements which constitute forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. Those statements
include statements regarding the intent, belief or current expectations of
DVL and its management team. DVL's stockholders and prospective investors
are cautioned that any such forward-looking statements are not guarantees
of future performance and involve risks and uncertainties, and that actual
results may differ materially from those projected in the forward-looking
statements. Such risks and uncertainties include, among other things,
general economic conditions and other risks and uncertainties that are
discussed, herein.
Results of Operations
- ---------------------
Three Months Ended September 30, 1998 Compared to Three Months Ended
September 30, 1997
- ----------------------------------------------------------------------------
DVL had operating losses in the third quarter of 1998 of $101,000, as
compared to the third quarter loss in 1997 of $755,000.
Interest income on mortgage loans made to affiliates increased in 1998
from 1997 primarily due to the Company's re-evaluation of several mortgage
loans in its portfolio. Previously, DVL was not recognizing interest income
on certain loans in its mortgage portfolio. Interest on loans was applied
to reduce the carrying value of assets, to the extent of cash payments
received. The Company has determined that no further reductions in carrying
value are appropriate. Therefore, commencing in the second quarter of 1998,
interest income is being recognized to the extent of said cash payments
ratably over the fiscal year. This increase was partially offset by
decreases in mortgage interest income as a result of a reduction in the size
of the loan portfolio which resulted from the repayment to DVL of mortgages
by various partnerships.
During the third quarter of 1998, DVL was paid aggregate proceeds of
$1,125,000 as full satisfaction on three of its mortgage loans. This amount
was $173,000 greater than its net carrying value which resulted in a gain
on satisfaction of mortgage loans.
13
Partnership management fees decreased in 1998 from 1997 due to a
reduction in the number of limited partnerships under management resulting
from sales of these partnerships' properties. In connection with sales of
partnership properties and refinancings of underlying mortgages, DVL
receives transaction and other fees from partnerships. Increased sales and
refinancing activities resulted in an increase in transaction and other fees
in 1998 compared to 1997.
In 1998, DVL recorded income of $40,000 from distributions received on
limited partnership unit investments, representing the excess proceeds over
the net carrying value. No income was recorded prior to December 31, 1997
from such distributions because the distributions were applied to reduce the
Company's carrying value. At December 31, 1997, the Company determined that
no further reductions in carrying value were appropriate.
Rental income from others increased in 1998 from 1997, as a result of
the Company's re-evaluation of the amounts to be realized from its real
estate lease interests and a higher occupancy level at the properties.
Previously, the Company's leasehold interests were amortized at a rate that
would have fully amortized the asset prior to the termination of the lease.
Amortization will now be over the remaining term of the lease.
Other income increased in 1998 from 1997, primarily due to the
performance by DVL of certain financial, consulting and other administrative
services to related entities.
General and administrative expense ("G&A") decreased in 1998 as compared
to 1997 primarily due to a reduction in service fees paid to agencies for
new employee hires. Legal and professional fees in 1998 were lower than
1997, as a result of the settlement of substantially all of DVL's
litigation.
Interest expense in 1998 increased from 1997 (exclusive of interest on
notes issued in the settlement of the shareholder litigation) due to the
accelerated amortization of financing costs associated with significant
paydowns and settlements of long-term debt obligations. Despite the lower
amount of interest costs incurred on lower outstanding debt obligations,
there was an increase in the amortization of financing costs as they are
written off in the same ratio as loan payoffs. Interest on notes issued in
settlement of the shareholder litigation is paid in the form of additional
notes, and does not represent a current cash obligation.
14
Nine Months Ended September 30, 1998 Compared to Nine Months Ended September
30, 1997
- ---------------------------------------------------------------------------
DVL had operating losses in the nine months ended September 30, 1998 of
$492,000, as compared to the nine months ended September 30, 1997 loss of
$2,119,000.
DVL realized a net loss of $290,000 for the nine months ended September
30, 1998, compared to a net loss of $1,015,000 for the corresponding 1997
period. In both years there were operating losses offset by extraordinary
gains realized upon settlements of indebtedness. In 1997, the extraordinary
gain of $1,104,000 was a result of the restructuring of certain
indebtedness. In 1998, the extraordinary gains of $202,000 arose from gains
realized upon DVL's purchase of promissory notes which were issued in
connection with the 1995 settlement of the shareholder litigation.
Interest income on mortgage loans made to affiliates increased in 1998
from 1997 primarily due to the Company's re-evaluation of several mortgage
loans in its portfolio. Previously, DVL was not recognizing interest income
on certain loans in its mortgage portfolio. Interest on loans was applied
to reduce the carrying value of assets, to the extent of cash payments
received. The Company has determined that no further reductions in carrying
value are appropriate. Therefore, commencing in the second quarter of 1998,
interest income is being recognized to the extent of said cash payments
ratably over the fiscal year. This increase was partially offset by
decreases in mortgage interest income as a result of a reduction in the size
of the loan portfolio which resulted from the repayment to DVL of mortgages
by various partnerships.
During the third quarter of 1998, DVL was paid aggregate proceeds of
$1,125,000 as full satisfaction on three of its mortgage loans. This amount
was $173,000 greater than its net carrying value which resulted in a gain
on the satisfaction of mortgage loans.
Partnership management fees decreased in 1998 from 1997 due to a
reduction in the number of limited partnerships under management resulting
from sales of these partnerships' properties. In connection with sales of
partnership properties and refinancings of underlying mortgages, DVL
receives transaction and other fees from partnerships. Increased sales and
refinancing activities resulted in an increase in transaction and other fees
in 1998 compared to 1997.
In 1998, DVL recorded income of $139,000 from distributions received
on limited partnership unit investments, representing the excess proceeds
over the net carrying value. No income was recorded prior to December 31,
1997 from such distributions because the distributions were applied to
reduce the Company's carrying value. At December 31, 1997, the Company
determined that no further reductions in carrying value were appropriate.
15
Rental income from others increased in 1998 from 1997, as a result of
the Company's re-evaluation of the amounts to be realized from its real
estate lease interests and a higher occupancy level at the properties.
Previously the Company's leasehold interests were amortized at a rate that
would have fully amortized the asset prior to the termination of the lease.
Amortization will now be over the remaining term of the lease.
Other income from others increased in 1998 from 1997, primarily due to
the performance by DVL of certain financial, consulting, and other
administrative services to related entities.
In 1998, the Company finalized settlement agreements that allow DVL to
realize cash proceeds that exceed the carrying value on previously reserved
limited partner notes receivable. As a result, in the nine months ended
September 30, 1998, DVL has reflected a recovery in the provision for losses
of $152,000.
General and administrative expense ("G&A") decreased in 1998 as compared
to 1997 primarily due to reductions in consulting costs, as well as service
fees paid to agencies for new employee hires. Legal and professional fees
in 1998 were lower than 1997, as a result of the settlement of substantially
all of DVL's litigation.
Interest expense in 1998 declined from 1997 due to paydowns and
settlements of long-term debt obligations. The decrease in interest costs
incurred on lower outstanding debt obligations was partially offset by the
accelerated amortization of financing costs associated with significant
paydowns and settlements of long-term debt obligations. Financing costs are
written off in the same ratio as loan payoffs. Interest on notes issued in
settlement of the shareholder litigation is paid in the form of additional
notes, and does not represent a current cash obligation.
16
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
DVL's cash flow from operations is generated principally from
management fees from the operation of partnerships and transaction and other
fees received as a result of the sale and/or refinancing of partnership
properties and mortgages. DVL's portfolio of loans to affiliated
partnerships currently does not produce cash flow from operations because
the cash received from the mortgages is used to pay the debt service on
liens on the properties senior to those held by DVL, with any excess being
used to pay principal and interest on the NPM Loan (as defined below) based
on the collateral interest in said mortgages held by NPM Capital LLC
("NPM"), and by certain other creditors.
DVL entered into a financing arrangement (the "BC Loan") with Blackacre
Bridge Capital, LLC, an unaffiliated entity (the "Lender"), permitting DVL
to borrow up to $1,760,000 to fund the purchase of Notes, and to pay related
costs and expenses. A total of $810,000 had been borrowed as of December
31, 1997, and an additional $250,000 had been borrowed through the
Expiration Date. There were no additional borrowings subsequent to the
Expiration Date. As further consideration for the Lender's providing DVL
with the BC Loan, DVL issued to the Lender 653,000 shares of Common Stock.
The BC Loan matures on September 30, 2002 and bears interest at the rate of
12% per annum. The effective rate to DVL for financial reporting purposes,
including DVL's costs associated with the BC Loan, and the value of the
653,000 shares issued to the Lender is approximately 15%. Interest payable
in connection with the BC Loan will be payable in the form of the issuance
of additional notes until DVL satisfies all of its obligations owing to NPM
and NPO Management LLC ("NPO"). Thereafter, interest and principal will be
paid from 100% of the proceeds then available to DVL from the mortgage
collateral held as security for the BC Loan.
As a result of the above factors, DVL continues to experience liquidity
problems. To enable DVL to meet its short-term operating needs, DVL must
continue to augment its cash flow with the proceeds from the sale or
refinancing of assets and borrowings. There still remains some risk that
DVL may not be able to raise the necessary funds with which to continue
operations. DVL's ability to continue as a going concern is dependent upon
(1) the sale or refinancing of certain assets to improve its cash position
in order to meet operating expenses and mandatory debt payments, (2) the
realization of the estimated value of its loan portfolio over an extended
period of time rather than the value of the assets on a liquidation basis,
(3) the return to profitable operations and (4) availability of additional
borrowings. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
17
In April, July and October of 1998, NPM advanced to DVL the aggregate
sum of $262,500 to fund three quarterly payments to a DVL creditor. These
advances were not required under the original loan transaction with NPM,
consummated in September 1996 (the "Original Loan"). These advances bear
interest at 15% per annum and will be paid pari passu with the Original
Loan, and with the additional advances aggregating $200,000 made in March
and April 1997. The Original Loan, together with the 1997 and 1998
advances, are referred to in the aggregate herein as the "NPM Loan".
Impact of Year 2000
- -------------------
Until recently, computer programs were generally written using two
digits rather than four to define the applicable year. Accordingly, such
programs may be unable to distinguish properly between the Year 1900 and the
Year 2000. DVL's internal computing systems are primarily limited to
hardware and software for its financial systems, such as general ledger and
accounts receivable and payable systems. DVL is not dependent on large
legacy systems and does not use mainframes.
DVL's management has conducted an assessment of DVL's operations from
an internal, vendor and customer perspective. The assessment addresses all
of DVL's material computer systems, applications and any other material
systems that DVL believes may be vulnerable to the Year 2000 Issue and
significantly affect operations. This assessment includes seeking
information from certain material vendors which provide certain external
services to DVL although DVL cannot control whether or the manner in which
such services will be provided. In addition, DVL's assessment includes
assessing whether its significant customers are Year 2000 compliant or will
be Year 2000 compliant prior to Year 2000. DVL believes that its internal
computer systems are currently Year 2000 compliant. To date, the cost of
DVL's Year 2000 assessment and compliance efforts has not been material to
DVL's results of operations or liquidity and DVL does not anticipate that
the cost of completing its assessment and compliance project will be
material to its results of operations or liquidity. Any costs associated
with addressing Year 2000 Issues will be expensed as incurred.
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(A) Exhibits:
10.1 - Agreement of Sublease between
Barclays Bank PLC and DVL, Inc.
10.2 - Consent To Sublease
27 - Financial Data Schedule
(B) There were no reports on Form 8-K filed during the three months
ended September 30, 1998.
18
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DVL, INC.
By:
_____________________________
Gary Flicker, Vice President
and Chief Financial Officer
(Principal Financial and
Chief Accounting Officer)
November 12, 1998
19
EXHIBIT INDEX
-------------
10.1 - Agreement of Sublease between
Barclays Bank PLC and DVL, Inc.
10.2 - Consent To Sublease
27 - Financial Data Schedule
20
AGREEMENT OF SUBLEASE
between
BARCLAYS BANK PLC
Sub landlord
and
DVL, INC.
Sub tenant
Dated: as of August 1, 1998
Premises:
--------
Approximately 5,679 rentable
square feet on the 7th floor located at
70 East 55th Street
New York, New York
AGREEMENT OF SUBLEASE, made as of the 1st day of
August, 1998, between BARCLAYS BANK PLC, a banking
corporation organized under the laws of England, having
an office at 222 Broadway, Attn: Facilities Management
and Corporate Services, New York, New York 10038
("Sublandlord") and DVL, INC., a Delaware Corporation
having an office at 34 River Road Bogota, New Jersey
("Subtenant")
W I T N E S E T H:
- - - - - - - - -
WHEREAS, by Agreement of Lease (the "Overlease"),
dated as of February 9, 1988, between The Overton-La
Cholla Joint Venture (as successor-in-interest to
Fidelity Service Corporation) ("OVERLANDLORD"), as
landlord, and Barclays Bank of New York, N.A. (as
predecessor-in-interest to Sublandlord), as tenant,
Overlandlord leased to Sublandlord certain premises (the
"ENTIRE PREMISES") including floors six (6) and seven (7)
of the building (the "BUILDING") known as 70 East 55th
Street, New York, New York, as more particularly
described in the Overlease; and
WHEREAS, Sublandlord desires to sublease to
Subtenant that portion of the Entire Premises consisting
of all of the rentable square feet on the 7th floor
containing approximately 5,679 rentable square feet (the
"Premises"), of the Building (as more particularly shown
on the plans attached as EXHIBIT "A") and Subtenant
desires to hire the Premises from Sublandlord on the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, it is mutually agreed as
follows:
1. SUBLEASING OF PREMISES. Sublandlord hereby
subleases to Subtenant, and Subtenant hereby hires from
Sublandlord, the Premises, upon and subject to the terms
and conditions hereinafter set forth.
2. TERM. The term (the "Term") of this Sublease
shall be deemed to have commenced on August 1, 1998 (the
"COMMENCEMENT DATE"), and shall terminate at 12:00
midnight on February 7, 2003 (the "EXPIRATION Date") , or
on such earlier date upon which the Term shall expire or
be canceled or terminated pursuant to any of the
conditions or covenants of this Sublease or pursuant to
law. Sublandlord represents that the Expiration Date of
the Overlease is February 8, 2003.
3. FIXED ANNUAL RENT AND ADDITIONAL RENT.
3.1 (i) Subtenant shall pay to Sublandlord, in
currency which at the time of payment is legal tender for
public and private debts in the United States of America,
as fixed annual rent ("FIXED ANNUAL RENT") during the
Term, an amount equal to TWO HUNDRED TWENTY-SEVEN
THOUSAND ONE HUNDRED SIXTY DOLLARS ($227,160) per annum,
payable in equal monthly installments of EIGHTEEN
THOUSAND NINE HUNDRED THIRTY DOLLARS ($18,930.00), for
the period commencing on the Commencement Date and ending
on the Expiration Date, both dates inclusive. Subtenant
shall pay to Sublandlord such monthly installments of
Fixed Annual Rent in advance on the first (1st) day of
each month during the Term. However, upon the execution
of this Sublease, Subtenant shall prepay to Sublandlord
an amount equal to a monthly installment of Fixed Rent
which shall be credited toward the first month of the
Term in which Fixed Rent shall become due.
(ii) So long as no default by Subtenant shall
have occurred and be continuing after notice by
Sublandlord under this Sublease, Subtenant shall be
entitled to concessions of Fixed Annual Rent only equal
to the monthly installments of Fixed Annual Rent that
would otherwise be due pursuant to subsection 3.1(i)
hereof for each of the first through third calendar
months of the Term. In all other respects, Subtenant s
obligations under this Sublease shall commence on the
Commencement Date and continue uninterrupted as provided
for herein.
3.2 (i) Under the terms of the Overlease, for
each Tax Year (as such term is defined in the Overlease)
during the Term, Sublandlord is required to pay to
Overlandlord a Tenant s Tax Payment (as such term is
defined in the Overlease) which amount, as well as the
amount of the Taxes (as such term is defined in the
Overlease) for the Tax Year, the estimated amount of
which is to be set forth on an Escalation Statement (as
such term is defined in the Overlease) which Overlandlord
is to submit to Sublandlord. To the extent that
Sublandlord is required to pay to Overlandlord a Tenant s
Tax Payment and the amount of the Taxes set forth on the
Escalation Statement for any Tax Year exceeds the Taxes
for the fiscal year July 1, 1998 to June 30, 1999
("SUBTENANT S BASE TAX"), Sublandlord shall submit a
statement ("SUBTENANT ESCALATION STATEMENT") to Subtenant
reflecting the amount of the Taxes due for such Tax Year,
and the amount which Subtenant shall pay to Sublandlord,
as Additional Rent (as hereinafter defined), which shall
be an amount ("SUBTENANT S TAX PAYMENT") equal to forty-
eight and 15/100 percent (48.15%) (such percentage shall
be hereinafter referred to as "SUBTENANT S TAX SHARE") of
Tenant s Tax Share of the amount by which Taxes for such
Tax Year exceed Subtenant s Base Tax. Sublandlord and
Subtenant agree that as of the date hereof, Subtenant s
Tax Share is 48.15%; provided however, that if, from time
to time, the number of rentable square feet comprising
the Entire Premises shall change, Subtenant s Tax Share
shall equal a percentage, expressed as a fraction, the
numerator of which shall be the number of rentable square
feet comprising the Premises, from time to time, and the
denominator of which shall be the number of rentable
square feet comprising the Entire Premises, from time to
time, as the same may be adjusted from time to time by
reason of a change in the number of rentable square feet
comprising (i) the Entire Premises pursuant to the
provisions of the Overlease or (ii) the Premises pursuant
to this Sublease. Subtenant s Tax Payment for each Tax
Year shall be due and payable in twelve (12) equal
monthly installments, on the first day of each calendar
month, based upon the Subtenant Escalation Statement
furnished to Subtenant. Sublandlord s failure to render
a Subtenant Escalation Statement during or with respect
to any Tax Year shall not prejudice Sublandlord s right
to render a Subtenant Escalation Statement during or with
respect to any subsequent Tax Year, and shall not
eliminate or reduce Subtenant s obligation to make
Subtenant s Tax Payments pursuant to this Section 3.2 for
such subsequent Tax Year. Upon receipt of a revised
Escalation Statement from Overlandlord, Sublandlord shall
(i) credit the excess, if any, of Subtenant s Tax Payment
over the amount set forth in the Escalation Statement
revised to reflect the actual Taxes for such Tax Year
against subsequent payments under this Section 3.2, or
(ii) Subtenant shall pay to Sublandlord, within twenty
(20) days after being furnished with a revised Subtenant
Escalation Statement, Subtenant s Tax Share of the
excess, if any, of the actual Taxes over the estimated
Taxes for such Tax Year, as the case may be. Sublandlord
shall not be responsible for any inaccuracy in the
Escalation Statement provided to it by Overlandlord or
for any inaccuracy in the Subtenant Escalation Statement
which is based on information provided by Overlandlord to
Sublandlord in the Escalation Statement, and except to
the extent as may be required under the provisions of
this Sublease, Sublandlord shall not be required to
contest any information contained in the Escalation
Statement. In the event that Subtenant requests that
Sublandlord contest the information contained in the
Escalation Statement and Sublandlord refuses to do so,
Subtenant may contest the information contained in the
Escalation Statement, pursuant to all terms and
conditions of Section 5.4 hereof. If, however,
Sublandlord does contest any information concerning the
Tenant s Tax Payment contained in the Escalation
Statement and is entitled to a refund in any amounts paid
in connection with the Escalation Statement, Sublandlord
shall refund to Subtenant the amount of Subtenant s Tax
Share of any such refund.
(ii) Subtenant shall not institute tax reduction
or other proceedings to reduce the assessed valuation of
the Land (as such term is defined in the Overlease) or
the Building, it being expressly understood and agreed
that only Overlandlord shall be eligible to institute
such tax reduction proceedings. Should any such tax
reduction proceedings be successful and a rebate or a
credit is obtained (which rebate or credit shall reflect
the fact that Overlandlord and Sublandlord shall be
entitled to deduct therefrom its respective reasonable
costs and expenses, including, without limitation,
reasonable appraisal accounting and legal fees in
connection therewith) for any Tax Year for which
Subtenant has paid installments of Subtenant s Tax
Payment, Sublandlord, to the extent it shall receive its
share of such rebate or credit, either by payment or a
credit against rental payments under the Overlease, shall
either pay to Subtenant, or credit to Subtenant
(whichever Sublandlord receives under the Overlease)
against the next installments of Fixed Annual Rent and
payments of Additional Rent payable under this Sublease,
an amount equal to Subtenant s Tax Share of any such
rebate or credit (which amount shall not exceed the
amount paid by Subtenant as Subtenant s Tax Payment for
the Tax Year with respect to which such rebate or credit
is obtained) for which Sublandlord shall receive a refund
or credit from Overlandlord.
3.3 Under the terms of the Overlease, for each
Operating Year (as such term is defined in the Overlease)
during the Term, Sublandlord is required to pay to
Overlandlord a Tenant s Expense Payment (as such term is
defined in the Overlease) the estimated amount of which
for the Operating Year, is to be set forth on an
Escalation Statement which Overlandlord. is to submit to
Sublandlord. To the extent that Sublandlord is required
to pay to Overlandlord a Tenant s Expense Payment and the
amount of the Expenses set forth on the Escalation
Statement for any Operating Year exceeds the Expenses for
the calendar year 1999 ("SUBTENANT S BASE EXPENSE
FACTOR"), Sublandlord shall submit a statement
("SUBTENANT ESCALATION STATEMENT") to Subtenant
reflecting the amount of the Expenses due for such
Operating Year, and the amount which Subtenant shall pay
to Sublandlord as Additional Rent (as hereinafter
defined), which shall be an amount ("SUBTENANT S EXPENSE
PAYMENT") equal to forty-eight and 15/100 percent
(48.15%) (such percentage shall be hereinafter referred
to as "SUBTENANT S EXPENSE SHARE") of Tenant s Expense
Share of the amount by which the Expenses for such
Operating Year exceed Subtenant s Base Expense Factor.
Sublandlord and Subtenant agree that as of the date
hereof, Subtenant s Expense Share is 48.15%; provided
however, that if, from time to time, the number of
rentable square feet comprising the Entire Premises shall
change, Subtenant s Expense Share shall equal a
percentage, expressed as a fraction, the numerator of
which shall be the number of rentable square feet
comprising the Premises, from time to time, and the
denominator of which shall be the number of rentable
square feet comprising the Entire Premises, from time to
time, as the same may be~adjusted from time to time by
reason of a change in the number of rentable square feet
comprising (i) the Entire Premises pursuant to the
provisions of the Overlease or (ii) the Premises pursuant
to this Sublease. Subtenant s Expense Payment for each
Operating Year shall be due and payable in twelve (12)
equal monthly installments, on the first day of each
calendar month, based upon the Subtenant Escalation
Statement furnished to Subtenant. Sublandlord s failure
to render a Subtenant Escalation Statement during or with
respect to any Operating Year shall not prejudice
Sublandlord s right to render a Subtenant Escalation
Statement during or with respect to any subsequent
Operating Year, and shall not eliminate or reduce
Subtenant s obligation to make Subtenant s Expense
Payments pursuant to this Section 3.3 for such subsequent
Operating Year. Upon receipt of a revised Escalation
Statement from Overlandlord, Sublandlord shall (i) credit
the excess, if any, of Subtenant s Expense Payment over
the amount set forth in the Escalation Statement revised
to reflect the actual Expenses for such Operating Year
against subsequent payments under this Section 3.3, or
(ii) Subtenant shall pay to Sublandlord, within twenty
(20) days after being furnished with a revised Subtenant
Escalation Statement, Subtenant s Expense Share of the
excess, if any, of the actual Expenses over the estimated
Expenses for such Operating Year, as the case may be.
Sublandlord shall not be responsible for any inaccuracy
in the Escalation Statement provided to it by
Overlandlord or for any inaccuracy in the Subtenant
Escalation Statement which is based on information
provided by Overlandlord to Sublandlord in the Escalation
Statement, and except to the extent as may be required
under the provisions of this Sublease, Sublandlord shall
not be required to contest any information contained in
the Escalation Statement. In the event that Subtenant
requests that Sublandlord contest the information
contained in the Escalation Statement and Sublandlord
refuses to do so, Subtenant may contest the information
contained in the Escalation Statement, pursuant to all
terms and conditions of Section 5.4 hereof. If, however,
Sublandlord does contest any information concerning the
Tenant s Expense Payment contained in the Escalation
Statement and is entitled to a refund in any amounts paid
in connection with the Escalation Statement, Sublandlord
shall refund to Subtenant the amount of Subtenant s
Expense Share of any such refund.
3.4 If, pursuant to Section 3.2 (i) hereof,
Subtenant s Tax Share or Subtenant s Expense Share shall
change during a Tax Year or an Operating Year, as the
case may be, then the amount of Subtenant s Tax Payment
or Subtenant s Expense Payment for such Tax Year or
Operating Year, as the case may be, shall be adjusted to
reflect such change in Subtenant s Tax Share or
Subtenant s Expense Share.
3.5 In addition to the foregoing, Subtenant shall
pay to Sublandlord, as Additional Rent, upon the
rendition to Subtenant of a bill therefor, one hundred
percent (100%) of all costs, charges and sums charged
against Sublandlord under the Overlease allocable solely
to the Premises not otherwise expressly provided for
pursuant to Sections 3.3 and 3.4 or otherwise herein.
3.6 (a) All Fixed Annual Rent, Additional Rent
and all other costs, charges and sums payable by
Subtenant hereunder (collectively, "Rental"), shall
constitute rent under this Sublease, and except as
otherwise set forth herein, shall be payable to
Sublandlord on the first day of each calendar month of
the Term, and shall be paid to Sublandlord at its address
as set forth in Article 14 hereof, unless Sublandlord
shall otherwise so direct in writing.
(b) If Sublandlord defaults in the payment of
any rent it owes to Overlandlord under the Overlease,
upon request of Overlandlord, Subtenant shall pay any
Fixed Annual Rent or Additional Rent it owes under the
Sublease directly to Overlandlord; provided, however, the
receipt of any sums by Overlandlord from Subtenant shall
not be deemed to release Sublandlord from its obligations
under the Overlease, nor shall such collection be deemed
to create a direct tenancy between Overlandlord and
Subtenant.
3.7 Subtenant shall promptly pay the Rental
as and when the same shall become due and payable without
set off or deduction of any kind whatsoever (except as
otherwise provided in this Sublease), and, in the event
of Subtenant s failure to pay the same when due (subject
to any grace periods provided herein), Sublandlord shall
have all of the rights and remedies provided for herein
or at law or in equity, in the case of non-payment of
rent. It is expressly agreed and understood that
Subtenant s obligation to pay Rental shall commence on
the Commencement Date (subject to the provisions of
Section 3.1(ii)); PROVIDED, however, that in the event
that the Commencement Date is not the first day of a
calendar month, Rental for the first month of the Term
shall be prorated accordingly.
3.8 Sublandlord s failure during the Term to
prepare and deliver any statements or bills required to
be delivered to Subtenant hereunder, or Sublandlord s
failure to make a demand under this Article 3 or under
any other provisions of this Sublease shall not in any
way be deemed to be a waiver of, or cause Sublandlord to
forfeit or surrender its rights to collect any Additional
Rent which may have become due pursuant to this Article
3 during the Term. Subtenant s liability for Fixed Annual
Rent and Additional Rent due under this Article 3
accruing during the Term, and Sublandlord s obligation to
refund overpayments of or adjustments to Fixed Annual
Rent or Additional Rent paid to it by Subtenant, shall
survive the expiration or sooner termination of this
Sublease. Notwithstanding the foregoing, Subtenant shall
have no obligations to make any payments under this
Article 3 if Sublandlord has not first requested such
payment by the third anniversary following the Expiration
Date.
3.9 Except as otherwise provided herein, in no
event shall any adjustment of any payments payable by
Subtenant hereunder result in a decrease in Fixed Annual
Rent, nor shall any adjustment of Subtenant s Operating
Payment result in a decrease in Subtenant s Tax Payment,
nor shall any adjustment of Subtenant s Tax Payment
result in a decrease in Subtenant s Operating Payment.
Accordingly, the payment of (i) Subtenant s Operating
Payment under this Article 3 is an obligation
supplemental to Subtenant s obligations to pay Fixed
Annual Rent and Subtenant s Tax Payment and (ii)
Subtenant s Tax Payment under this Article 3 is an
obligation supplemental to Subtenant s obligations to pay
Fixed Annual Rent and Subtenant s Operating Payment.
3.10 For purposes of this Sublease, the term
"ADDITIONAL RENT" shall include, without limitation,
individually and collectively, Subtenant s Tax Payment
and Subtenant s Operating Payment.
4. ELECTRICITY. The Premises shall be directly
metered as provided in Article 43 of the Overlease.
5. SUBORDINATION TO AND INCORPORATION OF THE
OVERLEASE.
5.1 This Sublease is in all respects subject
and subordinate to the terms, conditions and covenants of
the Overlease, and to all matters to which the Overlease
is subject and subordinate. Sublandlord represents that
a true and complete copy of the Overlease is annexed to
this Sublease as Exhibit B. In the event of termination,
re- entry or dispossession by the Overlandlord under the
Overlease, Overlandlord, may, at its option, take over
all of the right, title and interest of Sublandlord under
this Sublease, and Subtenant shall, at Overlandlord s
option, attorn to Overlandlord pursuant to the provisions
of this Sublease, except that Overlandlord shall not (i)
be liable for any previous act or omission of Sublandlord
under this Sublease, (ii) be subject to any offset, not
expressly provided in this Sublease, which theretofore
accrued to Subtenant against Sublandlord, (iii) be bound
by any previous modification of this Sublease (as to
which Overlandlord has not previously consented) or by
any previous prepayment of more than one month s rent,
(iv) be bound by any covenant to undertake or complete
any construction of the Premises or any portion thereof,
and (v) be bound by any obligation to make any payment to
or on behalf of Subtenant. Subtenant shall indemnify
Sublandlord for, and shall hold it harmless from and
against, any and all losses, damages, penalties,
liabilities, costs and expenses, including, without
limitation, reasonable attorneys fees and disbursements,
which may be sustained or incurred by Sublandlord by
reason of Subtenant s failure to keep, observe or perform
any of the terms, provisions, covenants, conditions and
obligations on Sublandlord s part to be kept, observed or
performed under the Overlease with respect to the
Premises to the extent same shall have been incorporated
herein (provided, however, that Subtenant s obligations
to pay any sums of money shall be solely pursuant to this
Sublease), or otherwise arising out of or with respect to
Subtenant s use and occupancy of the Premises from and
after the Commencement Date in violation of the terms of
this Sublease. Sublandlord shall indemnify Subtenant for,
and shall hold it harmless from and against, any and all
losses, damages, penalties, liabilities, costs and
expenses, including, without limitation, reasonable
attorneys fees and disbursements, which may be sustained
or incurred by Subtenant by reason of Sublandlord s
failure to keep, observe or perform any of the terms,
provisions, covenants, conditions and obligations on
Sublandlord s part to be kept, observed or performed
under the Overlease with respect to the Premises to the
extent same shall have been incorporated herein.
5.2 Except as otherwise expressly provided in this
Sublease, the terms, covenants, provisions and conditions
of the Overlease are incorporated herein by reference
MUTATIS MUTANDIS so that (except to the extent that they
are inapplicable to, inconsistent with, or are modified
by the provisions of this Sublease) for the purpose of
incorporation by reference, each and every term,
covenant, agreement and provision and condition of the
Overlease binding upon the tenant thereunder shall, in
respect of this Sublease, bind the Subtenant with the
same force and effect as if such terms, covenants,
provisions and conditions were completely set forth in
this Sublease, including, without limitation, all of the
default provisions set forth in the Overlease. It is
specifically acknowledged that (i) none of the rights of
the tenant under the Overlease shall inure to the benefit
of the Subtenant except to the extent expressly set
forth in this Sublease and (ii) all of the rights of the
landlord under the Overlease shall inure to the benefit
of Sublandlord. Notwithstanding anything contained herein
to the contrary, Subtenant has no right to exercise any
expansion or renewal rights or grant any waivers. The
following provisions of the Overlease shall not be
incorporated into this Sublease: Article 37; Sections
38.01.A. (a) and (d) ; Sections 38.02.A. (a) and (c);
Section 46.01; Section 47.01; Section 50.01; Section
50.02; Section 50.03; Section 53.01; Article 61; Article
62; Article 63; Article 64; Article 65; Article 66;
Article 67 and Schedule C.
5.3 All terms, covenants, conditions and
provisions of the Overlease, except as provided in
Section 5.2 hereof, are hereby incorporated in this
Sublease with the same force and effect as if set forth
in full herein. For this purpose, wherever the term
"Landlord", "Tenant", "this lease" or "Demised Premises"
appear in the Overlease, the same shall be deemed to
refer in this Sublease to "Sublandlord", "Subtenant",
"this Sublease" and "Premises", respectively.
5.4 Notwithstanding anything to the contrary
contained in this Sublease, Subtenant may exercise
Sublandlord s rights as tenant under the Overlease to
enforce the performance by Overlandlord of the building
service or maintenance obligations or any other
obligations owed by Overlandlord which benefit Subtenant
under the Sublease. If Overlandlord refuses to recognize
that Subtenant is thus subrogated to Sublandlord s
rights, upon Subtenant s request, Sublandlord will use
reasonable efforts to enforce its rights under the
Overlease for Subtenant s benefit (including the giving
of notices to Overlandlord). Subtenant will reimburse
Sublandlord for reasonable fees and costs incurred in
connection with the enforcement of such rights.
Notwithstanding the foregoing, Sublandlord shall have no
obligation to commence any legal proceeding to obtain any
relief sought by Subtenant by reason of Overlandlord s
breach of its obligations under the Sublease; provided,
however, that Sublandlord shall sign, to the extent
Sublandlord s signature is necessary, such papers as are
reasonably required to enable Subtenant to proceed in
Sublandlord s name, in any legal proceeding to enforce
Sublandlord s obligations under the Overlease. Subtenant
shall indemnify Sublandlord (and hold Sublandlord
harmless) from and against any and all loss, cost,
liability, judgment, damage or expense (including
reasonable fees and costs) which Sublandlord incurs, or
which may be asserted against Sublandlord, by reason of
any such legal proceeding. Subtenant agrees to provide
Sublandlord with additional adequate security, reasonably
requested by Sublandlord, to cover the costs involved
with such legal proceedings. This Section shall survive
the expiration or earlier termination of this Sublease.
6. USE; SIGNAGE. Subtenant shall use and occupy
the Premises for executive and general offices, and not
in contravention with Article 45 of the Overlease.
Subject to the provisions of the Overlease, Subtenant
shall be permitted to have its name displayed on exterior
doors of the Premises and in the 7th floor elevator
lobby, the location, size and design of which signage
shall be subject to Sublandlord s approval. Subtenant is
entitled to 48.15% (or a percentage equal to Subtenant s
Expense Share) of the number of Sublandlord s listings in
the Building lobby directory.
7. COVENANTS WITH RESPECT TO THE OVERLEASE.
7.1 (i) Subtenant shall not do anything
that would constitute a default under the terms of the
Overlease or omit to do anything that Subtenant is
obligated to do under the terms of this Sublease so as to
cause there to be a default under the Overlease.
(ii) Sublandlord shall not do anything
that would constitute a default under the terms of the
Overlease or omit to do anything that Sublandlord is
obligated to do under the terms of the Overlease (and
Subtenant is not solely obligated to do under the terms
of this Sublease) so as to cause a default under the
Overlease. Sublandlord agrees that it shall not consent
to any modification or amendment of the Overlease which
would have a material adverse effect on the rights or
obligations of Subtenant under this Sublease, unless it
obtains the prior consent of Subtenant to such
modification or amendment.
(iii) Sublandlord covenants and agrees
that (a) it shall not agree to shorten the term of the
Overlease with respect to the Premises or voluntarily
surrender its interest as tenant in and to the Overlease
with respect to the Premises without the prior consent of
Subtenant, except in the event of a casualty or
condemnation and (b) if the Overlease is terminated by
reason of a default by Overlandlord under any mortgage,
and as a result thereof, Sublandlord may be entitled to
a new lease for the Premises (the "NEW LEASE") from a
mortgagee, Sublandlord shall be under no obligation to
enter into such New Lease.
7.2 The time limits set forth in the Overlease
for the giving of notices, making demands, performance of
any act, condition or covenant, or the exercise of any
right, remedy or option, are changed for the purpose of
this Sublease, by lengthening or shortening the same in
each instance, as appropriate, so that notices may be
given, demands made, or any act, condition or covenant
performed, or any right, remedy or option hereunder
exercised, by Sublandlord or Subtenant, as the case may
be, (and each party covenants that it will do so) within
three (3) days prior to the expiration of the time limit,
taking into account the maximum grace period, if any,
relating thereto contained in the Overlease. Each party
shall promptly deliver to the other party copies of all
notices, requests or demands which relate to the Premises
or the use or occupancy thereof after receipt of same
from Overlandlord.
8. Services and Repairs.
8.1 Notwithstanding anything to the contrary
contained in this Sublease or the Overlease (except to
the extent provided in Section 16.1 hereof), Sublandlord
shall not be required to provide any of the services that
Overlandlord has agreed to provide, whether or not
specified in the Overlease or required by law, or make
any of the repairs or restorations that Overlandlord has
agreed to make pursuant to the Overlease or is required
to make by law, or comply with any laws or requirements
of any governmental authorities, or take any other action
that Overlandlord has agreed to provide, furnish, make,
comply with, or take, or cause to be provided furnished,
made, complied with or taken under the Overlease, but
Sublandlord agrees to use all diligent efforts to obtain
the same from Overlandlord (provided, however, that
Sublandlord shall not be obligated to use such efforts or
take any action which might give rise to a default under
the Overlease), and Subtenant shall rely upon, and look
solely to, Overlandlord for the providing, furnishing or
making thereof or compliance therewith. The costs
incurred in obtaining the foregoing shall be apportioned
between Sublandlord and Subtenant to the extent each
party benefits from the same. Sublandlord agrees that it
shall promptly request from Overlandlord any additional
services requested by Subtenant that Overlandlord is
obligated to furnish pursuant to the Overlease and it
shall use diligent efforts, at Subtenant s sole cost and
expense, to obtain the same from Overlandlord on
Subtenant s behalf. If Overlandlord shall default in the
performance of any of its obligations under the Overlease
Sublandlord shall, upon request of Subtenant, timely
institute and diligently prosecute any action or
proceeding which Subtenant, in its reasonable judgment,
deems meritorious, in order to have Overlandlord make
such repairs, provide such services or comply with any
other obligation of Overlandlord under the Overlease or
as required by law provided that the costs incurred in
and the benefits derived from obtaining the foregoing
shall be apportioned between Sublandlord and Subtenant to
the extent each party benefits from the same. Sublandlord
shall, at the request of Subtenant, enforce any
guarantees or warranties made by Overlandlord to
Sublandlord under the Overlease with respect to the
Premises, provided that the costs incurred in and the
benefits derived from enforcing such guaranties shall be
apportioned between Sublandlord and Subtenant to the
extent each party benefits from the same. Subtenant shall
indemnify and hold harmless Sublandlord from and against
any and all such claims arising from or in connection
with such request, action or proceeding. This indemnity
and hold harmless agreement shall include indemnity from
and against any and all liability, fines, suits, demands,
costs and expenses of any kind or nature, including,
without limitation, reasonable attorneys fees and
disbursements, incurred in connection with any such
claim, action or proceeding brought thereon. Provided
that Sublandlord has otherwise complied with the terms
and provisions of this Section 8.1, Subtenant shall not
make any claim against Sublandlord for any damage which
may arise, nor shall Subtenant s obligations hereunder be
diminished, by reason of (i) the failure of Overlandlord
to keep, observe or perform any of its obligations
pursuant to the Overlease unless such failure is due to
Sublandlord s negligence, willful misconduct or default
under the Overlease, or (ii) the acts or omissions of
Overlandlord or any of its agents, contractors, servants,
employees, invitees or licensees. The provisions of this
Article 8 shall survive the expiration or earlier
termination of the Term hereof.
9. CONSENTS.
9.1 Sublandlord agrees that whenever its
consent or approval is required hereunder, or where
something must be done to Sublandlord s satisfaction, it
shall not unreasonably withhold or delay such consent or
approval; provided, however, that whenever the consent or
approval of Overlandlord, the lessor under a superior
lease, or the mortgagee under a mortgage, as the case may
be, is also required pursuant to the terms of the
Overlease if Overlandlord, the lessor under a superior
lease, or the mortgagee under a mortgage shall withhold
its consent or approval for any reason whatsoever,
Sublandlord shall not be deemed to be acting unreasonably
if it shall also withhold its consent or approval. If
Overlandlord shall withhold its consent or approval in
connection with this Sublease or the Premises in any
instance where, under the Overlease, the consent or
approval of Overlandlord may not be unreasonably
withheld, Sublandlord, upon the request and at the
expense of Subtenant, shall either (i) timely institute
and diligently prosecute any action or proceeding which
Subtenant, in its reasonable judgment, deems meritorious,
in order to dispute such action by Overlandlord or (ii)
permit Subtenant, to the extent allowable under the
Overlease, to institute and prosecute such action or
proceeding in the name of Sublandlord, provided that
Subtenant shall keep Sublandlord informed of its actions
and shall not take any action which might give rise to a
default under the Overlease. Subtenant shall indemnify
and hold harmless Sublandlord from and against any and
all such claims arising from or in connection with such
request, action or proceeding.
9.2 If Subtenant shall request Sublandlord s
consent to or approval of any matter hereunder with
respect to which Sublandlord has expressly agreed herein
that its consent or its approval shall not be
unreasonably withheld, and Sublandlord shall fail or
refuse to give such consent or approval, and Subtenant
shall dispute the reasonableness of Sublandlord s refusal
to give such consent or approval, such dispute shall be
finally determined by arbitration in The City of New York
in accordance with the following provisions of this
Section. Within ten business days following the giving of
any notice by Subtenant to Sublandlord stating that it
wishes such dispute to be so determined, Sublandlord and
Subtenant shall each give notice to the other setting
forth the name and address of an arbitrator designated by
each party giving such notice. If either party shall fail
to give notice of such designation within said ten
business days, then the arbitrator chosen by the other
party shall make the determination of Sublandlord s
reasonableness or unreasonableness alone in accordance
with the provisions stated below, except as such
provisions relate to the number of arbitrators. The two
arbitrators shall designate a third arbitrator. If the
two arbitrators shall fail to agree upon the designation
of a third arbitrator within five business days after the
designation of the second arbitrator, then either party
may apply to the New York office of the American
Arbitration Association for the designation of such third
arbitrator. All arbitrators shall be persons who shall
have had at least fifteen years of continuous experience
in the practice of commercial real estate law in the
Borough of Manhattan, The City of New York and who are
not acting and have not have acted as legal counsel for
either party to such dispute. The three arbitrators shall
conduct such hearings as they deem appropriate, making
their determination in writing and giving notice to
Sublandlord and Subtenant of their determination as soon
as practicable, and if possible, within five business
days after the designation of the third arbitrator; the
concurrence of any two of said arbitrators shall be
binding upon Sublandlord and Subtenant, or, in the event
no two of the arbitrators shall render a concurrent
determination, then the determination of the third
arbitrator designated shall be binding upon Sublandlord
and Subtenant. The determination of such arbitrators
shall be limited to the following issues: first, whether
Sublandlord was reasonable or unreasonable in failing to
grant the consent or approval in question and, second, if
the determination on the first issue is that Sublandlord
was unreasonable, whether Sublandlord acted maliciously
or in bad faith in failing to grant such consent or
approval. Without limiting the generality of the
immediately preceding sentence, the arbitrators shall not
have the power to award compensatory, consequential,
punitive or other damages to any party. Judgment upon any
determination rendered in any arbitration held pursuant
to this Section shall be final and binding upon
Sublandlord and Subtenant, whether or not a judgment
shall be entered in any court. Each party shall pay its
own counsel fees and expenses, if any, in connection with
any arbitration under this Section, including the
expenses and fees of any arbitrator selected by it in
accordance with the provisions of this Section, and the
parties shall share all other expenses and fees of any
such arbitration. The arbitrators shall be bound by the
provisions of this Sublease, and shall not add to,
subtract from or otherwise modify such provisions. If the
determination shall be adverse to Sublandlord,
Sublandlord, nevertheless, shall not be liable to
Subtenant for a breach of Sublandlord s covenant not to
unreasonably withhold such consent or approval, and
Subtenant s sole remedy in such event shall be (i) the
granting of consent or approval by Sublandlord with
respect to such request under this Sublease and (ii) the
payment by Sublandlord of Subtenant s reasonable
attorneys fees in obtaining such determination.
Notwithstanding the preceding sentence, if the
arbitration described above shall have finally determined
that Sublandlord shall have maliciously or otherwise in
bad faith withheld any such consent or approval,
Subtenant may seek compensatory damages against
Sublandlord. Any such action for damages against
Sublandlord shall be determined in a separate proceeding
by a court of competent jurisdiction. Except in the case
of a determination by the arbitration that Landlord
withheld consent with malice or in bad faith as described
above, Sublandlord shall have no liability for damages to
Subtenant for Sublandlord s refusal or failure to give
such consent or approval. The remedy provided in this
Section is exclusive with respect to the subject matter
thereof and, as a material inducement to Sublandlord to
agree to act reasonably to the extent expressly provided
herein, Subtenant expressly waives any other remedies,
judicial or otherwise.
10. Termination of Overlease. If the Overlease
is terminated by Overlandlord pursuant to the terms
thereof with respect to all or any portion of the
Premises prior to the Expiration Date for any reason
whatsoever, including, without limitation, by reason of
casualty or condemnation, this Sublease shall thereupon
terminate with respect to any corresponding portion of
the Premises, and (unless such termination of the
Overlease shall be as a result of Sublandlord s default
thereunder or a voluntary surrender of the Premises,
other than a surrender of the Premises permitted under
the Overlease with respect to a termination of the
Overlease by reason of casualty to or condemnation of the
Premises or the Building) Sublandlord shall not be liable
to Subtenant by reason thereof. In the event of such
termination, Sublandlord shall return to Subtenant the
Security Deposit and that portion of the Rental paid in
advance by Subtenant with respect to such portion of the
Premises, if any, prorated as of the date of such
termination.
11. SUBLEASE, NOT ASSIGNMENT. Notwithstanding
anything contained herein, this Sublease shall be deemed
to be a sublease of the Premises and not an assignment,
in whole or in part, of Sublandlord s interest in the
Overlease.
12. DAMAGE, DESTRUCTION, FIRE AND OTHER CASUALTY;
CONDEMNATION. Notwithstanding anything to the contrary
contained in this Sublease or in the Overlease
incorporated herein by reference, Subtenant shall not
have the right to terminate this Sublease as to all or
any part of the Premises, or be entitled to an abatement
of Fixed Annual Rent, Additional Rent or any other item
of Rental, by reason of a casualty or condemnation
affecting the Premises unless Sublandlord is entitled to
terminate the Overlease or is entitled to a corresponding
abatement with respect to its corresponding obligation
under the Overlease. If Sublandlord is entitled to
terminate the Overlease for all or any portion of the
Premises by reason of casualty or condemnation, Subtenant
may terminate this Sublease as to any corresponding part
of the Premises by written notice to Sublandlord given at
least five (5) business days prior to the date(s)
Sublandlord is required to give notice to Overlandlord of
such termination under the terms of the Overlease.
13. NO WAIVERS. Failure by Sublandlord or
Subtenant in any instance to insist upon the strict
performance of any one or more of the obligations of the
other party under this Sublease, or to exercise any
election herein contained, shall in no manner be or be
deemed to be a waiver of any defaults or breaches
hereunder or of any rights and remedies by reason of such
defaults or breaches, or a waiver or relinquishment for
the future of the requirement of strict performance of
any and all obligations hereunder. Further, no payment by
Subtenant or receipt by Sublandlord of a lesser amount
than the correct amount or manner of payment of Rental
due hereunder 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 payment be
deemed to effect or evidence an accord and satisfaction,
and Sublandlord may accept any checks or payments as made
without prejudice to Sublandlord s right to recover the
balance or pursue any other remedy in this Sublease or
otherwise provided at law or equity.
14. NOTICES. Any notice, statement, demand,
consent, approval, advice or other communication required
or permitted to be given, rendered or made by either
party to the other, pursuant to this Sublease or pursuant
to any applicable law or requirement of public authority
(collectively, "COMMUNICATIONS") shall be in writing and
shall be deemed to have been properly given, rendered or
made only if sent by personal delivery, receipted by the
party to whom addressed, or registered or certified mail,
return receipt requested, posted in a United States post
office station in the continental United States,
addressed (i) to Sublandlord at its address first above
written, and (ii) to Subtenant at the address set forth
on the first page of this Sublease (Attn: General
Counsel) until Subtenant shall have moved into the
Premises, and thereafter, at the Premises. All such
communications shall be deemed to have been given,
rendered or made when delivered and receipted by the
party to whom addressed, in the case of personal
delivery, or three (3) days after the day so mailed.
Either party may, by notice as aforesaid actually
received, designate a different address or addresses for
communications intended for it.
15. BROKER. Subtenant and Sublandlord each
covenants, warrants and represents to the other that each
has had no dealings, conversations or negotiations with
any broker concerning the execution and delivery of this
Sublease other than Cushman & Wakefield ( the "Broker")
. Subtenant and Sublandlord each agrees to indemnify and
hold each other harmless from and against any and all
claims made by any broker or other party (other than the
Broker with respect to Subtenant s indemnity to
Sublandlord) for any brokerage commissions, finder s fee
or similar compensation and all costs, expenses and
liabilities in connection therewith, including, without
limitation, any liability to Overlandlord arising out of,
or in connection with, the Consent (as hereinafter
defined), and reasonable attorneys fees and
disbursements, arising out of any claim of or liability
to any broker or such other party who shall claim to have
dealt solely with such indemnifying party in connection
with this transaction (other than the Broker).
Sublandlord shall pay any brokerage commissions due the
Broker in connection with this transaction pursuant to a
separate agreement between Sublandlord and Broker. The
provisions of this Article 15 shall survive the
expiration or earlier termination of the Term hereof.
16. CONDITION OF THE PREMISES; SUBLANDLORD WORK.
16.1 Sublandlord has not made and does not
make any representations or warranties as to the physical
condition of the Premises, the use to which the Premises
may be put, or any other matter or thing affecting or
relating to the Premises, except as specifically set
forth in this Sublease. Sublandlord shall have no
obligation whatsoever to alter, improve, decorate or
otherwise prepare the Premises for Subtenant s occupancy.
Sublandlord shall deliver the Premises on the
Commencement Date in broom clean condition, and
Sublandlord s furnishings, fixtures and equipment (in
current "as-is" condition) shall remain for Subtenant s
use, (which, as long as no Event of Default has occurred
hereunder, shall be retained by Subtenant upon the
expiration of this Sublease) which Subtenant covenants
and agrees to maintain in good order and condition
throughout the Term.
16.2 The indemnity in Section 8 hereof shall
not apply to any efforts by Subtenant to require
Overlandlord to remedy any problems in connection with
the air conditioning system.
16.3 Sublandlord shall not be liable for any
cost in connection with remedying any problems in
connection with the air conditioning system or the
security system for the premises.
16.4 Upon the Expiration Date or earlier
termination of the Term, Subtenant shall quit and
surrender the Premises "broom-clean" to Sublandlord in
good order and repair, except for ordinary wear and tear
and such damage or destruction as Overlandlord or
Sublandlord is required to repair or restore under the
Overlease or this Sublease. Notwithstanding anything to
the contrary contained in this Sublease or in Article 3
of the Overlease, Subtenant shall not be obligated to
remove any leasehold improvements in the Premises
existing on the Commencement Date or to restore the
Premises to its condition prior to the Commencement Date.
16.5 Upon the Expiration Date or earlier
termination of the Term, Subtenant shall either (i)
remove any Alterations (as defined herein) made by
Subtenant or (ii) reimburse Sublandlord for the
incremental cost to Sublandlord for the removal of any of
Subtenant s Alterations which Overlandlord requires,
pursuant to the Overlease, to be removed by Sublandlord
upon its surrender of the Entire Premises. The provisions
of this subsection 16.5 shall survive the expiration of
this Sublease.
16.6 If the Premises are not surrendered upon
the termination of this Sublease, Subtenant hereby
indemnifies Sublandlord and holds Sublandlord harmless
against any loss and/or liability resulting from delay by
Subtenant in so surrendering the Premises, including,
without limitation, any claims made by any succeeding
tenant or prospective tenant founded-upon such delay, or
any loss of a prospective tenancy relating to such delay.
16.7 In the event Subtenant remains in
possession of the Premises after the termination of this
Sublease without the execution of a new sublease,
Subtenant, at the option of Sublandlord, may be deemed to
be occupying the Premises as a tenant from month-to-
month, at a monthly rental equal to three (3) times the
Rental payable during the last month of the Term, subject
to all other terms of the Sublease insofar as the same
are applicable to a month-to month tenancy.
17. CONSENT OF OVERLANDLORD TO THIS SUBLEASE.
Subtenant hereby acknowledges and agrees that this
Sublease is subject to and conditioned upon Sublandlord
obtaining the written consent (the "CONSENT") of
Overlandlord as provided in the Overlease. Such Consent
shall not be deemed or construed to modify, amend or
affect the terms and provisions of the Overlease or
Sublandlord s obligations thereunder, which obligations
shall continue as if the Sublease had not been made.
Promptly following the execution and delivery of this
Sublease by Sublandlord and Subtenant, Sublandlord shall
submit this Sublease to Overlandlord. It is expressly
understood and agreed that notwithstanding anything to
the contrary contained herein, this Sublease shall not be
valid, nor shall Subtenant take possession of the
Premises or any part thereof, until an executed
counterpart of this Sublease has been delivered to
Overlandlord, and Overlandlord has delivered its Consent
thereto. Subtenant hereby agrees that it shall cooperate
in good faith with Sublandlord and shall comply with any
reasonable requests made of Subtenant by Sublandlord or
Overlandlord in the procurement of the Consent. In no
event shall Sublandlord or Subtenant be obligated to make
any payment to Overlandlord in order to obtain the
Consent or the consent to any provision hereof, other
than as expressly set forth in the Overlease. In the
event that Overlandlord shall not have executed and
delivered the Consent within thirty (30) days after the
date of this Sublease, either party shall have the right
to cancel this Sublease by written notice given to the
other at any time thereafter prior to the execution and
delivery of the Consent, and with the giving of such
notice this Sublease shall be deemed canceled and of no
further force or effect and neither party shall have any
liability or obligation to the other in respect thereof
except that Sublandlord shall return to Subtenant the
first month s rent and the Security Deposit.
18. ASSIGNMENT, SUBLETTING AND MORTGAGING.
18.1 Subtenant shall not further assign,
sell, transfer (whether by operation or law or
otherwise), pledge, mortgage or otherwise encumber this
Sublease or any portion of its interest in the Premises,
nor sublet all or any portion of the Premises or permit
any other person or entity to use or occupy all or any
portion of the Premises without the consent of both
Sublandlord and Overlandlord, and in accordance with the
provisions of the Overlease.
18.2 Subtenant shall not enter into any
license, concession or other agreement which provides for
rental or any other payments for use, occupancy or
utilization of the Premises or any portion thereof based
in whole or in part on the net income or profits derived
by any person from the Premises or such portion.
19. SECURITY DEPOSIT. Upon the execution
of this Sublease, Subtenant shall deposit with
Sublandlord an amount equal to three (3) months Fixed
Rent ($56,790.00), as security (the "Security") for the
faithful performance and observance by Subtenant of the
terms, provisions and conditions of this Sublease. It is
agreed that in the event Subtenant defaults in respect of
any of the terms, provisions and conditions of this
Sublease, including, but not limited to, the payment of
Rental, Sublandlord may use, apply or retain the whole
or any part of the Security to the extent required for
the payment of any Rental or any other sum as to which
Subtenant is in default or for any sum which Sublandlord
may expend or may be required to expend by reason of
Subtenant's default in respect of any of the terms,
covenants and conditions of this Sublease, including but
not limited to, any damages or deficiency in the re-
letting of the Premises, whether such damages or
deficiency accrued before or after summary proceedings or
other re-entry by Sublandlord. In the event that
Subtenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of the
Sublease, the Security shall be returned to Subtenant
after the date fixed as the end of the Sublease and after
delivery of entire possession of the Premises to
Sublandlord. Subtenant further covenants that it will
not assign or encumber or attempt to assign or encumber
the Security and that neither Sublandlord nor its
successors or assigns shall be bound by any such
assignment, encumbrance, attempted assignment or
attempted encumbrance. In the event Sublandlord applies
or retains any portion or all of the Security deposited,
Subtenant shall forthwith fully restore the amount so
applied or retained.
20. ALTERATIONS AND MAINTENANCE.
20.1 Subtenant shall not make any
alterations, installations, improvements, additions,
decorations, replacements or other physical changes
(collectively, "ALTERATIONS") in or about the Premises
without the prior consent of Sublandlord as required in
accordance with Articles 3 and 57 of the Overlease.
20.2 Subtenant shall take good care of
and maintain in good order and condition the Premises and
the equipment and the fixtures and the appurtenances
therein, subject to reasonable wear and tear. The
foregoing sentence shall not be deemed to otherwise
affect the Subtenant s maintenance obligations set forth
in Article 4 of the Overlease, which provisions have been
incorporated herein pursuant to Section 5.2 hereof.
21. MISCELLANEOUS.
21.1 This Sublease contains the entire
agreement between the parties and all prior negotiations
and agreements are merged in this Sublease. Any agreement
hereafter made shall be ineffective to change, modify or
discharge this Sublease in whole or in part unless such
agreement is in writing and signed by the parties hereto.
No provision of this Sublease shall be deemed to have
been waived by Sublandlord or Subtenant unless such
waiver be in writing and signed by Sublandlord or
Subtenant, as the case may be. The covenants and
agreements contained in this Sublease shall bind and
inure to the benefit of Sublandlord and Subtenant and
their respective permitted successors and assigns.
21.2 In the event that any provision of this
Sublease shall be held to be invalid or unenforceable in
any respect, the validity, legality or enforceability of
the remaining provisions of this Sublease shall be
unaffected thereby.
21.3 The paragraph headings appearing herein
are for purpose of convenience only and are not deemed to
be a part of this Sublease.
21.4 This Sublease is offered to Subtenant
for signature with the express understanding and
agreement that this Sublease shall not be binding upon
Sublandlord unless and until Sublandlord shall have
executed and delivered a fully executed copy of this
Sublease to Subtenant.
21.5 All insurance obtained by Subtenant
shall name Sublandlord, and such other parties as may be
required in accordance with the Overlease, as additional
named insureds as their interests may appear.
21.6 This Sublease shall be governed by,
and construed in accordance with, the laws of the State
of New York.
21.7 Sublandlord represents that to the
best of its knowledge, neither Overlandlord nor
Sublandlord is in default under the Overlease, that the
Overlease is in full force and effect and that
Sublandlord has not been notified that Overlandlord is in
default under any mortgage or other agreement affecting
the Building.
21.8 If Millennium Financial Services,
Inc. shall fail to observe and perform any provisions of
any other sublease with Sublandlord for space in the
Building, where such failure continues beyond any grace
period set forth in such other sublease for the remedying
of such failure, then in such event, Sublandlord may at
any time thereafter give notice to Subtenant stating that
this Sublease and the Sublease Term shall automatically
expire and terminate on the date specified in such
notice, whereupon this Sublease and the Sublease Term and
all rights of Subtenant under this Sublease shall
automatically expire and terminate and Subtenant shall
then quit and surrender the Premises to Sublandlord.
IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement of Sublease as of the day
and year first above written.
BARCLAYS BANK PLC,
Sublandlord
By:
------------------------------
Name:
Title:
DVL, INC.
Subtenant
By:
------------------------------
Name:
Title:
<PAGE>
EXHIBIT "A"
Plan
<PAGE>
TABLE OF CONTENTS
Page
----
1. Subleasing of Premises........................1
2. Term..........................................1
3. Fixed Annual Rent and Additional Rent.........1
4. Electricity...................................6
5. Subordination to and Incorporation
of the Overlease.............................6
6. Use; Signage..................................7
7. Covenants with Respect to the Overlease.......8
8. Services and Repairs..........................8
9. Consents......................................9
10. Termination of Overlease.....................11
11. Sublease, Not Assignment.....................11
12. Damage, Destruction, Fire and Other Casualty;
Condemnation................................11
13. No Waivers...................................12
14. Notices......................................12
15. Broker.......................................12
16. Condition of the Premises; Sublandlord Work..13
17. Consent of Overlandlord to this Sublease.....14
18. Assignment, Subletting and Mortgaging........14
19. Security Deposit.............................15
20. Alterations and Maintenance..................15
16. Miscellaneous................................15
-i-
CONSENT TO SUBLEASE
-------------------
AGREEMENT (this "Agreement") made as of October
23, 1998, among AMTAD PROPERTY, INC., a Delaware
corporation, having an office at 801 S. Figueroa Street,
Suite 1010, Los Angeles, CA 90017 ("Landlord"), BARCLAYS
BANK PLC, a banking corporation organized under the laws
of England, having an address at 222 Broadway, Attn:
Facilities Management and Corporate Services, New York,
New York, 10038 ("Tenant"), and DVL, Inc., a Delaware
corporation, having an office at 70 East 55th Street, New
York, New York ("Subtenant").
By lease dated as of February 9, 1998, Landlord's
predecessor-in-interest did lease to Tenant's
predecessor-in-interest and Tenant's predecessor-in-
interest did hire from Landlord's predecessor-in-interest
certain premises including the leasable area of the sixth
(6th) and seventh (7th) floors of the building known as
Heron Tower, 70 East 55th Street, New York, New York,
which demised premises are more particularly described in
such lease (such lease, as same has been and may be from
time to time modified and assigned, the "Lease"). All
capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Lease.
Tenant has requested that Landlord consent to
the subletting by Tenant to Subtenant, pursuant to a
sublease (the "Sublease") dated as of August 1, 1998, a
copy of which is attached hereto, of certain space
described in the Sublease (the "Sublet Space").
Landlord hereby consents to the subletting by
Tenant to Subtenant pursuant to the Sublease, such
consent being subject to and upon the following terms and
conditions, to each of which Tenant and Subtenant hereby
expressly agree:
1. Notwithstanding anything to the contrary,
(i) nothing contained in this Agreement shall operate as
a consent or approval or ratification by Landlord to or
of any of the provisions of the Sublease or as a
representation or warranty by Landlord, (ii) Landlord is
not a party to the Sublease and is not bound by the
provisions thereof, and (iii) Landlord has not, and will
not, review or pass upon any of the provisions of the
Sublease.
2. Nothing contained in this Agreement shall
be construed to (i) modify, waive, impair or affect any
of the provisions, covenants, agreements, terms or
conditions contained in the Lease, (ii) waive any present
or future breach or default under the Lease or any rights
of Landlord against any person, firm, association or
corporation liable or responsible for the performance of
the Lease, or (iii) enlarge or increase Landlord's
obligations or Tenant's or Subtenant's rights under the
Lease or otherwise, and all provisions, covenants,
agreements, terms and conditions of the Lease are hereby
declared by Tenant and Subtenant to be in full force and
effect.
3. Landlord's consent under this Agreement is
not assignable or transferrable in connection with any
other subletting by Tenant or Subtenant.
4. The Sublease is, and shall be, subject and
subordinate at all times to the Lease and to all of the
provisions of the Lease (including, but not limited to,
the Rules and Regulations which are a part thereof) and
to each and every matter which the Lease is subordinate
to, including, without limitation, all mortgages and
underlying leases (including modifications and extensions
thereof) now or hereafter affecting the Building and/or
the land on which the Building is located, and Tenant and
Subtenant shall not do, permit or suffer anything to be
done in, or connection with Subtenant's use or occupancy
of, the Sublet Space which would violate any of the
provisions of any of the foregoing.
5. Neither the Sublease nor Landlord's consent
under this Agreement shall release or discharge Tenant
from any liability or obligation under the Lease, and
Tenant shall remain liable and responsible for the full
performance and observance of all of the provisions of
the Lease on the part of Tenant to be performed or
observed with the same force and effect as though no
sublet had been made. Any breach or violation of any
provision of the Lease (whether by act or by omission) by
Subtenant shall be deemed to be, and shall constitute, a
default by Tenant in fulfilling such provision, and, in
such event, Landlord may exercise its rights and remedies
under the Lease in the case of such a default.
6. Landlord's consent under this Agreement is
not, and shall not be construed as, a consent by Landlord
to any assignment, reassignment, further or other
subletting, or other transfer by Tenant or Subtenant.
The Sublease shall not be assigned, reassigned,
transferred, surrendered, renewed or extended, nor shall
the Demised Premises or the Sublet Space or any part of
either be sublet or sub-sublet, without prior written
consent of Landlord thereto in each instance. If
Subtenant is a corporation, partnership or other entity,
the prohibition on assigning the Sublease shall be deemed
breached if there occurs a change in the ownership or
control of the Subtenant (however accomplished, whether
in a single transaction or in a series of related or
unrelated transactions) with the result that the
beneficial and record ownership in and to, and/or control
of Subtenant shall no longer be identically held in the
same proportion by the benefical record owners of
Subtenant as of the date Subtenant executed the Sublease.
7. Subject to all of the provisions, covenants,
agreements, terms and conditions of the Lease, the Sublet
Space shall be used solely as specified in and in
compliance with Articles 2 and 45 of the Lease and for no
other purpose (except that any reference to
"international and domestic private banking services and
other banking business" in Article 2 shall be deleted as
to Subtenant).
8. In addition to the obligations set forth in
Paragraph 2 hereof, and in no way limiting the same,
tenant and Subtenant shall be jointly and severally
liable for all bills rendered by Landlord for charges
incurred by or imposed upon Subtenant for services
rendered and materials supplied to the Sublet Space by
Landlord whether requested by Tenant and/or Subtenant.
Nothing in this Paragraph 8 shall require Landlord to
respond to, or comply with, any requests for services or
materials made by Subtenant. Landlord's decision with
respect to any such request shall be in its sole
discretion.
9. Tenant and Subtenant represent and warrant
to Landlord that the copy of the Sublease attached hereto
is a true and correct copy thereof and that the Sublease
has not been amended, changed or modified.
Notwithstanding anything to the contrary contained in the
Lease or the Sublease, Tenant and Subtenant shall not,
without the prior written consent of Landlord in each
instance, execute any amendment, change or modification
of the Sublease. Tenant and Subtenant further represent
and warrant to Landlord that the sublease is the only
agreement between Tenant and Subtenant with respect to
the Sublet Space and Tenant is not receiving
consideration (money or otherwise) in connection with the
Sublease other than as set forth therein.
10. Upon the expiration or termination of the
term of the Lease during the term of the Sublease by
reason of condemnation or eminent domain or destruction
by fire or other cause, or if the Lease expires or is
terminated for any other reason or is surrendered by
Tenant to Landlord and Landlord, in either such case,
does not exercise either of its elections pursuant to
Paragraph 11 hereof, the Sublease and its term shall
expire and come to an end as of the effective date of
such expiration, termination or surrender and Subtenant
shall vacate the Sublet Space on or before such date. If
Subtenant does not so vacate, Landlord shall be entitled
to all of the rights and remedies available to a landlord
against a tenant holding over after the expiration of a
term.
11. If the Lease expires or is terminated
during the term of the Sublease for any reason
(including, without limitation, a rejection of the Lease
under the Bankruptcy Code) other than condemnation or
eminent domain or destruction by fire or other type of
casualty, or in case of the surrender of the Lease by
Tenant to Landlord during the term of the Sublease,
Landlord, in its sole discretion, upon notice to Tenant
and Subtenant, given within sixty (60) days after the
effective date of such expiration, termination or
surrender, without any additional or further agreement of
any kind on the part of Subtenant, may elect to (i)
continue the Sublease, with the same force and effect as
if Landlord as lessor and Subtenant had entered into a
lease as of the effective date of the expiration,
termination or surrender of the Lease, for a term equal
to the then unexpired term of the Sublease and containing
the same provisions as those contained in the Sublease,
and Subtenant shall attorn to Landlord pursuant to the
then executory provisions of the Sublease, and Landlord
shall have the same rights and remedies with respect to
any breach or default under the Sublease as Tenant had or
would have had if the Lease had not expired or been
terminated or surrendered, or (ii) declare effective as
of the effective date of the expiration, termination or
surrender of the Lease, a lease with Landlord as lessor
and Subtenant as lessee for a term equal to the then
unexpired term of the Sublease containing the same
provisions as those contained in the Sublease, and
Subtenant shall adhere to and be bound by such lease,
which, if the Sublease is then still in existence, shall
supersede the Sublease and be in substitution therefor.
In neither event, however, shall Landlord be (a) liable
for any act or omission of Tenant, (b) subject to any
credit, offset, claim, counterclaim, demand or defense
which Subtenant may have or have had against Tenant, (c)
bound by any amendment, change or modification of the
Sublease not consented to in writing and signed by
Landlord or by any rent or additional rent or other
payment which Subtenant might have paid in advance to
Tenant or be liable for any security deposit (except to
the extent actually received by Landlord), (d) bound by
any covenant of Tenant to undertake or complete any
construction of the Sublet Space or any portion thereof,
(e) responsible for any monies owing by Landlord to the
credit of Tenant or (f) required to remove any person
occupying the Sublet Space or any part thereof. In the
event that Landlord does not elect to continue the
Sublease or declare effective a new lease between
Landlord and Subtenant, then Landlord shall have the
right to terminate the Sublease at any time after such
expiration, termination or surrender. In the event that
the Sublease is assigned prior or subsequent to any
attornment, Subtenant agrees that it shall remain jointly
and severally liable (along with all future tenants under
the Sublease) for the performance of the Sublease.
12. Any breach or violation of any provision
of this Agreement (whether by act or by omission) by
Tenant or Subtenant shall be deemed to be and shall
constitute a default by Tenant in fulfilling the
provisions of the Lease, and, in such event, Landlord may
exercise its rights and remedies under the Lease in case
of such a default.
13. In the event that Tenant shall be in
default under the Lease which default remains uncured
upon the expiration of all applicable grace and cure
periods and Landlord gives notice of any such default to
Subtenant (Landlord hereby agreeing to give a copy of
such notice to Tenant), then, from the date upon which
Landlord gives such notice to Subtenant until such time
as Landlord rescinds said notice, Subtenant shall make
all payments of fixed rent and additional rent/charges
due under the Sublease directly to Landlord by unendorsed
check made payable solely to Landlord at the address
designated by Landlord in said notice. Any such payments
shall be credited, upon collection only, by (a) Landlord
against any sums due Landlord by Tenant under the Lease
in such manner and in such order as Landlord may elect,
in its sole discretion, and (b) Tenant against any sums
due Tenant by Subtenant under the Sublease. Tenant
hereby irrevocably authorizes payment by Subtenant to
Landlord pursuant to this Paragraph 13. Landlord may
exercise its right under this Paragraph 13 on one or more
occasions, and from time to time, as often as Landlord
desires, and the rights granted to it hereunder shall
apply in each event of default by Tenant under the Lease.
This Paragraph 13 shall in no event limit or impair other
rights and remedies which may be available to Landlord as
a result of any such default by Tenant. The acceptance
of any such payments from Subtenant shall not be deemed
an acceptance of Subtenant as tenant under the Lease or
an attornment to Landlord under the Sublease nor shall it
release tenant from any of its obligations under the
Lease.
14. Except to the extent expressly permitted
under, and subject to and in accordance with the terms
and provisions of, the Lease, neither Subtenant, nor
Tenant on behalf of Subtenant, shall make any changes,
alterations, additions or improvements to the Sublet
Space without the prior written consent of Landlord in
each instance.
15. Any notice or any statement or communication
which any party hereto may desire or be required to give
or render to any other party hereto under or with respect
to this Agreement shall be given or rendered shall be
effective only if given in writing in accordance with the
terms of the Lease. All notices shall be sent to
Landlord at 801 South Figueroa Street, Suite 1010, Los
Angeles, California 90017.
16. This Agreement shall be construed and
enforced in accordance with the laws of the State of New
York. This Agreement contains the entire agreement of
the parties hereto with respect to the subject matter
hereof. This Agreement may not be changed, modified,
terminated or discharged unless such change,
modification, termination or discharge is in writing and
signed by Landlord. Each right and remedy of Landlord
provided for in this Agreement or in the Lease shall be
cumulative and shall be in addition to every other right
and remedy provided for therein or now or hereafter
existing at law or in equity or by statute or otherwise,
and the exercise or beginning of the exercise by Landlord
of any one or more of the rights or remedies so provided
for or existing shall not preclude the simultaneous or
later exercise by Landlord of any or all other rights or
remedies so provided for or so existing. If any one or
more of the provisions contained in this Agreement shall
be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be
affected or impaired thereby.
17. The validity and enforceability of this
Agreement is expressly conditioned upon there being no
default existing under the Lease at the commencement of
the term of the Sublease. This consent shall not be
binding upon Landlord unless and until it is signed by
Landlord. This consent may be executed in any number of
counterparts, all of which taken together shall
constitute one and the same original, and the execution
of separate counterparts by Landlord, Tenant and
Subtenant shall bind Landlord, Tenant and Subtenant as if
they had each executed the same counterpart.
18. Tenant and Subtenant agree that Landlord is
not responsible for the payment of any commissions or
fees in connection with the Sublease and/or the
transactions contemplated under this Agreement
(including, without limitation, in the event that
Landlord elects to either continue the Sublease or
declare effective a new lease between Landlord and
Subtenant pursuant to Section 11 of this Agreement) and
Tenant and Subtenant each, jointly and severally,
defends, indemnifies and holds harmless Landlord from and
against any and all (a) claims of and liabilities to any
broker(s), finder(s) and/or any other person(s) regarding
fees or commissions alleged to be due as a result of the
granting of this consent, the execution of the Sublease,
and/or such continuation of the Sublease or such
effectiveness of a new lease and (b) loss, cost, expense
or damage suffered by Landlord relating to any such
claims and liabilities.
19. In case of any conflict between the
provisions of this Agreement and the provisions of the
Lease, the provisions of this Agreement shall prevail
unaffected by the Lease, and any conflicting or
inconsistent terms, covenants and conditions of the Lease
shall be deemed modified to conform with the terms,
covenants and conditions of this Agreement. In case of
any conflict between the provisions of the Lease and the
provisions of the Sublease, the provisions of the Lease
shall prevail unaffected by the Sublease, and any
conflicting or inconsistent terms, covenants and
conditions of the Sublease shall be deemed modified to
conform with the terms, covenants and conditions of the
Lease.
20. Tenant and Subtenant jointly and severally
certify to Landlord and agree that (i) the Lease is in
full force and effect and is hereby ratified and
confirmed in all respects, (ii) neither Tenant nor
Subtenant has any offsets, counterclaims or defenses to
the enforcement of the Lease, (iii) no default on the
part of Landlord or event which, with the giving of
notice or the passage of time, or both, could constitute
a default or an event of default on the part of Landlord
or otherwise give rise to any remedies of Tenant exist or
has occurred, and (iv) all of the representations and
warranties of Tenant set forth in the Lease are hereby
repeated and are true and correct in all material
respects as if made again as of the date hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement as of the date set forth at
the outset of this Agreement.
Landlord
--------
AMTAD PROPERTY, INC.
By:
---------------------------
Name:
Title:
Tenant
------
BARCLAYS BANK PLC
By:
---------------------------
Name:
Title:
Subtenant
---------
DVL, INC.
By:
---------------------------
Name:
Title:
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