<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 June 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 1-6862
DONALDSON, LUFKIN & JENRETTE, INC.
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-1898818
--------------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
277 Park Avenue, New York, New York 10172
--------------------------------------- -------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (212) 892-3000
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 than 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 ( ).
As of August 7, 1998, the latest practicable date, there were 122,563,252
shares of Common Stock, $0.10 par value, outstanding.
1
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1998
TABLE OF CONTENTS
Part I FINANCIAL INFORMATION
Page Number
Item 1. Financial Statements
Condensed Consolidated Statements of Financial
Condition at June 30, 1998 and December 31, 1997
(Unaudited)............................................ 3
Condensed Consolidated Statements of Income for
the three and six months ended June 30, 1998
and 1997 (Unaudited) .................................. 5
Condensed Consolidated Statements of Changes in
Stockholders' Equity for the year ended December 31,
1997 and the six months ended June 30, 1998
(Unaudited) ........................................... 6
Condensed Consolidated Statements of Cash Flows for
the six months ended June 30, 1998 and 1997
(Unaudited)............................................ 7
Notes to Condensed Consolidated Financial
Statements (Unaudited)................................. 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 14
Item 3. Quantitative and Qualitative Disclosures About
Market Risk............................................ 19
Part II OTHER INFORMATION
Item 1. Legal Proceedings...................................... 21
Item 2. Changes in Securities and Use of Proceeds.............. 22
Item 6. Exhibits and Reports on Form 8-K....................... 22
Signature.............................................. 23
2
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition (Unaudited)
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------- ------------
ASSETS
<S> <C> <C>
Cash and cash equivalents.................................................... $ 459,353 $ 273,164
Cash and securities segregated for regulatory purposes or deposited with
clearing organizations.................................................... 348,784 832,093
Collateralized short-term agreements:
Securities purchased under agreements to resell........................... 21,663,789 22,628,782
Securities borrowed....................................................... 24,220,198 20,598,639
Receivables:
Customers................................................................. 6,740,818 4,397,668
Brokers, dealers and other................................................ 4,571,661 3,162,970
Financial instruments owned, at value:
U.S. government and agency................................................ 8,567,615 6,834,996
Corporate debt............................................................ 5,330,002 5,577,023
Foreign sovereign debt.................................................... 2,000,004 1,624,235
Mortgage whole loans...................................................... 923,531 1,555,685
Equity and other.......................................................... 1,992,194 943,782
Long-term corporate development investments............................... 454,265 315,774
Office facilities, at cost, (net of accumulated depreciation and amortization
of $248,527 and $216,230, respectively)................................... 426,520 388,677
Other assets ................................................................ 1,861,104 1,372,357
------------ ------------
Total Assets................................................................. $ 79,559,838 $ 70,505,845
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition (Unaudited)
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Commercial paper and short-term borrowings...................................... $ 2,337,938 $ 1,121,352
Collateralized short-term financings:
Securities sold under agreements to repurchase.............................. 36,692,568 36,006,656
Securities loaned........................................................... 8,530,793 7,687,416
Payables:
Customers................................................................... 5,795,471 5,071,653
Brokers, dealers and other.................................................. 4,597,280 2,912,218
Financial instruments sold not yet purchased, at value:
U.S. government and agencies................................................ 9,215,199 7,671,498
Corporate debt.............................................................. 935,499 854,155
Foreign sovereign debt...................................................... 371,491 553,852
Equities & other............................................................ 2,406,461 1,376,395
Accounts payable and accrued expenses........................................... 2,218,308 2,119,131
Other liabilities............................................................... 1,156,856 741,870
------------ ------------
74,257,864 66,116,196
Long-term borrowings............................................................ 2,563,206 2,128,159
------------ ------------
Total liabilities...................................................... 76,821,070 68,244,355
------------ ------------
Company-obligated mandatorily redeemable preferred securities
of subsidiary trust holding solely debentures of the Company................ 200,000 200,000
------------ ------------
Stockholders' Equity:
Preferred stock, 50,000,000 shares authorized:
Series A Preferred Stock, at $50.00 per share liquidation
preference (4,000,000 shares issued and outstanding)................... 200,000 200,000
Series B Preferred Stock, at $50.00 per share liquidation
preference (3,500,000 shares issued and outstanding).................. 175,000 -
Common stock ($0.10 par value; 300,000,000 shares
authorized; 117,355,060 and 111,852,762 shares issued
and outstanding, respectively)........................................... 11,736 11,185
Restricted stock units (10,358,294 units authorized; 2,082,876
and 6,562,414 units issued and outstanding, respectively)................ 21,339 67,255
Paid-in capital............................................................. 537,906 440,926
Retained earnings........................................................... 1,589,295 1,338,220
Accumulated other comprehensive income...................................... 3,492 3,904
------------ ------------
Total stockholders' equity............................................. 2,538,768 2,061,490
------------ ------------
Total Liabilities and Stockholders' Equity...................................... $ 79,559,838 $ 70,505,845
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Commissions......................................... $ 201,942 $ 158,346 $ 400,466 $ 326,696
Underwritings....................................... 352,675 181,538 673,474 357,360
Fees................................................ 318,436 176,695 573,807 322,827
Interest, net of interest to finance U.S. govern-
ment, agency and mortgage-backed securities
of $782,747, $751,917, $1,548,818 and
$1,365,794, respectively........................ 590,264 369,992 1,155,053 689,720
Principal transactions-net:
Trading........................................... 30,420 92,892 134,723 247,308
Investment........................................ 47,195 63,533 88,493 64,380
Other............................................... 15,813 18,184 24,150 34,292
---------- ---------- ---------- ----------
Total revenues................................... 1,556,745 1,061,180 3,050,166 2,042,583
---------- ---------- ---------- ----------
Costs and Expenses:
Compensation and benefits........................... 672,966 442,330 1,317,050 865,779
Interest............................................ 378,241 247,006 752,107 465,177
Brokerage, clearing, exchange fees and other........ 72,916 51,305 129,237 109,785
Occupancy and equipment............................. 64,614 45,335 124,048 85,305
Communications...................................... 21,658 15,927 41,159 29,771
Other operating expenses............................ 115,850 92,277 238,815 175,766
---------- ---------- ---------- ----------
Total costs and expenses......................... 1,326,245 894,180 2,602,416 1,731,583
---------- ---------- ---------- ----------
Income before provision for income taxes................ 230,500 167,000 447,750 311,000
---------- ---------- ---------- ----------
Provision for income taxes.............................. 88,200 66,800 171,300 124,400
---------- ---------- ---------- ----------
Net income.............................................. $ 142,300 $ 100,200 $ 276,450 $ 186,600
========== ========== ========== ==========
Dividends on preferred stock............................ $ 5,289 $ 2,970 $ 10,732 $ 6,204
========== ========== ========== ==========
Earnings applicable to common shares.................... $ 137,011 $ 97,230 $ 265,718 $ 180,396
========== =========== ========== ==========
Earnings per share:
Basic............................................... $ 1.17 $ 0.88 $ 2.29 $ 1.65
Diluted............................................. $ 1.05 $ 0.79 $ 2.05 $ 1.47
========== ========== ========== ==========
Weighted average common shares:
Basic............................................... 117,394 110,234 116,244 109,180
Diluted............................................. 130,661 124,106 129,795 122,634
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Changes in
Stockholders' Equity (Unaudited)
For the Year Ended December 31, 1997 and the Six Months Ended June 30, 1998
(In thousands, except per share data)
<TABLE>
<CAPTION>
Accumulated
Restricted Other
Preferred Common Stock Paid-in Retained Comprehensive
Stock Stock Units Capital Earnings Income Total
-------- ------- -------- -------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1996....... $200,000 $10,659 $104,167 $360,660 $ 969,856 $1,897 $1,647,239
Net income........................... - - - - 408,250 - 408,250
Dividends:
Common stock ($0.25 per share).... - - - - (27,742) - (27,742)
Preferred stock................... - - - - (12,144) - (12,144)
Common stock issued upon the
exercise of stock options,
including related tax benefits.... - 30 - 6,428 - - 6,458
Conversion of restricted stock
units to common stock,
including related tax benefits.... - 358 (36,756) 45,041 - - 8,643
Forfeiture of restricted stock units. - - (156) 156 - - -
Conversion of debentures............. - 138 - 28,641 - - 28,779
Translation adjustment............... - - - - - 2,007 2,007
-------- ------- -------- -------- ---------- ------ ----------
Balances at December 31, 1997....... $200,000 $11,185 $ 67,255 $440,926 $1,338,220 $3,904 $2,061,490
Net income........................... - - - - 276,450 - 276,450
Dividends:
Common stock ($0.125 per
share)......................... - - - - (14,643) - (14,643)
Preferred stock .................. - - - - (10,732) - (10,732)
Issuance of Series B Preferred
Stock............................. 175,000 - - - - - 175,000
Common stock issued upon the
exercise of stock options,
including related tax benefits.... - 103 - 26,085 - - 26,188
Conversion of restricted stock
units to common stock,
including related tax benefits.... - 448 (45,891) 70,870 - - 25,427
Forfeiture of restricted stock units. - - (25) 25 - - -
Translation adjustment............... - - - - - (412) (412)
-------- ------- -------- -------- ---------- ------ ----------
Balances at June 30, 1998........... $375,000 $11,736 $ 21,339 $537,906 $1,589,295 $3,492 $2,538,768
======== ======= ======== ======== ========== ====== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
For the Six Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income....................................................................... $ 276,450 $ 186,600
------------ ------------
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation and amortization................................................. 42,478 27,981
Deferred taxes................................................................ (7,003) 10,643
Decrease in unrealized depreciation of long-term corporate
development investments.................................................... (2,042) (23,571)
------------ ------------
309,883 201,653
(Increase) decrease in operating assets:
Cash and securities segregated for regulatory
purposes or deposited with clearing organizations........................... 483,309 (31,126)
Securities purchased under agreements to resell............................... (4,135,727) (4,340,640)
Securities borrowed........................................................... (3,621,559) (4,414,529)
Receivables from customers.................................................... (2,343,150) (836,106)
Receivables from brokers, dealers and other................................... (1,408,691) (1,531,088)
Financial instruments owned, at value......................................... (2,277,625) (1,909,207)
Other assets.................................................................. (221,259) (175,123)
Increase (decrease) in operating liabilities:
Securities sold under agreements to repurchase................................ 4,135,727 4,340,640
Securities loaned............................................................. 843,377 1,688,736
Payables to customers......................................................... 723,818 1,052,776
Payables to brokers, dealers and other........................................ 1,685,062 328,050
Financial instruments sold not yet purchased, at value........................ 2,472,750 1,379,440
Accounts payable and accrued expenses......................................... 99,177 (184,365)
Other liabilities and deferred amounts ....................................... 450,818 126,358
Translation adjustment........................................................ (412) 1,671
------------ ------------
Net cash used in operating activities.............................................. $ (2,804,502) $ (4,302,860)
------------ ------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
For the Six Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from investing activities: Net (payments for) proceeds from:
Purchases of long-term corporate development investments.................... $ (308,286) $ (78,415)
Sales of long-term corporate development investments........................ 171,837 53,742
Office facilities........................................................... (76,522) (67,113)
Other assets................................................................ (262,901) (81,634)
----------- -----------
Net cash used in investing activities........................................... (475,872) (173,420)
----------- -----------
Cash flows from financing activities: Net proceeds from (payments for):
Short-term financings....................................................... 2,867,491 4,309,601
Senior notes................................................................ 643,076 -
Subordinated revolving credit agreement..................................... (325,000) 118,500
Medium-term notes........................................................... 124,562 89,805
Other long-term debt........................................................ (8,248) 17,526
Dividends................................................................... (25,375) (19,977)
Issuance of Series B preferred stock........................................ 175,000 -
Exercise of stock options................................................... 15,057 145
----------- -----------
Net cash provided by financing activities....................................... 3,466,563 4,515,600
----------- -----------
Increase in cash and cash equivalents........................................... 186,189 39,320
Cash and cash equivalents at beginning of period................................ 273,164 158,831
----------- -----------
Cash and cash equivalents at end of period...................................... $ 459,353 $ 198,151
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
8
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
June 30, 1998
1. Basis of Presentation
The condensed consolidated financial statements include Donaldson, Lufkin &
Jenrette, Inc. and its subsidiaries ("DLJ" or the "Company"). All significant
intercompany balances and transactions have been eliminated. The Company is a
majority owned subsidiary of The Equitable Companies Incorporated and its
subsidiaries (together, "Equitable"). The Company's separate financial
statements reflect Equitable's cost basis established at the time of
Equitable's acquisition of the Company in 1985.
Certain financial information that is normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
but is not required for interim reporting purposes has been condensed or
omitted. These condensed consolidated financial statements reflect, in the
opinion of management, all adjustments (consisting of normal, recurring
accruals) necessary for a fair presentation of the condensed consolidated
financial position and results of operations for the interim periods presented.
The results of operations for interim periods are not necessarily indicative of
results for the entire year. These financial statements should be read in
conjunction with the consolidated financial statements and notes thereto as of
and for the year ended December 31, 1997 included on Form 10-K filed by the
Company under the Securities Exchange Act of 1934.
The preparation of condensed consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the condensed consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. Certain reclassifications have been made to prior year
financial statements to conform to the 1998 presentation.
2. Common Stock Split
In February 1998, the Board of Directors declared a two-for-one stock split
(the "stock split") of the Company's common stock, subject to stockholder
approval, to increase the number of authorized common shares. In April 1998,
stockholders approved an amendment to the Company's Certificate of
Incorporation whereby the amount of total authorized shares of common stock was
increased to 300 million shares and the amount of total authorized shares of
preferred stock was increased to 50 million. The stock split was effected in
the form of a 100% stock dividend to stockholders of record on April 27, 1998,
and was paid on May 11, 1998. The par value of the common stock remained at
$.10 per share. Accordingly, an adjustment from paid-in capital to common stock
was made to preserve the value of the post-split shares. All common share, per
common share, restricted stock unit and option data have been restated for the
effect of the stock split in the accompanying condensed consolidated financial
statements.
3. Income Taxes
Income taxes for interim period condensed consolidated financial statements
have been accrued using the Company's estimated effective tax rate. Federal
income taxes paid for the six months ended June 30, 1998 and 1997 were $14.7
and $45.2 million including net Federal income tax equivalents paid to
Equitable of $1.7 million and of $7.1 million, respectively for the same
period.
4. Borrowings
Short-term borrowings are generally demand obligations, at interest rates
approximating Federal fund rates from banks and other financial institutions.
Such borrowings are generally used to finance securities inventories, to
facilitate the financial instruments settlement process and to finance
financial instruments purchased by customers on margin. In January 1998, the
Company commenced a $1.0 billion commercial paper program. Obligations issued
thereunder (the "Notes") are exempt from registration under the Securities Act
of 1933, as amended. The Notes rank pari passu with the Company's other
unsecured and unsubordinated indebtedness. At June 30, 1998, $661.1 million of
Notes were outstanding under this program.
9
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Long-term borrowings, including current maturities of $1.1 million and $32.8
million at June 30, 1998 and December 31, 1997, respectively, consist of the
following: June 30, December 31, 1998 1997 (In thousands)
<TABLE>
<S> <C> <C>
Medium-term notes, 5.625%-6.90% due various dates through 2016.... $ 822,046 $ 697,310
Senior subordinated revolving credit agreement due in 2000......... - 325,000
Global floating rate notes, due in 2002............................ 348,133 347,909
Subordinated exchange notes, 9.58% due in 2003.................... 225,000 225,000
Senior notes, 6 7/8% due in 2005................................... 497,646 497,484
Senior notes, 6 1/2% due in 2008................................... 643,173 -
Other.............................................................. 27,208 35,456
----------- -----------
Total long-term borrowings.................................... $ 2,563,206 $ 2,128,159
=========== ===========
</TABLE>
During the six months ended June 30, 1998, the Company issued $650.0 million of
6 1/2% Senior Notes which mature in 2008 and $125.0 million medium-term notes
that bear interest at rates ranging from 6.11% - 6.28% and mature at various
dates through 2003.
In May 1998, the Company repaid its $325 million senior subordinated revolving
credit agreement and terminated the related credit facility.
Subordinated exchange notes due in 2003 include $20.0 million due to a
subsidiary of Equitable at June 30, 1998.
During the second quarter of 1998, the Company amended its $2.0 billion
revolving credit facility to increase the aggregate commitment of banks
thereunder to $2.75 billion, of which $1.65 billion may be unsecured. There
were no borrowings outstanding under this agreement at June 30, 1998.
Interest paid on all borrowings and financing arrangements amounted to $2.3
billion and $1.8 billion for the six months ended June 30, 1998 and 1997,
respectively.
5. Long-term Corporate Development Investments
Long-term corporate development investments represent the Company's involvement
in private debt and equity investments which generally have no readily
available market or may otherwise be restricted as to resale under the
Securities Act of 1933, as amended. Accordingly, these investments are carried
at estimated fair value as determined by the Finance Committee of the Board of
Directors. The cost of these investments was $459.7 million and $323.2 million
at June 30, 1998 and December 31, 1997, respectively. The decrease in net
unrealized depreciation for the six months ended June 30, 1998 and 1997
amounted to $2.0 million and $23.6 million, respectively. Changes in unrealized
appreciation (depreciation) arising from changes in fair value or upon
realization are reflected in revenues, principal transactions-net, investment
in the condensed consolidated statements of income.
6. Net Capital
The Company's principal wholly-owned subsidiary, Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJSC"), is a registered broker-dealer, a registered
futures commission merchant and member firm of The New York Stock Exchange,
Inc. (the "NYSE") and, accordingly, is subject to the minimum net capital
requirements of the Securities and Exchange Commission, NYSE and the
Commodities Futures Trading Commission. As such, it is subject to NYSE's net
capital rule which conforms to the Uniform Net Capital Rule pursuant to rule
15c3-1 of the Securities Exchange Act of 1934. Under the alternative method
permitted by this rule, the required net capital, as defined, shall not be less
than two percent of aggregate debit balances arising from customer
transactions, as defined, or four percent of segregated funds, as defined,
whichever is greater. The NYSE may also require a member firm to reduce its
business if its net capital is less than four percent of aggregate debit
balances and may prohibit a member firm from expanding its business and
declaring cash dividends if its net capital is less than five percent of
aggregate debit balances. At June 30, 1998, DLJSC's net capital of
approximately $929.1million was 14.6 percent of aggregate debit balances and in
excess of the minimum requirement by approximately $789.3 million.
10
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
Certain of the Company's London-based broker-dealer subsidiaries are subject to
the requirements of the Securities and Futures Authority, a self-regulatory
organization established pursuant to the United Kingdom Financial Services Act
of 1986. Other U.S. and foreign broker-dealer subsidiaries of the Company are
subject to net capital requirements of their respective regulatory agencies. At
June 30, 1998, the Company and its broker-dealer subsidiaries were in
compliance with all applicable regulatory capital adequacy requirements.
7. Earnings Per Share
Basic and diluted earnings per common share amounts have been calculated by
dividing earnings applicable to common shares (net income less preferred
dividends) by the weighted average common shares outstanding. Diluted earnings
per common share also include the dilutive effects of shares of common stock
issuable under the Restricted Stock Unit Plan and options under the treasury
stock method. All earnings per share amounts have been restated for the effect
of the stock split.
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per common share computations:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
--------- -------- --------- --------
(in thousands)
<S> <C> <C> <C> <C>
Earnings applicable to Common Shares-Basic $ 137,011 $ 97,230 $ 265,718 $180,396
Effect of Dilutive Securities:
Convertible Debt - 216 - 216
--------- -------- --------- --------
Earnings applicable to Common Shares- Diluted $ 137,011 $ 97,446 $ 265,718 $180,612
========= ======== ========= ========
Weighted Average Common Shares- Basic 117,394 110,234 116,244 109,180
Effect of Dilutive Securities:
Restricted Stock Units 1,929 6,522 2,746 7,577
Stock Options 11,338 5,980 10,805 5,188
Convertible Debt - 1,370 - 689
--------- -------- --------- --------
Weighted Average Common Shares- Diluted 130,661 124,106 129,795 122,634
========= ======== ========= ========
</TABLE>
8. Stockholders' Equity
In January 1998, the Company issued 3.5 million shares of Fixed/Adjustable Rate
Cumulative Preferred Stock, Series B, with a liquidation preference of $50 per
share ($175.0 million aggregate liquidation value). Dividends are payable
quarterly at a rate of 5.30% per annum, subject to adjustment after January
2003.
In February 1998, approximately 4.4 million restricted stock units (after
giving effect to the stock split) vested and were converted into the Company's
common stock from the authorized and unissued shares. Approximately 1.95
million of such shares (after giving effect to the stock split) were deposited
in a grantor trust pursuant to the Executive Deferred Compensation Plan.
In July 1998, the Company sold an aggregate of five million shares of newly
issued common stock to Equitable and AXA Holdings (Belgium), an affiliate of
AXA UAP for $300.0 million in a transaction exempt from the registration
requirement of the Securities Act of 1933, under Section 4(2). As a result,
Equitable and its affiliates beneficial ownership of the Company increased to
approximately 73 percent on an undiluted basis.
11
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
9. Comprehensive Income
The components of comprehensive income for the three and six months ended June
30, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
--------- --------- --------- ---------
(In thousands)
<S> <C> <C> <C> <C>
Net income................................................. $ 142,300 $ 100,200 $ 276,450 $ 186,600
Other comprehensive income:
Foreign currency translation adjustments................. 150 988 (412) 1,671
--------- --------- --------- ---------
Total comprehensive income................................. $ 142,450 $ 101,188 $ 276,038 $ 188,271
========= ========= ========= =========
</TABLE>
10. Derivative Financial Instruments
The Company enters into certain contractual agreements referred to as
derivatives or off-balance sheet financial instruments involving options,
forwards and futures and swap agreements. Substantially all of the Company's
activities related to derivatives are, by their nature, trading activities
which are primarily for the purpose of customer accommodations. The Company's
option activities consist primarily of writing over-the-counter ("OTC") options
to accommodate its customers' needs. Forward and futures contracts primarily
represent commitments to purchase or sell U.S. government and agency issued or
guaranteed securities, money market instruments and foreign currency. The
Company enters into swap transactions to manage foreign currency, interest rate
and equity risks. The Company's involvement in commodity derivative instruments
is not significant. Although the Company may enter into certain derivative
instruments to provide an economic hedge against certain risks, all realized
and unrealized gains and losses on these instruments are recorded currently in
the condensed consolidated statements of income.
Accounting Policies for Derivatives
Changes in unrealized gains or losses as well as realized gains and losses at
settlement on all derivative instruments (options, forward and futures
contracts and swaps) are included in the condensed consolidated statements of
income in principal transactions-net, trading. Related offsetting amounts are
presented as receivables or payables from brokers, dealers and other in the
condensed consolidated statements of financial condition. Fair value of certain
options includes the unamortized premiums which are deferred and are included
in payables to brokers, dealers and other in the condensed consolidated
statements of financial condition. Such premiums are recognized over the life
of the option contracts on a straight-line basis. Cash flows from derivative
instruments are presented as operating activities in the condensed consolidated
statements of cash flows.
The Company also enters into swap transactions as an end-user for non-trading
purposes to modify the interest rate and foreign currency exposure associated
with certain liabilities and assets. Such transactions are accounted for on an
accrual basis. Under the accrual basis, the net amount to be received or paid
under the swap agreement is accrued as part of interest expense in the
condensed consolidated statements of income.
Options contracts are typically written for a duration of less than 13 months.
The notional (contract) values of written options contracts outstanding was
approximately $7.9 billion and $5.4 billion at June 30, 1998 and December 31,
1997, respectively. Such options contracts are substantially covered by various
financial instruments that the Company has purchased or sold on a proprietary
basis.
The notional amounts of forward and futures contracts are treated as
off-balance sheet items. The notional contract and market values of such
contracts at June 30, 1998 and December 31, 1997, were as follows:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
Purchases Sales Purchases Sales
--------- ----- --------- -----
(In millions)
<S> <C> <C> <C> <C>
Forward Contracts
(Notional Contract Value)....................................... $ 33,814 $ 37,750 $ 18,366 $ 27,028
======== ======== ======== ========
Futures Contracts and Options on Futures Contracts
(Market Value)................................................. $ 1,560 $ 3,441 $ 988 $ 2,767
======== ======== ======== ========
</TABLE>
12
<PAGE>
DONALDSON, LUFKIN & JENRETTE, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
The notional (contract) value of swap agreements was approximately $2.1 billion
and $553.8 million at June 30, 1998 and December 31, 1997, respectively.
The notional or contract amounts indicate the extent of the Company's
involvement in the derivative instruments noted above. They do not measure the
Company's exposure to market or credit risk and do not represent the future
cash requirements of such contracts.
11. Commitments and Contingencies
At June 30, 1998, the Company was contingently liable for unsecured letters of
credit of approximately $258.2 million.
The Company has outstanding commitments, expiring on March 16, 2000, to provide
financings to third parties in the total amount of $150.0 million which would
be secured by mortgage loans on real estate properties. At June 30, 1998,
unfunded commitments outstanding under this facility amounted to $53.5 million.
In addition, the Company enters into commitments to extend credit in connection
with the origination and syndication of senior bank debt of non-investment
grade borrowers. At June 30, 1998, unfunded senior bank loan commitments
outstanding amounted to $514.7 million.
The Company has commitments to invest on a side by side basis with merchant
banking partnerships in the amount of $781.0 million at June 30, 1998.
As a securities broker and dealer, risk is an inherent part of the Company's
business activities. The principal types of risks involved in the Company's
activities are market risk, credit or counterparty risk and transaction risk.
The Company has developed an infrastructure designed to control, monitor and
manage each type of risk. For a further discussion of these matters, refer to
Notes 8, 9 and 10 of the Consolidated Financial Statements in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
12. Legal Proceedings
Certain significant legal proceedings and matters have been previously
disclosed in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997. With respect to the litigation in the National Gypsum case,
DLJSC has appealed the Bankruptcy Court's ruling in January 1998 that the State
Court plaintiff's claims were not barred by the NGC plan of reorganization
insofar as they alleged nondisclosure of certain cost reductions. On May 7,
1998, DLJSC and others were named as defendants in a second action filed in a
Texas State Court brought by the NGC Settlement Trust. The allegations of this
second Texas State Court action are substantially similar to those of the
earlier class action pending in State Court.
In addition to the significant proceedings and matters referred to above, the
Company has been named as a defendant in a number of actions relating to its
various businesses including various civil actions and arbitrations arising out
of its activities as a broker-dealer in securities, as an underwriter and as an
employer and arising out of alleged employee misconduct. Some of the actions
have been brought on behalf of various classes of claimants and seek damages of
material or indeterminate amounts. The Company is also involved, from time to
time, in proceedings with, and investigations by, governmental agencies and
self regulatory organizations. Although there can be no assurance that such
other actions, proceedings, investigations and litigation will not have a
material adverse effect on the results of operations of the Company in any
future period, depending in part on the results for such period, in the opinion
of management of the Company the ultimate resolution of any such other actions,
proceedings, investigations and litigation against the Company will not have a
material adverse effect on the consolidated financial condition and/or results
of operations of the Company.
13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following analysis of the consolidated results of operations and financial
condition of Donaldson, Lufkin & Jenrette, Inc. and Subsidiaries (the
"Company") should be read in conjunction with the Condensed Consolidated
Financial Statements and the related Notes to Condensed Consolidated Financial
Statements included elsewhere herein, and with the Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's 1997 Annual Report on Form 10-K.
BUSINESS ENVIRONMENT
The Company's principal business activities, investment and merchant
banking, securities sales and trading and correspondent brokerage services are,
by their nature, highly competitive and subject to general market conditions,
volatile trading markets and fluctuations in the volume of market activity.
Consequently, the Company's net income and revenues have been and are likely to
continue to be, subject to wide fluctuations, reflecting the impact of many
factors beyond the Company's control including securities market conditions,
the level and volatility of interest rates, competitive conditions and the size
and timing of transactions.
The U.S. economy remained strong for the first six months of 1998,
despite potential weakening due to the spillover from Asia's economic crisis.
U.S. interest rates and inflation remained low, with the last increase in
interest rates by the Federal Reserve Board occurring in March 1997. The bond
markets rallied during the latter half of the second quarter when the 30-year
Treasury bond reached new record lows. Underwriting volumes for both equity and
high-yield strengthened over the prior year due to increased stock prices and
attractive yields. Trading activity on major exchanges continued to increase to
record volume levels. The Dow Jones Industrial Average and Standard & Poor's
500 Index increased 13.2% and 16.8%, respectively for the first six months of
1998.
Global financial market conditions were generally favorable during the quarter.
European interest rates and currencies have stabilized in anticipation of
economic and monetary union ("EMU"). However, U.S. interest rate policy will
continue to be a primary factor in determining whether the European capital
markets will remain buoyant.
RECENT DEVELOPMENTS
During the six months ended June 30, 1998, the Company issued $650.0
million of 6 1/2% Senior Notes and $125.0 million medium-term notes that bear
interest at rates ranging from 6.11%-6.28%. In addition, the Company repaid its
$325 million senior subordinated revolving credit agreement and terminated the
related facility.
In July 1998, the Company sold an aggregate of five million shares of
newly issued common stock to Equitable and AXA Holdings (Belgium), an affiliate
AXA UAP for $300.0 million in a transaction exempt from the registration
requirement of the Securities Act of 1933, under Section 4(2). As a result,
Equitable and its affiliates beneficial ownership of the Company increased to
approximately 73 percent on an undiluted basis.
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 1998 COMPARED TO QUARTER ENDED JUNE 30, 1997
Total revenues for the quarter ended June 30, 1998 were $1.6 billion,
an increase of $495.6 million or 46.7% over the quarter ended June 30, 1997.
Revenues increased in the second quarter of 1998 due primarily to an increase
in net interest income, underwriting and fees.
Commission revenues increased by $43.6 million or 27.5% to $201.9
million due to increased business in all areas and is generally consistent with
the overall growth in listed share volume on major equity exchanges.
Underwriting revenues increased by $171.1 million or 94.3% to $352.7
million. The Company and the industry experienced increases in equity, fixed
income and high-yield underwriting during the second quarter of 1998.
Fee revenues increased by $141.7 million or 80.2% to $318.4 million.
Overall, merger and acquisition, asset management and other advisory services
activities have increased during the second quarter of 1998.
Interest, net of interest expense to finance U.S. government, agency
and mortgage-backed securities, increased by $220.3 million or 59.5% to $590.3
million. The largest increases took place in the stock loan/borrowed business.
In addition, there were increases in domestic and foreign margin balances and
higher levels of fixed-income securities in the Company's Fixed Income and
Emerging Markets business. The Emerging Markets business operates under a
trading strategy whereby profits are realized as net interest revenues rather
than as trading gains.
14
<PAGE>
Principal transactions-net, trading revenues decreased by $62.5
million or 67.3% to $30.4 million, primarily from the emerging markets trading
strategy referred to above. Such decreases are offset by the increases in net
interest revenues from the Company's Emerging Markets business.
Principal transactions-net, investment revenues decreased by $16.3
million or 25.7% to $47.2 million. Realized gains on investments were $50.9
million. Net unrealized carrying values decreased by $3.7 million, which
includes the elimination of net unrealized depreciation of $1.1 million on
investments sold and an increase in net unrealized depreciation of $4.8 million
on retained investments.
Other revenues, consisting primarily of dividends and miscellaneous
transaction revenues, decreased by $2.4 million or 13.0% to $15.8 million.
Total costs and expenses for the second quarter of 1998 were $1.3
billion, an increase of $432.1 million or 48.3% over the second quarter of
1997.
Compensation and benefits increased $230.6 million or 52.1% to $673.0
million. Incentive and production-related compensation increased by 55.5% in
1998 due to higher revenues and operating results. Base compensation, including
benefits and all payroll taxes, increased by 42.2% due to continued hiring of
senior level executives in various business groups. At June 30, 1998, full-time
personnel totaled 7,710 compared to 6,468 at June 30, 1997, an increase of
1,242 or 19.2 %.
Interest expense increased $131.2 million or 53.1% to $378.2 million.
Most of this increase was related to the financing of domestic and foreign
stock loan/borrowed business as well as expanded levels of inventory of
fixed-income related products including foreign local fixed-income securities.
All other expenses, as noted below, increased by $70.2 million or
34.3% to $275.0 million for the second quarter of 1998.
Brokerage, clearing, exchange fees and other expenses increased by
$21.6 million due to increased volume related expense and underwriting
activity. Occupancy and equipment costs increased by $19.3 million as a result
of the expansion of the Company's principal office in the U.S. and the
expansion of the Company's other domestic and overseas offices. Communications
costs increased by $5.7 million due to expanded facilities and growth in
professional staff. All other operating expenses increased by $23.6 million.
Included therein are professional fees, travel and entertainment, and printing
and stationery which increased due to an overall increase in the level of
business activity. Data processing costs increased due to expansion of the
Company's international operations and the implementation and development of
new systems. In addition, these costs increased due to the overhaul of the
online customer trading and information system for the Company's correspondent
brokerage network as well as costs relating to the Year 2000 project.
The Company's income tax provision for the second quarter of 1998 and
1997 was $88.2 million and $66.8 million, respectively, which represented a
38.3% and 40% effective tax rate, respectively.
Net income for the quarter ended June 30, 1998 was $142.3 million, up
$42.1 million or 42.0% from the comparable 1997 period. Basic and diluted
earnings per common share using the treasury stock method were $1.17 and $1.05
and $0.88 and $0.79 for the second quarter of 1998 and 1997, respectively.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997
Total revenues for the six months ended June 30, 1998 were $3.1
billion, an increase of $1.0 billion or 49.3% over the six months ended June
30, 1997. Revenues increased primarily due to increases in fees and net
interest income during 1998.
Commission revenues increased by $73.8 million or 22.6% to $400.5
million due to increased business in all areas and is generally consistent with
the overall growth in listed share volume on major equity exchanges.
Underwriting revenues increased by $316.1 million or 88.5% to $673.5
million. The Company and the industry experienced increases in equity fixed
income and high yield underwriting during the six months ended June 30, 1998.
Fee revenues increased by $251.0 million or 77.7% to $573.8 million.
Overall, merger and acquisition, asset management and other advisory services
activities have increased during the first six months of 1998.
Interest, net of interest expense to finance U.S. government, agency
and mortgage-backed securities, increased by $465.3 million or 67.5% to $1.2
billion. The largest increases took place in the stock loan/borrowed business.
In addition, there were increases in domestic and foreign margin balances and
higher levels of foreign fixed-income securities in the Company's Fixed Income
and Emerging Markets business. The Emerging Markets business operates under a
trading strategy whereby profits are realized as net interest revenues rather
than as trading gains.
15
<PAGE>
Principal transactions-net, trading revenues decreased by $112.6
million or 45.5% to $134.7 million primarily from the emerging markets trading
strategy referred to above. Such decreases are offset by the increases in net
interest revenues from the Company's Emerging Markets business.
Principal transactions-net, investment revenues increased by $24.1
million or 37.5% to $88.5 million. Realized gains on investments were $86.5
million. Net unrealized carrying values increased by $2.0 million, which
includes the elimination of net unrealized depreciation of $5.4 million on
investments sold and an increase in net unrealized depreciation of $3.4 million
on retained investments.
Other revenues, consisting primarily of dividends and miscellaneous
transaction revenues, decreased by $10.1 million or 29.6% to $24.2 million.
Total costs and expenses for the six months ended June 30, 1998 were
$2.6 billion, an increase of $870.8 million or 50.3% over the six months ended
1997. During 1998, the Company launched an international equities group, opened
an office in Moscow and established a high-yield business in London. In
addition, the Investment Banking Group expanded coverage in the financial
services, technology and telecommunications industries.
Compensation and benefits increased $451.3 million or 52.1% to $1.3
billion. Incentive and production-related compensation increased by 55.2% in
1998 due to higher revenues and operating results. Base compensation, including
benefits and all payroll taxes, increased by 43.0% due to the hiring of more
senior level executives in various business groups. In addition, the first
quarter of 1998 includes a $29 million one-time provision for costs associated
primarily with the Company's plans for significant expansion in Europe.. At
June 30, 1998, full-time personnel totaled 7,710 compared to 6,468 at June 30,
1997, an increase of 1,242 or 19.2%.
Interest expense increased $286.9 million or 61.7% to $752.1 million.
Most of this increase was related to the financing of Pershings domestic and
foreign stock loan/borrowed business as well as expanded levels of inventory of
fixed-income related products including foreign local fixed-income securities.
All other expenses, as noted below, increased by $132.6 million or
33.1% to $533.3 million for the first six months of 1998.
Brokerage, clearing, exchange fees and other expenses increased by
$19.5 million due to increased share volume and transaction fee payments.
Occupancy and equipment costs increased by $38.7 million as a result of the
expansion of the Company's principal office in the U.S. and the expansion of
the Company's other domestic and overseas offices. Communications costs
increased by $11.4 million due to expanded facilities and growth in
professional staff. All other operating expenses increased by $63.0 million.
Included therein are professional fees, travel and entertainment, and printing
and stationery which increased due to an overall increase in the level of
business activity. Data processing costs increased due to expansion of the
Company's international operations and the implementation and development of
new systems. In addition, these costs increased due to the overhaul of the
online customer trading and information system for the Company's correspondent
brokerage network as well as costs relating to the Year 2000 project.
The Company's income tax provision for the six months ended June 30,
1998 and 1997 was $171.3 million and $124.4 million, respectively, which
represented a 38.3% and 40% effective tax rate, respectively.
Net income for the six months ended June 30, 1998 was $276.5 million,
up $89.9 million or 48.2% from the comparable 1997 period. Basic and diluted
earnings per common share using the treasury stock method were $2.29 and $2.05
and $1.65 and $1.47 for the six months ended June 30, 1998 and 1997,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
The Company's assets are highly liquid with the majority consisting of
securities inventories and collateralized receivables, both of which fluctuate
depending on the levels of proprietary trading and customer business. Such
collateralized receivables consist primarily of resale agreements and
securities borrowed, both of which are secured by U.S. government and agency
securities, and marketable corporate debt and equity securities. In addition,
the Company has significant receivables from customers, brokers and dealers
which turn over frequently. As a securities dealer, the Company may carry
significant levels of trading inventories to meet client needs. As such, the
Company's total assets or the individual components of total assets vary
significantly from period to period because of changes relating to customer
needs, economic and market conditions and proprietary trading strategies. A
relatively small percentage of total assets is fixed or held for a period of
longer than one year. The Company's total assets at June 30, 1998 and December
31, 1997 were $79.6 billion and $70.5 billion, respectively.
The majority of the Company's assets are financed through daily
operations by repurchase agreements, financial instruments sold not yet
purchased, securities loaned, bank loans, and through payables to brokers and
dealers. Short-term funding is generally obtained at rates related to Federal
funds, LIBOR and money market rates. Other borrowing costs are negotiated
depending upon prevailing market conditions. The Company monitors
16
<PAGE>
overall liquidity by tracking the extent to which unencumbered marketable
assets exceed short-term unsecured borrowings.
During the second quarter of 1998, the Company amended its $2.0
billion revolving credit facility to increase the aggregate commitment of banks
thereunder to $2.75 billion, of which $1.65 billion may be unsecured. There
were no borrowings outstanding under this agreement at June 30, 1998.
Certain of the Company's businesses are capital intensive. In addition
to normal operating requirements, capital is required to cover financing and
regulatory charges on securities inventories, merchant banking investments and
investments in fixed assets. The Company's overall capital needs are
continually reviewed to ensure that its capital base can appropriately support
the anticipated needs of its business units as well as the regulatory capital
requirements of subsidiaries. Based upon these analyses, management believes
that the Company's debt and equity base is adequate for current operating
levels. The Company has been active in raising additional long-term financing,
including the issuance of $650.0 million of 6 1/2% Senior Notes and $125.0
million medium-term notes during the six months ended June 30, 1998. In
addition, in May 1998, the Company repaid its $325 million senior subordinated
revolving credit agreement and terminated the related credit facility.
In January 1998, the Company issued 3.5 million shares of
Fixed/Adjustable Rate Cumulative Preferred Stock, Series B, with a liquidation
preference of $50 per share ($175.0 million aggregate liquidation value).
In January 1998, the Company commenced a $1.0 billion commercial paper
program. Obligations issued thereunder (the "Notes") are exempt from
registration under the Securities Act of 1933, as amended. The Notes rank pari
passu with the Company's other unsecured and unsubordinated indebtedness. At
June 30, 1998, the $661.1 million of Notes were outstanding under this program.
The Company's current credit ratings of its long-term debt and commercial paper
are as follows:
Long-Term Debt Commercial Paper
-------------- ----------------
Duff & Phelps A D-1
Fitch IBCA A F-1
Moody's A3 P-2
Standard & Poors A- A-2
Thomson Bank Watch A+ TBW-1
The Company's principal wholly-owned subsidiary, Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC") is subject to the capital
requirements of the Securities and Exchange Commission, the New York Stock
Exchange, Inc., the Commodities Futures Trading Commission and the Chicago
Board of Trade, all of which should ensure the general capital adequacy and
liquidity of broker-dealers and/or futures commission merchants. DLJSC has
consistently maintained capital substantially in excess of the minimum
requirements of such capital rules. At June 30, 1998, DLJSC had aggregate
regulatory "net capital," after adjustments required by Rule 15c3-1 under the
Securities Exchange Act of 1934, of approximately $929.1 million, which
exceeded minimum net capital requirements by $789.3 million and which exceeded
the net capital required by DLJSC's most restrictive debt covenants by $514.7
million. Certain of the Company's London-based broker-dealer subsidiaries are
subject to the requirements of the Securities and Futures Authority, a
self-regulatory organization established pursuant to the United Kingdom
Financial Services Act of 1986. Other U.S. and foreign broker-dealer
subsidiaries of the Company are subject to net capital requirements of their
respective regulatory agencies. At June 30, 1998, the Company and its
broker-dealer subsidiaries were in compliance with all applicable regulatory
capital adequacy requirements.
The Company's overall capital and funding needs are continually
reviewed to ensure that its capital base can support the estimated needs of its
business units.
The Company continues to explore potential acquisition opportunities
as a means of expanding its business. Such opportunities may involve
acquisitions which are material in size and may require the raising of
additional capital.
CASH FLOWS
The Company's condensed consolidated statements of cash flows classify
cash flow into three broad categories: cash flows from operating activities,
investing activities and financing activities. The Company's net cash flows are
principally associated with operating and financing activities, which support
the Company's trading, customer and banking activities.
Six Months Ended June 30, 1998 and 1997
Cash and cash equivalents at June 30, 1998 and 1997, totaled $459.4
million and $198.2 million, respectively, an increase of $186.2 million and
$39.3 million, respectively for the comparable periods.
17
<PAGE>
Cash used in operating activities totaled $2.8 billion and $4.3
billion for the six months ended June 30, 1998 and 1997, respectively, and
reflects primarily an increase in operating assets. In the first six months of
1998, there were increases in assets including securities borrowed of $3.6
billion, receivables from customers of $2.3 billion and financial instruments
owned of $2.3 billion. These increases were partially offset by increases in
liabilities including financial instruments sold not yet purchased of $2.5
billion and payables to brokers, dealers and other of $1.7 billion. In the
first six months of 1997, there were increases in assets including securities
borrowed of $4.4 billion, financial instruments owned of $1.9 billion and
receivables from brokers, dealers and other of $1.5 billion. These increases
were partially offset by increases in securities loaned of $1.7 billion,
financial instruments sold not yet purchased of $1.4 billion and payables to
customers of $1.1 billion.
For the six months ended June 30, 1998 and 1997, cash of $475.9
million and $173.4 million, respectively, was used in investing activities.
These generally consist of purchases of long-term corporate development
investments and office facilities. Additionally, in 1997, cash was used for the
purchase of net assets related to the Phoenix acquisition.
For the first six months of 1998 and 1997, net cash provided by
financing activities totaled $3.5 billion and $4.5 billion, respectively, of
which, $2.9 billion and $4.3 billion was provided by short-term financings
(principally repurchase agreements). Additionally, in 1998, $643.1 million was
provided by the issuance of Senior Notes, $175.0 million was provided from the
issuance of Series B preferred stock and $325.0 million was used to repay the
Company's senior subordinated revolving credit facility.
DERIVATIVE FINANCIAL INSTRUMENTS
The Company's derivative activities are not as extensive as many of
its competitors. Instead, the Company has focused its derivative activities on
writing over-the-counter ("OTC") options contracts to accommodate its
customers' needs, trading in forward contracts in U.S. government and agency
issued or guaranteed securities, trading in futures contracts on equity-based
indices, interest rate instruments and foreign currencies and entering into
swap transactions. As a result, the Company's involvement in derivative
products is related primarily to revenue generation through the provision of
products to its clients as opposed to covers of the Company's own positions.
The Company's involvement in commodity derivative instruments is not
significant.
Options Contracts:
Options contracts are typically written for a duration of less than 13
months. Revenues from these activities (net of related interest expenses) were
approximately $40.8 million and $42.2 million for the six months ended June 30,
1998 and 1997, respectively. Option writing revenues are primarily from the
amortization of option premiums.
The notional value of written options contracts outstanding was
approximately $7.9 billion and $6.5 billion at June 30, 1998 and 1997,
respectively. Such written options contracts are substantially covered by
various financial instruments that the Company has purchased or sold as
principal. The overall increase in the notional value of all options was due
primarily to increases in customer activity related to U.S. government and
mortgage-backed securities and currency forward contracts.
Forward and Futures Contracts:
As part of the Company's trading activities, including trading
activities in the related cash instruments, the Company enters into forward and
futures contracts primarily involving securities, foreign currencies, indices
and forward rate agreements, as well as options on futures contracts. Such
forward and futures contracts are entered into as part of the Company's
covering transactions and generally are not used for speculative purposes.
Net trading gains (losses) on forward contracts were $45.5 million and
$(47.7) million and net trading losses on futures contracts were $(26.2)
million and $(25.7) million for the six months ended June 30, 1998 and 1997,
respectively.
The notional contract and market values of the forward and futures
contracts at June 30, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
------------- -------------
Purchases Sales Purchases Sales
--------- ----- --------- -----
(In millions)
<S> <C> <C> <C> <C>
Forward Contracts
(Notional Contract Value)................ $ 33,814 $ 37,750 $ 15,622 $ 20,572
======== ======== ========= ========
Futures Contracts and Options on
Futures Contracts (Market Value)......... $ 1,560 $ 3,441 $ 2,669 $ 5,668
======== ========= ========= ========
</TABLE>
18
<PAGE>
Swap Agreements:
The Company enters into swap agreements to manage foreign currency,
interest rate and equity risk.
The notional (contract) value of swap agreements was approximately $2.1
billion at June 30, 1998. The Company's involvement in swap contracts at June
30, 1997 was not significant.
The notional or contract amounts indicate the extent of the Company's
involvement in the derivative instruments noted above. They do not measure the
Company's exposure to market or credit risk and do not represent the future
cash requirements of such contracts.
MERCHANT BANKING AND BRIDGE LENDING ACTIVITIES
The Company's merchant banking activities include investments in
various partnerships, for which subsidiaries of the Company act as general
partner, as well as direct investments in connection with its merchant banking
activities. As of June 30, 1998 the Company had investments of $370.1 million
and has commitments to invest up to an additional $781.0 million in connection
with these merchant banking activities.
The Company is the sponsor of the $1.25 billion DLJ Bridge Fund which
provides short-term loans in connection with DLJ's merchant banking and
financial advisory businesses. The Bridge Fund has a commitment of subordinated
debt from Equitable. Any loans made by the DLJ Bridge Fund would be expected to
be refinanced, and the outstanding amounts repaid, within a short-term period.
At June 30, 1998, the DLJ Bridge Fund had extended $337.1 million of short-term
bridge loans.
HIGH-YIELD AND OTHER NON-INVESTMENT GRADE DEBT
The Company participates in the underwriting, trading, sales and
holding of high-yield and other non-investment-grade debt. Non-investment-grade
debt is defined as loans to companies rated BB+ or lower as well as non-rated
loans. These instruments generally involve greater risk than investment-grade
debt holdings due to credit considerations, liquidity of secondary trading
markets and vulnerability to general economic conditions. In the second quarter
of 1998, the Company's high-yield and other non-investment grade debt increased
due to the demand for higher-yielding instruments, expansion of the Company's
senior bank debt activities and increased investment activities of the Emerging
Markets Division.
The Company accounts for its high-yield financial instruments at
market value and other non-investment grade holdings generally at market or
fair value, with unrealized gains and losses recognized currently in earnings.
At June 30, 1998 and December 31, 1997 the Company had long and short financial
instruments (excluding derivatives and structured notes) as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------------ ------------------
(In millions)
Long Short Long Short
---- ----- ---- -----
<S> <C> <C> <C> <C>
High-Yield Debt............................ $ 829.9 $ 375.8 $ 645.6 $ 389.6
Senior Bank Debt........................... 1,126.2 - 864.1 -
Foreign Sovereign Debt..................... 1,995.7 317.4 1,615.4 543.3
Mortgage Whole Loans ...................... 921.3 - 1,555.7 -
Convertible Debt........................... 396.1 16.6 320.3 3.1
Other Non-Investment Grade................. 127.5 26.9 44.4 4.9
--------- ------- --------- -------
Totals...................................... $ 5,396.7 $ 736.7 $ 5,045.5 $ 940.9
========= ======= ========= =======
</TABLE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
RISK MANAGEMENT AND VALUE AT RISK
For a description of the Company's risk management policies and
procedures and value-at-risk ("VAR") model, including such model's assumptions
and limitations, refer to the Management's Discussion and Analysis of Financial
Condition and Results of Operations included in the Company's 1997 Annual
Report on form 10-K.
19
<PAGE>
The Company-wide VAR was approximately $19 million and $11 million at June 30,
1998 and December 31, 1997, respectively. The Company-wide VAR is less than the
sum of the individual components below due to the benefit of diversification
among the risks presented below. The VAR for the three main components of
market risk, expressed in terms of theoretical fair values at June 30, 1998 and
December 31, 1997 is as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------------- ---------------
(In millions)
<S> <C> <C>
Interest rate risk......................... $ 9 $ 8
Equity risk................................ $ 16 $ 8
Foreign currency exchange risk............. $ 4 $ 1
</TABLE>
YEAR 2000
As a result of the Company's recent expansion, entry into new product
markets and its move to new corporate headquarters, many of the Company's newer
communications and data processing systems are Year 2000 compliant. The
Company, however, has undertaken a project to identify and modify non-Year 2000
compliant communications and data processing systems in anticipation of the
Year 2000. Many of the non-Year 2000 compliant systems process transactions
using two-digit date fields for the year of a transaction, rather than the full
four digits. If these systems are not identified and reconfigured, Year 2000
transactions would be processed as year "00," which could lead to processing
inaccuracies and potential inoperability and could have a material adverse
effect on the Company's business. At the present time, the Company expects that
most of its significant Year 2000 corrections should be tested and in
production by the end of 1998. Full integration testing of these systems and
testing of interfaces with third party providers will continue through 1999.
However, there can be no assurance that such schedule will be met or the
systems of other companies on which the Company's business is dependent also
will be timely converted or that any such failure to convert by another company
would not have an adverse effect on the Company's business. The total cost of
the project through the end of 1998 is currently estimated to be between $80
and $90 million. Costs related to this project are expensed and the Company has
incurred approximately $63 million of such costs at June 30, 1998.
RECENT ACCOUNTING DEVELOPMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities," which requires
all derivatives to be recognized in the statement of financial condition at
fair value. SFAS No. 133 is effective for fiscal years beginning after June 15,
1999 and should be applied prospectively. Earlier application is permitted.
Since most of the Company's derivatives are carried at fair value, the adoption
of this statement is not expected to have a material impact on the Company's
results of operations or its consolidated statement of financial condition.
FORWARD-LOOKING STATEMENTS
The Company has made in this report, and from time to time may otherwise make
in its public filings, press releases and discussions with Company management,
forward looking statements concerning the Company's operations, economic
performance and financial condition. Such forward looking statements are
subject to various risks and uncertainties and the Company claims the
protection afforded by the safe harbor for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995. Actual results could
differ materially from those currently anticipated due to a number of factors
in addition to those discussed elsewhere herein and in the Company's other
public filings, press releases and discussions with Company management,
including (i) the volatile nature of the securities business, (ii) the
competitive nature of the securities business, (iii) the effect of extensive
federal, state and foreign regulation on the Company's business, (iv) market,
credit and liquidity risks associated with the Company's underwriting,
securities trading, market-making and arbitrage activities, (v) potential
losses that could result from the Company's merchant banking activities as a
result of its capital intensive nature, (vi) risks associated with the
Company's use of derivative financial instruments, (vii) the availability of
adequate financing to support the Company's business, (viii) potential
restrictions on the business of, and withdrawal of capital from, certain
subsidiaries of the Company due to net capital requirements (ix) potential
liability under federal and state securities and other laws and (x) the effect
of any future acquisitions.
20
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Certain significant legal proceedings and matters have been previously
disclosed in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997. With respect to the litigation involving Dayton Monetary
Associates and Charles Davison, DLJSC's motions for summary judgments were
denied in April 1998. In the National Gypsum case, DLJSC has appealed the
Bankruptcy Court's ruling in January 1998 that the State Court plaintiff's
claims were not barred by the NGC plan of reorganization insofar as they
alleged nondisclosure of certain cost reductions. On May 7, 1998, DLJSC and
others were named as defendants in a second action filed in a Texas State Court
brought by the NGC Settlement Trust. The allegations of this second Texas State
Court action are substantially similar to those of the earlier class action
pending in State Court.
In addition to the significant proceedings and matters referred to
above, the Company has been named as a defendant in a number of actions
relating to its various businesses including various civil actions and
arbitrations arising out of its activities as a broker-dealer in securities, as
an underwriter and as an employer and arising out of alleged employee
misconduct. Some of the actions have been brought on behalf of various classes
of claimants and seek damages of material or indeterminate amounts. The Company
is also involved, from time to time, in proceedings with, and investigations
by, governmental agencies and self regulatory organizations. Although there can
be no assurance that such other actions, proceedings, investigations and
litigation will not have a material adverse effect on the results of operations
of the Company in any future period, depending in part on the results for such
period, in the opinion of management of the Company the ultimate resolution of
any such other actions, proceedings, investigations and litigation against the
Company will not have a material adverse effect on the consolidated financial
condition and/or results of operations of the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On July 22, 1998, the Company sold an aggregate of five million shares
of newly issued common stock to its parent companies, The Equitable Companies
Incorporated, Equitable Life Assurance Society of the United States and AXA
Holdings (Belgium), an affiliate of AXA UAP in a private placement. Proceeds
from the sale were $300 million. The shares are exempt from registration under
Section 4(2) of the Securities Act of 1933.
21
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
3.1 Amended and Restated Certificate of Incorporation. (Incorporated herein
by reference to Exhibit 3.1 to the Company's Quarterly Report on
Form 10-Q for the period ended March 31, 1998.)
3.2 By-Laws. (Incorporated herein by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-1, File No. 33-96276).
4.1 Certificate of Designation of 3,500,000 shares of Fixed/Adjustable Rate
Cumulative Preferred Stock, Series B. (Incorporated herein by reference
to Exhibit 99.1 to the Company's Form 8-K, dated January 8, 1998;
Item 5).
10.85 Purchase and Sale Agreement, dated July 16, 1998 among the Company, The
Equitable Companies Incorporated and AXA Holdings (Belgium).
10.91 First Amended and Restated Credit Agreement, dated May 29, 1998 among
the Company, a syndicate of banks, Chase Securities, Inc. the Chase
Manhattan Bank, the Bank of New York and The First National Bank of
Chicago.
10.92 Agreement of Lease between USF Nominees Limited, Landlord, DLJ UK
Properties Limited, Tenant, 111 Old Broad Street, London and the
Company, Surety, dated as of June 3, 1998.
10.93 Sublease Agreement between Furman Selz, LLC, Sublandlord and the
Company, Subtenant, 280 Park Avenue, New York, New York, dated as of
June 16, 1998.
11 Statement re: computation of basic earnings per share.
11.1 Statement re: computation of diluted earnings per share.
27 Financial Data Schedule
(b) Reports on Form 8-K
1. Form 8-K dated June 22, 1998; Items 5 and 7
22
<PAGE>
Signature
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.
DONALDSON, LUFKIN & JENRETTE, INC.
August 14, 1998 /s/ Anthony F. Daddino
------------------------------
Anthony F. Daddino
Executive Vice President and Chief
Financial Officer
(On behalf of the Registrant and as
Principal Financial Officer)
23
<PAGE>
EXHIBIT INDEX
3.1 Amended and Restated Certificate of Incorporation. (Incorporated herein
by reference to Exhibit 3.1 to the Company's Quarterly Report on
Form 10-Q for the period ended March 31, 1998.)
3.2 By-Laws. (Incorporated herein by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-1, File No. 33-96276).
4.1 Certificate of Designation of 3,500,000 shares of Fixed/Adjustable Rate
Cumulative Preferred Stock, Series B. (Incorporated herein by reference
to Exhibit 99.1 to the Company's Form 8-K, dated January 8, 1998;
Item 5).
10.85 Purchase and Sale Agreement, dated July 16, 1998 among the Company, The
Equitable Companies Incorporated and AXA Holdings (Belgium).
10.91 First Amended and Restated Credit Agreement, dated May 29, 1998 among
the Company, a syndicate of banks, Chase Securities, Inc. the Chase
Manhattan Bank, the Bank of New York and The First National Bank of
Chicago.
10.92 Agreement of Lease between USF Nominees Limited, Landlord, DLJ UK
Properties Limited, Tenant, 111 Old Broad Street, London and the
Company, Surety, dated as of June 3, 1998.
10.93 Sublease Agreement between Furman Selz, LLC, Sublandlord and the
Company, Subtenant, 280 Park Avenue, New York, New York, dated as of
June 16, 1998.
11 Statement re: computation of basic earnings per share.
11.1 Statement re: computation of diluted earnings per share.
27 Financial Data Schedule
24
<PAGE>
Exhibit 10.85
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement"), dated as of July 16, 1998,
is made by and among Donaldson, Lufkin & Jenrette, Inc., a Delaware corporation
("DLJ"), The Equitable Companies Incorporated, a Delaware corporation ("EQ")
and AXA Holdings (Belgium) ("AXA", and together with EQ and any assignee of EQ,
the "Purchasers").
1. (a) DLJ hereby agrees to issue and sell, and each Purchaser hereby
agrees to purchase, the number of shares (collectively, the "Shares") of common
stock ("Common Stock") of DLJ equal to the dollar amount set forth below such
Purchaser's name on the signature page hereof (such amount being such
Purchaser's "Purchase Commitment") divided by the Purchase Price per Share (as
hereinafter defined); provided that no fractional Shares shall be issued and
such Purchaser's Purchase Commitment shall be reduced by an amount equal to
such fractional share multiplied by the Purchase Price per Share, and provided,
further, that EQ shall have the right to assign all or any part of its rights
and obligations under this agreement, including its Purchase Commitment, to an
affiliate of EQ. Notwithstanding the foregoing, if the aggregate number of
Shares to be purchased exceed 5% of the Common Stock outstanding immediately
prior to such issuance, then each Purchaser's Purchase Commitment shall be
reduced proportionately so that the aggregate number of Shares issued pursuant
hereto does not exceed 5% of the Common Stock outstanding immediately prior to
such issuance. "Purchase Price per Share" means the average of the closing
prices for the Common Stock on the New York Stock Exchange, Inc. as of the end
of the regular session, as reported on the Consolidated Tape (the "NYSE Closing
Price"), for the three trading days commencing on July 17, 1998; provided that
the Purchase Price per Share shall not be less than 95% or greater than 105% of
the NYSE Closing Price on July 16, 1998.
(b) Payment for and delivery of the Shares shall be made at a closing at
the offices of DLJ, on July 22, 1998, at 10:00 a.m. New York City time. The
respective representations of DLJ and the Purchasers set forth in Sections 2
and 3 hereof shall be deemed to be brought down to the date of closing upon
payment of the purchase price and delivery of the Shares.
(c) Payment for the Shares shall be made by wire transfer of immediately
available funds to the account of
<PAGE>
- - 2-
DLJ set forth below DLJ's signature block, or by such other means as DLJ and
the Purchasers shall agree. Each Purchaser shall receive a single certificate
evidencing the number of shares of Common Stock to be purchased by it, and
registered in its name.
2. DLJ represents to the Purchasers that (a) the Shares are duly
authorized, validly issued and free of preemptive rights, and when paid for as
described above will be fully paid and non-assessable, (b) neither DLJ nor
anyone acting on its behalf has taken any action which would subject the sale
of the Shares to the registration requirements of Section 5 of the Securities
Act of 1933, as amended (the "Act") or to the securities laws of any State of
the United States and (c) this Agreement has been duly and validly authorized,
executed and delivered by DLJ.
3. Each Purchaser, severally and not jointly, represents to DLJ that (a)
it is acquiring the Shares not with a view to, or for resale in connection
with, any distribution thereof within the meaning of the Act, (b) it is an
accredited investor and (c) the Agreement has been duly and validly authorized,
executed and delivered by it.
4. DLJ and the Purchasers acknowledge that the Shares have not been
registered under the Act; that each of the Purchasers may be deemed to be an
affiliate of DLJ under the Act; that the Shares are "Registrable Securities" as
defined in that Registration Rights and Indemnification Agreement dated as of
October 30, 1995 between DLJ and EQ and the Purchasers shall have the benefit
of that agreement with respect to the Shares; and that the Shares may not be
sold, pledged or otherwise transferred except pursuant to an effective
registration statement under the Act or in accordance with an exemption from
the registration requirements of the Act.
5. It shall be a condition to closing that DLJ shall have delivered to
each Purchaser an opinion of counsel confirming DLJ's representation in Section
2(a) hereof.
6. This Agreement may be executed in counterparts.
<PAGE>
- 3 -
IN WITNESS WHEREOF, this Agreement has been duly executed as of the date
first written above.
<TABLE>
<S> <C>
THE EQUITABLE COMPANIES AXA Holdings (Belgium)
INCORPORATED, Purchaser Purchaser
By: /s/ By: /s/
------------------------------------ ------------------------------------
Name: Name:
Title: Title:
Purchase Commitment: Purchase Commitment:
$200,000,000 $100,000,000
</TABLE>
DONALDSON, LUFKIN & JENRETTE, INC.
BY: /s/
- -----------------------------------
Name:
Title:
Payment for Shares shall be wired to:
Bank: Citibank, N.A.
ABA No. 021000089
For the Account of: Donaldson, Lufkin & Jenrette, Inc.
Account No.:
<PAGE>
ASSIGNMENT
We refer to the Purchase and Sale Agreement, dated as of July 16, 1998, by
and among Donaldson, Lufkin & Jenrette, Inc., The Equitable Companies
Incorporated ("EQ") and AXA Holdings (Belgium). EQ hereby assigns to The
Equitable Life Assurance Society of the United States ("ELAS") the right to
purchase the number of shares indicated below. ELAS's signature below indicates
its consent to such assignment.
Dated: July 22, 1998
Numbers of Shares: 1,500,000
The Equitable Companies Incorporated
By: /s/ Kevin R. Byrne
------------------------------------
Name: Kevin R. Byrne
Title: Senior Vice President and
Treasurer
The Equitable Life Assurance Society of
the United States
By: /s/ Kevin R. Byrne
------------------------------------
Name: Kevin R. Byrne
Title: Senior Vice President and
Treasurer
<PAGE>
[EQUITABLE LOGO]
July 22, 1998
Donaldson, Lufkin & Jenrette, Inc.
277 Park Avenue
New York, New York, 10172
Ladies and Gentlemen:
We refer to the Purchase and Sale Agreement dated as of July 16, 1998 (the
"Agreement") by and among Donaldson, Lufkin & Jenrette, Inc., The Equitable
Companies Incorporated ("EQ") and AXA Holdings (Belgium). Pursuant to the
attached Assignment, EQ assigned the right to purchase the indicated number of
shares to The Equitable Life Assurance Society of the United States ("ELAS"),
which accordingly shall have the rights afforded to a Purchaser as defined in
the Agreement.
Please register the shares to be purchased by ELAS in the name of the
following wholly owned subsidiary:
EQUITABLE HOLDINGS, LLC
Thank you for your attention.
Very truly yours,
Kevin R. Byrne
<PAGE>
CROSS-RECEIPT
Reference is made to the Purchase and Sale Agreement dated July 16, 1998
(the "Purchase Agreement") among Donaldson, Lufkin & Jenrette, Inc. (the
"Company"), The Equitable Companies Incorporated ("EQ") and AXA Holdings
(Belgium) ("AXA" and, together with EQ and its partial assignee Equitable Life
Assurance Society of the United States ("ELAS"), the "Purchasers").
The Company hereby acknowledges receipt from the Purchasers of wire
transfers of immediately available funds in the amounts of $110,000,000,
$90,000,000 and $100,000,000 representing payment in full by EQ, ELAS and AXA,
respectively, of the purchase price for 1,833,333 shares, 1,500,000 shares and
1,666,667 shares, respectively, of Common Stock of the Company, par value $0.10
per share, issued and sold by the Company pursuant to the Purchase Agreement.
DONALDSON, LUFKIN & JENRETTE, INC.
/s/ Marjorie S. White
----------------------------------------
Name: Marjorie S. White
Title: Vice President and Secretary
EQ, ELAS and AXA hereby acknowledge receipt from the Company of
certificates representing 1,833,333 shares, 1,500,000 shares and 1,666,667
shares, respectively, of Common Stock of the Company, par value $0.10 per
share, such shares have been registered in the names and denominations
heretofore requested by the Purchasers.
THE EQUITABLE COMPANIES INCORPORATED
/s/ Allan R. Spilker
----------------------------------------
Name: Allan R. Spilker
Title: Attorney-in-fact
EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
Allan R. Spilker
----------------------------------------
Name: Allan R. Spilker
Title: Vice President and Counselor
AXA HOLDINGS (BELGIUM)
/s/ Allan R. Spilker
----------------------------------------
Name: Allan R. Spilker
Title: Attorney-in-fact
<PAGE>
Exhibit 10.91
EXECUTION COPY
****************************************************
DONALDSON, LUFKIN & JENRETTE, INC.
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
------------------------
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of May 29, 1998
------------------------
$2,750,000,000
------------------------
CHASE SECURITIES INC.,
as Arranger
THE CHASE MANHATTAN BANK
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION,
as Syndication Agents
THE FIRST NATIONAL BANK OF CHICAGO,
as Documentation
Agent, DLJSC Collateral Agent and Payment Agent
THE BANK OF NEW YORK,
as Administrative Agent and Payment Agent
****************************************************
<PAGE>
FIRST AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 29, 1998
among: DONALDSON, LUFKIN & JENRETTE, INC., a Delaware corporation ("DLJ");
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, a Delaware corporation
("DLJSC" and, together with DLJ, the "Borrowers"); each of the lenders that is
a signatory hereto identified under the caption "BANKS" on the signature pages
hereto or that, pursuant to Section 11.06(b) of the Credit Agreement (as
hereinafter defined), shall become a "Bank" hereunder (individually, a "Bank"
and, collectively, the "Banks"); CHASE SECURITIES INC., as arranger for the
Banks (in such capacity, together with its successors in such capacity, the
"Arranger"); THE CHASE MANHATTAN BANK and DLJSC, as Syndication Agents for the
Banks (each individually, in such capacity, together with its successors in
such capacity, a "Syndication Agent" and, collectively, the "Syndication
Agents"); THE BANK OF NEW YORK, as administrative agent for the Banks (in such
capacity, together with its successors in such capacity, the "Administrative
Agent") and as Payment Agent with respect to loans made to DLJ (in such
capacity, together with its successors in such capacity, a "Payment Agent");
and THE FIRST NATIONAL BANK OF CHICAGO, as documentation agent for the Banks
(in such capacity, together with its successors in such capacity, the
"Documentation Agent") and as collateral agent for the Banks with respect to
loans to DLJSC (in such capacity, together with its successors in such
capacity, the "DLJSC Collateral Agent") and as Payment Agent with respect to
loans made to DLJSC (in such capacity, together with its successors in such
capacity, a "Payment Agent").
WITNESSETH:
WHEREAS, the Borrowers, DLJ Mortgage Capital, Inc., a Delaware
corporation ("DLJMC"), certain Banks (the "Existing Banks"), the Administrative
Agent, the Arranger, the Syndication Agents, the Payment Agents, the DLJSC
Collateral Agent and the Documentation Agent are party to a Credit Agreement
dated as of May 30, 1997 (the "Existing Credit Agreement") pursuant to which
the Existing Banks have agreed to make revolving loans to the Borrowers and
DLJMC, on the conditions set forth therein, through and including the date
hereof;
WHEREAS, DLJMC desires to terminate its rights under the Existing
Credit Agreement upon the effectiveness of this Agreement; and
WHEREAS, BBL International (U.K.) Limited, Banque Nationale de Paris
S.A. Dublin Branch, Barclays Bank PLC and National Australia Bank Limited
A.C.N. 004044937 (the "New Banks") wish to become parties to the Credit
Agreement (as defined below) as "Banks" thereunder, and the parties hereto
desire to amend and restate the Existing Credit Agreement in its entirety to
provide, among other things for the extension of the Commitment
First Amended and Restated Credit Agreement
<PAGE>
-2-
Termination Date (as defined in the Existing Credit Agreement). an increase of
the aggregate commitments of the Banks thereunder to $2,750,000,000 and certain
other changes;
NOW, THEREFORE, the parties hereto agree to amend the Existing Credit
Agreement as set forth herein and to restate the Existing Credit Agreement to
read in its entirety as set forth in the Existing Credit Agreement, which is
hereby incorporated herein by reference, with the amendments set forth in
Article II below (as so amended and restated, the "Credit Agreement"):
ARTICLE I
Definitions
Except as used in the definitions set forth in Article II below,
references to "hereby," "herein," "hereof" and "herewith" refer to this
document but not the Credit Agreement. Capitalized terms used but not
otherwise defined herein have the meanings given them in the Credit
Agreement.
ARTICLE II
Amendments
Subject to Article IV hereof, the Existing Credit Agreement is hereby
amended as follows:
Paragraph 2.01. References in the Existing Credit Agreement to "this
Agreement" (including indirect references) shall be deemed to be references to
the Credit Agreement. The New Banks shall be deemed to be "Banks' under and for
all purposes of the Credit Agreement, and each reference in the Credit
Agreement to "Banks" shall be deemed to include the New Banks.
Paragraph 2.02. Section 1.01 of the Existing Credit Agreement is
amended by adding the following new definitions (to the extent not already
included in said Section 1.01) and inserting the same in the appropriate
alphabetical locations and amending in their entirety the following definitions
(to the extent already included in said Section 1.01) to read in their entirety
as follows:
"Agents" shall mean the Administrative Agent, the DLJSC Collateral
Agent, the Documentation Agent and the Payment Agent.
First Amended and Restated Credit Agreement
<PAGE>
-3 -
"Agreement" shall mean, on any date from and after the
Amendment Effective Date, this Credit Agreement as in effect on the
Amendment Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in
effect on such date.
"Applicable Margin" shall mean, with respect to any Type of
Committed Rate Loan made to a Borrower, the applicable margin per
annum specified in the Borrower Annex applicable to such Borrower;
provided that from and after the Commitment Termination Date until the
payment in full of such Loan, the "Applicable Margin" with respect
to such Loan shall be increased by .14%.
"Amendment Effective Date" means the date upon which the
conditions set forth in Article IV hereof shall have been satisfied.
"Basic Documents" shall mean, collectively, this Agreement,
the Notes (if any) and the Security Documents.
"Borrower" shall mean DLJ or DLJSC (as the case may be).
"Commitment" shall mean, as to each Bank for each Borrower,
the obligation of such Bank to make Committed Rate Loans to such
Borrower in an aggregate principal amount at any one time outstanding
up to but not exceeding the amount set forth opposite such Bank's name
on Appendix I hereto under the applicable caption for such Borrower
(as the same may at any time or from time to time be reduced pursuant
to Section 2.03 hereof or increased or decreased pursuant to Section
11.06 hereof).
"Commitment Termination Date" shall mean May 28, 1999 (or if
such day is not a Business Day, the immediately preceding Business
Day), as the same may be extended pursuant to Section 2.10 hereof.
"Consolidated Tangible Net Worth" shall mean, with respect to
any Person, as of any date of determination, all amounts that would,
in accordance with GAAP, be included under shareholders' equity on a
consolidated balance sheet of such Person as at such date, plus any
preferred stock, less all assets of such Person and its Subsidiaries
(determined on a consolidated basis) at such date that would be
classified as intangible assets in accordance with GAAP, including,
without limitation, trade or service marks, franchises, trade names
and goodwill.
"DLJSC Tri-Party Agreement" shall mean the Tri-Party
Agreement, dated as of May 30, 1997, among DLJSC, the DLJSC Collateral
Agent and Chase, as custodian, as the same shall be modified and
supplemented and in effect from time to time.
First Amended and Restated Credit Agreement
<PAGE>
-4-
"Event of Default" shall mean a DLJ Event of Default or a
DLJSC Event of Default (as the case may be).
"Maximum Aggregate Commitment" shall mean, as to each Bank,
the obligation of such Bank to make Committed Rate Loans to the
Borrowers in an aggregate principal amount at any one time outstanding
up to but not exceeding the amount set forth opposite the name of such
Bank on Appendix I hereto under the caption "Maximum Aggregate
Commitment" (as the same may be reduced from time to time pursuant to
Section 2.03 hereof or increased or decreased pursuant to Section
11.06 hereof).
"Payment Agent" shall mean, with respect to DLJ, BNY and,
with respect to DLJSC, First Chicago.
"Security Documents" shall mean, collectively, the DLJSC
Security Agreement, the DLJSC Tri-Party Agreement, the Euroclear
Agreements and all Uniform Commercial Code financing statements
required by this Agreement or any such Security Document to be filed
with respect to the security interests created pursuant to the DLJSC
Security Agreement.
Paragraph 2.03. Section 1.01 of the Existing Credit Agreement is
further amended by deleting the following definitions from said Section 1.01:
"Bankers Trust", "BT Collateral Custodian", "BT Security Agreement",
"Collateral Custodians", "DLJ Mortgage Acceptance", "DLJMC Borrowing Base",
"DLJMC Collateral", "DLJMC Default", "DLJMC Event of Default", "DLJMC Secured
Obligations", "DLJMC Security Agreements", "LaSalle", "LaSalle Collateral
Custodian", "LaSalle Security Agreement", "Parent Guarantee", "Qualified
Originator", "Qualified Servicer", "Securitization Take-Out Commitment",
"Take-Out Commitments", "Third-Party Custodian" "Third-Party Custody
Agreement", "Third-Party Pledged Mortgage Loan", and "Trust Receipt".
Paragraph 2.04. Section 1.02 of the Existing Credit Agreement is
amended by deleting "8.03(c) or 8.04(d)" and replacing it with "or 8.03(c)" in
subsection (b) thereof.
Paragraph 2.05. Section 2.02(c) of the Existing Credit Agreement is
amended by deleting clause (iii) therefrom.
Paragraph 2.06. Section 2.04 of the Existing Credit Agreement is
amended by replacing the reference to ".10%" in the first sentence thereof with
".09%" and by replacing "the date hereof' in such sentence with "the Amendment
Effective Date".
First Amended and Restated Credit Agreement
<PAGE>
-5-
Paragraph 2.07. Section 2.09 of the Existing Credit Agreement shall be
amended by deleting subsection (b) therefrom and relettering existing
subsection "(c)" thereof as subsection "(b)" thereof.
Paragraph 2.08. Section 4.04 of the Existing Credit Agreement is
amended by deleting "or DLJMC" and "or DLJMC Collateral Agent (as the case may
be)" from the first sentence thereof.
Paragraph 2.09. Section 5.06 of the Existing Credit Agreement is
amended by adding "or on the Amendment Effective Date" to the end of the first
parenthetical phrase in subsection (a)(i) thereof.
Paragraph 2.10. Section 6.02 of the Existing Credit Facility is amended
by deleting Section 6.02(c) in its entirety and replacing it with
"[Intentionally Omitted]".
Paragraph 2.11. Section 6.03 of the Existing Credit Agreement is
amended by deleting subsection (b) in its entirety and replacing it with
"[Intentionally Omitted]".
Paragraph 2.12. Section 7.01 of the Existing Credit Agreement is
amended by (a) deleting "1996" from the first and last sentences of subsection
(b) and inserting "1997" and (b) deleting "and DLJMC" from subsection (m).
Paragraph 2.13. Section 7.01 of the Existing Credit Agreement is
further amended by changing the heading thereof to read in its entirety,
"Representations of DLJ and DLJSC". In addition, Section 7.01 of the Existing
Credit Agreement is further amended by adding the following subsection:
"(p) Year 2000. Any reprogramming required to permit the
proper functioning in and following the year 2000 of (i) such
Borrower's computer systems and (ii) any necessary equipment of such
Borrower containing embedded microchips (including systems and
equipment supplied by any other Person with which such Borrower's
systems interface) and the testing of all such systems and equipment
as so reprogrammed, will be completed by January 1, 1999. The cost to
such Borrower of such reprogramming and testing and the reasonably
foreseeable consequences of the year 2000 to such Borrower (including,
without limitation, reprogramming errors and failure of the systems or
equipment of such other Person) will not result in a Material Adverse
Effect. Except for such of the reprogramming referred to in the
preceding sentence as may be necessary, the computer and management
information systems of such Borrower and its Subsidiaries are and,
with ordinary course upgrading and maintenance, will continue for the
term of this Agreement to be, sufficient to permit such Borrower to
conduct its business without Material Adverse Effect."
First Amended and Restated Credit Agreement
<PAGE>
-6-
Paragraph 2.14. The heading of Section 8.01 of the Existing Credit
Agreement is amended to read in its entirety "Covenants of DLJ and DLJSC."
Paragraph 2.15. Section 7.02 of the Existing Credit Agreement is
amended by deleting "or DLJMC" from subsection (b)thereof.
Paragraph 2.16. Section 7.03 of the Existing Credit Agreement is
amended by deleting "1996" from the first and last sentences of subsection (d)
and inserting "1997".
Paragraph 2.17. Section 8.01 of the Existing Credit Agreement is
amended by (a) deleting "either DLJMC or" from the second proviso to subsection
(e) thereof and (b) by deleting "and clauses (h), (i) or (j) of Section 9.03
hereof, in the case of DLJMC" from subsection (i) thereof and inserting "and"
between "DLJ," and "clauses" in such subsection (i).
Paragraph 2.18. Section 8.02(a) of the Existing Credit Agreement is
amended by replacing the reference to "$1,300,000,000" with "$1,600,000,000,"
and the reference to "1997" with "1998".
Paragraph 2.19. Section 8.03(b) of the Existing Credit Agreement is
amended by replacing the reference to $750,000,000 with "$900,000,000" and the
reference to "1997" with "1998".
Paragraph 2.20. Section 8.03(c) of the Existing Credit Agreement is
amended by deleting "setting forth in each case in comparative form the
corresponding consolidated figures as of the end of, and for, the preceding
fiscal year," from clause (ii) of such subsection (c).
Paragraph 2.21. Section 8.04 of the Existing Credit Facility is amended
by deleting Section 8.04 in its entirety and replacing it with "[Intentionally
Omitted]".
Paragraph 2.22. Section 9.01(k) of the Existing Credit Agreement is
amended to read in its entirety as follows:
"(k) DLJ shall cease to own beneficially and of record 100%
of the voting stock of DLJSC, or Equitable shall either cease to own
beneficially, directly or indirectly, more than 40% of the voting
stock of DLJ or cease to hold the largest percentage of the voting
stock of DLJ of all holders of the voting stock of DLJ."
Paragraph 2.23. Section 9.03 of the Existing Credit Facility is amended
by deleting Section 9.03 in its entirety and replacing it with "[Intentionally
Omitted]".
Paragraph 2.24. Section 10.01 of the Existing Credit Agreement is
amended by deleting "Bankers Trust, as the Collateral Custodian under the BT
Security Agreement, LaSalle as the
First Amended and Restated Credit Agreement
<PAGE>
-7-
Collateral Custodian under the LaSalle Security Agreement, and", "and the
Tri-Party Custody Agreement, each", "DLJMC Collateral or", "(as the case may
be)" and "and (y) BNY may also act as DLJMC Collateral Agent under the DLJMC
Security Agreements" from the first sentence thereof.
Paragraph 2.25 Section 10.03 of the Existing Credit Agreement is
amended by deleting "or the DLJMC Collateral Agent" and "or, in the case of the
DLJMC Collateral Agent, the failure of DLJMC to maintain at any time the DLJMC
Borrowing Base in an amount at least equal to the amount of the DLJMC Secured
Obligations at such time" from the first sentence thereof.
Paragraph 2.26 Section 10.09 of the Existing Credit Agreement is
amended by deleting "neither the DLJSC Collateral Agent nor the DLJMC
Collateral Agent shall" and inserting "the DLJSC Collateral Agent shall not"
and deleting "or 'DLJMC Borrowing Base'" and "and the DLJMC Collateral Agent"
therefrom.
Paragraph 2.27 Section 11.11 of the Existing Credit Agreement is
amended by deleting "DLJMC," and "The DLJMC Collateral Agent" therefrom.
Paragraph 2.28. Annex A to the Existing Credit Agreement is amended by
replacing the reference to "$1,000,000,000" under the heading "Maximum Loan"
with "$1,650,000,000" and by replacing the reference to "0.350%" under the
heading "Applicable Margin" with "0.335%".
Paragraph 2.29. Annex B to the Existing Credit Agreement is amended by
replacing the reference to "$2,000,000,000" under the heading "Maximum Loan"
with "$2,750,000,000" and by replacing the reference to "0.30%" under the
heading "Applicable Margin" with "0.285%".
Paragraph 2.30. Annex C to the Existing Credit Agreement is deleted in
its entirety.
Paragraph 2.31. The table of contents of the Existing Credit Agreement
is amended by deleting the titles of Schedules III and IV and Exhibits C, E-1,
E-2, F-1 and F-2 therefrom and replacing the same in each case with
"[Intentionally Omitted]".
ARTICLE III
Representations and Warranties
Each Borrower hereby represents and warrants to the Banks and the
Agents as of the date hereof and as of the Amendment Effective Date (as defined
in Article I hereof) that:
(i) no Default has occurred and is continuing; and
First Amended and Restated Credit Agreement
<PAGE>
-8-
(ii) each of the representations and warranties of the
Borrowers in Section 7 of the Existing Credit Agreement (except that
the representations and warranties in Section 7.01(m) thereof shall be
updated by the Borrowers as of the Amendment Effective Date pursuant
to Schedule 7.01(m) hereto) and in the other Basic Documents are true
and correct as of each such date with the same force and effect as if
made on and as of each such date (or, if any such representation or
warranty is expressly stated to have been made as of a specific date,
as of such specific date).
ARTICLE IV
Conditions Precedent
The amendments set forth in Article II hereof shall become effective
on the date on which the following conditions precedent shall have been
satisfied:
Paragraph 4.01. Execution by All Parties. This First Amended and
Restated Credit Agreement shall have been executed and delivered by each of the
parties hereto.
Paragraph 4.02. Resolutions, Etc. The Administrative Agent shall have
received from the Borrowers, the following documents, each certified as
indicated:
(a) a certificate from the Secretary of State of the
jurisdiction of its incorporation, dated as of a recent date, listing
each amendment to the charter of such Borrower and certifying as to
the good standing of such Borrower in such jurisdiction and a copy of
each amendment to such charter since the date of the Existing Credit
Agreement, certified as of a recent date by the Secretary of State of
its jurisdiction of incorporation;
(b) a certificate of the Secretary or an Assistant Secretary
of each Borrower, dated the Amendment Effective Date and certifying
(A) that attached thereto is a true and complete copy of the by-laws
of such Borrower as amended and in effect at all times from the date
on which the resolutions referred to in clause (B) were adopted to and
including the date of such certificate, (B) that attached thereto is a
true and complete copy of resolutions duly adopted by the board of
directors of such Borrower authorizing the execution, delivery and
performance of such of the Basic Documents to which such Borrower is
or is intended to be a party and the extensions of credit hereunder,
and that such resolutions have not been modified, rescinded or amended
and are in full force and effect, (C) that the charter of such
Borrower has not been amended since the date of the certification
thereto furnished pursuant to clause (a) above, and (D) as to the
incumbency and specimen signature of each officer of such Borrower
executing such of the Basic Documents to which such Borrower is
intended to be a party and each other document or notice or other
communication to be delivered by such Borrower from time to time in
First Amended and Restated Credit Agreement
<PAGE>
-9-
connection therewith and the Administrative Agent and each Bank may
conclusively rely on such certificate until it shall have received a
further certificate of the Secretary or an Assistant Secretary of such
Borrower canceling or amending such prior certificate; and
(c) a certificate of another officer of each Borrower as to
the incumbency and specimen signature of the Secretary or Assistant
Secretary, as the case may be, of such Borrower.
Paragraph 4.03. Opinion of Counsel. The Administrative Agent shall have
received an opinion (with sufficient signed original copies for the Agents and
each Bank), dated the Amendment Effective Date and addressed to the Agent and
the Banks, from Wilmer, Cutler & Pickering, special New York counsel for the
Borrowers, substantially in the form of Exhibit B hereto. The Borrowers hereby
instruct such counsel to deliver said opinions to the Administrative Agent and
each Bank hereunder.
Paragraph 4.04. Officer's Certificate. The Administrative Agent shall
have received a certificate of a senior officer of each Borrower dated as of
the Amendment Effective Date, to the effect set forth in Article III hereto.
Paragraph 4.05. Other Documents. Such other documents as any Agent or
any Bank or special New York counsel to the Agents may reasonably request.
ARTICLE V
Amendment to Security Agreement
Each of the Banks hereby consents to, and authorizes the Collateral
Agent to execute and deliver on its behalf, Amendment No. 1 to Master Security
Agreement, in the form attached hereto as Exhibit A.
Each party hereto agrees that, by its signature hereto and without any
further action on the part of any other party, each New Bank has become a
Lender (as defined in the Security Agreement) and is entitled to the rights and
subject to the obligations of a Lender, as set forth in the Security Agreement.
ARTICLE VI
Paragraph 6.01. Miscellaneous. Except as herein provided, the Existing
Credit Agreement shall remain unchanged and in full force and effect. This
First Amended and Restated Credit Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
amendatory instrument and any of the parties
First Amended and Restated Credit Agreement
<PAGE>
-10-
hereto may execute this First Amended and Restated Credit Agreement by signing
any such counterpart and sending the same by telecopier, mail messenger or
courier to the Administrative Agent or counsel to the Administrative Agent.
This First Amended and Restated Credit Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
Paragraph 6.02. Termination of DLJ Mortgage Capital Commitments. DLJMC
acknowledges by its signature below that as of the date hereof, the Existing
Banks' Commitments to DLJMC under the Existing Credit Agreement shall be
terminated and from and after the date hereof, DLJMC shall no longer be a
"Borrower" under the Credit Agreement.
First Amended and Restated Credit Agreement
<PAGE>
-11-
IN WITNESS WHEREOF, the parties hereto have caused this First Amended and
Restated Credit Agreement to be duly executed as of the day and year first
above written.
DONALDSON, LUFKIN & JENRETTE, INC.
By /s/ Charles J. Hendrickson
------------------------------------
Name: CHARLES J. HENDRICKSON
Title: SENIOR VICE
PRESIDENT/TREASURER
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By /s/
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-12-
BANKS
THE CHASE MANHATTAN BANK
By /s/ A. Hickmann
------------------------------------
Name: A. Hickmann
Title: VP
THE BANK OF NEW YORK
By
------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By
------------------------------------
Name:
Title:
BANK OF AMERICA NT & SA
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-12-
BANKS
THE CHASE MANHATTAN BANK
By
------------------------------------
Name:
Title:
THE BANK OF NEW YORK
By /s/ Mark T. Rogers
------------------------------------
Name: Mark T. Rogers
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By
------------------------------------
Name:
Title:
BANK OF AMERICA NT & SA
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-12-
BANKS
THE CHASE MANHATTAN BANK
By
------------------------------------
Name:
Title:
THE BANK OF NEW YORK
By
------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Denise de Diego
------------------------------------
Name: Denise de Diego
Title: Vice President
BANK OF AMERICA NT & SA
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-12-
BANKS
THE CHASE MANHATTAN BANK
By
------------------------------------
Name:
Title:
THE BANK OF NEW YORK
By
------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO
By
------------------------------------
Name:
Title:
BANK OF AMERICA NT & SA
By /s/ Robert A. Jennings
------------------------------------
Name: ROBERT A. JENNINGS
Title: MANAGING DIRECTOR
First Amended and Restated Credit Agreement
<PAGE>
-13-
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Sebastian Rocco
------------------------------------
Name: Sebastian Rocco
Title: Senior Vice President
SOCIETE GENERALE, NEW YORK BRANCH
By
------------------------------------
Name:
Title:
BANQUE PARIBAS LONDON
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
CITIBANK, N.A.
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-13-
CREDIT LYONNAIS NEW YORK BRANCH
By
------------------------------------
Name:
Title:
SOCIETE GENERALE, NEW YORK BRANCH
By /s/ Charles Fischer
------------------------------------
Name: CHARLES FISCHER
Title: VICE PRESIDENT
BANQUE PARIBAS LONDON
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
CITIBANK, N.A.
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-13-
CREDIT LYONNAIS NEW YORK BRANCH
By
------------------------------------
Name:
Title:
SOCIETE GENERALE, NEW YORK BRANCH
By
------------------------------------
Name:
Title:
BANQUE PARIBAS LONDON
By /s/ Christina Feicht
------------------------------------
Name: CHRISTINA FEICHT
Title:
By /s/ Jane Lillie
------------------------------------
Name: JANE LILLIE
Title:
CITIBANK, N.A.
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-13-
CREDIT LYONNAIS NEW YORK BRANCH
By
------------------------------------
Name:
Title:
SOCIETE GENERALE, NEW YORK BRANCH
By
------------------------------------
Name:
Title:
BANQUE PARIBAS LONDON
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
CITIBANK, N.A.
By /s/ Michael Mauerstein
------------------------------------
Name: MICHAEL MAUERSTEIN
Title: Managing Director
First Amended and Restated Credit Agreement
<PAGE>
-14-
NATIONSBANK, N.A.
By /s/ Ken Ricciardi
------------------------------------
Name: Ken Ricciardi
Title: Senior Vice President
ROYAL BANK OF CANADA
By
------------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND, NEW YORK
BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-14-
NATIONSBANK, N.A.
By
------------------------------------
Name:
Title:
ROYAL BANK OF CANADA
By Joanne Ciciro
------------------------------------
Name: Joanne Ciciro
Title: Senior Manager
UNION BANK OF SWITZERLAND, NEW YORK
BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-14-
NATIONSBANK, N.A.
By
------------------------------------
Name:
Title:
ROYAL BANK OF CANADA
By
------------------------------------
Name:
Title:
UNION BANK OF SWITZERLAND, NEW YORK
BRANCH
By Charles Griggs
------------------------------------
Name: Charles Griggs
Title: Director
By Virginia M. Loebel
------------------------------------
Name: Virginia M. Loebel
Title: Managing Director
First Amended and Restated Credit Agreement
<PAGE>
-15-
BANQUE NATIONALE DE PARIS
By /s/ Riva L. Howard
------------------------------------
Name: Rivia L. Howard
Title: Vice President
By /s/ William Shaheen
------------------------------------
Name: William Shaheen
Title: Vice President
BANCO SANTANDER
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST CO.
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-15-
BANQUE NATIONALE DE PARIS
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
BANCO SANTANDER, S.A., NEW YORK
BRANCH
By /s/ Robert E. Schlegel
------------------------------------
Name: Rober E. Schlegel
Title: Vice President
Manager--Corporate Bank
Banco Santander
By /s/ Jorge Saavedra
------------------------------------
Name: Jorge Saavedra
Title: Vice President
Banco Santander
BANK OF TOKYO-MITSUBISHI TRUST CO.
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-15-
BANQUE NATIONALE DE PARIS
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
BANCO SANTANDER
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
BANK OF TOKYO-MITSUBISHI TRUST CO.
By /s/ David H. Place
------------------------------------
Name: David H. Place
Title: Vice President
First Amended and Restated Credit Agreement
<PAGE>
-16-
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCH
By /s/ Peter J. Bassler
------------------------------------
Name: Peter J. Bassler
Title: Vice President
By /s/ Jonathan B.P. Mendes
------------------------------------
Name: Jonathan B.P. Mendes
Title: Vice President
FLEET NATIONAL BANK
By
------------------------------------
Name:
Title:
LLOYDS BANK Plc
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-16-
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
FLEET NATIONAL BANK
By /s/ Kenneth G. Ahrens
------------------------------------
Name: Kenneth G. Ahrens
Title: Senior Vice President
LLOYDS BANK Plc
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-16-
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
FLEET NATIONAL BANK
By
------------------------------------
Name:
Title:
LLOYDS BANK PLC
By /s/ Michal J. Gilligan
------------------------------------
Name: Michael J. Gilligan
Title: Director, Financial
Institutions, USA
G311
By /s/ Paul D. Briamonte
------------------------------------
Name: Paul D. Briamonte
Title: Director, Acquisition &
Project Finance, USA
B374
First Amended and Restated Credit Agreement
<PAGE>
-17-
MELLON BANK, N.A.
By /s/ Robert E. Richardson
------------------------------------
Name: Robert E. Richardson
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH
By
------------------------------------
Name:
Title:
BARCLAYS BANK PLC
By
------------------------------------
Name:
Title:
COMMERZBANK AKTIENGESELLSCHAFT,
NY BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-17-
MELLON BANK, N.A.
By
------------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH
By /s/ John C. Kissinger
------------------------------------
Name: John C. Kissinger
Title: Joint General Manager
BARCLAYS BANK PLC
By
------------------------------------
Name:
Title:
COMMERZBANK AKTIENGESELLSCHAFT,
NY BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-17-
MELLON BANK, N.A.
By
------------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH
By
------------------------------------
Name:
Title:
BARCLAYS BANK PLC
By /s/ Karen M. Wagner
------------------------------------
Name: Karen M. Wagner
Title: Associate Director
COMMERZBANK AKTIENGESELLSCHAFT,
NY BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-17-
MELLON BANK, N.A.
By
------------------------------------
Name:
Title:
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH
By
------------------------------------
Name:
Title:
BARCLAYS BANK PLC
By
------------------------------------
Name:
Title:
COMMERZBANK AKTIENGESELLSCHAFT,
NY BRANCH
By /s/ William M. Earley
------------------------------------
Name: William M. Earley
Title: Vice President
By /s/ Joseph J. Hayes
------------------------------------
Name: Joseph J. Hayes
Title: Assistant Vice President
First Amended and Restated Credit Agreement
<PAGE>
-18-
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By /s/ Martha Skidmore
------------------------------------
Name: Martha Skidmore
Title: Vice President
By /s/ Eric Longuet
------------------------------------
Name: Eric Longuet
Title: Vice President
CREDITO ITALIANO
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
DEN DANSKE BANK AKTIESELSKAB,
CAYMAN ISLANDS BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-18-
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
CREDITO ITALIANO
By /s/ Harmon P. Butler
------------------------------------
Name: Harmon P. Butler
Title: F.V.P. & Deputy Manager
By /s/ Gianfranco Bisagni
------------------------------------
Name: Gianfranco Bisagni
Title: First Vice President
DEN DANSKE BANK AKTIESELSKAB,
CAYMAN ISLANDS BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-18-
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
CREDITO ITALIANO
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
DEN DANSKE BANK AKTIESELSKAB,
CAYMAN ISLANDS BRANCH
By /s/ Henrik Ibsen
------------------------------------
Name: Henrik Ibsen
Title: Vice President
By /s/ Sonia Kataria
------------------------------------
Name: Sonia Kataria
Title: Vice President
First Amended and Restated Credit Agreement
<PAGE>
-19-
KREDIETBANK N.V.
By /s/ Patrick J. Owens
------------------------------------
Name: Patrick J. Owens
Title: Vice President
By /s/ Robert Snauffer
------------------------------------
Name: Robert Snauffer
Title: Vice President
NATIONAL AUSTRALIA BANK LIMITED
A.C.N. 004044937
By
------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
By
------------------------------------
Name:
Title:
THE TORONTO DOMINION (TEXAS), INC.
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-19-
KREDIETBANK N.V.
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
NATIONAL AUSTRALIA BANK LIMITED
A.C.N. 004044937
By /s/ Thomas R. Chiego
------------------------------------
Name: Thomas R. Chiego
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By
------------------------------------
Name:
Title:
THE TORONTO DOMINION (TEXAS), INC.
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-19-
KREDIETBANK N.V.
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
NATIONAL AUSTRALIA BANK LIMITED
A.C.N. 004044937
By
------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
By /s/ Donald Davis
------------------------------------
Name: Donald Davis
Title:
THE TORONTO DOMINION (TEXAS), INC.
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-19-
KREDIETBANK N.V.
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
NATIONAL AUSTRALIA BANK LIMITED
A.C.N. 004044937
By
------------------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
By
------------------------------------
Name:
Title:
THE TORONTO DOMINION (TEXAS), INC.
By /s/ Jimmy Simien
------------------------------------
Name: Jimmy Simien
Title: Vice President
First Amended and Restated Credit Agreement
<PAGE>
-20-
WELLS FARGO BANK, N.A.
By /s/ David B. Hollingsworth
------------------------------------
Name: David B. Hollingsworth
Title: Vice President
By /s/ Rachel Uyama
------------------------------------
Name: Rachel Uyama
Title: Assistant Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
REPUBLIC NATIONAL BANK OF NEW YORK
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-20-
WELLS FARGO BANK, N.A.
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By /s/ Raymond K. Miller
------------------------------------
Name: Raymond K. Miller
Title: Vice President
By /s/ Vincent J. Portella
------------------------------------
Name: Vincent J. Portella
Title: Managing Director
REPUBLIC NATIONAL BANK OF NEW YORK
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-20-
WELLS FARGO BANK, N.A.
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
REPUBLIC NATIONAL BANK OF NEW YORK
By /s/ James Powers
------------------------------------
Name: James Powers
Title: Senior Vice President
By /s/ Paul M. Lopez
------------------------------------
Name: Paul M. Lopez
Title: FVP
First Amended and Restated Credit Agreement
<PAGE>
-21-
BANQUE NATIONALE DE PARIS S.A.
DUBLIN BRANCH
By /s/ Kevin Farnan
------------------------------------
Name: Kevin Farnan
Title: Head of Credit Department
By /s/ Maud Moreau
------------------------------------
Name: Maud Moreau
Title: Assistant General Manager
BANCO DI NAPOLI S.P.A.
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
BANKERS TRUST COMPANY
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-21-
BANQUE NATIONALE DE PARIS S.A.
DUBLIN BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
BANCO DI NAPOLI S.P.A.
By /s/ Vito Spada
------------------------------------
Name: Vito Spada
Title: Executive Vice President
By /s/ Claude P. Mapes
------------------------------------
Name: Claude P. Mapes
Title: First Vice President
BANKERS TRUST COMPANY
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-21-
BANQUE NATIONALE DE PARIS S.A.
DUBLIN BRANCH
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
BANCO DI NAPOLI S.P.A.
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
BANKERS TRUST COMPANY
By /s/ Robert P. Tinari
------------------------------------
Name: Robert P. Tinari
Title: Managing Director
First Amended and Restated Credit Agreement
<PAGE>
-22-
BBL INTERNATIONAL (U.K.)
LIMITED
By /s/ G.A. Michael
------------------------------------
Name: G.A. Michael
Title: Authorised Signatory
By /s/ C.F. Wright
------------------------------------
Name: C.F. Wright
Title: Authorised Signatory
CIBC Inc.
By
------------------------------------
Name:
Title:
THE NORTHERN TRUST COMPANY
By
------------------------------------
Name:
Title:
THE SAKURA BANK, LIMITED
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-22-
BBL INTERNATIONAL (U.K.)
LIMITED
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
CIBC Inc.
By /s/ Gerald Girardi
------------------------------------
Name: Gerald Girardi
Title: Executive Director
CIBC Oppenheimer Corp., As
Agent
THE NORTHERN TRUST COMPANY
By
------------------------------------
Name:
Title:
THE SAKURA BANK, LIMITED
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-22-
BBL INTERNATIONAL (U.K.)
LIMITED
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
CIBC Inc.
By
------------------------------------
Name:
Title:
THE NORTHERN TRUST COMPANY
By /s/ Michelle D. Griffin
------------------------------------
Name: Michelle D. Griffin
Title: Vice President
THE SAKURA BANK, LIMITED
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-22-
BBL INTERNATIONAL (U.K.)
LIMITED
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
CIBC Inc.
By
------------------------------------
Name:
Title:
THE NORTHERN TRUST COMPANY
By
------------------------------------
Name:
Title:
THE SAKURA BANK, LIMITED
By /s/ Yasumasa Kikuchi
------------------------------------
Name: Yasumasa Kikuchi
Title: Senior Vice President
First Amended and Restated Credit Agreement
<PAGE>
-23-
STANDARD CHARTERED BANK
By /s/ Robert L. Gilbert
------------------------------------
Name: Robert L. Gilbert
Title: Vice President
By /s/ Paul S. Knox
------------------------------------
Name: Paul S. Knox
Title: Regional Executive
SVENSKA HANDELSBANKEN
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
BANK OF MONTREAL IRELAND PLC
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-23-
STANDARD CHARTERED BANK
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
SVENSKA HANDELSBANKEN
By /s/ Geoffrey Walker
------------------------------------
Name: Geoffrey Walker
Title: Senior Vice President
By /s/ Robert H. Bollinger
------------------------------------
Name: Robert H. Bollinger
Title: Vice President
BANK OF MONTREAL IRELAND PLC
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-23-
STANDARD CHARTERED BANK
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
SVENSKA HANDELSBANKEN
By
------------------------------------
Name:
Title:
By
------------------------------------
Name:
Title:
BANK OF MONTREAL
By /s/ Leon H. Sinclair
------------------------------------
Name: Leon H. Sinclair
Title: Director
First Amended and Restated Credit Agreement
<PAGE>
-24-
THE FIRST NATIONAL BANK OF CHICAGO,
as DLJSC Collateral Agent,
Documentation Agent and Payment
Agent
By /s/ Denise de Diego
------------------------------------
Name: Denise de Diego
Title: Vice President
THE BANK OF NEW YORK
as Administrative Agent and
Payment Agent
By
------------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
as Syndication Agent
By
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Syndication Agent
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-24-
THE FIRST NATIONAL BANK OF CHICAGO,
as DLJSC Collateral Agent,
Documentation Agent and Payment
Agent
By
------------------------------------
Name:
Title:
THE BANK OF NEW YORK
as Administrative Agent and
Payment Agent
By /s/ Mark T. Rogers
------------------------------------
Name: Mark T. Rogers
Title: Vice President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
as Syndication Agent
By
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Syndication Agent
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-24-
THE FIRST NATIONAL BANK OF CHICAGO,
as DLJSC Collateral Agent,
Documentation Agent and Payment
Agent
By
------------------------------------
Name:
Title:
THE BANK OF NEW YORK
as Administrative Agent and
Payment Agent
By
------------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
as Syndication Agent
By /s/ William M. Temai
------------------------------------
Name: William M. Temai
Title: SVP
THE CHASE MANHATTAN BANK,
as Syndication Agent
By
------------------------------------
Name:
Title:
First Amended and Restated Credit Agreement
<PAGE>
-24-
THE FIRST NATIONAL BANK OF CHICAGO,
as DLJSC Collateral Agent,
Documentation Agent and Payment
Agent
By
------------------------------------
Name:
Title:
THE BANK OF NEW YORK
as Administrative Agent and
Payment Agent
By
------------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
as Syndication Agent
By
------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Syndication Agent
By /s/ A. Hickmann
------------------------------------
Name: A. Hickmann
Title: VP
First Amended and Restated Credit Agreement
<PAGE>
-25-
THE FOREGOING IS HEREBY ACKNOWLEDGED AND AGREED
DLJ MORTGAGE CAPITAL, INC.
By /s/ N. Dante Hora
------------------------------------
Name: N. Dante Hora
Title:
First Amended and Restated Credit Agreement
<PAGE>
APPENDIX I
COMMITMENTS
-----------
<TABLE>
<CAPTION>
MAXIMUM
AGGREGATE DLJ DLJSC
BANK COMMITMENT COMMITMENT COMMITMENT
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
The Chase Manhattan Bank 150,000,000 90,000,000 150,000,000
The Bank Of New York 150,000,000 90,000,000 150,000,000
The First National Bank of Chicago 150,000,000 90,000,000 150,000,000
Bank of America NT & SA 125,000,000 75,000,000 125,000,000
Credit Lyonnais, New York Branch 125,000,000 75,000,000 125,000,000
Societe Generale, New York Branch 125,000,000 75,000,000 125,000,000
Banque Paribas London 100,000,000 60,000,000 100,000,000
Citibank, N.A. 100,000,000 60,000,000 100,000,000
Nationsbank, N.A. (South) 100,000,000 60,000,000 100,000,000
Royal Bank Of Canada 100,000,000 60,000,000 100,000,000
Union Bank Of Switzerland,
New York Branch 100,000,000 60,000,000 100,000,000
Banque Nationale De Paris 90,000,000 54,000,000 90,000,000
Banco Santander 70,000,000 42,000,000 70,000,000
Bank Of Tokyo-Mitsubishi Trust Co. 70,000,000 42,000,000 70,000,000
</TABLE>
First Amended and Restated Credit Agreement
-------------------------------------------
<PAGE>
- 3 -
<TABLE>
<CAPTION>
MAXIMUM
AGGREGATE DLJ DLJSC
BANK COMMITMENT COMMITMENT COMMITMENT
- ---- ---------- ---------- ----------
<S> <C> <C> <C>
Westdeutsche Landesbank Girozentrale,
New York Branch 50,000,000 30,000,000 50,000,000
Republic National Bank of New York 45,000,000 27,000,000 45,000,000
Banque Nationale de Paris S.A.
Dublin Branch 35,000,000 21,000,000 35,000,000
Banco Di Napoli S.P.A. 25,000,000 15,000,000 25,000,000
Bankers Trust Company 25,000,000 15,000,000 25,000,000
BBL International (U.K.) Limited 25,000,000 15,000,000 25,000,000
CIBC Inc. 25,000,000 15,000,000 25,000,000
The Northern Trust Company 25,000,000 15,000,000 25,000,000
The Sakura Bank, Limited 25,000,000 15,000,000 25,000,000
Standard Chartered Bank 25,000,000 15,000,000 25,000,000
Svenska Handelsbanken 25,000,000 15,000,000 25,000,000
Bank of Montreal Ireland Plc 15,000,000 9,000,000 15,000,000
---------- ---------- ----------
TOTAL: 2,750,000,000 1,650,000,000 2,750,000,000
</TABLE>
First Amended and Restated Credit Agreement
-------------------------------------------
<PAGE>
EXHIBIT A
AMENDMENT NO. 1 TO MASTER SECURITY AGREEMENT
AMENDMENT NO. 1 TO MASTER SECURITY AGREEMENT dated as of May 29, 1998,
between DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, a corporation duly
organized and validly existing under the laws of the State of Delaware (the
"Company") and THE FIRST NATIONAL BANK OF CHICAGO, as collateral agent for the
Lenders (as defined in the Security Agreement referred to below) (in such
capacity, together with its successors in such capacity, the "Collateral
Agent").
WHEREAS, the Borrowers, certain lenders (the "Banks"), THE BANK OF NEW
YORK, as administrative agent (the "Administrative Agent") and the Collateral
Agent are parties to the First Amended and Restated Credit Agreement dated as
of May 29, 1998 (as amended and supplemented and in effect from time to time,
the "Amended and Restated Credit Agreement"), providing, subject to the terms
and conditions thereof, for extensions of credit (by making of loans) by said
Banks to the Company in an aggregate principal amount not exceeding
$2,750,000,000;
WHEREAS, the Company, the Banks, the Administrative Agent and the
Collateral Agent are parties to a Master Security Agreement dated as of May
30, 1997 (as amended and supplemented and in effect from time to time, the
"Security Agreement"), providing security for the payment of the Extensions of
Credit and the other Secured Obligations (as such terms are defined in the
Security Agreement); and
WHEREAS, the Company, the Banks, the Administrative Agent and the
Collateral Agent wish to amend the Security Agreement in certain other
respects,
NOW, THEREFORE, the parties hereto hereby agree as follows:
Paragraph 1. Definitions. Except as otherwise defined in this
Amendment No. 1 to Master Security Agreement, terms defined in the Security
Agreement are used herein as defined therein.
Paragraph 2. Amendments. Subject to the satisfaction of the conditions
precedent specified in Paragraph 4 below, the Security Agreement shall be
amended as follows:
(a) Section 1 of the Security Agreement shall be amended by replacing
the definition of "Credit Agreement" with the following definition:
"Credit Agreement" means the First Amended and Restated Credit
Agreement dated as May 29, 1998, among Donaldson, Lufkin & Jenrette, Inc.,
the Company, certain Lenders, First Chicago, as the DLJSC Collateral Agent,
a Payment Agent and the
<PAGE>
-2-
Documentation Agent, The Bank of New York, as the Administrative Agent
and a Payment Agent, and The Chase Manhattan Bank and the Company, as
Syndication Agents, as amended, supplemented or otherwise modified
from time to time."
(b) Section 1 of the Security Agreement shall be further amended by
amending the definition of "Customers Securities Collateral Pool" therein as
follows: (i) the reference to "$250,000,000" in clause (b) of such definition
shall be replaced with "$345,000,000"; (ii) the reference to "$75,000,000" in
clause (c) of such definition shall be replaced with "$86,000,000"; (iii) the
reference to "$1,000,000,000" in clause (d) of such definition shall be
replaced with $1,375,000,000"; (iv) the reference to "$700,000,000" in clause
(e) of such definition shall be replaced with "$900,000,000"; (v) the reference
to $200,000,000" in clause (f) of such definition shall be replaced with
"$345,000,000"; and (vi) the reference to "$75,000,000" in clause (g) of such
definition shall be replaced with "$137,500,000".
(c) Section 1 of the Security Agreement shall be further amended by
amending the definition of "Firm Securities Collateral Pool" therein as
follows: (i) the reference to "$250,000,000," in clause (b) of such definition
shall be replaced with "$345,000,000"; (ii) the reference to "$75,000,000" in
clause (c) of such definition shall be replaced with "$86,000,000"; (iii) the
reference to "$1,000,000,000" in clause (d) of such definition shall be
replaced with "$1,375,000,000"; (iv) the reference to "$700,000,000" in clause
(e) of such definition shall be replaced with "$900,000,000"; (v) the reference
to "$200,000,000" in clause (f) of such definition shall be replaced with
"$345,000,000"; and (vi) the reference to "$75,000,000" in clause (g) of such
definition shall be replaced with "$137,500,000".
Paragraph 3. Representations and Warranties. The Company represents
and warrants to the Collateral Agent that the representations and warranties
set forth in Section 2 of the Security Agreement are true and complete on the
date hereof as if made on and as of the date hereof after giving effect to this
Amendment No. 1 to Master Security Agreement and as if each reference in said
Section 2 to "this Agreement" included reference to this Amendment No. 1 to
Master Security Agreement.
Paragraph 4. Conditions Precedent. The amendments to the Security
Agreement set forth in said Section 2 shall become effective, as of the date
hereof, upon the satisfaction of the conditions precedent that this Amendment
No. 1 to Master Security Agreement shall have been executed and delivered by
each of the parties listed on the signature pages hereto and that the Amended
and Restated Credit Agreement shall have become effective in accordance with
its terms.
Paragraph 5. Miscellaneous. Except as herein provided, the Security
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 1 to Master Security Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
amendatory instrument and any of the parties hereto may execute this Amendment
No. 1 to Master Security Agreement by signing any such counterpart. This
<PAGE>
-3-
Amendment No. 1 to Master Security Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
Master Security Agreement to be duly executed and delivered as of the day and
year first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By
-------------------------------------
Title:
THE FIRST NATIONAL BANK
OF CHICAGO, as Collateral Agent
By
-------------------------------------
Title:
<PAGE>
EXHIBIT B
May 29, 1998
To the Banks party to the Credit Agreement referred to below; Chase Securities
Inc., as Arranger; The Chase Manhattan Bank, as Syndication Agent; Donaldson
Lufkin & Jenrette Securities Corporation in its capacity as Syndication Agent;
The First National Bank of Chicago, as Documentation Agent, DLJSC Collateral
Agent and Payment Agent; and The Bank of New York, as Administrative Agent and
Payment Agent.
Ladies and Gentlemen:
We have acted as special counsel to Donaldson Lufkin & Jenrette, Inc.,
("DLJ") and Donaldson Lufkin & Jenrette Securities Corporation ("DLJSC") (each
a "Borrower" and collectively the "Borrowers") in connection with the First
Amended and Restated Credit Agreement dated as of May 29, 1998, (the "Credit
Agreement") among DLJ; DLJSC; the Banks party thereto; Chase Securities Inc.,
as Arranger; DLJSC and The Chase Manhattan Bank, as Syndication Agents; The
Bank of New York, as Administrative Agent; and The First National Bank of
Chicago, as Documentation Agent, DLJSC Collateral Agent and Payment Agent. All
capitalized terms used but not defined herein have the respective meanings
given to such terms in the Credit Agreement.
This opinion is being delivered pursuant to Paragraph 4.03 of the Credit
Agreement.
<PAGE>
-2 -
In rendering the opinions expressed below, we have examined the following
agreements, instruments and other documents:
(a) the Credit Agreement;
(b) the Notes;
(c) the Master Security Agreement dated as of May 30, 1997, as amended
by Amendment No. 1 to Master Security Agreement dated as of May 29,
1998, each among DLJSC, the Banks, The First National Bank of
Chicago as DLJSC Collateral Agent and the Bank of New York as
Administrative Agent; and
(d) such corporate records of the Borrowers and such other documents as
we have deemed necessary as a basis for the opinions expressed
below.
The agreements and instruments referred to in the foregoing lettered clauses
(a), (b), and (c) are collectively referred to as the "Credit Documents".
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with authentic original documents of all documents submitted to us as copies.
As to factual matters relevant to this opinion, we have relied upon statements
of governmental officials and upon representations made in or pursuant to the
Credit Documents and certificates of appropriate representatives of the
Borrowers.
In rendering the opinions expressed below, we have assumed, with respect to
all of the documents referred to in this opinion letter, that (except, to the
extent set forth in the opinions expressed below, as to the Borrowers):
(i) such documents have been duly authorized by, have been duly executed
and delivered by, and constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and validly
existing and have the power and authority (corporate or other) to
execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the comments and
qualifications set forth below, and having considered such questions of law as
we have deemed necessary as a basis for the opinions expressed below, we are of
the opinion that:
1. Each of the Credit Documents constitutes the legal, valid and binding
obligation of each Borrower party to such Credit Document, enforceable against
such Borrower in accordance with its terms, except as may be limited by
bankruptcy, insolvency,
<PAGE>
-3 -
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors generally and except as the enforceability of the Credit
Documents is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including, without limitation, (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (b) concepts
of materiality, reasonableness, good faith and fair dealing.
2. No authorization, approval or consent of, and no filing or registration
with, any governmental or regulatory authority or agency of the United States
of America is required on the part of any Borrower for the execution, delivery
or performance by such Borrower of any of the Credit Documents or for the
borrowings by such Borrower under the Credit Agreement or the granting of a
security interest in the collateral (as defined in the Security Agreement)
pursuant to the Security Agreement.
3. The execution, delivery and performance by each Borrower of, and the
consummation by such Borrower of the transactions contemplated by, the Credit
Documents do not and will not violate any applicable law, rule or regulation.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of the second paragraph of Section 11.03 of the
Credit Agreement (and any similar provisions in any of the other Credit
Documents) may be limited by laws rendering unenforceable (i) indemnification
contrary to Federal or state securities laws and the public policy underlying
such laws and (ii) the release of a party from, or the indemnification of a
party against, liability for its own wrongful or negligent acts under certain
circumstances.
(B) The enforceability of provisions in the Credit Documents to the effect
that terms may not be waived or modified except in writing may be limited under
certain circumstances.
(C) We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Bank is located (other than the State of New York)
that limit the interest, fees or other charges such Bank may impose, (ii)
Section 4.07(c) of the Credit Agreement, (iii) the second sentence of Section
11.10 of the Credit Agreement, insofar as such sentence relates to the subject
matter jurisdiction of the United States District Court for the Southern
District of New York to adjudicate any controversy related to the Credit
documents, and (iv) the waiver of inconvenient forum set forth in Section 11.10
of the Credit Agreement with respect to proceedings in the United States
District Court for the Southern District of New York and the waiver in the
antepenultimate sentence of said Section 11.10.
(D) We wish to point out that the obligations of DLJSC, and the rights and
remedies of the Lenders (as defined in the Security Agreement), under the
Security Agreement may be subject to possible limitations upon the exercise of
remedial or procedural provisions contained in the Security Agreement, provided
that such limitations do not, in our opinion, make the remedies and procedures
that will be afforded to the Lenders inadequate for
<PAGE>
-4 -
the practical realization of the substantive benefits purported to be provided
to the Lenders by the Security Agreement, subject to the economic consequences
of any delay which may result from applicable law, rules, or judicial process.
The foregoing opinions are limited to the Federal laws of the United States of
America, the General Corporation Law of the State of Delaware, the law of the
State of New York and the law of the District of Columbia, and we do not
express any opinion as to the laws of any other jurisdiction. We disclaim any
obligation to update or supplement this opinion to reflect any facts or
circumstances which may hereafter come to our attention, or any changes in laws
which may hereafter occur.
At the request of our clients, this opinion letter is, pursuant to Paragraph
4.03 of the Credit Agreement Amendment, provided to you by us in our capacity
as special counsel to the Borrowers and may not be relied upon by any Person
other than you and your respective successors and assigns and then only in
connection with the transactions contemplated by the Credit Agreement without,
in each instance, our prior written consent.
Very truly yours,
WILMER, CUTLER & PICKERING
By:
Russell J. Bruemmer
a partner
<PAGE>
AMENDMENT NO.1 TO MASTER SECURITY AGREEMENT
AMENDMENT NO.1 TO MASTER SECURITY AGREEMENT dated as of May 29, 1998,
between DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION, a corporation duly
organized and validly existing under the laws of the State of Delaware (the
"Company") and THE FIRST NATIONAL BANK OF CHICAGO, as collateral agent for the
Lenders (as defined in the Security Agreement referred to below) (in such
capacity, together with its successors in such capacity, the "Collateral
Agent").
WHEREAS, the Borrowers, certain lenders (the "Banks"), THE BANK OF NEW
YORK, as administrative agent (the "Administrative Agent") and the Collateral
Agent are parties to the First Amended and Restated Credit Agreement dated as
of May 29, 1998 (as amended and supplemented and in effect from time to time,
the "Amended and Restated Credit Agreement"), providing, subject to the terms
and conditions thereof, for extensions of credit (by making of loans) by said
Banks to the Company in an aggregate principal amount not exceeding
$2,750,000,000;
WHEREAS, the Company, the Banks, the Administrative Agent and the
Collateral Agent are parties to an Master Security Agreement dated as of May
30, 1997 (as amended and supplemented and in effect from time to time, the
"Security Agreement"), providing security for the payment of the Extensions of
Credit and the other Secured Obligations (as such terms are defined in the
Security Agreement); and
WHEREAS, the Company, the Banks, the Administrative Agent and the
Collateral Agent wish to amend the Security Agreement in certain other
respects,
NOW, THEREFORE, the parties hereto hereby agree as follows:
Paragraph 1. Definitions. Except as otherwise defined in this
Amendment No. 1 to Master Security Agreement, terms defined in the Security
Agreement are used herein as defined therein.
Paragraph 2. Amendments. Subject to the satisfaction of the conditions
precedent specified in Paragraph 4 below, the Security Agreement shall be
amended as follows:
(a) Section 1 of the Security Agreement shall be amended by replacing
the definition of "Credit Agreement" with the following definition:
"Credit Agreement" means the First Amended and Restated
Credit Agreement dated as May 29, 1998, among Donaldson, Lufkin &
Jenrette, Inc., the Company, certain Lenders, First Chicago, as the
DLJSC Collateral Agent, a Payment Agent and the
<PAGE>
-2-
Documentation Agent, The Bank of New York, as the Administrative Agent
and a Payment Agent, and The Chase Manhattan Bank and the Company, as
Syndication Agents, as amended, supplemented or otherwise modified
from time to time."
(b) Section 1 of the Security Agreement shall be further amended by
amending the definition of "Customers Securities Collateral Pool" therein as
follows: (i) the reference to "$250,000,000" in clause (b) of such definition
shall be replaced with "$345,000,000"; (ii) the reference to "$75,000,000" in
clause (c) of such definition shall be replaced with "$86,000,000"; (iii) the
reference to "$1,000,000,000" in clause (d) of such definition shall be
replaced with "$1,375,000,000"; (iv) the reference to "$700,000,000" in clause
(e) of such definition shall be replaced with "$900,000,000"; (v) the reference
to "$200,000,000" in clause (f) of such definition shall be replaced with
"$345,000,000"; and (vi) the reference to "$75,000,000" in clause (g) of such
definition shall be replaced with "$137,500,000".
(c) Section 1 of the Security Agreement shall be further amended by
amending the definition of "Firm Securities Collateral Pool" therein as
follows: (i) the reference to "$250,000,000" in clause (b)of such definition
shall be replaced with "$345,000,000"; (ii) the reference to "$75,000,000" in
clause (c) of such definition shall be replaced with "$86,000,000"; (iii) the
reference to "$1,000,000,000" in clause (d) of such definition shall be
replaced with "$1,375,000,000"; (iv) the reference to "$700,000,000" in clause
(e) of such definition shall be replaced with "$900,000,000"; (v) the reference
to "$200,000,000" in clause (f) of such definition shall be replaced with
"$345,000,000"; and (vi) the reference to "$75,000,000" in clause (g) of such
definition shall be replaced with "$137,500,000".
Paragraph 3. Representations and Warranties. The Company represents
and warrants to the Collateral Agent that the representations and warranties
set forth in Section 2 of the Security Agreement are true and complete on the
date hereof as if made on and as of the date hereof after giving effect to this
Amendment No. 1 to Master Security Agreement and as if each reference in said
Section 2 to "this Agreement" included reference to this Amendment No. 1 to
Master Security Agreement.
Paragraph 4. Conditions Precedent. The amendments to the Security
Agreement set forth in said Section 2 shall become effective, as of the date
hereof, upon the satisfaction of the conditions precedent that this Amendment
No. 1 to Master Security Agreement shall have been executed and delivered by
each of the parties listed on the signature pages hereto and that the Amended
and Restated Credit Agreement shall have become effective in accordance with
its terms.
Paragraph 5. Miscellaneous. Except as herein provided, the Security
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 1 to Master Security Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
amendatory instrument and any of the parties hereto may execute this Amendment
No. 1 to Master Security Agreement by signing any such counterpart. This
<PAGE>
-3-
Amendment No. 1 to Master Security Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 Master Security Agreement to be duly executed and delivered as of the day and
year first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By /s/ Charles J. Hendrickson
-----------------------------------
TITLE: CHARLES J. HENDRICKSON
SENIOR VICE PRESIDENT/TREASURER
THE FIRST NATIONAL BANK
OF CHICAGO, as Collateral Agent
By
------------------------------------
Title:
<PAGE>
-3-
Amendment No. 1 to Master Security Agreement shall be governed by, and
construed in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 Master Security Agreement to be duly executed and delivered as of the day and
year first above written.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By
-----------------------------------
TITLE:
THE FIRST NATIONAL BANK
OF CHICAGO, as Collateral Agent
By /s/
------------------------------------
Title: Vice President
<PAGE>
DATED 3RD JUNE 1998
--------------------------------------
(1) USF NOMINEES LIMITED
(2) DLJ UK PROPERTIES LIMITED
(3) DONALDSON, LUFKIN & JENRETTE, INC.
-----------------------------------------
UNDERLEASE
of the whole of 109-118 Old Broad Street
London EC2
-----------------------------------------
From : 3rd June 1998
Term : 20 years
Expires: 2nd June 2018
Initial rent: Pounds sterling 5,764,540
BOODLE
-------
HATFIELD
61 Brook Street o London W1Y 2BL
Telephone 0171 629 7411 o Fax 0171 629 2621 o DX53
<PAGE>
INDEX
-----
INTERPRETATION...................................................
Defined terms..................................................
End of the Term................................................
Landlord and Tenant(Covenants) Act 1995........................
Construction of obligations....................................
Statutes.......................................................
Value Added Tax................................................
Indemnities....................................................
Superior interests.............................................
Approvals......................................................
Vitiation of insurance.........................................
Parties and joint and several obligations......................
Clause numbers.................................................
TERM RIGHTS & RENTS..............................................
TENANT'S COVENANTS...............................................
Rent...........................................................
Interest on arrears............................................
Outgoings......................................................
Common outgoings...............................................
Common items...................................................
Value Added Tax ...............................................
Gas electricity and other services.............................
Repair.........................................................
To clean windows...............................................
Internal decoration............................................
External decoration............................................
Standard of works..............................................
Reinstatement and delivery at end of Term......................
Alienation.....................................................
Enforcement of underlease terms................................
Registration of dealings.......................................
Alterations....................................................
Permitted user.................................................
No nuisance....................................................
No overloading.................................................
Other restrictions.............................................
Contamination..................................................
Waste and refuse...............................................
Plant and machinery............................................
Aerials........................................................
Signs..........................................................
Preservation of rights and boundaries..........................
Reletting and for sale notices.................................
Rights of entry................................................
To permit Landlord to remedy breach............................
Statutory obligations..........................................
Copies of notices..............................................
To pay charges under the Planning Acts.........................
No planning applications etc without consent...................
Copies of permissions..........................................
<PAGE>
To complete works before end of Term...........................
Landlord's costs...............................................
Indemnities....................................................
Deeds affecting the reversion..................................
Surety.........................................................
LANDLORD'S COVENANT..............................................
Quiet Enjoyment................................................
INSURANCE OBLIGATIONS............................................
Landlord to effect insurance...................................
Landlord's insurance covenants.................................
Landlord to obtain consents for rebuilding.....................
Landlord to reinstate..........................................
Cesser of rent and termination.................................
Tenant's insurance obligations.................................
Payment of monies to Landlord..................................
PROVISOS.........................................................
Forfeiture.....................................................
No implied rights..............................................
No restrictions on adjoining property..........................
Exclusion of liability ........................................
Release of Landlord............................................
Service of notices.............................................
Representations................................................
Validity.......................................................
Applicable Law.................................................
Floor areas....................................................
RENT REVIEW......................................................
Frequency of review............................................
Upwards only reviews...........................................
Basis of valuation.............................................
Treatment of rent free periods.................................
Method of determination........................................
Interim arrangements...........................................
Time not of the essence........................................
Statutory restrictions.........................................
Memoranda......................................................
The Arbitration Act 1996.......................................
SURETY'S COVENANTS...............................................
SCHEDULE 1.......................................................
(Rights granted)...............................................
SCHEDULE 2.......................................................
(Exceptions and reservations)..................................
<PAGE>
SCHEDULE 3.......................................................
(Documents which affect or relate to the Premises).............
(Encumbrances).................................................
(Documents which benefit the Premises).........................
SCHEDULE 4.......................................................
(Alienation conditions)........................................
(Requirements for an assignment)...............................
(General requirements).........................................
SCHEDULE 5.......................................................
(Surety covenants).............................................
SCHEDULE 6.......................................................
(Form of Authorised Guarantee Agreement).......................
SCHEDULE 7.......................................................
(Agreed net internal areas)....................................
<PAGE>
THIS UNDERLESS made the third day of June 1998
- --------------
BETWEEN:
- --------
(1) USF NOMINEES LIMITED (Company Registration Number 263490) whose registered
office is at Unilever House Blackfriars London EC4P 4BQ ("the Landlord") and
(2) DLJ UK PROPERTIES LIMITED (Company Registration Number 3530382) whose
registered office is at 99 Bishopsgate London EC2M 3XD ("the Tenant") and
(3) DONALDSON, LUFKIN & JENRETTE, INC. of 227 Park Avenue New York 10 whose
address for service is c/o S J Berwin & Co of 22 Grays Inn Road London
WC1X 8HB (Ref: ENHP) ("the Surety")
WITNESSES as follows:
- ---------
INTERPRETATION
- --------------
1. IN this lease the headings and index shall be ignored in its construction
and unless context otherwise requires:
Defined terms
-------------
1.1 The following expressions have the meanings set against them:
"A3 Unit" the Part of the Premises shown for the purpose
identification only edged red on the plan annex
hereto.
"Basic Rent" the rent payable under Clause 2.1
"conduits" pipes sewers drains cisterns ducts waterthouse
wires cables channels flues and conducting
media and any other apparatus
"Contract Employee" an employee or partner of another firm who
1
<PAGE>
within the Premises solely providing services the
Tenant and who solely works for the Tenant and
whose function would be performed by employee of
the Tenant in the absence contractual relationship
"full cost of such amount as is the full cost of rebuilding
reinstatement" Premises after destruction by an Insured
(including the cost of shoring-up demolition
clearance any works that may be required statute
professional fees payable on applications for
planning permission or consents Value Added Tax and
other expenses) when the rebuilding occurs
any likely increases in building costs up to time
of completion
"Insurance Rent" such sums as the Landlord shall pay by way gross
premiums:
(1) for effecting insurance at commercial rates
under Clause 5.1 and
(2) in respect of the Landlord's liability
insurance at reasonable commercial rates
Together with (or with where applicable the
proportion of):
(3) all reasonable and proper expenses
2
<PAGE>
[ MAP OMITTED ]
[ FLOOR PLAN ]
<PAGE>
incurred by the Landlord in connection with
valuation of the full cost of reinstatement
excluding any expenses incurred by the Landlord
in carrying out any more than one valuation in
three year period) and
(4) any reasonable or usual excesses as insurers
require under any policy of insurance effected by
the Landlord under Clause 5.1 respect of any
Insured Damage that occurs
"Insured Damage" damage or destruction to any part of the
which is caused by a risk against which at the
of the damage or destruction the Landlord has
should have effected insurance of that part of
Premises under Clause 5.1
"Insured Risks" damage or destruction arising from
activity fire lightning storm explosion
aircraft and other aerial devices and
dropped therefrom riot malicious damage
commotion earthquake (fire and shock) bursting
overflowing of water tanks apparatus or pipes
so long as each such risk remains insurable
insurers of repute at reasonable commercial
or is actually insured by the Landlord in
reasonable discretion for the purposes of
3
<PAGE>
Lease together with such other usual commercial
risks of damage or destruction to the
against which the Landlord reasonably from
to time effects insurance for the purpose of
Lease (if any) or as the Tenant may reasonably
require
"Landlord's insurance against all liability of the Landlord
liability third parties arising out of or in connection
insurance" the Premises or any matter relating to the Premises
on such terms and in such amount as the Landlord
from time to time reasonably determines
"Loss of Rent" the amount of the Basic Rent for the time
payable during a period of five years including
increase in Basic Rent during such period the
Landlord reasonably estimates occur as result of
any review due under Clause.
"Outgoings" (in relation to the Premises or other property as
context requires) all present and future
charges taxes assessments impositions
outgoings of any kind (including without limit
the foregoing any which are of a capital or
recurring nature or wholly novel) assessed charged
imposed or payable by or on any owner
occupier of or on or in respect of the Premises
4
<PAGE>
(pursuant to Clause 3.4 hereof) other
respectively
"Planning Acts" the Town and Country Planning Act 1990
Planning (Listed Building and Areas)
Act 1990 the Planning (Substances) Act 1990
and other statutes relating town and country
planning
"Plant" all plant and machinery comprising part of
Landlord's fixtures and fittings now or hereafter
or serving the Premises including (but
limiting the foregoing) any lifts and lift
boilers public address system internal telephone
air conditioning heating and ventilation plant a
machinery sprinklers and associated
electrical systems fire detection and fire
systems central or monitoring systems
installations and any plant and machinery
time to time installed to replace any of
foregoing
"Premises" the whole and each part of the premises known
109/118 Old Broad Street London EC2 register
at H M Land Registry under title number
738917 including all additions and alterations
the Premises and (without limiting the foregoing
5
<PAGE>
any tiles carpeting and other furnishing of
floor referred to in the specification
hereto but excluding (for the avoidance of
any Tenant's fixtures and fittings
"Prescribed Rate" 4 per cent annum above the base rate
National Westminster Bank plc or (if such
ceases to exist) above such other base rate
interest as the Landlord from time to time
reasonably determines
"Quarter Days" 25 March 24 June 29 September and
December in each year
"rents" the Basic Rent and the Insurance Rent
"Rent 14th June 1999
Commencement
Date"
"Superior Lease" a lease dated 3 April 1996 between Old
Street Properties Limited (1) and the Landlord(2)
"Term" the term of year granted by Clause 2 together
with any period of holding-over extension
continuance by statute or common law
"Visitor" The Tenant any undertenant (however remote)
the whole or any part of the Premises and a person
within the Premises expressly with
authority or under the control of the Tenant or a
6
<PAGE>
such undertenant
"1954 Act" the Landlord and Tenant Act 1954
"Group Company" any subsidiary or holding company of
the Tenant or the Guarantor and for the
purpose of this Lease, a company is a
subsidiary of another company or
holding company if that other company
holds a minimum of 25% of the issued
share capital carrying voting rights
End of the Term
1.2 "The last year of the Term" and "the end of the Term" mean
the last twelve months of and the end of the Term however it
ends (including by expense forfeiture or surrender)
Landlord and Tenant (Covenants) Act 1995
1.3 The expressions "excluded assignment" "authorised guarantee
agreement" and "collateral agreement" have in relation to
this Lease the meanings specified in Sections 11(1) 16 and
28(1) of the Landlord and Tenant (Covenants) Act 1995
Construction of obligations
1.4 Obligations by the Tenant:
1.4.1 not to do or omit to do anything in relation to the
Premises or other property include an obligation to
ensure that such act or thing is not done or omitted by
(in relation to the Premises) any other person and (in
relation to other property) and Visitor
7
<PAGE>
1.4.2 to do anything in relation to the Premises or other
property include obligation to ensure that (in relation
to the Premises) all other persons and (in relation to
other property) all Visitors comply with them
1.5 References to obligations of the Tenant in this Lease include
obligations of the Tenant in any document entered into
pursuant to this lease and in any collateral agreement
Statutes
1.6 References to a statute or a statutory instrument include any
extension, amendment or re-enactment for the time being in
force and any regulation instruments permissions directions
orders or notices for the time being made or issued under
them
Value Added Tax
1.7 References to Value Added Tax include any similar tax
substituted for or levied in addition to it
Indemnities
1.8 Obligations to indemnify the Landlord against a matter are
obligations to indemnify the Landlord against liabilities
actions proceedings damages penalties proper costs expenses
claims and demands of whatsoever nature and any property fees
and expenditure incurred arising directly or indirectly from
or in connection with that matter
Superior interests
1.9 References to the Landlord include any superior landlord of
the Landlord where:
1.9.1 the relevant superior lease requires the approval of
the superior landlord to a matter and the Landlord's
approval to that matter is required under
8
<PAGE>
this Lease (although nothing in this Lease shall
prevent the superior landlord from withholding its
approval if it is entitled to do so under the relevant
superior lease)
1.9.2 there is provision for repayment to the Landlord of any
expense incurred and
1.9.3 there is an indemnity in favour of the Landlord
Approvals
1.10 References to the approval or consent of or to a matter being
approved by a person are to its prior written approval or
consent
Vitiation of insurance
1.11 References to insurance being vitiated are to the insurance
effected under Clause 5.1 (and if relevant Landlord's
liability or other similar insurance) being vitiated and/or
payment of the insurance monies under such insurance being
refused in whole or part by reason of any act or omission by
any Visitor
Parties and Joint and several obligations
1.12 References to "the Landlord" and "the Tenant" include the
immediate landlord and the tenant for the time being under
this Lease and (if respectively more than one person) their
and the Surety's obligations are joint and several
Clause numbers
1.13 Without further designation references to numbered Clauses
and Schedules and to clauses of and schedules to this Lease
TERM RIGHTS & RENTS
2. THE Landlord DEMISES the Premises to the Tenant
9
<PAGE>
TOGETHER WITH (in common with the Landlord those authorised by it
and all others with similar rights) the rights specified in
Schedule 1
RESERVING to the Landlord and those authorised by it the rights
specified in Schedule 2
SUBJECT to the matters specified in Part I of Schedule 3 and
(insofar as they are valued and affect the Premises) with the
benefit of the matters in or referred to in the document specified
in part II of Schedule 3
TO HOLD to the Tenant from and including the 3rd day of June 1998 a
term of 20 years
PAYING to the landlord:
2.1 Yearly during the Term (and proportionately for any shorter
period) (pounds sterling) 5,764,540 (Five million seven
hundred and sixty-four thousand five hundred and forty
pounds) (subject to increase in accordance with Clause 7) by
equal quarterly payments in advance on the Quarter Days the
first to be made on the Rent Commencement Date proportionate
from and including the Rent Commencement Date to and
including the day before the next Quarter Day
2.2 By way of further rent the Insurance Rent within ten days of
demand
TENANT'S COVENANTS
3. THE Tenant COVENANTS with the Landlord during the Term and thereafter
specified as follows:
Rent
3.1 To pay the rents:
3.1.1 in accordance with Clause 2 without any deduction and
not to exercise any right or claim to withhold rent or
legal or equitable set-off
10
<PAGE>
3.1.2 (if so requested by the Landlord in writing) by
banker's standing order credit transfer to a bank
account in the United Kingdom nominated by the Landlord
Interest on arrears
3.2 To pay the Landlord interest at the Prescribed Rate from when
the rent or other sum was due or incurred until actual
payment or reimbursement (whether formally demanded or not
and before and after the judgment) on:
3.2.1 any part of the Insurance Rent unpaid on the due date
3.2.2 any part of the Basic Rent unpaid seven days after it
is due
3.2.3 any other sum due under this Lease unpaid ten days
after it is due
PROVIDED THAT this sub-clause is without prejudice to any
other right of Landlord and rents and other sums shall be
deemed unpaid if the Tenant is in breach of the terms of this
Lease and the Landlord has properly refused to accept a
payment so as not to waive a right to forfeit this Lease
Outgoings
3.3 To pay and indemnify the Landlord against all Outgoings which
relate to Premises excluding (save for Value Added Tax) any
payable by the Landlord occasioned by receipt of the rents or
by any dealing with any interest ownership in the Premises of
the Landlord or any superior landlord
Common outgoings
3.4 To repay to the Landlord within ten days of demand a fair
proportion (to be reasonably determined from time to time by
the Landlord) of any Outgoings which relate to the Premises
and other property
11
<PAGE>
Common items
3.5 To pay on demand a fair proportion (to be determined from
time to time by the Landlord) of the costs of maintaining
repairing renewing rebuilding (in the case of renewing and
rebuilding when necessary for the purpose of repair)
cleansing as appropriate all conduits for which the Tenant is
not liable hereunder the use which is common to the Premises
and any other property
Value Added Tax
3.6 To pay to the Landlord as additional rent any Value Added Tax
chargeable any payments or other consideration (including the
rents) made or given by the Tenant under or in connection
with this Lease such Value Added Tax to be payable in
addition to such payments or other consideration and on
receipt thereof the Landlord shall issue a valid Value Added
Tax invoice addressed to the Tenant
3.7 Where under this Lease the Tenant agrees to pay the Landlord
or any other person (including without limitation by way of
indemnity or reimbursement a sum calculated by reference to
an amount expended by the Landlord or another person to pay
in addition a sum equal to any Value Added Tax on such
amounts save to the extent (if any) that is recoverable or
has been recovered by the Landlord or other person
respectively
3.8 at no time to represent or claim to the Commissioners of
Customs & Excise any other person or authority or bring
proceedings of any kind to establish that or any person with
whom it is connected within the meaning of Section 839 the
Income and Corporation Taxes Act 1988 has as at the date of
this Lease provided finance for the Landlord's development of
the Premises or entered into
12
<PAGE>
any agreement arrangement or understanding (whether or not
legally enforceable) to provide finance for the Landlord's
development of the Premises (within the meaning of paragraph
3A(3) and (4) Schedule 10 VATA 1994 that any supplies for
Value Added Tax purposes made to the Tenant by the Landlord
under this Lease should not be treated as taxable supplies by
virtue of the provisions of paragraph 2(3AA) Schedule 10 VATA
1994
Gas electricity and other services
3.9 To pay to the suppliers all charges for gas electricity and
other services consumed or used at the Premises and all
charges for meters and telephones and to comply with all
requirements of the supplying authorities insofar as they
relate to the Premises
Repair
3.10 To keep the Premises in good and substantial repair and
condition except Insured Damage save where the insurance
against such Insured Damage is vitiated
3.11 To keep the Premises in a clean and tidy condition and clear
of all rubbish
3.12 To replace any landlord's fixtures in the Premises which are
or become beyond repair with other good quality fixtures
3.13 To give written notice to the Landlord of any defect or item
requiring repair in the Premises which might give rise to a
common law or statutory duty on the Landlord in favour of the
Tenant or any other person as soon as it comes to the
attention of the Tenant or those deriving title under it
13
<PAGE>
To clean windows
3.14 to clean all windows of the Premises as often as may be
necessary and externally at least once in every month and
internally once in every two months
Internal decoration
3.15 In 2003 and thereafter at least once in every consecutive
period of five years and in the last twelve months of the
last year of the Term (but no so that these works are
required twice in any one period of twenty four consecutive
months) prepare and paint with at least two coats of good
quality paint all parts of the inside of the Premises as
shall have been previously painted
3.16 In the last twelve months of the last year of the Term (but
not so that the works are required twice in any one period of
twenty-four consecutive months to supply and lay throughout
the Premises new blinds and new fitted carpets such carpets
to be of no less quality than those set out in specification
annexed hereto and of a colour and design required by
Landlord acting reasonably both as to the colour and design
required by Landlord acting reasonably both as to the colour
design and cost of such blinds and carpets
External decoration
3.17 In 2003 and thereafter at least once in every consecutive
period of five years and in the last twelve months of the
last year of the Term (but not so that the works are required
twice in any one period of twenty-four consecutive months to
prepare and paint with at least two coats of good quality
paint all parts of the exterior of the Premises as shall have
been previously painted and as often as reasonably necessary
to clean and re-point the external brickwork plasterwork and
stonework of the Premises PROVIDED THAT the Tenant shall not
paint the
14
<PAGE>
whole or any part of any external brickwork steelwork or
stonework of Premises unless such has actually been painted
before the date of this Lease
3.18 As often as is reasonably necessary to clean and treat in a
proper manner other surfaces and fixtures in the Premises not
required to be painted
Standard of works
3.19 To carry out repairs decorations and other works required
under this Lease in a good and workmanlike manner
Reinstatement and delivery at the end of Term
3.20 Before the end of the Term:
3.20.1 to remove any additions or alterations made to the
Premises during Term so as to reinstate and restore the
Premises into the state and condition set out in the
specification annexed hereto
3.20.2 to remove any advertisements or signs erected on or
near the Premises and
3.20.3 to make good any damaged caused by such removal and
the removal of tenant's fixtures
3.21 At the end of the Term to deliver the Premises up in repair
and in accordance with the Tenant's obligations in this Lease
Alienation
3.22 Not to assign charge underlet hold on trust for another or
otherwise part with share possession or occupation of or
suffer any other person to occupy or have an interest in the
whole or any part of the Premises save by way of assignment
charge sharing occupation or possession or underletting of
the whole
15
<PAGE>
of the Premises or an underletting of part of the Premises
satisfying the relevant requirements of Schedule 4
Enforcement of underlease terms
3.23 In relation to any underlease however remote of the whole or
any part of Premises:
3.23.1 not to waive or save with the prior written consent of
the Landlord (which shall not be unreasonably withheld or
delayed if such variation complies with the terms of the
Lease) vary its terms
3.23.2 to procure that the tenant for the time being complies
with the covenant given or which it should have given to
the Landlord pursuant to Part II Schedule 4 and in any
document entered into by the Tenant pursuant to this Lease
2.23.3 to operate properly any provisions for the review of rent
thereby reserved in accordance with its terms
3.23.4 within twenty-one days to give notice to the Landlord of
the details and the determination of every rent review
Registration of dealings
3.24 Within twenty-eight days after any assignment charge
underlease transmission or other disposition or devolution
relating to the whole or any part of the Premises or any
derivative interest in them to give notice of such to the
landlord and to produce to the Landlord a certified copy of
the relevant document and to pay the Landlord's solicitors'
reasonable and proper charges for the registration of every
such document
16
<PAGE>
Alterations
3.25 Not to erect any new buildings on the Premises nor to annex
the Premises to other premises nor to make any alterations or
additions which will alter the height or elevation of the
Premises and not to make any external or any structural
alterations or additions to the Premises
3.26 Subject to Clause 3.25 not to make any other alterations or
additions to the Premises without the Landlord's approval
(such approval not to be unreasonably withheld or delayed)
nor without having entered into such obligations as Landlord
shall reasonably require as to their execution and
reinstatement PROVIDED THAT no approval shall be required for
the erection alteration or removal of internal demountable
partitioning and associated works but Tenant shall submit
full details to the Landlord within three months of doing so
Permitted user
3.27 To use those parts of the Premises designated as at the date
hereof as offices only as offices within sub-class (a) of
Class B1 of the Schedule to the Town and Country Planning
(Use Classes) Order 1987 (ignoring for this purpose an
extension amendment or revocation of such Order made after
the date of the Lease) (" the 1987 Order") together with
ancillary storage and car parking and in addition (but
without limiting the foregoing) to use the A3 Unit as a good
quality licensed wine bar or for such other purpose within
Class A3 or Class A of the Schedule to the 1987 Order as the
Landlord shall approve (such approval not to be unreasonably
withheld or delayed)
17
<PAGE>
No nuisance
3.28 Not to do on the Premises anything which in the reasonable
opinion of Landlord will become or cause a nuisance damage or
material disturbance to the Landlord or to its lessees or to
the owners or occupiers of neighbouring properties.
No overloading
3.29 Not to do or bring in or on the Premises anything which may
put any weight or impose a strain in excess of that which the
Premises are designed to bear
Other restrictions
3.30 Not to hold any sale by auction on the Premises
3.31 Not to permit any person to sleep in the Premises nor to use
the Premises for any residential illegal or immoral purpose
3.32 Not to allow to pass into the sewers or drains or
watercourses serving the Premises any noxious or deleterious
effluent or other substance which may obstruct or damage them
and to make good any such obstruction or damage caused
thereto
Contamination
3.33 Not to allow any noxious or deleterious effluent or any form
of contaminant pollutant or other substance to seep into or
otherwise enter the buildings or other structures on the
Premises or the ground below them
Waste and refuse
3.34 To make proper and adequate arrangements for the removal from
the Premises of all trade and other waste in accordance with
the requirements of a competent authority and any reasonable
regulations made from time to time by the Landlord
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Plant and machinery
3.35 Not without the approval of the Landlord (such approval not
to be unreasonably withheld or delayed) to erect or install
in the Premises any engine or machinery or other appliance or
apparatus of any description (other than usual office
machinery)
3.36 Not to overload the electrical wiring or drainage
installations and apparatus in serving the Premises and to
ensure that they comply with the standard terms conditions
and regulations of the relevant authorities
3.37 To keep all Plant in working order and to enter into and
maintain comprehensive maintenance contracts with reputable
contractors
Aerials
3.38 Not without the approval of the Landlord (such approval not
to be unreasonably withheld or delayed) to erect on the
exterior of the Premises any pole mast w??? aerial or dish or
any erection of any kind whatsoever
Signs
3.39 Not to fix or exhibit on the exterior of or (if visible from
the exterior) the interior of the Premises any sign placard
notice fascia board or advertisement other than with the
approval of the landlord (such approval not to be
unreasonably withheld or delayed) signs giving the name of
the Tenant and occupiers of the Premises
Preservation of rights and boundaries
3.40 not to obstruct any window or light enjoyed by the Premises
and to use best endeavours to prevent the loss of any right
belonging to the Premises
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3.41 To take reasonable steps (insofar as it is within the
Tenant's control) to prevent any encroachment on the Premises
and the acquisition of any right over the Premises and to
notify the Landlord upon becoming aware of any encroachment
or if the acquisition of a right is attempted or made
Reletting and for sale notices
3.42 To permit the Landlord (save where the Tenant is intending to
apply for a r??? tenancy under the 1954 Act and has indicated
such intention to the Landlord in writing) at any time after
the date six months before the end of the contracted term
created by Clause 2 in the case of re-letting to fix and
retain on any suitable part of the Premises a notice for
re-letting the Premises and not to remove or obscure such
notice and to permit all persons with the authority of the
Landlord to view the Premises at reasonable hours on
reasonable prior written appointment
Rights of entry
3.43 To permit the Landlord and those authorised by it to enter
the Premises to:
3.43.1 ascertain whether the Tenant has complied with its
obligations of this Lease
3.43.2 assess the full cost of reinstatement
3.43.3 take schedules of fixtures and chattels to be yielded
up at the end of the Term
3.43.4 inspect repair renew connect to cleanse move relay or
construct existing or new conduits or Plant in over or
under the Premises serving or to serve any neighbouring
property
3.43.5 comply with the obligations in any superior lease
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AND anyone exercising the right of entry shall:
3.43.6 (except in an emergency) do so only at reasonable
times and reasonable prior written notice
3.43.7 cause as little damage and inconvenience as reasonably
practicable and
3.43.8 make good any resulting damage to the Premises
3.43.9 comply with such reasonable security requirements of
the Tenant as the Tenant may specify
To permit Landlord to remedy breach
3.44 To permit the Landlord and all those authorised by it to
enter the Premises without liability to the Tenant for any
inconvenience thereby created to remove any breach of the
Tenant's obligations in this Lease specified by the
Landlord's notice to the Tenant if three months thereafter
the Tenant has not completed remedying the breach AND the
costs properly so incurred by the Landlord (including
solicitors' and surveyors' fees) shall be a liquidated debt
and paid by the Tenant to the Landlord on demand
Statutory obligations
3.45 To comply with the present and future requirements of any
statute government department local or other public or
competent authority or court relating to the Premises or
their use whether imposed on any owner or occupier of them
including (but without limiting the foregoing) to apply for
obtain and maintain fire certificate in respect of the
Premises insofar as it is not the Landlord's statutory
obligation to do so
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3.46 To execute all works and provide and maintain all
arrangements on or in respect of the Premises or their use
that are required under Clause 3.45
3.47 Not to do or omit to do in or near the Premises any thing as
a result of which Landlord may under any statute have imposed
upon it or become liable to any penalty damages compensation
costs charges or expenses
Copies of notices
3.48 As soon as reasonably practicable after receipt to give to
the Landlord particulars of any notice order proposal or
recommendation given to or served on the Tenant or any owner
or occupier of the Premises affecting the Premises
neighbouring property whether advertised or served directly
on the Tenant such owner or occupier or the original (or a
copy) is received by any of them from any other person
3.49 If so requested by the Landlord to produce any such notice
order proposal recommendation and at the request and cost of
the Landlord to make or join making such objections or
representations in respect of it as the Landlord requests
provided that such representations and objections do not
adversely affect the Tenant's interest
To pay charges under the Planning Acts
3.50 To pay and satisfy any charge or levy imposed under the
Planning Acts during or after the Term in respect of the
carrying out or maintenance of any operation at the Premises
or the commencement or continuance of any use of the Premises
during the Term
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No planning applications etc without consent
3.51 Not to serve any notice on not to enter into any agreement
with the planning authority nor without the approval of the
Landlord (such approval not to be unreasonably withheld or
delayed) make any application for permission under the
Planning Acts
Copies of permissions
3.52 As soon as reasonably practicable after receipt to give to
the Landlord a copy of the grant refusal or modification of
any permission or other decision under Planning Acts
To complete works before end of Term
3.53 To carry out and complete before the end of the Term:
3.53.1 any works to be carried out to the Premises by a
date subsequent to end of the Term by a condition of
any planning permission granted any development
implemented before the end of the Term and
3.53.2 any development implemented upon the Premises in
respect of which the Landlord shall or may be liable
for any charge or levy under the Planning Acts
Landlord's costs
3.54 To pay to the Landlord within ten days of demand all (in the case of
Clauses 3.54.1 and 3.54.4 reasonable and proper) costs fees damages
charges and expenses (including insofar as it is reasonable to employ
the same those agents bailiffs and professional advisers) properly
incurred in connection with incidental to:
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3.54.1 any application by the Tenant or any person deriving title
under Tenant in connection with the Premises or any term of
this Lease whether it proceeds or is granted refused or
granted subject to condition unless unreasonably refused or
proffered subject to unreasonable conditions
3.54.2 the preparation and service of a notice under Section 146 of
the Law Property Act 1925 or any steps taken in or in
contemplation of proceedings under Sections 146 or 147 of
that Act or otherwise require the Tenant to remedy any breach
of the Tenant's obligations in this Lease (notwithstanding
that forfeiture is avoided otherwise than by _____ granted by
the court and whether or not any right of forfeiture is
waived by the Landlord or a notice served under the said
Section 146 complied with by the Tenant)
3.54.3 any steps taken in or towards preparing or serving a schedule
dilapidations whether for service during or within six months
after the end of the Term
3.54.4 the recovery or attempted recovery of arrears of the rents or
other sums due from the Tenant under this Lease or any other
breach by the Tenants of its obligations in this Lease
Indemnities
3.55 To indemnify the Landlord against any act omission or
negligence of any Visitor and any breach of the Tenant's
obligations in this Lease by any Visitor
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Deeds affecting the reversion
3.56 To comply with the obligations in or referred to in the
documents set out in Schedule 3 insofar as they relate to the
Premises or the exercise of the right granted by this Lease
and are subsisting and (so far as aforesaid) to indemnify the
Landlord against all matters relating thereto
Surety
3.57 To give notice to the Landlord within fourteen days if the
Surety (or if more than one person any of them) or any person
who has entered into covenants with Landlord in the form of
the covenants in Schedule 5 becomes bankrupt becomes
insolvent or is otherwise dissolved wound up or ceases to
exist and required by the Landlord following the service of
such notice to procure ________ within fourteen days of the
request some other person reasonably acceptable the Landlord
enters into covenants with the Landlord in the form of
covenants in Schedule 5 PROVIDED THAT this Clause will not
apply when this Lease is vested in DLJ UK Properties Limited
unless the Surety is dissolved wound up or ceases to exist
as a result of a solvent amalgamation reorganisation
LANDLORD'S COVENANT
4. THE Landlord COVENANTS with the Tenant as follows:
Quiet Enjoyment
4.1 That the Tenant shall peaceably hold and enjoy the Premises
during the Term without interruption or disturbance from or
by the Landlord or any person lawfully claiming under or in
trust for the Landlord
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4.2.1 To pay the rents reserved by the Superior Lease and to
perform so far as Tenant is not liable for such performance
under the terms of this Lease covenants and conditions on the
part of the lessee contained in the Super Lease
4.2.2 On the request and at the reasonable expense of the
Tenant to take all reasonable steps to enforce the
covenants of the superior landlord contained in the
Superior Lease
4.3 To take all reasonable steps at the Tenant's reasonable
expense to obtain consent of the superior landlord under the
Superior Lease whenever the Tenant makes application for any
consent required under this Lease when the consent both the
Landlord and such superior landlord is needed by virtue of
this Lease and the Superior Lease
4.4 Not to name the Premises and to permit the Tenant to name the
Premises with such name as the Tenant properly requires
INSURANCE OBLIGATIONS
5. THE Landlord and the Tenant AGREE with each other as follows:
Landlord to effect insurance
5.1 (Unless the insurance is vitiated and subject to such
reasonable or usual exclusions qualifications and excesses
as the insurers require) the Landlord shall insure and keep
insured the Premises (excluding tenant's fixtures and any
item which the Tenant covenants to insure but including the
plate glass in the Premises) against risk of loss or damage
by the Insured Risks in the full cost
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reinstatement together with Value Added Tax and for Loss of
Rent or so procure such insurance
Landlord's insurance covenants
5.2 The Landlord covenants with the Tenant in relation to the
policy of insurance effected by the Landlord pursuant to its
obligations contained in this Lease:
5.2.1 to procure that the interest of the Tenant and any
undertenants are not on the policy
5.2.2 to produce to the Tenant on demand written
confirmation from insurers that they have agreed to
waive all rights of subrogation against the Tenant
or any undertenants
5.2.3 to produce to the Tenant on demand (but not more
than once in twelve month period) a written summary
of the terms of the policy insurance effected by the
Landlord
Landlord to obtain consents for rebuilding
5.3 If the Premises suffer Insured Damage the Landlord shall use
its reasonable endeavours to obtain all planning permissions
or other permits and consent required under the Planning Acts
or other statutes (if any) ("the Permissions" enable it to
rebuild the parts of the Premises which have suffered the
Insured Damage PROVIDED THAT:
5.3.1 if the insurance against any Insured Damage (or any
damage destruction which would be Insured Damage but
for such vitiation vitiated (subject to Clause 5.2
above) the Landlord's obligations Clauses 5.3 and
5.4 shall not apply in relation to that damage
destruction unless and until the Tenant has within
six months of
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occurrence of the damage or destruction paid to the
Landlord in full sums due under Clause 5.6.2 as a
result of the vitiation
5.3.2 all sums received in respect of such insurance shall
belong to Landlord and the Tenant according to the
value of their respective interests
Landlord to reinstate
5.4 If the Premises suffer Insured Damage the Landlord shall as
soon as reasonably practicable (or where required as soon as
reasonably practicable after Permissions have been obtained)
rebuild the parts of the Premises which have suffered the
Insured Damage so as to make good the Insured Damage (
Landlord making up any shortfall out of its own monies) but
so that Landlord shall be obliged to use reasonable
endeavours to provide a facsimile the original Premises
PROVIDED THAT it is acknowledged by the Landlord and the
Tenant that the Landlord may use different materials to those
current existing where the materials are of no less quality
than those currently existing and where the materials do not
prejudice the character and appearance of the Premises and
the Landlord may (having used reasonable endeavours to obtain
Permissions for a facsimile of the original Premises) make
changes to the design of the Premises where this is required
by the Permissions but which do not prejudicially affect the
Tenant's use of the Premises as authorised hereunder PROVIDED
FURTHER THAT the Landlord shall not be liable to rebuild
under this sub-clause if and for so long as such rebuilding
is prevented because:
5.4.1 the Landlord has failed despite using its reasonable
endeavours to obtain all the Permissions
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5.4.2 any of the Permissions is granted subject to a
lawful condition which relates to the rebuilding of
the Premises and which it is unreasonably expect or
impossible for the Landlord to comply with
5.4.3 some defect or deficiency in the site on which it is
to take place making rebuilding impossible or
incapable of being undertaken
5.4.4 of war act of God governmental action strike lockout
or
5.4.5 of any other proper circumstances beyond the control
of the Landlord which makes rebuilding impossible or
incapable of being undertaken
Cesser of rent and termination
5.5 If the Premises suffer Insured Damage so as to render the
whole or any part of the Premises unfit for occupation or use
and the insurance against such Insured Damage has not been
vitiated:
Suspension
5.5.1 the whole or (according to the nature and extent of
the Insured Damage a fair proportion of the Basic
Rent shall be immediately suspended either until the
parts of the Premises which have suffered the
Insured Damage have been rebuilt so that they are no
longer unfit for occupation or use a result of the
Insured Damage or until the end of five years from
the Insured Damage whichever first occurs PROVIDED
THAT if such Insured Damage occurs before the Rent
Commencement Date then the period of suspension of
the Basic Rent shall be extended by the number of
days from the date of the Insured Damage to (but not
including) the Rent Commencement Date
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Termination
5.5.2 If on the expiration of three years from the Insured
Damage the works rebuilding the parts of the
Premises (which may for the avoidance doubt and
where the context requires include the whole) which
has suffered the Insured Damage have not yet
commenced or on expiration of four years the parts
of the Premises which have suffered Insured Damage
have not been rebuilt so as to make good the Insured
Damage THEN the Tenant may by one month's notice
served on the Landlord at any time after the
expiration of such period but before the Premises
are rebuilt so as to make good the Insured Damage
terminate the Term (but without prejudice to
any rights in respect of an antecedent breach of
the landlord's or the Tenant's obligations in the
Lease or any surety therefor)
Tenant's insurance obligations
5.6 The Tenant shall:
Notice of damage
5.6.1 give notice to the Landlord immediately if the
Premises are destroyed damaged by any of the Insured
Risks
Payment after vitiation
5.6.2 pay to the Landlord within twenty-eight days of
demand the insurance monies (other than for Loss of
Rent) which would have been payable for such
insurance being vitiated if Landlord's liability
insurance or other similar insurance is vitiated or
if the Premises are destroyed or damaged by any of
the Insured Risks and the insurance against such
damage
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destruction is vitiated PROVIDED THAT the Tenant
shall be entitled make reasonable representations
relating to such vitiation with insurers of the
Premises
Tenant's insurance monies
5.6.3 apply all monies to which the Tenant is entitled by
virtue of an insurance of the Premises in making good
the loss or damage in respect of which they are
payable
No dangerous substances
5.6.4 not without the consent of the Landlord bring or do
on the Premises anything of an unreasonably
dangerous combustible inflammable explosive nature
and not to allow petrol oil cellulose or other
inflammable materials to be stored in the Premises
other than petrol oil in the tanks of vehicles for
the time being kept in those parts of Premises
designated as car parking
Not to vitiate
5.6.5 not do or omit to do on the Premises anything which
may result in increase in the premium for the
insurance of the Premises or which may vitiate any
insurance of the Premises
Insurer's requirements
5.6.6 comply with the reasonable and proper requirements
from time to time of the insurers of the Premises
Tenant's third party liabilities
5.6.7 insure against the Tenant's third party public and
occupiers' liability risk
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Terms etc of Tenant's insurance
5.6.8 within ten days of demand produce particulars of any such
policy or policies and the receipt for every premium for
the then current year
Payment of monies to Landlord
5.7 The Tenant hereby irrevocably authorises the insurers of the
Premises to pay any insurance monies in respect of the Premises
to the Landlord (unless such monies belong to the Tenant) without
the necessity of consent of the Tenant who shall issue such
further separate authorities of this nature to the insurers
whenever requested by the Landlord
PROVISOS
6. IT IS FURTHER AGREED as follows:
Forfeiture
6.1 Whenever:
6.1.1 the rents are in whole or part unpaid twenty one days
after becoming payable whether formally demanded or not
6.1.2 there is a breach of any of the Tenant's obligations in
this Lease
6.1.3 the Tenant (which expression includes in Clauses 6.1.3 to
6.1.7 any person in whom this Lease is then vested) or
the Surety becomes bankrupt or is the subject of an
interim order under the Insolvency Act 1986.
6.1.4 the Tenant or the Surety goes into voluntary or compulsory
liquidation (except solely for the purpose of a bona fide
solvent amalgamation or reconstruction previously approved
by the Landlord) or is the subject of
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a winding-up order or a petition for an administration
order or is otherwise dissolved wound up or ceases to
exist
6.1.5 a receiver or a receiver and manager or an
administrative receiver is appointed in respect of the
whole or any part of either the Tenant's or the Surety's
respective undertaking or assets or
6.1.6 (save for the purpose of a bona fide solvent amalgamation
or reconstruction) the Tenant or the Surety enters into
any arrangement moratorium or composition for the benefit
of or with its creditors
THEN the Landlord may re-enter the Premises or any part of them
in the name of the whole and the Term will determine absolutely
but without prejudice either party's rights in respect of any
prior breach of the other party's obligations in this Lease or
any surety for them
No implied rights
6.2 Save for any rights expressly granted by this Lease the Tenant is
not and shall not be entitled by implication of law or otherwise
to any right or privilege whatsoever over or against any
neighbouring property which belongs to the Landlord now or in the
future
No restrictions on adjoining property
6.3 Nothing contained or implied in this Lease shall impose or be
deemed to impose any restriction on the use of any land or
building other than the Premises or give the Tenant the benefit
of or prevent the release or modification of any obligation
entered into by any purchaser lessee or occupier of any
neighbouring property
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Exclusion of liability
6.4 Except insofar as liability may be covered by insurance effected
by the Landlord in force when the liability is incurred or
attributable wholly or partly to any omission or default of the
Landlord or its servants or agents the Landlord shall not be
responsible to the Tenant or anyone at the Premises for any
accident happening or injury suffered or for any damage to or
loss of any change sustained in the Premises whether caused by
the negligence or otherwise
Relase of Landlord
6.5 Each of the Tenant and its successors in title hereby releases
each person now hereafter included in or comprising the Landlord
from liability for any breach in the landlord's obligations in
this Lease or any collateral agreement occurred whole that person
is not the Tenant's immediate landlord
Service of notices
6.6 Any notice served under this Lease:
6.6.1 shall be in writing
6.6.2 may be addressed to "the Landlord" or "the Tenant" by that
designation without naming the person who is the Landlord
or the Tenant
6.6.3 shall be validly served if left at the addressee's last
konwn place of abode or business in the United Kingdom
6.6.4 shall (in the case of the Tenant) be validly served if
attached to or left at the Premises and
6.6.5 shall be validly served on the third day (excluding
Saturdays, Sundays and statutory bank holidays) after
being posted if it is posted to the addressee's last known
place of abode or business in the United
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Kingdom in a registered letter or by recorded delivery
service unless returned through the post office
undelivered
PROVIDED THAT whilst this Lease is vested in DLJ UK Properties Limited
any notice served on the Tenant or the Surety shall only be validly
served if sent by recorded delivery or left at the offices of SJ Berwin
& Co (ref: EMHP) or as the Tenant may otherwise direct PROVIDED FURTHER
THAT copies of such notices shall also be sent to the registered office
of the Tenant (ref: Company Secretary) by recorded delivery service and
to the offices of the Surety (ref: Vakharia) but the service of such
copies shall not affect the valid service of the original notice in
accordance with the first proviso
Representations
6.7 The Tenant and the Surety each acknowledges that it has not
entered into the Lease in reliance wholly or partly on any
written oral or implied representation by or on behalf of the
Landlord other than the Landlord's solicitor's replies to the
Tenant's solicitor's written enquiries
6.8 Clause 6.7 only excludes or restricts any liability or remedy
for misrepresentation to the extent that (notwithstanding the
exclusion or restriction) it would be a fair and reasonable term
to include in this Lease having regard for the circumstances
which at the date of this Lease were or ought reasonably have
been known to or in the contemplation of the parties hereto
Validity
6.9 If any provision or provisions of this Lease or of any document
referred to herein is or at any time becomes illegal invalid or
unenforceable in any respect
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the legality validity and enforceability of the remaining
provisions of this Lease (or such document) shall not in any way
be affected or impaired thereby
Applicable Law
6.10 This Lease shall be governed by English Law and each of the
parties hereto submits to the non-exclusive jurisdiction of the
High Court of Justice of England and Wales
Floor areas
6.11 The Landlord and the Tenant shall each have the right to refer to
the internal area of each floor of the Premises as set out in
Schedule 7 but such areas shall not be treated as conclusive for
the purpose of any rent review under this Lease.
RENT REVIEW
7. THE Basic Rent for the time being payable under this Lease shall be
reviewed as follows:
Frequency of review
7.1 For the purposes of this Clause "the Review Date" means the day
after the date of expiry of the fifth year of the Term and of
each subsequent period of five years
Upwards only reviews
7.2 From and including each Review Date the Basic Rent shall be
whichever is the greater of the amount of the Basic Rent payable
during the twelve months immediately preceding that Review Date
(ignoring for this purpose but without prejudice to any
suspension under Clause 5) and the open market rent for the
Premises at that Review Date
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Basis of valuation
7.3 (Subject to Clause 7.4) the open market rent for the Premises at
each Review Date shall be the amount agreed by the Landlord and
the Tenant (or if they fail to agree determined in accordance
with Clause 7.5) to be the annual rent at which the Premises
might reasonably be expected to be let in the open market at that
Review Date:
7.3.1 as a whole
7.3.2 by a willing lessor to a willing lessee
7.3.3 with vacant possession
7.3.4 without taking any fine or premium
7.3.5 for a term of 10 years or a term of years equal to the
residue then unexpired of the contractual term hereby
created (whichever is the longer) commencing on that
Review Date
7.3.6 on the terms of this Lease including this Clause other
than as to the amount of the Basic Rent
ON THE ASSUMPTIONS that at that Review Date:
7.3.7 the Tenant has fully complied with its obligations in this
Lease
7.3.8 the Premises are in good and substantial repair and
condition and have been completed in accordance with the
specification annexed hereto
7.3.9 no work has been carried out to the Premises which has
diminished the rental value
7.3.10 if the Premises have been damaged or destroyed they have
been fully rebuilt
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7.3.11 the Premises may be lawfully used for any of the purposes
permitted in this Lease as varied or extended by any
licence pursuant to this Lease
BUT DISREGARDING
7.3.12 the fact that the Tenant any undertenants any Group
Company of the Tenant or any undertenant or their
respective predecessors in title shall have been in
occupation of the Premises
7.3.13 any goodwill that shall have become attached to the
Premises from any carrying on of the business of the
Tenant or any undertenants or any Group Company of the
Tenant or any undertenant or their respective predecessors
in such business
7.3.14 any effect on rent of the Premises attributable to the
existence at such Review Date of any works to the Premises
carried out by the Tenants undertenants or their
respective predecessors in title otherwise than in
pursuance of any obligation to the Landlord and/or their
immediate landlord
Treatment of rent free periods
7.4 The open market rent for the Premises is to be the rent payable
after the expiry of a rent-free period or period of
concessionary rent of such length as would be negotiated in the
open market for fitting out purposes only upon a letting of the
Premises on the terms of Clause 7.3
Method of determination
7.5 If the Landlord and the Tenant fail to agree the open market
rent for the Premises by a date three months before any Review
Date then:
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7.5.1 the determination of the open market rent for the Premises
at that Review Date may be referred to an independent
chartered surveyor ("the Surveyor") with at least ten years
experience in the letting and valuation of office premises
in City of London and its environs
7.5.2 the Surveyor shall be appointed by the Landlord and the
Tenant jointly and (if they fail to agree) shall be
nominated at the request of the Landlord or the Tenant by
or on behalf of the President (or Senior Officer) ("the
President") for the time being of The Royal Institution
of Chartered Surveyors
7.5.3 if the Surveyor dies delays or becomes unwilling unfit or
incapable of acting or if for any reason the President
thinks fit he may on the application of the Landlord or the
Tenant by writing discharge the Surveyor and appoint
another in his place
7.5.4 the costs and expenses of the Surveyor (including the
costs of appointment) shall be borne as he shall direct
7.5.5 the Surveyor shall act as an arbitrator or by agreement
as an independent expert
7.5.6 if the Surveyor is an arbitrator (subject to Clause 7.5.3)
the arbitration shall be conducted in accordance with the
Arbitration Act 1996
7.5.7 if the Surveyor is an independent expert:
7.5.7.1 his decision shall be final and binding and
7.5.7.2 he shall afford the Landlord and the Tenant an
opportunity to make representations to him and to
comment to him on the other's representations
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Interim arrangements
7.6 If the open market rent for the Premises payable from any Review
Date has not been ascertained in accordance with this Clause
before that Review Date then:
7.6.1 the Tenant shall until the first quarter day after the
date on which it is ascertained continue to pay the Basic
Rent at the rate applicable but the review due at that
Review Date
7.6.2 within ten days after the date on which it is ascertained
the Tenant shall pay to the Landlord as additional Basic
Rent:
7.6.2.1 the amount (if any) of the shortfall between (a)
the amount of Basic Rent so payable by the Tenant
down to such quarter day and (b) the amount which
would have been payable if it had been ascertained
before that Review Date and
7.6.2.2 interest at 4% below the Prescribed Rate on each
further payment of Basic Rent which would have been
payable if it had been ascertained before that
Review Date for the period from which such payment
would have been payable until due for payment under
this sub-clause
Time not of the essence
7.7 In respect of the time limits mentioned in this Clause time shall
not be or be deemed to be of the essence
Statutory restrictions
7.8 If at any Review Date there is in force a statute or other
instrument which prevents restricts or modifies the Landlord's
rights to review the Basic Rent in accordance with this Lease
and/or to recover any increase in the Basic Rent then
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(if such prevention restriction or modification is removed
relaxed or modified but without prejudice to its rights (if any)
to recover any Basic Rent the payment of which has only been
deferred by law) the Landlord may by giving not less than one
month's nor more than three months' notice to the Tenant at any
time within six months of it being removed relaxed or modified
proceed with review of the Basic Rent which was prevented or
further review the Basic Rent in respect of any review where the
Landlord's right was restricted or modified and the date of
expiry of such notice shall be deemed to be a Review Date
(provided that nothing in this sub-clause shall vary any
subsequent Review Dates) and recover any increase in Basic Rent
thereby resulting with effect from the earliest date permitted by
law
Memoranda
7.9 Whenever the Basic Rent has been agreed or determined in
accordance with Clause memoranda of it shall thereupon be signed
by or on behalf of the Landlord and the Tenant and attached to
this Lease and its counterpart and each party shall bear their
own costs relating to the memoranda
The Arbitration Act 1996
7.10 The parties shall be deemed to have agreed the following matters
in relation to the Arbitration Act 1996:
7.10.1 that the ordinary rules of evidence (as applied in the
High Court of England and Wales) shall apply as to the
admissibility of and weight to be attached to any evidence
(whether written or oral) by the arbitrator
7.10.2 Section 34(2)(g) shall not apply
7.10.3 that the proceedings should be in English and conducted in
London
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7.10.4 Section 39 shall apply
7.10.5 In Section 61(1) the word "may" shall be substituted with
the word "shall"
7.10.6 The notice provisions as defined in this Lease shall stand
in substitution for the provisions of Section 76
SURETY'S COVENANTS
8. THE Surety COVENANTS with the Landlord in the form of the covenants
Schedule 5
IN WITNESS whereof this Lease has been duly executed by the parties hereto
and is delivered as a Deed the day and year first before written
SCHEDULE 1
(Rights granted)
Conduits
(So far as the Landlord can grant them and subject to temporary interruption
for repair alteration or replacement) the passage of water soil gas
electricity and other services to and from the Premises in and through the
conduits which now serve the Premises and are in or over neighbouring
property
SCHEDULE 2
(Exceptions and reservations)
To build
Save where such building or rebuilding or altering will adversely affect the
beneficial use of the Premises to build or rebuild or alter any buildings on
any neighbouring land in any manner
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<PAGE>
whatsoever notwithstanding that as a result there is a diminution in the
present or future access of light or air to the Premises which it is hereby
agreed is and shall be enjoyed with the consent of the Landlord or other the
owner or occupier of such land and not as of right
SCHEDULE 3
(Documents which affect or relate to the Premises)
PART I
(Encumbrances)
1. The matters contained or referred to in the registers of Title Number NGL
738917
2. The undertaking dated 28 March 1996 made between (1) Midland Bank Plc (2)
Old Broad Street Properties Limited (3) USF Nominees Limited
3. The deed of variation dated 17 December 1997 made between (1) OGM Flinders
Range BV and (2) Old Broad Street Properties Limited and USF Nominees
Limited
PART II
(Documents which benefit the Premises)
<TABLE>
<CAPTION>
DATE DOCUMENT PARTIES
- -------------- ------------------------- --------------------------------------------
<S> <C> <C>
14/05/1998 Substation Underlease USF Nominees Limited (1)
London Electricity Plc (2)
14/07/1925 Deed of Arrangement The Anglo-South American Real Property
Company Limited (1)
The London and South American Investment
Trust Limited and Others (2)
2/12/1955 Light Agreement Jurrian Ten Doesschate & Others (1)
Claremont Estates Limited (2)
117 Old Broad Street Limited (3)
25/10/1990 Party Wall Award MNOPF Trustees Limited (1)
Midland Bank Plc (2)
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
DATE DOCUMENT PARTIES
- -------------- -------------------- -------------------------------------------
<S> <C> <C>
14/01/1992 Party Wall Award Flinders Range BV (1)
Midland Bank Plc (2)
08/07/1996 Party Wall Award Old Broad Street Properties Limited (1)
OGM Flinders Range BV (2)
07/08/1996 Party Wall Award Old Broad Street Properties Limited (1)
The Trustees of the Dutch Church (2)
07/08/1996 Party Wall Award Old Broad Street Properties Limited (1)
Pearl Assurance Limited (2)
21/10/1996 Party Wall Award Old Broad Street Properties Limited (1)
OGM Flinders Range BV (2)
01/11/1996 Party Wall Award Old Broad Street Properties Limited (1)
Pearl Assurance Limited (2)
01/11/1996 Party Wall Award Old Broad Street Properties Limited (1)
The Trustees of the Dutch Church (2)
13/11/1996 Party Wall Award Old Broad Street Properties Limited (1)
BP Properties (2)
18/11/1996 Party Wall Award Old Broad Street Properties Limited (1)
Ashcombe Investments Limited (2)
18/11/1996 Party Wall Award Old Broad Street Properties Limited (1)
Bank Nagara (2)
11/08/1997 Addendum Award Old Broad Street Properties Limited (1)
OGM Flinders Range BV (2)
30/12/1997 Party Wall Award Old Broad Street Properties Limited (1)
The Trustees of the Dutch Church (2)
Undated Confirmation of Old Broad Street Properties Limited (1)
Agreement MNOPF Trustees Limited (2)
</TABLE>
44
<PAGE>
SCHEDULE 4
(Alienation conditions)
PART I
(Requirements for an assignment)
Application
1. This Part applies for the purposes of Section 19(1A) of the Landlord and
Tenant Act of 1927
Authorised guarantee agreement
2. Before any assignment of the Premises the assignor shall give a guarantee
to the Landlord of the performance by the assignee of the Tenant's
obligations in this Lease in the form set out in Schedule 6
Further guarantors
3. Before any assignment of the Premises if reasonably so requested by the
Landlord Tenant shall procure that any person who is then a guarantor of
the then current Tenant obligations in this Lease and (if reasonably so
requested by the Landlord) such other persons as are acceptable to the
Landlord in its reasonable discretion jointly and severally give a
guarantee to the Landlord of the assignor's obligations in the guarantee
given in relation to that assignment pursuant to paragraph 2 above on the
same terms as that guarantee with such amendments as the Landlord reasonably
requires to adapt them to use as a guarantee of the assignor's obligations
as guarantor
No arrears
4. The Tenant shall not assign the Premises unless it has paid all rents and
other sums which have fallen due under this Lease and remedied any breach
of the Tenant's
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obligations in this Lease specified by the Landlord by notice to the Tenant
before date of the assignment PROVIDED THAT such notice shall have been
served on Tenant at least three months before the date of the assignment
5. Subject as provided in paragraph 6 of this part of this Schedule if so
reasonably required by the Landlord that the proposed assignee shall have
procured prior to or contemporaneously with the assignment covenants with
the Landlord by a guarantor or guarantors reasonably acceptable to the
Landlord (but not being the Tenant) in the same form (mutatis mutandis) as
those contained in Schedule 5
6. If the proposed assignee is a company which is either the holding company
of the Tenant or a wholly owned subsidiary of the Tenant (as both
expressions are defined in Section 736 Companies Act 1985) or both are
subsidiaries of a third body corporate (in this clause referred to as
"Associated Company") prior to or contemporaneously with the assignment the
Tenant shall have procured either:
6.1 if the Tenant's obligations in this Lease are guaranteed by an
Associated Company that such Associated Company covenants with the
Landlord on the same terms (mutatis mutandis) as those contained in
Schedule 5
6.2 if there is no guarantor of the Tenant's obligations in this Lease and
if the proposed assignee is not in the reasonable opinion of the
Landlord of equivalent or greater financial standing than the Tenant
that the proposed assignee procure covenants by an Associated Company
which is neither the Tenant nor the proposed assignee and which
Associated Company in the reasonable opinion of the Landlord is of
equivalent or greater financial standing then the Tenant in the same
terms (mutatis mutandis) as those contained in Schedule 5
46
<PAGE>
PART II
(General requirements)
Prior approval to permitted dealings
1. (Subject to the other provisions of this Schedule and Clause 3.22) the
Tenant shall not without the approval of the Landlord (such approval not to
be unreasonably withheld or delayed) assign charge or underlet the whole or
underlet any part of the Premises
Group sharing
2. (Notwithstanding the foregoing or any covenant entered into by an
undertenant pursuant to this Lease) the Tenant or any undertenant of the
whole of the Premises may share occupation of the whole or any part of the
Premises with any Group Company (for as long as both the Tenant or
undertenant and the other person remain members of the group) or any
Contract Employee subject to (in both cases):
2.1 no landlord and tenant relationship or other interest in the Premises
at law or equity being thereby created and
2.2 the Tenant notifying the Landlord immediately of the identity of the
other persons
Underlettings of part
3. (Notwithstanding references in this Part and Clause 3.23 to underleases of
part of the Premises) there shall be no underletting of any part of the
Premises (as distinct from the whole) other than the following:
3.1 an underletting of one or more Permitted Floors or
3.2 an underletting of one or more Permitted Part Floors or
3.3 an underletting of one or more Permitted Floors together with one or
more Permitted Part Floors (including for the avoidance of doubt an
underletting of the whole of the Premises excluding the A3 Unit)
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<PAGE>
together with (at the Tenant's discretion) the whole or part of the
basement of Premises and/or all or any of the car parking spaces
located within the Premises in each case together with and excepting
and reserving such rights as are reasonably necessary in the
circumstances PROVIDED THAT there shall be not more than fourteen
occupants of the Premises (including the Tenant but excluding any Group
Company of the Tenant and the occupant of the A3 Unit) and there shall
be not more than three occupants of each of the lower ground to sixth
floors of the Premises (including the Tenant but excluding any Group
Company of the Tenant and the occupant of the A3 Unit)
No premiums for underleases
4. No underlease shall be granted at a fine or premium nor other than at the
then market rent for the premises underlet such rents to be subject to
review not frequently than five yearly intervals (but not during the
period twelve months before review date under this Lease) and in the same
manner as under this Lease
Undertenants' direct covenants
5. Before the grant or assignment of any underlease the undertenant or
assignee shall covenant with the Landlord:
5.1 to comply with the Tenant's obligations in the underlease until the
underlease is assigned by an assignment which is not an excluded
assignment and
5.2 not to assign charge underlet hold on trust for another or otherwise
part with share possession or occupation of or suffer any other person
to occupy the whole or any part of the premises underlet save with the
approval of the Landlord (such approval not to be unreasonably withheld
or delayed) by way of an assignment or a sub-underletting of the whole
or part or a group sharing in all cases
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<PAGE>
complying with the provisions of this Schedule mutatis mutandis to a
person who has entered into the covenants required by this paragraph 5
PROVIDED THAT on a sub-underletting of a Permitted Part Floor the sub-
undertenant shall only be permitted to assign the whole with the
approval of the Landlord (such approval not to be unreasonably withheld
or delayed)
Terms of underleases
6. Any underlease of the Premises shall be granted on terms consistent with
this Lease modified to the same effect as the alienation covenants to be
given to the Landlord pursuant to paragraph 5 but in relation to an
underletting of part a service charge may be levied
Exclusion of security of tenure
7. Before completion of any underlease consisting inter alia of a Permitted
Part Floor (with the exception of an underlease of the A3 Unit or an
underlease of the whole of Premises excluding the A3 Unit) and the
occupation by any proposed undertenant of the premises to be demised
thereby a valid court order shall be made authorising the exclusion of the
provisions of Sections 24 to 28 (inclusive) of the 1954 Act in relation to
the tenancy to be created by such underlease and a declaration to that
effect shall be included in it and a certified copy of such order shall be
supplied to the Landlord
Definition of "Permitted Floor" and "Permitted Part Floor"
8.1 In this Schedule "Permitted Floor" means one entire floor of the Premises
except the basement of the Premises (other than common parts and
structural parts of the Premises)
8.2 In this Schedule "Permitted Part Floor" means a part of the lower ground
to sixth floor (including for the avoidance of doubt the A3 Unit) of the
Premises (other than common parts of the Premises)
49
<PAGE>
Car Parking Spaces
9. The car parking spaces in the Premises may only be underlet or licensed to
the undertenant of the Premises or part thereof
SCHEDULE 5
(Surety covenants)
Guarantee and new lease on disclaimer
1. The Surety covenants with the Landlord that:
1.1 the Tenant will comply with all the Tenant's obligations in this Lease
until it is assigned by an assignment which is not an excluded
assignment
1.2 in the case of default in complying with such obligations it will
within ten days of demand pay and make good to the Landlord and
indemnify the Landlord against such default
1.3 it will enter into the guarantee required under paragraph 3 of Part I
of Schedule
1.4 (if before an assignment which is not an excluded assignment a trustee
in bankruptcy or liquidator of the Tenant or the Treasury Solicitor or
any other competent person disclaims this Lease) it will (if the
Landlord so requires notice within six months of becoming aware of the
disclaimer) accept or it will guarantee the performance of a company
within the same Group as the Tenant which it will procure enters into
the form of lease from the Landlord a lease the Premises
1.5 it will pay the Landlord's proper costs of such new lease and execute
and deliver to the Landlord a counterpart of it
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Terms of new lease
2. Such new lease shall be for a term equal in duration to the residue which
would have remained unexpired of the contractual term hereby created but
for the disclaimer at rents payable under this Lease immediately before the
date of the new lease (subject to review on the dates mentioned in Clause 7
whether before or after such dates) commencing as from such date and shall
contain the same provisions in all respects as this Lease insofar as
applicable immediately before the disclaimer
Subordination
3. The Surety covenants with the Landlord that while any liability of the
Tenant or the Surety relating to their respective obligations in this Lease
to the Landlord are outstanding it will:
3.1 not claim in any liquidation bankruptcy composition or arrangement of
the Tenant in competition with the Landlord
3.2 account to the Landlord for the proceeds of any judgment or
distribution when it receives from any liquidator or trustee in
bankruptcy of the Tenant
3.3 hold for the benefit of the Landlord any security or right which the
Surety may have over any asset of the Tenant
3.4 not participate in any security held by the Landlord in respect of any
of the Tenant's obligations in this Lease or stand in the place of the
Landlord in respect of any such security
Non-vitiation
4. None of the following shall release or otherwise affect in whole or part
the liability of the Surety under this Schedule:
4.1 any time or indulgence granted by the Landlord to the Tenant
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<PAGE>
4.2 any neglect or forbearance of the Landlord in enforcing the payment of
the rent or compliance with the Tenant's obligations in this Lease
4.3 any refusal by the Landlord to accept a payment in order not to waive
any right to re-enter the Premises
4.4 any variation of this Lease by the Landlord and the Tenant (including
surrender of part of the Premises)
4.5 the release of any security or guarantee held by the Landlord in
relation to the Tenant's obligations
4.6 any other act or omission (other than a release by Deed) whereby the
Surety liability would otherwise be released or affected in whole or
part
SCHEDULE 6
(Form of Authorised Guarantee Agreement)
THIS DEED is made the __________ day of _______________ 1998
BETWEEN:
(1) [ ] (Company
Registration Number [ ] ) whose registered office is at/of
("the Surety") and
(2) [ ] (Company
Registration Number [ ] ) whose registered office is at/of
("the Landlord")
52
<PAGE>
WHEREAS:
(1) The Deed is supplemental to an underlease ("the Lease") of the premises
known as 1 118 Old Broad Street London EC2 dated [ ] 1998 made
between (1) Landlord (2) [DLJ UK] Properties Limited and (3) Donaldson
Lufkin & Jenrette Inc
(2) By an assignment of even date herewith the Surety assigned the Lease
to [ ] ("the Assignee" which expression includes where the context
admits successors in title to the Lease)
(3) Pursuant to the Lease the Surety is required to enter into this guarantee
at the same time as the Lease is assigned to the Assignee
NOW IT IS WITNESSED as follows:
Guarantee and new lease on disclaimer
1. The Surety [jointly and severally] covenants with the Landlord that:
1.1 the Assignee will comply with all the Tenant's obligations in the
Lease until it is assigned by an assignment which is not an excluded
assignment under the Landlord and Tenant (Covenants) Act 1995
1.2 in the case of default in complying with such obligations it will
within seven days of demand pay and make good to the Landlord and
indemnify the Landlord against such default
1.3 (if before an assignment which is not such an excluded assignment a
trustee in bankruptcy or liquidator of the Assignee or the Treasury
Solicitor or any other competent person disclaims the Lease) it will
(if the Landlord so requires notice within six months of becoming
aware of the disclaimer) accept from the Landlord a lease of the
Premises
53
<PAGE>
1.4 it will pay the Landlord's proper costs of such new lease and execute
and deliver to the Landlord a counterpart of it
Terms of new lease
2. Such new lease shall be for a term equal in duration to the residue which
would have remained unexpired of the contractual term created by Clause 2
of the Lease but for the disclaimer at the rents payable under the Lease
immediately before the date of the new lease (subject to review on the
dates mentioned in Clause 7 of the Lease whether before or after such date)
commencing as from such date and shall contain the same provisions in all
respects as in the Lease insofar as applicable immediately before the
disclaimer
Non-vitiation
3. None of the following shall release or otherwise affect in whole or part
the liability of the Surety under this Deed:
3.1 any time or indulgence granted by the Landlord to the Assignee
3.2 any neglect or forbearance of the Landlord in enforcing the payment of
the rent or compliance with the Tenant's obligations in the Lease
3.3 any refusal by the Landlord to accept a payment in order not to waive
any right to re-enter the Premises
3.4 any variation of the Lease by the Landlord and the Assignee (including
the surrender of part of the Premises)
3.5 the release of any security or guarantee held by the Landlord in
relation to the Assignee's obligations
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<PAGE>
3.6 any other act or omission (other than a release by Deed) whereby the
Surety liability would otherwise be released in whole or part
IN WITNESS whereof this Deed has been duly executed by the Surety and is
delivered a Deed the day and year first before written
THE COMMON SEAL of [ ] )
)
was hereunto affixed in the presence of: )
Director
Secretary
SCHEDULE 7
(Agreed net internal areas)
(1) Office & Storage
Size
Floor Use Sq ft
- ----- --- -----
6th Office 13,997
5th Office 16,736
4th Office 16,889
3rd Office 16,882
2nd Office 16,876
1st Office 15,641
Ground Office 8,311
Lower Ground Office 8,024
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<PAGE>
Lower Ground Storage 594
Basement Storage 5,303
14 car parking spaces
(2) A3 Unit
Size
Floor Use Sq ft
- ----- --- -----
Ground A3 3,650
(THE COMMON SEAL of USF
[SEAL] (NOMINEES LIMITED was hereunto
(affixed in the presence of:
Director /s/ ILLEGIBLE
-----------------
Secretary /s/ ILLEGIBLE
-----------------
56
<PAGE>
Foggo Associates
55 Chaarterhouse Street
London EC1M 6HA
Telephone 0171.498.4040
Facsimile 0171.490.2889
111 OLD BROAD
STREET
OUTLINE BUILDING SPECIFICATION
LEASE SPECIFICATION
<PAGE>
OUTLINE BUILDING SPECIFICATION
DESIGN APPROACH
INTRODUCTION
The site of 109-118 Old Broad Street is located opposite the National
Westminster Tower Part of the site lies within the Bank Conservation Area.
GENERAL
The new building is planned around a central internal atrium which
incorporates the main passenger lifts. The main core facilities, including
toilets, and escape staircases are arranged along the party wall boundaries
with Pinners Hall and 119-122 Old Broad Street. A fire core and fire lift is
located in the core adjacent to Pinners Hall. A third core including an
escape stair, a goods lift, disabled toilet, fire core and fire lift is
positioned adjacent to Austin Friars Square to the West.
The building consists of nine levels of which levels 1 to 6 are wholly
planned for office use. At ground level there is B1 accommodation and an
A1/A3 retail unit, adjacent to Pinners Hall separated from the main body of
the building by a pedestrian route that links Old Broad Street with Austin
Friars Square. At lower ground level is further office accommodation
ancillary storage and car parking.
The air handling units, lift motors, and boilers are located in plant rooms
at level 7, with the chillers in an external louvred enclosure. All other
plant is located in the basement.
BUILDING ACCESS AND SERVICING
The main office entrance is in the centre of the Old Broad Street frontage.
Service access to the building, refuse store and car parking for the offices
is from Austin Friars Square.
The retail unit has been designed so that it can be accessed from Old Broad
Street, Austin Friars Square and the pedestrian route.
BUILDING MASSING
The massing of the building responds directly to the adjacent buildings. The
top floor is recessed back from Austin Friars Square and Old Broad Street
bringing the height of the principal portion of these facades in line with
that of Pinners Hall and 119 Old Broad Street respectively. The overall
height of the building has been set to be equivalent to the room levels of
119 Old Broad Street and Pinners Hall.
The composition of the new facades also respect principal cornice, cill and
parapet and two storey base lines on the adjacent buildings.
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<PAGE>
OUTLINE BUILDING SPECIFICATION
DESIGN APPROACH CONTD.
EXTERIOR FINISHES
PRINCIPAL ELEVATIONS:
The composition of the elevations to Austin Friars and Old Broad Street are
both based on 6 metre wide bay, the width of which responds to the size and
scale of the major bays of both 10 Austin Friars and Pinners Hall.
The main piers of the building that articulate the 6 metre bay consist of
precast structure columns either side of a limestone clad infill.
The bays have a traditional tripartite vertical subdivision. The major part
of the facade, the middle, reinterprets the traditional device of the masonry
supported bay window using post-tensioned natural limestone. The detailing
expresses the structural nature of the components, with stone used in
compression and stainless steel used in tension.
The top of the facade is articulated by omitting the bay window and providing
a stainless steel balcony and a stainless steel brise-soleil, which echo
cornices and parapets on the adjacent buildings.
At ground and level 1, the floor to ceiling bay windows are replaced by
smaller bay windows. At level 1 the bay is supported from underneath by a
post-tensioned limestone and stainless steel truss. At ground level the bay
window is supported off the ground via metal posts, and sits over a natural
limestone grillage stall riser. Either side of the bay window are small areas
for low level planting.
The main entrance to the offices from Old Broad Street is articulated by
pairing the main piers of the building at closer centres within the three
central bays. The bay windows in the central area changes to a chevron
pattern at upper levels. At ground floor there are fully glazed doors, with a
glazed revolving door for the office entrance.
At high level, where the building sets back, the elevations are simplified
and comprise a metal framed curtain walling system with clear solar control
glass to the vision areas and screen printed glass to the spandrels.
The subsidiary bay at each end of the Old Broad Street elevation, consists of
limestone cladding with "punched" windows, providing a more neutral
transition between Pinners Hall and 119 Old Broad Street and the new
building.
59
<PAGE>
OUTLINE BUILDING SPECIFICATION
DESIGN APPROACH CONTD.
INTERIOR FINISHES
ENTRANCE:
The entrance area, which links directly to the main passenger lift lobby at
the centre of the atrium, comprises a stone floor and either glass or stone
walls to each of the side walls, and plasterboard ceiling. Set into the stone
floor by the entrance doors is an entrance mat with stainless steel frame.
ATRIUM:
The floor finish is stone. The walls to all levels of the atrium consist of
frameless glazing, with obscured areas of glass having a screen printed or
acid etched finish, and vision area being clear toughened glass. Areas of
timber grillages are also incorporated at ground and level 1 to provide
visual privacy. The exposed concrete columns and beams are painted white.
A timber or stone reception desk may be positioned by the tenant to enable
access to and from the upper levels of the building to be monitored.
At the centre of the atrium are the passenger lifts. The wall to the lift
shafts off the lobby is silicone glazed glass and the lift doors will be
glazed with stainless steel finished frame where required.
LIFTS:
The interior of the passenger lifts consists of stone flooring, predominantly
clear glass walls and ceiling, feature lighting and stainless steel
metalwork.
OFFICE:
The office spaces at lower ground and Levels, 1, 4, 5 and 6 have a 150mm
raised floor with carpet tiles. At ground level a 325mm raised floor is
provided. On levels 2 and 3 provision for dealer floors has been made
incorporating a 270mm raised floor and increased floor to ceiling height. The
ceiling is finished with metal suspended ceiling system with integral light
fittings, sprinkler heads and air diffusers. A four-pipe fan coil system
within the ceiling void provides heating and cooling to the offices.
TOILETS:
The toilets include ceramic tiled floors and walls and stone vanity units.
Cubicles have timber panelled walls and full height timber partitions and
doors. The rear wall of each cubicle incorporates a small stone shelf and has
removable access panels to a duct behind.
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<PAGE>
OUTLINE BUILDING SPECIFICATION
DESIGN APPROACH CONTD.
INTERIOR FINISHES CONTD.
TOILETS: CONTD.
Recessed basins in vanity units and WC pans are white vitreous china. Taps
and flush handles are brushed stainless steel. Above the vanity unit is a
mirror, behind which are concealed paper towel dispensers.
Between the mirror and vanity unit is a ceramic tiled zone incorporating taps
and soap dispensers.
A wall mounted mirror is provided away from the basins.
The ceiling consists of a flat pasterboard ceiling with recessed lighting,
air extract grille and sprinklers with suitable maintenance access.
INTRODUCTION
The building is lifted out to the Developers' Standard specified herein.
STANDARDS
All materials and workmanship comply where appropriate with applicable
current British or internationally recognised Standard Specifications and
Codes of Practice.
OFFICE WORKSPACE:
Typically the workspace depth is nominally 11-12m (at level 2) from the
windows on the two main external elevations to the atrium window wall.
OFFICE PLANNING MODULES:
A module of 1.50m is adopted.
STRUCTURAL GRID:
Column spacings are at 6.0m centres along the facade and nominally 11.75 or
9.775m perpendicular to the two main facades. Spans are 11.0m varying to 6.5m
in the centre portion, which are also at 6.0m centres parallel to the atrium
side.
At lower ground and basement the column spacings are nominally 6.0m x 6.0m.
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<PAGE>
OUTLINE BUILDING SPECIFICATION
INTRODUCTION CONTD.
STANDARDS CONTD.
FLOOR TO SUSPENDED CEILING HEIGHTS:
Typical floor to ceiling heights measured from the top of the finished floor
to the underside of the ceiling finish are:
<TABLE>
<CAPTION>
<S> <C>
Lower Ground 2.600m
Ground, 1, 4, 5 and 6 2.670m
Levels 2 and 3 2.800m
</TABLE>
FLOOR TO FLOOR HEIGHTS:
Typical floor to floor heights measured from top of the structural floor slab
are:
<TABLE>
<CAPTION>
<S> <C>
Basement Varies
Lower Ground 3.435m
Ground, 1, 4 and 6 3.850m
Levels 2 to 3 4.100m
</TABLE>
PLANTROOMS AND CAR PARK HEADROOMS:
Roof plantroom clear headrooms are typically 2.50m and 3.250m below beams.
Basement plantroom clear headroom is typically 3.00m.
Basement car park headroom below beams is not less than 2.2m.
RAISED FLOOR:
The buildings are designed to accommodate a nominal 150mm deep overall,
raised floor in the typical office areas (270mm on levels 2 & 3 and 325mm on
ground level).
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<PAGE>
OUTLINE BUILDING SPECIFICATION
INTRODUCTION CONTD.
STANDARDS CONTD.
OCCUPATIONAL DENSITIES:
The design is based upon the following occupation ratios (people per sq.m. of
usable area:
<TABLE>
<CAPTION>
<S> <C>
W.C. provision floor by floor 1:12
Male: female ratio 60:60
Disabled one per floor
Air Conditioning & Lifts--General 1:12
--Levels 2 and 3 1:7
Fire escape 1:10
</TABLE>
CAR PARKING:
14 car and 14 motor cycle spaces are provided at lower ground level served by
an access ramp from Austin Friars Square. Space is also provided for cycles.
STRUCTURE
2000 -- PILING
The building is supported primarily on small diameter, bored, cast insitu
reinforced concrete piles. (part new, part retained existing)
2500 -- CONCRETE WORKS
BASEMENT:
Concrete ground slabs on Type 1 granular beds. Insitu reinforced concrete
pile caps.
Reinforced concrete:
- -- watertight ground slabs laid on concrete blinding, including manholes
and sumps
- -- lift pits, including excavations
- -- watertight concrete retaining walls
- -- reinforced concrete insitu columns and shear walls
- -- suspended slabs and stairs from basement to lower ground level
63
<PAGE>
OUTLINE BUILDING SPECIFICATION
STRUCTURE CONTD.
2500 -- CONCRETE WORKS CONTD.
BASEMENT: CONTD.
- -- upstands and edge details
Foul and surface water drainage systems under the buildings complete with
petro-interceptor and sump pumps.
Works for mechanical and electrical services, including forming holes,
casting-in sleeves and the like where services pass through concrete
structures, and subsoil ducts under the buildings.
Plant and storage areas have a design load capacity of 7.5kN/m(2).
LOWER GROUND:
All as that defined under Basement for the structure between basement and
ground levels.
Provision of a floating concrete slab to improve acoustic isolation of office
areas which are proximate to the Central Line tunnel along Old Broad Street.
The width of the isolated slab extends from the Old Broad Street side to the
edge of the atrium.
Design load capacities are:
1. 3.5kN/m(2) live load allowance plus 1kN/m(2) for lightweight
partitions in the office areas. There is a dead load allowance of
0.85 kN/m(2) for ceiling, services and raised floors.
2. 5kN/m(2) in office archive areas.
3. 5kN/m(2) in car park areas.
GROUND TO ROOF:
Insitu reinforced concrete slab and concrete downstand beams skip float
finish to the main office areas.
Suspended slabs have a maximum design live load capacity of 3.5 kN/m(2) plus
an allowance of 1.0 kN/sq.m. for lightweight partitions. The dead load
allowance for ceilings, services and access floors to be installed by the
tenant is 0.85kN/m(2).
On each floor a designated area of structure of at least 5% of the usable
office is capable of sustaining a live load of 7.5kN/m(2) for storage
purposes.
64
<PAGE>
OUTLINE BUILDING SPECIFICATION
STRUCTURE CONTD.
2500 -- CONCRETE WORKS CONTD.
GROUND TO ROOF: CONTD.
The design imposed load at roof level is 1.5kN/m(2), except in plant areas
where its 7.5kN/m(2).
Insitu reinforced concrete internal columns and downstanding beams with fair
face exposed precast columns on the external facade. The building is braced
by either insitu reinforced concrete core walls or framing action between
beams and columns.
Steel pan main and secondary escape staincases with concrete tread infill.
Lightweight concrete in making up levels in the stair lobbies, toilets and
core areas.
2800 -- STEEL FRAMED PLANTROOMS (LEVEL 7)
The structure around the roof plant areas is a painted galvanised structural
steel frame supporting a lightweight roof and cladding or louvre panels.
The design imposed roof load is 0.75 kN/m(2).
BUILDING FABRIC
3200 -- EXTERNAL CLADDING
Polyester powder coated aluminium framed curtain wall to office areas,
comprising internally framed structural double glazed wall (using clear solar
control, low E glass) forming bay window projections from levels 2 to 4 on
the Old Broad Street and Levels 1 to 4 on the Austin Friars Square
elevations.
The front edges of the bay windows between levels 2 to 4 are cantilvered and
tied to the post tensioned natural limestone and stainless steel mullion and
truss transome assembly supported on the white fair faced precast concrete
columns. The central entrance bay is treated in a similar way but with a
chevron window.
Spandrel areas in front of floor slabs are insulated and faced externally
with screen printed enamelled glass and internally with sheet metal.
Limestone rain screen cladding between twin white fair faced precast concrete
columns with a suspended sheet weathering membrane behind.
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<PAGE>
OUTLINE BUILDING SPECIFICATION
BUILDING FABRIC CONTD.
3200 -- EXTERNAL CLADDING CONTD.
Walls facing into Courtyards and those to the set back elevations at level 6
on Old Broad Street and Austin Friars Square are polyester powder coated
aluminium structural double glazed curtain walls with screen printed
enamelled glass spandrels in front of the floor structure.
Anodised aluminium sunscreen louvres are provided at 5th and 6th floor level.
Polyester powder coated aluminium extruded louvred cladding (insulated where
required to the plantrooms at Level 7 with louvred openings where required
for ventilation complete with access doors and associated ironmongery.
Polyester powder coated extruded aluminium louvred cladding with acoustic
attenuation around the open chiller plant areas at roof level complete with
access doors and associate ironmongery.
Single glazed, revolving main entrance door complete with adjacent single
glazed safety pass doors and associated ironmongery set into the recessed
entrance bay.
Single glazed side hung double entrance doors to the retail areas at ground
level.
The pedestrian route has stainless steel roller grilles and ironmongery at
each end.
The car park access ramp and escape staincase onto Austin Friars Square have
stainless steel doors and fixed over panels. Those to the car park access
ramp are perforated for ventiliation.
The thermal transmittance (U-Value) for the external cladding in office areas
is equal to or better than:
<TABLE>
<CAPTION>
<S> <C> <C>
Double glazed vision areas
(excluding the frame) -- 1.60 W/m(2)K
Solid areas -- 0.30 Wm(2)K
Frames -- 2.80 Wm(2)K
</TABLE>
(See document 4300 for stone faced rainscreen cladding on block walls).
3350 -- ATRIUM ROOF GLAZING
Single clear glazed, polyester powder coated metal framed roof over the
atrium incorporating painted steel supporting structure, (see element 6000
for motorised fans for ventiliation and smoke evacuation in case of fire) and
suspended polyester powder coated metal walkways/sunscreens complete with
safely latchway wires for safety when cleaning outside.
The atrium roof glazing achieves a U-value equal to or better than 5.40
W/m(2)K.
66
<PAGE>
OUTLINE BUILDING SPECIFICATION
BUILDING FABRIC CONTD.
3400 -- ATRIUM GLAZING
Full height, frameless, single glazing with silicone mastic joints to the
sides around the internal atrium and lift lobbies having metal faced spandrel
panels cladding the edges of the structural slabs, doors and associated
ironmongery.
3600 -- ROOF FINISHINGS
'Inverted Roof' construction comprising concrete paving slabs and gravel
protection/ballas on insulation board on fully bonded waterproofing membrane
laid on concrete roof slab to falls. The roof finish construction achieves a
U value equal to or better than 0.30 W/m(2)K except the roof plant room roofs
which is equal to or better than 0.6W/m(2)K.
Falls on the roof are achieved by setting the roof slab to falls.
3700 -- BLOCKWORK AND METAL DOORS
Partition walls in car park, plantrooms and core areas at basement and lower
ground level and the refuse and car park ramp areas at ground level are
constructed in fair fact blockwork. Existing boundary walls are faced in
blockwork as are any existing retaining wall at lower ground level within
office or archive areas.
External stone faced rainscreen cladding is backed with a solid blockwall to
the flanking strip adjoining 119 Old Broad Street and Pinners Hall, the
Austin Friars lightwell recess adjoining Pinners Hall, the flank walls
adjacent to Austin Friars Square stair and to the solid areas on wall at
higher levels overlooking Augustine House. (See element 4300 for the stone
facing insulation and weathering membrane).
3800 -- DRYLININGS AND PARTITIONS
Dry lined partitions and suspended ceilings comprising plasterboard on a
metal framework with the joint, filled and prepared to receive decorations
where facing into occupied areas are installed in the following locations.
- -- core areas, providing fire resistance to escape routes
- -- linings to concrete block party walls and external cladding in the
office areas
Thermal insulation is included in partitions where necessary adjacent
external elevations.
67
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Outline Building Specification
FINISHES
4000 - SUSPENDED CEILINGS
A modular grid painted suspended ceiling in usable office areas consisting of
perforated metal tiles fixed to a two way aluminium suspended concealed grid,
co-ordinated with light fittings, air diffusers and sprinkler heads and
including fire rated cavity barriers as necessary
Painted plasterboard in the main lift lobbies and passenger the main ground
floor entrance areas.
Installation of light fittings and controls (see element 8725) in usable office
areas.
4100 - RAISED FLOORS
A full access raised floor in office areas generally having an overall depth of
150mm (270mm at levels 2 and 3 and 325mm at ground level) comprising nominal
600 x 600 x 38mm thick metal faced panels, fixed on props at 600mm centres to
provide approximately a 112mm deep under floor cavity (232mm at levels 2 and 3
and 287mm ground level), complete with fire rated cavity barriers. Complies
typically with the PSA MOB PF2 PS/SPU medium grade specification and is capable
of supporting a 3kN point load on a 25mm square or a 1 kN/sq.m. uniformly
distributed load. Deflection under either condition will not exceed 2.4mm.
Either raised access floor or screed on insulation to main stair landings and
lift lobbies (as specified under element 8530).
4200 - TOILETS
DISABLED TOILETS:
A unisex disabled toilet is provided at lower ground and levels 1 to 6.
Finishes are as described under elements 4300 and 4500 for the main toilets
with the exception of the walls which are all timber panelled, stainless steel
paper towel dispensers are surface mounted, waste disposal bins are free
standing and stainless steel grab handles (d line or similar quality) are
provided. Separate vitreous china basins are provided in lieu of those set in
stone vanity taps.
4300 - STONE FINISHES
Stone wall cladding to main entrance area (externally) and pedestrian route.
Stone rainscreen external cladding with insulation and waterproofing to west
core lightwells and sundry elevations at rear, adjacent Pinners Hall and 120
Old Broad Street to front elevation. (See block backing under element 3700).
<PAGE>
Outline Building Specification
FINISHES CONTD
4300 - STONE FINISHES CONTD.
Stone wall cladding and floor finish to main passenger lift pits, and stone
floor finish passenger lift cars.
Stone vanity unit tops with steel frame and cover fascias, stone cistern
shelves above WC's.
Stone tiled floor finish to ground floor main entrance and atrium, lower ground
atrium and stone floor finish to the central lift lobbies at all levels.
Threshold mats at main entrance doors.
4350 - CARPET
600 x 600mm Square edged anti-static carpet tiles at all office levels laid
direct on the raised office floor of a quality similar to the Milliken
"Affiniti Midnight Sparkle", one to one tiles fixed with a magnetic strip
fixing incorporated into the backing.
600 x 600mm square edged anti-static carpet tiles laid direct stair treads,
risers and landing and stair lobbies e.g. of a quality and type similar to the
Milliken "Afinity Midnight Sparkle" range.
PVC nosings to stairs, e.g. of a quality and type similar to the "Gradus"
polished aluminium.
4500 - JOINERY
DOORS
Clear polished timber veneered solid core full height internal doors with
hardwood frames in cores at all office levels.
MDF faced painted internal doors with softwood frames to ducts.
Doors on fire exit routes have the required fire resistance properties.
Ironmongery is satin stainless steel or anodised aluminium with tubular D
handle door furniture as (d line" or similar quality).
TOILET FINISHES GENERALLY:
Clear polished timber veneered solid core full height toilet cubicles and doors
with hardwood frames.
Clear polished timber veneered panelling to the rear and flank walls of the WC
cubicles with integral shelf over cistern and concealed access panels.
<PAGE>
Outline Building Specification
FINISHES CONTD
4500 - JOINERY CONTD.
TOILET FINISHES GENERALLY: CONTD.
Ceramic tiling to walls within the toilet circulation space.
Ceramic floor tiling.
Mirrors above vanity tops, hinged for access and wall mounted elsewhere.
Stainless steel paper towel dispensers concealed behind mirrors, waste disposal
bins seated into tiled recesses, toilet roll holders and combined coat hook and
door buffer (d line or similar quality) in each toilet cubicle.
ATRIA SCREENS:
Solid hardwood screens mounted on a sliding track are provided at lower ground
and ground levels to the perimeter of the atria.
SIGNAGE:
Foamex statutory signage to emergency exits etc. and illuminated emergency
signage. Stainless steel building signage and nickel plated brass floor markers
to cover.
SUNDRY ITEMS:
MDF skirtings are provided to all areas and an MDF sill to 6th floor west stair
core.
4600 - HANDRAILS AND METALWORK
GALVANISED MILD STEEL:
- -- handrails to steps at changes in level in the basement
- -- handrails to stairs from basement to lower ground and ground levels.
- -- safety balustrades on the roof, complete with concrete bases
- -- steps over pipework on the roof, complete with concrete bases
- -- ventilation grillage on the car park ramp
- -- access ladders and grab handles to the oil store rooms
<PAGE>
Outline Building Specification
FINISHES CONTD
4600 - HANDRAILS AND METALWORK CONTD.
STAINLESS STEEL:
- -- balustrades in the West stair core
- -- handrails in the North, South and West stair cores
- -- handrails in the pedestrian route at ground floor level
Anodised aluminium access ladders to the roof vent hatches in the North, South
and West Stair cores.
4700 - METAL DOORS AND SHUTTERS
Steel doors and frames of the required fire resistance, to car park areas and
plant rooms and lower ground and basement levels. Steel fire shutters to car
park doors on escape routes.
All metal doors have a polyester powder coated finish.
4800 - DECORATIONS
Emulsion paint to plasterboard columns and core walls facing into office areas.
Emulsion paint on exposed plasterboard suspended ceilings, walls and column
casings in core areas.
Sprayed glazed finish on plasterboard walls in cleaners cupboards.
Emulsion paint to seal surfaces of blockwork walls and concrete ceilings in
lift motor rooms HV substations, LV switchrooms and telecommunications rooms.
Emulsion paint on blockwalls in the car park.
Acrylic based floor paint on concrete floors in lift motor rooms, HV
substations, LV switchrooms, mechanical and plumbing plant rooms and
telecommunications rooms.
Parking bay markings in the lower ground car park
<PAGE>
Outline Building Specification
EQUIPMENT
5200 - RECEPTION FURNITURE
Polished timber, glass or stone faced reception desk in the ground floor
entrance hall.
5500 REFUSE COMPACTOR
A small refuse compactor and space for disposal bins is provided adjacent to
the lower ground floor goods access point.
5600 OFFICE BLINDS
Internal office blinds comprising painted perforated metal slats with cord
operated raise, lower and tilt control and adjustment are provided to all
usable external office window vision areas (excluding atrium windows).
5800 - WINDOW CLEANING ACCESS
Rails and electrically operated trolley and cradle on the main roof at level 7
providing access for window cleaning and periodic maintenance.
Access ladder and latchway safety cable for inertia reel lanyard/harness
attachment for access to the top surface of the roof glazing (See element 3350
for access to the internal roof glazing surfaces).
Fixed attachment points on the north and south plant room roofs at level 8 for
either an abseiler to attach to for access to the stone walls facing adjoining
property or for an inertia reel lanyard/harness attachment for roof
maintenance access.
The "punched window" in stone cladding adjoining Pinners Hall and 119 Old Broad
Street incorporate side hung, opening inward vents complete with safety
handrails and eye bolts for lanyard/harness attachment in order to provide the
facility to clean them from inside the office.
Monorail on cantilevered brackets at high level in the atrium and electrically
operated cradle for access to the atrium glazed wall.
Access to clean the stainless steel brise soleil at level 6 is facilitated with
the aid of a safetyway latchway cable fixed to the cleaning trolley rail
adjacent. The stainless steel balconies at level 5 also incorporate a latchway
cable.
<PAGE>
Outline Building Specification
MECHANICAL SERVICES
DESIGN CRITERIA
The heating and ventilating systems are designed to suit the following design
parameters.
(All area related units refer to net internal areas).
WINTER:
External Conditions -4 degrees C db saturated
Internal Conditions 20 degrees C plus/minus 1.5 degrees C
SUMMER:
External Conditions CIBSE Standard Weather Year
Internal Conditions 23 degrees C plus/minus 2.0 degrees C
SOUND:
Excluding external noise sources a maximum overall permitted noise level of
NR38 from the base building engineering services is achieved in office areas
(measured in open plan unoccupied furnished space). In toilets the equivalent
figure is NR45.
OUTSIDE AIR:
A minimum 16.00 litres per second person is provided.
HUMIDITY CONTROL:
No humidity control is provided but steam humidification could be added later,
in the plan rooms to the fresh air supply by tenants, if required.
SMALL POWER COOLING LOAD:
A cooling allowance for 20W/m2 in office areas and 35W/m2 for levels 2 and 3
(possible dealer floors).
6000 - MECHANICAL AND PLUMBING
LEGIONELLA:
Within WC areas the hot water service distribution pipework is designed in
accordance with the requirement of CIBSE document TM13.
<PAGE>
Outline Building Specification
MECHANICAL SERVICES CONTD
6000 - MECHANICAL AND PLUMBING CONTD.
LEGIONELLA: CONTD.
The internal bulk water storage tanks are insulated in accordance with
guidelines contained in CIBSE document TM13.
SOIL AND WASTE:
Soil and waste drainage and ventilation pipework with branches from fittings
using uPVC. There are capped branch connections at each office floor for
Tenants future use.
SANITARY FITTINGS:
WC pans in white vitreous china with concealed 6 litre capacity cisterns, wall
mounted level handle and white plastic solid core seats.
White vitreous china basins set in the stone vanity top with wall mounted basin
mixer valve wall mounted mixer spout, and pop-up waster lever under basin.
White vitreous china WC pan and wall mounted basins with lever operated mixer
taps and wall mounted grab handles in the disabled toilets.
Floor mounted white glazed fireclay bucket sink and stainless steel grating
with chromium plated bib taps in cleaners cupboards.
Soap dispensing system comprising central soap reservoir, hose, concealed pump
assemblies and wall mounted spout.
Generally all exposed taps and waste traps are brushed chromium plated
WATER INSTALLATIONS:
Comprising, hot and cold water service and overflows in copper tubes. Hot
water service supplied by a gas fired heater in each of the north and south
roof plant rooms serving core toilet areas.
A main cold water sectional storage tank and booster pumps are located in the
basement plantroom together with associated pipework.
Capped branch connections at each office floor level are provided for Tenant's
future use.
A cold water bib tap is provided in the ground floor refuse storage area for
hosing down a refuse compactor and in the lower ground floor car park for
washing cars.
<PAGE>
Outline Building Specification
MECHANICAL SERVICES CONTD
6000 - MECHANICAL AND PLUMBING CONTD.
RAINWATER:
A gravity rainwater system collecting rainwater from roof outlets, using
plastic pipework.
HEATING:
High efficiency low NOX gas fired boiler plant, double wall flues,
pressurisation unit and pumps located in the plant room at roof level from
which LPHW black steel distribution pipework and risers serve heating coils in
the various air handling plants and fan coils at each office floor level.
Low pressure hot water distribution, heating pipework from the main core riser
position also serves the under floor heating to the ground floor entrance and
atrium areas, warm air fan convector units serve the main and secondary escape
staircases and radiators serve the west core landings.
COOLING:
Cooling to office areas is provided by means of ceiling mounted fan coils, with
a fresh air supply ducted adjacent to each fan coil unit. The entrance hall is
served by fan coil positioned in the floor void below the matwell.
Heating and chilled water distribution pipework from the main core riser
positions serves the fan coils.
An open acoustic louvre enclosure at roof level screens air cooled chillers and
the standby generator remote cooling radiator.
Chilled water pressurisation unit and pumps are located at roof level from
which black steel distribution pipework and risers serve the main air handling
plant cooling coils and fan coils at each office level and entrance area.
Space for additional chilled water risers is left to allow for the possibility
of future supplementary cooling together with space for pumps in the roof plant
room and space for extra chillers on the roof (subject to further planning
approval).
GAS SUPPLY:
Gas services are sized to suit the base building boiler and HWS plant and a
Tenant kitchen with a capacity to serve 100 meals per hour (40 cu.m./hour of
gas for the kitchen). The gas meter and a gas pressure reducing set is sited in
the lower ground floor with a supply to the boiler and HWS heaters and a
separately metered valved branch left adjacent ready for a Tenant to extend to
a future kitchen.
<PAGE>
Outline Building Specification
MECHANICAL SERVICES CONTD
6000 - MECHANICAL AND PLUMBING CONTD.
FIRE PROTECTION:
Fire hosereel service of galvanised mild steel. Automatic fire hosereels with a
30 metre maximum length of hose.
Dry risers with outlets at 1st to 6th floor and main roof levels are located in
the fire fighting staircases.
6200 - SPRINKLERS
Sprinkler system to meet Building Regulations comprising storage tanks and
electric pump sets in the basement plant room, valve sets and risers to
branches at each floor level including monitored valves, floor switches, drain
down pipework and sprinkler zone fire alarm panel.
Sprinkler main distribution pipework from branches in the perimeter riser core
ducts run out over office areas within the ceiling voids including secondary
range distribution, swivels and dropper pipework to and including flush heads
fitted in ceiling tiles.
A tail end extension provides sprinkler protection within the car park.
6400 - AIR HANDLING PLANT
An air handling unit is located in each of the two roof plant rooms, comprising
filters, variable volume suply air fan, heating coil, heat recovery unit,
chilled water coil, automatic control dampers and silencers. The air handling
unit is sized to deliver a volume of fresh air equal to 16 l/s per person
throughout the office areas.
6500 - DUCTWORK
FRESH AIR VENTILATION - GENERAL DESCRIPTION:
The building is mechanically ventilated. The mechanical fresh air supply is
tempered in cold weather, cooled in the summer and dehumidified at the main air
handling plant and introduced into the office space via a ceiling void ductwork
system terminating adjacent to each fan coil unit.
DISTRIBUTION DUCTWORK:
Supply air is transmitted via galvanised mild steel sheet riser ducts (to a
performance specification for medium/low pressure velocity classification) to
each office floor level discharging into distribution ducts which run above the
false ceiling having branch outlets provided along their lengths adjacent to
each fan coil unit.
<PAGE>
Outline Building Specification
MECHANICAL SERVICES CONTD
6500 - DUCTWORK CONTD.
DISTRIBUTION DUCTWORK: CONTD.
Supply air distribution ductwork and the main riser ducts in galvanised sheet
steel ducts, a performance specification for medium-low pressure/velocity
classification.
Linear pattern ceiling air diffusers.
Exhaust air is taken from the space via openings in the light fittings, is
drawn through the ceiling void to the exhaust ducts on each office floor level
and exhausted to atmosphere at roof level. This exhaust system also serves as
the office smoke extract system in a fire situation.
TOILET VENTILATION:
Toilet extract ventilation to provide an air change rate of 6 air changes per
hour in each toilet area. Air is extracted via slots in the toilet ceilings
into a system of ductwork which connects to duplex extract plant located in the
roof plant room where it discharges through external grilles in the external
cladding. A fresh air supply plant provides make up air to the toilets via a
system of ductwork and grilles in the toilets.
PLANT ROOM VENTILATION:
Supply and/or extract ventilation ductwork systems serving electrical and
generator basement plant rooms. Cooling to lift motor rooms by means of extract
fans. A mechanical smoke extract system serves basement areas.
The fire lift motor at lower ground floor level is cooled by a local "split"
air conditioning unit.
CAR PARK BAY VENTILATION:
Extract ventilation system serving the lower ground floor car park comprising
ductwork and duplex fans. The extract system also serves as the smoke extract
system in a fire situation.
ATRIUM SMOKE AND SUMMER VENTILATION
Mechanical smoke extract ventilation with fans mounted at roof level and a
make-up air facility at ground floor level. Additional summer ventilation fans
at roof level.
<PAGE>
Oultine Building Specification
MECHANICAL SERVICES CONT'D
6500 - DUCTWORK CONTD.
STAIRCASES:
Smoke ventilators at roof level over internal staircases activated by break
glass contacts and key switches with additional temperature and rain sensor for
the west core unit.
KITCHEN VENTILATION:
The structure is designed to accommodate a designated future soft core position
adjacent to the north core where tenants can form a hole in the structure and
construct additional service riser positions.
6700 - CONTROLS
The heating, cooling and ventilation plant is controlled and monitored by a
software drive direct digital control building management system (BMS)
incorporating stand alone outstations.
The control system provides optimised start/stop of plant, an early morning
'boost' heating control facility, frost control, weather compensated control,
fire protection interfaces and includes the following:
Motor control centres, serving the air handling plant, chiller, boiler, toilet
supply and extracts fire services plant, plant room ventilation plant and
individual control and monitoring of each fan coil unit.
Software programmes for driving the controls.
A PC and printer for accessing and monitoring the status of the system.
As an energy saving measure, the system also provides the facility to control
the supply air volume to individual floor or part floors, allowing them to
operate outside normal working hours when the remainder of the building is
shut-down.
Duct, plant and pipe mounted control devices includes all sensors, detectors,
flow switches, control valves, damper actuators and controllers for the
heating, cooling and ventilating systems.
The controls system is capable of expansion by the Tenant to control additional
plants installed by the Tenant and to fully monitor the plant and conditions
within the building as required.
<PAGE>
Outline Building Specification
MECHANICAL SERVICES CONTD
6900 - THERMAL INSULATION & TRACE HEATING
Thermal insulation to all heating and chilled water distribution pipework, cold
water pipework in risers, roof plant rooms and where exposed to freezing,
rainwater pipework in floor and ceiling voids and ventilation system supply,
generator cooling water pipes and generator flues in the west core.
Thermal insulation to heating and chilled water distribution pipework serving
fan coils with the usable office suspended ceiling.
Fibrous or phenolic foam type insulation, with coated aluminium foil face or
equal, or pipework and ductwork.
Fire and smoke stopping around horizontal and vertical services where they pass
through fire rated walls and floors.
Thermal insulation to the soffit of the lower ground floor car park, refuse
area, main-entrance area and pedestrian access passage below occupied office
areas.
Trace heating in addition to thermal insulation is provided to small bore cold
water pipework in areas exposed to freezing and HWS "dead-leg" pipework where
applicable and sprinkler pipework in the refuse store.
ELECTRICAL SERVICES
7000 - ELECTRICAL INSTALLATION
MAIN SUPPLIER:
The electrical supply to the building is taken from a new London Electricity
transformer chamber located in the basement. From this chamber new low voltage
(415V) supplies are taken to separate air switchboards serving the landlord and
tenant services.
SUB-MAIN DISTRIBUTION:
Cable risers, from the tenants' main switchboard in the basement switchroom,
feed miniature circuit breaker distribution boards on each office floor for
Tenants to install small power into usable office areas.
Cable risers from the landord's main switchboard feed distribution boards
serving central plant, lighting and small power in all areas, except the usable
office and retail.
<PAGE>
Outline Building Specification
ELECTRICAL SERVICES CONTD
7000 - ELECTRICAL INSTALLATION CONTD.
LIGHTING & POWER IN USABLE OFFICE AREAS:
Light sub-circuits in the suspended ceiling void, between the tenant's
distribution board on each floor and lighting outlet boxes. Note:- the light
fittings (supplied under Element 8725 and installed under Element 4000) fix
directly into the outlet boxes.
Supply and installation of electrical floor boxes (for installation in the
raised floor) at a density of 1 per 12 sq.m in usable office areas at lower
ground, ground and levels 1, 4, 5 and 6 and 1 per 7 sq.m at levels 2 and 3.
Each floor box comprising galvanised steel 4 compartment base and mounting
frame nylon/plastic lid tray assembly suitable for carpet inlay, two twin
unswitched socket power outlets and two blank plates to receive telecom/data
outlets (data and telecom outlets excluded).
Small power wiring, trunking and conduit is not included. However, the main
electrical supply to the building and electrical risers have been designed on
the assumption that Tenants will install their small power installations at an
average load of 25W/m2 on general office floors and 35/Wm2 on Dealer Floors.
LIGHTING IN LANDLORD'S COMMON AREAS:
Lighting in main entrances and core areas is by means of recessed fluorescent
downlighting fittings and those in the atrium are purpose designed for their
application.
Lighting in the lower ground floor car park is by means of surface mounted
metal halidon fittings. In the basement plantrooms and other landlord areas
lighting is by means of surface fixed tubular fluorescent fittings.
The design average illumination is in accordance with the CIBSE Code for
interior lighting (1994) as detailed below:-
Entrance halls, lobbies 200 lux
Reception desk 500 lux
Lifts 100 lux
Corridors, stairs 100 lux
Atrium (general) 50-200 lux
Toilets, cleaners rooms 100 lux
<PAGE>
Outline Building Specification
ELECTRICAL SERVICES CONTD
7000 - ELECTRICAL INSTALLATION CONTD.
LIGHTING IN LANDLORD'S COMMON AREAS: CONTD.
Telecom Room 150 lux
Boiler, Plant Rooms 100-150 lux
Control room 300 lux
Electrical switchrooms 200 lux
Store rooms 100 lux
Car parks (internal) 100 lux
Ramps 150 lux
Emergency lighting by the use of non-maintained self contained units is
provided to a escape routes; these units are either contained within
fluorescent luminaires or are independent battery packs powering emergency
downlighters.
EXTERNAL LIGHTING:
External lighting is controlled via a distribution board automatically switched
by a solar disk time clock. The design average illumination is in accordance
with the CIBSE Lighting Guideline LG6: 1992 'The Outdoor Environment'.
SMALL POWER IN LANDLORD'S COMMON AREAS:
Small power in the main entrance, atrium, core and other landlord areas, is
provided by socket outlets recessed into walls (or surface fixed if on fair
face block walls).
FIRE ALARMS:
Addressable detection fire alarm system based upon an open plan office layout
comprising break glass contacts, bells and smoke detectors.
A main monitoring zoned panel is provided in the security/control room and a
repeat fire brigade panel at the brigade arrival point. These have interface
connections to the main plant, lifts and sprinkler systems and a facility for
fireman's control of selected plant.
TELECOMMUNICATIONS:
Telecommunications equipment and cabling to and within the building is provided
by Tenants.
<PAGE>
Outline Building Specification
ELECTRICAL SERVICES CONTD
7000 - ELECTRICAL INSTALLATION CONTD.
TELECOMUNICATIONS: CONTD.
Separate entry ductways for both BT and Mercury are provided in two locations.
A common main frame room is located at basement level.
A cable tray riser is provided in two positions for future telecoms cable
installations.
SUB-METERING:
A kilowatt hour meter is provided at each main low voltage switchboard (4 No.)
If the building is let on a multi-tenancy basis it may require additional
sub-metering.
TV AERIAL:
A central roof mounted television aerial is provided complete with the signal
booster and a aerial socket in the main core at each office level.
SECURITY INSTALLATIONS:
Closed circuit television cameras covering the Old Broad Street and Austin
Friars Square elevations and the pedestrian route.
An intercom system between the main reception desk, security/control room,
main Old Broad Street entrance, car park entrance and lower ground car park
only.
A conduit installation, linking external doors and core doors into the usable
office areas, to allow future installation of door monitoring equipment by the
Tenant.
A traffic control system to regulate cars entering and leaving the lower ground
floor car park.
7500 - STANDBY GENERATION
Standby generation is provided, sufficient for 100% emergency supplies to
Landlord's areas and plant as detailed below. The generation plant, however,
will not be of sufficient capacity to serve the air conditioning chiller plant
and chilled water pumps.
(1) Boilers and associated pumps and ventilation systems.
(2) Car park ventilation, automatic parking equipment and lighting.
(3) fire fighting services i.e. hosereel and sprinkler pumps.
(4) Basements and stairs lighting and small power.
<PAGE>
Outline Building Specification
ELECTRICAL SERVICES CONTD
7500 - STANDBY GENERATION CONTD.
(5) Domestic water services.
(6) Toilet supply and extract fans
(7) Passenger and fire fighting lifts
(8) Smoke extract fans and associated fire dampers.
(9) Entrance hall reception lighting and power.
A 300 mm diameter insulated flue is provided to exhaust at roof level.
Space has been allocated in the basement for a future Tenant's generator of
approximate 1000 kVA capacity.
7700 - LIGHTNING PROTECTION
A lightning protection scheme is installed to BS 6651 comprising roof mounted
earth tape having coloured pvc covering. Down conduction is by connection to
selected column steel reinforcement terminating in copper flexible tapes to
pile reinforcement and driven earth rods.
7800 - LIFT INSTALLATIONS
The building is served by a group of 4 passenger lifts, having a contract load
of 1250 kg carrying capacity of 16 persons and a travel speed of 1.6m/sec.
The passenger lifts serve ground to sixth floor levels inclusive, one pair of
lifts additionally serves the lower ground floor.
Each passenger lift is finished to a high standard having stone tiled floor,
suspended ceiling, concealed lighting and predominantly clear glass walls and
doors.
Two fire fighting lifts within the fire fighting stair cores serve lower ground
floor to levels complying with BS 5588 each having a contract load capacity
of 630 kg and a car size of approximately 1400 x 1100 x 2200 mm high internally
a door opening size of 800 - 2000mm and a travel speed of 1.0m/sec. The lift
car includes manufacturer's standard finishes.
A separate goods lift serves basement to level 6 inclusive having a contract
load of 1600 k + top hat and a travel speed of 1.0 m/sec
<PAGE>
Outline Building Specification
ELECTRICAL SERVICES CONTD
7800 - LIFT INSTALLATIONS
OFFICE LIGHT FITTINGS:
500 x 500mm recessed, air handling, high frequency, twin lamp fluorescent
luminaires with louvres and reflectors, located to suit the 1.50m planning
module to provide an average illumination of 450 lux at desk top level in open
plan usable office areas.
Emergency lighting is achieved by the use of non-maintained self-contained
units of notional escape routes based upon an open plan layout.
The 500 x 500 mm luminaires are supplemented at perimeters and changes in
direction of the grid, by 220mm diameter recessed, high frequency fluorescent
downlighters.
<PAGE>
Outline Building Specification
EXTERNAL WORKS
8229 - REFACING AUGUSTINE HOUSE
Refacing to match existing with Portland stone the areas of wall of Augustine
House exposed by the demolition of 116-118 Old Broad Street.
8990 - EXTERNAL WORKS
Stone paving and sub-base to paved areas inside the site boundary around the
building at ground level including the pedestrian route through.
Road surfacing/waterproofing in the lower ground level car park access ramp
area.
An allowance for replacing the Local Authorities pavings around the site
boundary with York stone slabs and re-setting approximately 50% of the
existing road kerbs.
Existing waterproofing over basement areas under pavements replaced with new
master asphalt. Waterproof membrane under the paving to the public route
through.
8995 - AUSTIN FRIARS SQUARE
Taking up existing pavings, regrading and laying granite setts to the service
access road and York stone paving to the remaining areas of the Square.
The provision of trees, seating, kerbs and bollards.
Upgrading the existing external lighting and altering existing underground
services as necessary.
-----------End-------------
<PAGE>
EXHIBIT 10.93
EXECUTION COUNTERPART
SUBLEASE
FURMAN SELZ LLC,
SUBLANDLORD
DONALDSON LUFKIN & JENRETTE, INC.
SUBTENANT
PREMISES:
280 PARK AVENUE
NEW YORK, NEW YORK
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
Section1. Parties ................................................... 1
Section2. Master Lease............................................... 1
Section3. Premises................................................... 1
Section4. Warranties................................................. 1
4.1. Sublandlord Warranties..................................... 1
4.2. Mutual Warranties.......................................... 1
Section5. Term....................................................... 2
Section6. Rent....................................................... 2
6.1. Annual fixed rent.......................................... 2
6.2. Rent Abatement............................................. 3
6.3. Other Rent Items........................................... 3
6.4. Taxes...................................................... 3
6.5. Wage Rate.................................................. 4
6.6. Statements................................................. 4
6.7. Additional Rent............................................ 4
Section7. Security Deposit........................................... 5
Section8. Use of the Premises........................................ 5
Section9. Assignment and Subletting.................................. 5
9.1. General.................................................... 5
9.2. Commissions................................................ 5
Section10. Incorportion of Master Lease............................... 6
Section11. Utilities and Services..................................... 8
Section12. Electricity................................................ 8
Section13. Notices.................................................... 8
Section14. Time Periods for Performance............................... 9
(i)
<PAGE>
Section15. Performance by Sublandlord................................. 10
Section16. Enforcement of Rights...................................... 10
Section17. Delivery of Possession..................................... 11
Section18. Insurance ................................................. 11
Section19. Alterations................................................ 11
Section20. Limitations on Sublandlord................................. 12
Section21. Subtenant's Obligations To Maintain........................ 12
Section22. Subordination to Master Lease.............................. 12
Section23. Repairs and Maintenance of the Premises.................... 13
Section24. Interest on Unpaid Rent.................................... 13
Section25. Consent or Approval of Sublandlord and Master Landlord .... 13
Section26. Intentionally Deleted...................................... 13
Section27. Survival................................................... 13
Section28. Attorneys' Fees............................................ 14
Section29. Brokers.................................................... 14
Section30. Conditions to Sublease..................................... 14
Section31. Submission of Sublease to Subtenant........................ 15
Section32. Improvements to Premises................................... 15
32.1. Subtenant's Work........................................... 15
32.2. Work Allowance............................................. 15
32.3 Payment.................................................... 15
32.4. Inspection................................................. 15
Section33. Authority.................................................. 16
Section34. Directory Listings......................................... 16
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
PAGE
------
<S> <C> <C>
Section35. Asbestos............................. 16
Section36. No Recording......................... 16
EXHIBITS
Exhibit A Master Lease
Exhibit B Premises
Exhibit C Master Landlord Conditions Precedent
</TABLE>
(iii)
<PAGE>
SUBLEASE
Section 1. Parties. This Sublease, dated as of June 16, 1998, is made
between FURMAN SELZ LLC, a limited liability company ("Sublandlord"), and
DONALDSON LUFKIN & JENRETTE, INC., a Delaware corporation ("Subtenant").
Section 2. Master Lease. Sublandlord is the tenant under a lease dated
June 29, 1997 (the "Original lease"), wherein Bankers Trust Company, a New
York corporation, predecessor in interest to Boston Properties Limited
Partnership ("Master Landlord"), leases to Sublandlord premises in that
certain building commonly known as the Bankers Trust Company Building, East,
West and Middle Building (collectively, the "Building") at 280 Park Avenue,
New York, New York, comprising the "East Building" which is located on parcel
A shown on Exhibit A annexed to the Master Lease and the "Middle Building"
and "West Building" location on parcels B, C and D shown on Exhibit A annexed
to the Master Lease consisting of approximately 205,366 rentable square feet
on the entire 8th through 11th floors of the Building and the entire 12th
floor of the East Building (the "Master Premises"). The Original Lease has
been amended by a Lease Amendment Agreement dated August 4, 1997 (the "First
Amendment") and a Letter Agreement dated Septembe 22, 1997 (the "First Letter
Agreement") and a Letter Agreement dated December 29, 1997 (the "Second
Letter Agreement"). The Original Lease, the First Amendment, and the Letter
Agreements shall hereinafter be referred to collectively as the "Master
Lease" and are attached hereto as EXHIBIT A.
Section 3. Premises. Sublandlord hereby subleases to Subtenant on the
terms and conditions set forth in this Sublease a portion of the Master
Premises consisting of the entire 9th, 10th and 11th floors of the Building
and entire 12th floor of the East Building conssisting of approximately
159,288 rentable square feet (the "Premises"), as more particularly described
in EXHIBIT B attached hereto and made a part hereof.
Section 4. Warranties.
4.1 Sublandlord Warranties. Sublandlord hereby represents and warrants
that (i) the Master Lease has not been amended or modified except as set
forth herein (ii) EXHIBIT A represents the entire Master Lease, and (iii)
Sublandlord has received no notice from Master Landlord that Sublandlord is
in default or breach of any of the provisions of the Master Lease.
4.2. Mutual Warranties. Sublandlord and Subtenant each represent and
warrant that (i) this Sublease represents the entire agreement between
Sublandlord and Subtenant with respect to the matters set forth therein; (ii)
this Sublease was negotiated as parrt of an arms-length transaction between
the parties hereto, and (iii) there are no other third parties involved with
respect to this Sublease (related or otherwise), except for each party's
attorneys and consultants, and the brokers referenced in Section 29 hereof.
<PAGE>
Section 5. Term. The term ("Term") of this Sublease shall commence (the
"Commencement Date") on the third business day after Sublandlord has notified
Subtenant that the conditions to the effectiveness of this Sublease set forth
in Section 30 hereof have been satisfied, and end on January 30, 2014 (the
"Expiration Date"), unless sooner terminated in accordance with the
provisions of this Sublease. At Sublandlord's request, Subtenant shall
execute a memorandum setting forth the actual Commencement Date of the Term.
Possession of the Premises shall be delivered to Subtenant on the
Commencement Date. If for any reason Sublandlord does not deliver possession
to Subtenant on the Commencement Date, Sublandlord shall not be subject to
any liability for such failure, the Expiration Date shall not be extended by
the delay, and the validity of this Sublease shall not be impaired, but rent
shall abate until delivery of possession. Notwithstanding the foregoing, if
Sublandlord has not delivered possession of the Premises to Subtenant within
sixty (60) days after the Commencement Date, then, at any time thereafter and
before delivery of possession, Subtenant may give written notice to
Sublandlord of Subtenant's intention to cancel this Sublease. Such notice
shall set forth an effective date for such cancellation which shall be at
least five (5) days after delivery of such notice to Sublandlord. If
Sublandlord delivers possession to Subtenant on or before such effective
date, this Sublease shall remain in full force and effect. If this Sublease
shall be so canceled, any consideration previously paid by Subtenant to
Sublandlord on account of this Sublease shall be returned to Subtenant, this
Sublease shall thereafter be of no further force or effect, and Sublandlord
shall have no further liability to Subtenant on account of such delay or
cancellation. In addition, if the conditions to the effectiveness of this
Sublease set forth in Section 30 have not been fully satisifed within sixty
(60) days after the date of full execution hereof, and if this Sublease is
not terminated pursuant to Section 30, then, the Abatement Period (as defined
in Section 6.2) shall be extended on a day for day basis for each day after
the expiration of such sixty (60) day period plus the three (3) business day
period referred to in the first sentence hereof, that possession of the
Premises has not been delivered to Subtenant.
Section 6. Rent
6.1. Annual Fixed rent. Subtenant shall pay to Sublandlord annual
fixed rent ("Annual Fixed Rent") pursuant to the schedule set forth below,
without deduction, setoff, notice, or demand (except as provided in the Master
Lease including but not limited to the right to set-off contained in Section
21.10 of the First Amendment), at 135 East 57th Street, New York, New York
10022 or at such other place as Sublandlord shall designate from time to time
by notice to Subtenant. Annual Fixed Rent shall be payable in monthly
installments, in advance, on the first day of each month of the Term, subject
to Section 6.2 hereof. All remittances by Subtenant for rent shall be drawn
on a member bank of the New York Clearinghouse Association.
SCHEDULE OF ANNUAL FIXED RENT
<TABLE>
<CAPTION>
PERIOD OF TERM ANNUAL FIXED RENT MONTHLY INSTALLMENT
- --------------------------------- ----------------- -------------------
<S> <C> <C>
Comencement Date through
01/31/04......................... $7,645,824.00 $637,152.00
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
02/01/04 through
01/31/09................. $8,282,976.00 $690,248.00
02/01/09 through
01/30/14................. $9,079,416.00 $756,618.00
</TABLE>
6.2. Rent Abatement. Notwithstanding the provisions of Section 6.1
of this Sublease, provided that Subtenant is not otherwise in default of a
material provision hereunder (after receipt of notice and expiration of any
applicable cure period), from the Commencement Date through November 1, 1998
monthly installments of Annual Fixed Rent and Additional Rent (other than the
charge for electricity) shall be abated in full (the "Abatement Period"). Upon
the expiration of the Abatement Period, monthly installments of Annual Fixed
Rent shall be payable in full in accordance with the terms of Section 6.1.
6.3. Other Rent Items. The Annual Fixed Rent does not take into
account increases in Taxes (as defined in Section 6.4) and/or Wage Rate (as
defined in Section 6.5) payable by Subtenant during the Term of this Sublease.
Provision therefor is hereinafter made in Sections 6.4 and 6.5 and the rent
payable hereunder shall be increased and Subtenant shall pay such increases
in Taxes and Wage Rate as Additional Rent (as defined in Section 6.7).
Further, Annual Fixed Rent does not include an electric current charge,
provision for which is made in Section 12 hereof, and Subtenant shall pay
such charge as Additional Rent as provided therein.
6.4. Taxes. The Master Lease requires Sublandlord to pay to Master
Landlord a portion of the "Taxes" on the "Real Property", as those terms are
defined in Section 2.3(a) of the Master Lease (the "Taxes"). "Subtenant's
Percentage", as used herein, shall mean a fraction (expressed as a
percentage) of which the numerator is the rentable square foot area of the
Premises and the denominator is the total rentable square foot area of the
Building. In the event that the rentable square feet in the Premises is
reduced pursuant to the provisions of this Sublease or the Master Lease, such
numerator shall be adjusted in accordance with the rentable square feet so
affected, as determined based on the measurements shown on Exhibit H attached
to the Master Lease. In the event that the rentable square feet in the
Building is increased or decreased, such denominator shall be adjusted in the
same proportion as such adjustment is made pursuant to the Master Lease in
accordance with the rentable square feet so increased or decreased, based on
the building measurement systems used in determining the measurements shown
on Exhibit H attached to the Master Lease. As of the Commencement Date,
Subtenant's Percentage by mutual agreement of the parties is (x) 22.23% for
that portion of the Premises located in the East Building ("Subtenant's East
Building Percentage") and 9.08% for that portion of the Premises located in
the Middle Building and West Building ("Subtenant's Middle and West Building
Percentage") and (y) 13.29% for the entire Building without duplication.
Notwithstanding anything contained herein to the contrary, in no event shall
Subtenant's Percentage of the Taxes exceed the (x) 77.5630% of what
Sublandlord shall pay to Landlord under the Master Lease for the Master
Premises as currently constituted. Throughout the Term, Subtenant shall pay
to Sublandlord the amounts chargeable pursuant to Article 2 of the Master
Lease for increases in Taxes calculated as though "Tenant's East Building
Percentage", "Tenant's Middle and West Building Percentage" and "Tenant's
Percentage" were Subtenant's East Building Percentage,
3
<PAGE>
Subtenant's Middle and West Building Percentage and Subtenant's Percentage,
respectively. Such Taxes or any estimates thereof shall be payable by
Subtenant to Sublandlord as and when the Taxes or such estimates are payable
by Sublandlord to Master Landlord pursuant to the Master Lease, provided that
Subtenant shall receive at least fifteen (15) days prior written notice of
the amount due. When adjustments between estimated and actual Taxes are made
under the Master Lease, the obligations of Sublandlord and Subtenant
hereunder shall be adjusted in a like manner. If any such adjustment shall
occur after the expiration or earlier termination of the Term, then the
obligations of Sublandlord and Subtenant under this Section 6.4 shall survive
such expiration or termination. Sublandlord shall furnish Subtenant with
copies of any statements submitted by Master Landlord of actual or estimated
Taxes as they relate to the Premises during the Term.
6.5. Wage Rate. Pursuant to Section 2.5 of the Master Lease
Sublandlord is required to pay to Master Landlord increases in the "Wage Rate"
over the "Base Wage Rate" (the "Wage Escalation Payment") as such terms are
defined in the Master Lease. Subtenant shall be responsible for Subtenant's
pro rata share of such Wage Escalation Payments calculated in accordance with,
and in the same per rentable square foot amount as set forth in, Section 2.5 of
the Master Lease except that the number of rentable square feet of the Premises
shall be used in place of the number of rentable square feet of the Master
Premises in such calculation. Such Wage Escalation Payments are payable by
Subtenant to Sublandlord as and when the Wage Escalation Payments are payable
by Sublandlord to Master Landlord under the Master Lease except that
Subtenant shall receive at least twenty (20) days prior written notice before
such amount is due.
6.6 Statements. Subject to Section 2.6 of the Master Lease, any tax
or wage rate comparative statement sent to Subtenant which has been delivered
by Master Landlord to Sublandlord shall be conclusively binding upon Subtenant.
6.7. Additional Rent. All amounts over and above, or in addition to,
the Annual Fixed Rent which are payable by Subtenant to Sublandlord under the
terms of this Sublease on account of the Premises, including but not limited
to the increases in Taxes described in Section 6.4, the Wage Rate increases
described in Section 6.5, and the electric current charge in Section 12,
shall be deemed "Additional Rent" hereunder and Sublandlord shall have all
the rights and remedies in the event of the nonpayment thereof as it would
have had in the event of the nonpayment of any installment of the Annual
Fixed Rent. (The Annual Fixed Rent and Additional Rent are sometimes
collectively referred to in this Sublease as the "rent.")
If Sublandlord shall receive from the Master Landlord any refund of or
credits with respect to any amounts for which Subtenant shall have paid
Additional Rent to Sublandlord or Master Landlord, Sublandlord shall pay or
credit, as the case may be, to Subtenant, within thirty (30) days of receipt
of such refund or credit by Sublandlord, the pro rata portion of such refund
which is equitably attributable to amounts paid by Subtenant as Additional
Rent hereunder. Sublandlord shall reasonably cooperate with Subtenant in
seeking any refund or credit due Subtenant from Master Landlord. If any
action for a refund or credit of rent paid by Subtenant
4
<PAGE>
under this Sublease against Master Landlord in Subtenant's name is barred by
reason of lack of privity, nonassignability or otherwise, then Subtenant, at
Subtenant's sole expense, may bring such action in Sublandlord's name and
Sublandlord shall execute all documents reasonably required therewith;
provided, however, Subtenant shall defend, indemnify and hold Sublandlord
harmless from all claims, costs, claims, expenses and liabilities, including,
without limitation, reasonable attorneys' fees and costs, arising out of or
in connection with any such action by Sublandlord, at Subtenant's request, or
by Subtenant. The foregoing obligations shall survive the expiration or
termination of this Sublease.
Section 7. Security Deposit. (Intentionally Deleted)
Section 8. Use of the Premises. The Premises shall be used and occupied
only for offices for administrative and support purposes including, but not
limited to, human resources, tax, treasury, technology, internal audit,
internal premises and internal services, graphics, curator, legal and
corporate secretary functions, operations and back office operations and not
for private banking, retail operations or for customers and for no other use
whatsoever. Subtenant will not at anytime use or occupy the premises in
violation of the certificate of occupancy issued for the Building, a copy of
which is annexed as Exhibit J to the Master Lease.
Tenant and Subtenant acknowledge that Bankers Trust Company shall be a
third party beneficiary to the use restrictions set forth in this Section 8
and Bankers Trust Company shall be entitled independently to enforce such
restrictions by injunction or otherwise. Tenant and Subtenant agree to
execute and deliver at the request of Bankers Trust Company an agreement with
Bankers Trust Company confirming the foregoing.
Section 9. Assignment and Subletting.
9.1. General. Neither this Sublease, nor the Term and estate hereby
granted, nor any part hereof or thereof, nor the interest of Subtenant in any
sublease or the rentals thereunder, shall be assigned, mortgaged, pledged,
encumbered or otherwise transferred by Subtenant, and neither the Premises,
nor any part thereof, shall be encumbered in any manner by reason of any act
or omission on the part of Subtenant or anyone claiming under or through
Subtenant, nor shall the Premises be sublet, or offered or advertised for
subletting, or used or occupied or permitted to be used or occupied, or
utilized for desk space or for mailing privileges, by anyone other than
Subtenant or for any purpose other than as permitted by this Sublease, except
(i) in accordance with and subject to all the terms and provisions of the
Master Lease including, without limitation, Articles 3 and 11 thereof, and
(ii) with the prior written consent of Master Landlord and Sublandlord (with
Sublandlord's consent not to be unreasonably withheld) in each instance;
provided, however, Sublandlord hereby agrees that if the Master Landlord
consents to an assignment or a sublet by Subtenant, Sublandlord shall also
consent to such assignment or sublet provided that in the event same shall
increase the obligations of Sublandlord under the
5
<PAGE>
Master Lease, Subtenant hereby agrees to indemnify Sublandlord for any loss,
cost or expense actually incurred by Sublandlord in connection with any
increased obligations of Sublandlord under the Master Lease.
9.2. Commissions. Sublandlord shall have no liability for brokerage
commissions incurred with respect to any assignment of this Sublease or any
sub-subletting of the Premises by or on behalf of Subtenant. Subtenant shall
pay, and shall indemnify and hold Sublandlord harmless from and against any
and all cost, expense (including reasonable attorneys' fees and costs) and
liability in connection with any compensation, commissions or charges claimed
by any broker or agent with respect to any such assignment or subletting.
Section 10. Incorporation of Master Lease. Except as set forth below, the
terms, covenants and conditions of the Master Lease (collectively, the
"Incorporated Provisions") are incorporated herein by reference. The
provisions below which are deemed deleted from this Sublease are specifically
excluded from the Incorporated Provisions and shall not be binding upon
Subtenant and shall not be incorported into the terms of this Sublease.
Except to the extent that the Incorporated Provisions are inapplicable or are
modified by the provisions of this Sublease, the Incorporated Provisions
binding or inuring to the benefit of Master Landlord thereunder shall, in
respect of this Sublease, bind or inure to the benefit of Sublandlord, and
the Incorporated Provisions, binding or inuring to the benefit of the tenant
thereunder shall, in respect of this Sublease, bind or inure to the benefit
of Subtenant, with the same force and effect as if such Incorporated
Provisions were completely set forth in this Sublease, and as if the words
"Landlord" and "Tenant", or words of similar import, wherever the same
appears in the Incorporated Provisions, were construed to mean, respectively,
"Sublandlord" and "Subtenant" in this Sublease, and as if the words "Demised
Premises", or words of similar import wherever the same appear in the
Incorporated Provisions, were construed to mean "Premises" in this Sublease,
and as if the word "Lease", or words of similar import, wherever the same
appear in the Incorporated Provisions, were construed to mean this
"Sublease", and as if the words "Tenant's Initial Construction", or words of
similar import, wherever the same appear in the Incorporated Provisions, were
construed to mean "Subtenant's Work" (as defined in Section 32 hereof)
respectively. Notwithstanding any other provision hereof, except as
specifically set forth herein, incorporating such provisions herein shall not
obligate Sublandlord or be construed as obligating Sublandlord to assume or
agree to perform any obligations of Master Landlord or to be responsible for
any representations or warranties of Master Landlord under the Master Lease.
Notwithstanding the foregoing:
(a) from the Original Lease the following provisions shall be
deemed deleted for the purpose of incorporation herein: Sections 1.1(f), (h),
and (t), 2.1, 2.3(f), 3.1(a), 3.2, the first sentence of 3.5, 7.6, the second
and third sentences of Section 13.1, 25.1, 26.15(c), 26.16, 26.17, the third
sentence of 26.18(a), 28.1, and 35.2 through 35.6 inclusive, and all of
Articles 32, 39, 40, 43, 44, and 45; and Exhibits A, B, E, F, G and M and all
references in the Master Lease to such exhibits;
6
<PAGE>
(b) from the First Amendment the following provisions shall be
deemed deleted for the purpose of incorporation here: Sections 1, 2 (except for
the first sentence thereof), the second sentence of 3, Sections 4, 5, 8, 10, 11,
12 and 13 from Exhibit 1 of the First Amendment 1, 2, 5 and 6; and in Section
4 of Exhibit 1, in Subsection 21.7, the "Landlord's Commitment" amount shall
be deemed to be $6,371,520.00, and Sub-Sebsection 21.9(c) shall be deemed to
be deleted;
(c) in the Original Lease where reference is made in the
following provisions to "Landlord", the same shall be deemed to refer both to
"Master Landlord" and "Sublandlord" hereunder: Sections 8.1, 8.2(a) and (c),
8.3, 8.4(b), the second sentence of 8.4(c) and 8.5;
(d) in the Original Lease in Sections 8.6 and 35.1 and in
Article 41 and in the First Amendment in Section 9 where reference is made to
"Landlord", the same shall be deemed to refer only to "Master Landlord"
hereunder;
(e) in the sixth sentence of Section 7.1 of the Original Lease,
the words "Subtenant shall" shall be inserted between "at any time or times" and
"execute, acknowledge and deliver;"
(f) in Section 11.8 of the Original Lease, "one hundred percent
(100%)" shall be substituted for "fifty percent (50%)" wherever it appears;
(g) in Section 21.2 of the Original Lease, the amount $120,000
shall be reduced to $93,076;
(h) with respect to the services to be provided by "Landlord"
pursuant to Article 26 of the Original Lease, such services shall be the sole
responsibility of Master Landlord and Subtenant shall, if requested to do so
by Sublandlord and if permitted to do so by Master Landlord, make all
requests for overtime and extra services directly to Master Landlord;
(i) in Section 26.3(f) of the Original Lease, the references
to "one hundred fifty (150) tons" in the first and second sentences shall be
changed to "one hundred sixteen and 35/100ths (116.35) tons", and the references
to "twenty-five (25) tons" in the second to last sentence shall be changed to
"nineteen and 4/10ths (19.4) tons";
(j) notwithstanding the incorporation herein of Articles 9 and 10
and Section 26.14 of the Original Lease, Subtenant shall be entitled to rent
abatement for the Premises only to the extent rent is correspondingly abated
as to Sublandlord's rent obligation to Master Landlord for the Premises
pursuant to such provisions of the Master Lease; and
7
<PAGE>
(k) if any of the express provisions of this Sublease shall
conflict with any of the Master Lease provisions incorporated by reference,
such conflict shall be resolved in every instance in favor of the express
provisions of this Sublease.
To the extent incorporated herein by reference, Subtenant assumes and
agrees to perform the tenant's obligations under the Master Lease during the
Term to the extent that such obligations are applicable to the Premises
except that the obligation to pay annual "Fixed Rent," and "Tenant's East
Building Percentage", "Tenant's Middle and West Building Percentage" and
"Tenant's Percentage" of increases in "Taxes," and increases in the "Wage
Rate" to Master Landlord, as those terms are defined in and pursuant to the
terms of the Master Lease, shall be considered performed by Subtenant to the
extent and in the amount Annual Fixed Rent and Subtenant's East Building
Percentage, Subtenant's Middle and West building Percentage and Subtenant's
Percentage of increases in Taxes and increases in Wage Rate are paid by
Subtenant to Sublandlord in accordance with Section 6 of this Sublease.
Subtenant shall not commit or suffer any act or ommission that will violate
any of the provisions of the Master Lease.
Notwithstanding the provisions of clause (h) hereinabove, to the
extent that the occupant of the eight (8th) floor of the Master Premises is
subject to the Master Lease and consents to Subtenant's use of any portion of
the tonnage capacity otherwise allocable to the eighth (8th) floor occupant,
Subtenant shall be entitled to increase its tonnage capacity allocations in
clause (h) by such amount.
Notwithstanding the deletion of Sections 26.16 and 26.17 of the
Master Lease pursuant to clause (a) hereinabove, to the extent that Master
Landlord agrees in writing, at its sole option, to allow Subtenant the rights
granted under either or both of such sections of the Master Lease, such
sections so agreed to by Master Landlord shall be deemed incorporated herein.
Section 11. Utilities and Services. Subtenant shall be entitled to all
those services and utilities which the Master Landlord is required to provide
to the Premises pursuant to Article 26 and Exhibit D of the Master Lease.
Subtenant shall look solely to the Master Landlord for the provision of such
services and utilities and, except to the extent specifically set forth
herein, Sublandlord shall not be responsible for Master Landlord's failure to
provide the same. To the extent that Master Landlord charges Sublandlord for
any additional service or utility provided to the Premises beyond the basic
services and utilities that are required to be supplied by the Master Lease
without charge, including but not limited to additional cleaning and after
hours and/or supplemental HVAC, Subtenant shall pay for such charges, as
Additional Rent, within the time period (less two business days) and upon
receipt of such invoices from Master Landlord as are provided for in the
Master Lease.
Section 12. Electricity. Subtenant shall pay for all electricity furnished
to the Premises pursuant to the terms of Section 26.4 of the Master Lease as
incorporated herein pursuant to Section 10 hereof.
8
<PAGE>
Section 13. Notices. All notices and demands which may be or are required
or permitted to be given by either party hereunder shall be in writing. All
notices and demands shall be sent by personal delivery or United States mail,
registered or certified, return receipt requested, postage prepaid, or by Fed
Ex or other nationally recognized overnight carrier with an invoice
evidencing receipt, addressed as set forth below, or to such other place as a
party may from time to time designate in a written notice to the other party.
All notices and demands hereunder shall by deemed to have been served and
given, (a) if sent by registered or certified mail, postage prepaid, return
receipt requested, five (5) business days after deposit with the United
States Postal Service, or (b) if sent by Fed Ex or other nationally
recognized overnight courier with an invoice evidencing receipt, the next
business day, or (c) if served personally, on the date of delivery (provided
written acknowledgment of receipt is given and delivery is made before 5:00
p.m. on a business day).
<TABLE>
<CAPTION>
<S> <C>
To Sublandlord: Furman Selz LLC
230 Park Avenue
New York, New York 10169
Attn: Mr. Steven D. Blecher
with a copy to: Sullivan & Worcester LLP
767 Third Avenue
New York, New York 10017
Attn: Charles M. Dubroff, Esq.
To Subtenant: Donaldson Lufkin & Jenrette
277 Park Avenue
New York, New York 10172
Attn: Mr. George P. Twill
with a copy to: Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attn: Wallace L. Schwartz, Esq.
To Master Landlord: Boston Properties Limited Partnership
c/o Boston Properties, Inc.
599 Lexington Avenue
New York, New York 10022
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
with a copy to: Mintz, Levin, Cohn, Ferris,
Glovsky & Popeo, P.C.
One Financial Center
Boston, MA 02111
Attn: Stuart A. Offner, Esq.
</TABLE>
Section 14. Time Periods for Performance. Notwithstanding the provisions
of Section 10 of this Sublease, the time limits contained in the Master Lease
for the giving of notices, making of demands or performing of any act,
condition or covenant on the part of tenant under the Master Lease, as
incorporated herein, or for the exercise by tenant thereunder of any right,
remedy or option incorporated herein are changed for the purpose of
incorporation herein by reference by shortening the same, in each instance,
by two (2) business days, so that, in each instance, Subtenant shall have two
(2) business days less time to observe or perform hereunder than Sublandlord
has as tenant under the Master Lease. If the Master Lease, as incorporated
herein, only allows five (5) days or less for Subtenant to perform any act or
to correct any failure relating to the Premises or this Sublease, then,
Subtenant shall not be in technical default hereunder so long as Subtenant
performs prior to the date or time required for Sublandlord's performance
under the Master Lease.
Section 15. Performance by Sublandlord. Sublandlord shall not default
under the Master Lease or cause a termination, cancellation or surrender
thereof (other than due to a casualty or eminent domain action) which results
in a termination, cancellation or surrender of this Sublease without
recognition of this Sublease and all of Subtenant's rights and obligations
hereunder by Master Landlord, provided that Master Landlord shall not be
liable for any previous act or omission of Sublandlord under this Sublease.
Sublandlord shall comply with the terms and provisions of the Master Lease,
but Sublandlord shall not be required to furnish, supply or install anything
required under the Master Lease and Subtenant shall look solely to Master
Landlord for such furnishing, supplying and installation. Sublandlord agrees
to promptly send to Subtenant copies of all notices of default pertaining to
the Master Lease which Sublandlord receives during the term of this Sublease.
Except as provided specifically herein, Sublandlord shall have no liability
or responsibility whatsoever for Master Landlord's failure or refusal to
perform under the Master Lease, except to the extent such failure or refusal
to perform (or the interruption of services) is permitted under the terms of
the Master Lease and is due solely to the default of Sublandlord under the
Master Lease or this Sublease. Sublandlord agrees that it shall indemnify and
hold harmless Subtenant from and against any and all loss, claim, damage,
cost or expense (including, without limitation, reasonable attorneys' fees
and disbursements) which Subtenant shall suffer or incur in connection with a
default by Sublandlord under the Master Lease (other than if such default is
caused by Subtenant) or the voluntary termination, surrender or cancellation
of the Master Lease by Sublandlord (other than due to casualty or eminent
domain action) which results in a termination, cancellation or surrender of
this Sublease without recognition of this Sublease and all of Subtenant's
rights and obligations hereunder by Master Landlord, provided that Master
Landlord shall not be liable for any previous act or omission of Sublandlord
under this Sublease.
10
<PAGE>
In the event Sublandlord shall default in the performance of its
obligations under the Master Lease beyond any applicable grace period,
Subtenant shall have the right (to the extent agreed to by Master Landlord)
to cure such default upon five (5) days prior written notice to Sublandlord
of its decision so to do. Sublandlord shall indemnify and hold Subtenant
harmless for all reasonable costs incurred and paid by Subtenant in effecting
such cure.
Section 16. Enforcement of Rights. If Master Landlord defaults in any of
its obligations under the Master Lease with respect to the Premises, and if,
after written request from Subtenant, Sublandlord elects not to take action,
whether legal action or otherwise, for the enforcement of Sublandlord's
rights against Master Landlord, Subtenant shall have the right to take such
action in its own name and, for that purpose and only to such extent, all the
rights of Sublandlord under the Master Lease with respect to the Premises
shall be and are hereby conferred upon and assigned to Subtenant, and
Subtenant shall be subrogated to such rights to the extent they apply to the
Premises. Sublandlord shall cooperate with Subtenant using commercially
reasonable and diligent efforts in connection with Subtenant's efforts to
enforce Master Landlord's obligations under the Master Lease, or to contest
Master Landlord's computations of Additional Rent or other fees and charges.
In the event that any action by Subtenant hereunder is legally required or
required under the provisions of the Master Lease, to be brought in
Sublandlord's name, any such demands, authorizations and requests, pleadings
and/or other papers that may be reasonably required shall be signed by
Sublandlord. Subtenant shall defend, indemnify and hold Sublandlord harmless
from all claims, costs and liabilities, including reasonable attorneys' fees
and costs, arising out of or in connection with any action by Sublandlord, at
the request of Subtenant, or by Subtenant. Any recovery so obtained by
Subtenant shall be the property of Subtenant. Notwithstanding any other
provision hereof, Sublandlord's obligation hereunder to cooperate with
Subtenant shall be subject to Subtenant's not being in default of a material
obligation under this Sublease (after notice and expiry of any applicable
grace period). As used herein the term "commercially reasonable efforts"
shall not include, inter alia, the institution of litigation or arbitration
(except with respect to any action by Subtenant at its sole cost which is
required to be brought in Sublandlord's name), or the payment of money or
other consideration (except to the extent that Subtenant agrees to make such
payments on Sublandlord's behalf or reimburse Sublandlord for any such
payments, as elected by Sublandlord).
Notwithstanding the foregoing, provided Subtenant is not in default
hereunder (including but not limited to its obligation to pay Fixed Rent and
Additional Rent hereunder), in any such extent beyond any applicable notice
and grace periods provided hereby Sublandlord hereby, covenants and agrees
that it shall not exercise its right to terminate the Master Lease and shall
not exercise its right to have Master Landlord restore the Premises (unless
such restoration by Master Landlord is requested by Subtenant within thirty
(30) days of the occurrence of such casualty or condemnation proceeding) in
connection with such casualty or condemnation.
11
<PAGE>
Section 17. Delivery of Possession. The Premises shall be delivered in
their "as is" condition, broom clean, as of the Commencement Date without
representation or warranty of any kind. Subtenant acknowledges that is has
inspected the Premises and found them to be in acceptable condition.
Section 18. Insurance. Subtenant shall comply with all of the insurance
requirements and obligations of Sublandlord, as tenant under the Master
Lease, set forth in Article 8 (or any other section) of the Master Lease in
respect of the Premises.
Section 19. Alterations. Notwithstanding the provisions of Article 4 of
the Master Lease as incorporated herein pursuant to Section 10 hereof, all
references in Article 4 of the Master Lease to "Landlord" shall be deemed to
refer to Master Landlord and Sublandlord; provided, however, that Sublandlord
will grant its consent or approval in any instance where Master Landlord has
granted its consent or approval. Prior to commencing work on any alteration,
addition, or improvement to the Premises ("Alteration") for which Master
Landlord's consent or approval is required pursuant to the terms of Article 4
of the Master Lease, Subtenant shall deliver to Sublandlord, a copy of Master
Landlord's consent or approval, as the case may be. Sublandlord and Subtenant
agree that the provisions of the Master Lease incorporated herein pursuant to
Section 10 hereof, including but not limited to Article 4, shall apply to all
work to be performed by, at the request of, or on behalf of Subtenant in the
Master Premises in the same manner as such provisions would apply to any work
of Sublandlord in the Premises under the Master Lease. Subtenant acknowledges
and agrees that, notwithstanding anything herein to the contrary, Sublandlord
shall have no responsibility whatsoever for the installation or proper
functioning of, cost of correcting, or removal upon Sublease termination as
may be required by the Master Lease of any of Subtenant's Alterations (as
opposed to any Alterations to the Premises made by Sublandlord) or any
compliance requirements of the Master Lease in connection therewith, and
Subtenant shall bear the entire cost, responsibility and liability therefor.
Section 20. Limitations on Sublandlord.
(a) Subtenant acknowledges that Sublandlord has made no
representations or warranties with respect to the Building or
the Premises except as expressly provided in this Sublease.
(b) If Sublandlord assigns its leasehold estate in the Master
Premises, Sublandlord shall have no obligation to Subtenant
arising thereafter. Subtenant shall then recognize and attorn to
Sublandlord's assignee as the sublandlord under this Sublease.
(c) Sublandlord shall not be required to perform any of the
covenants and obligations of Master Landlord under the Master
Lease and, insofar as any of the obligations of the Sublandlord hereunder are
required to be performed under the Master Lease by Master Landlord, Subtenant
shall rely on and look solely to Master Landlord for the performance thereof.
12
<PAGE>
Section 21. Subtenant's Obligations To Maintain. Subtenant shall keep the
Premises in good order and condition and as otherwise required pursuant to
the Master Lease as incorporated herein.
Section 22. Subordination to Master Lease. This Sublease is expressly
subject and subordinate to the Master Lease and all of the obligations of
tenant thereunder and if the Master Lease terminates with respect to the
Premises in the event of any re-reentry or dispossession by Master Landlord
under the Master Lease, this Sublease shall terminate unless Master Landlord,
has agreed to deliver to Subtenant a "Landlord's Non-Disturbance Agreement"
as defined in and subject to Section 11.9 of the Master Lease. Sublandlord
agrees to request Landlord's Non-Disturbance Agreement on behalf of Subtenant
in accordance with Section 11.9 of the Master Lease. Sublandlord hereby
covenants and warrants that it shall not terminate, cancel or surrender the
Master Lease, except in connection with a casualty or eminent domain action
(unless Subtenant notifies Sublandlord within thirty (30) days of such
casualty or institution of such action not to exercise its termination,
surrender, or cancellation option), unless it shall have received Master
Landlord's agreement to recognize this Sublease and all of Subtenant's rights
and obligations hereunder provided that Master Landlord shall not be liable
for any previous act or omission of Sublandlord under this Sublease.
Subtenant shall indemnify and hold Sublandlord harmless from and against any
and all claims, suits, liabilities, costs and expenses, including attorney's
fees and costs, asserted against or sustained by Sublandlord under the Master
Lease with respect to the Premises or arising out of or in connection with a
termination of the Master Lease resulting from a breach by Subtenant of this
Sublease or a holdover by Subtenant. Subtenant shall not do, anything which
constitutes a default under the terms of the Master Lease or causes a
termination thereof.
Section 23. Repairs and Maintenance of the Premises. Any repair and
maintenance obligations with respect to the Premises which are the
responsibility of Sublandlord, as tenant under the Master Lease, shall be
performed by Subtenant, at Subtenant's sole cost and expense (except with
respect to any repairs or maintenance which are caused due to the act or
negligence of Sublandlord, which repairs and maintenance shall be at
Sublandlord's sole cost and expense). Subtenant shall promptly notify
Sublandlord of the need for any such repair, even though Sublandlord shall
not be responsible or liable therefor.
Section 24. Interest on Unpaid Rent. All installments of Annual Fixed
Rent, Additional Rent, and any other charges which are not paid by Subtenant
when due shall bear interest from the date due until paid, at a rate
equivalent to the prime rate in effect from time to time at Citibank N.A.
plus two percent (2%), in no event to exceed the maximum legal rate.
Section 25. Consent or Approval of Sublandlord and Master Landlord. If the
consent or approval of Master Landlord is required under the Master Lease
with respect to any matter relating to the Premises or this Sublease, then
notwithstanding any other provision hereof, it shall also be required of
Sublandlord hereunder. However, Sublandlord agrees that it shall not
13
<PAGE>
withhold or delay its consent or approval provided that the consent or
approval of the Master Landlord has been obtained and that as a result
thereof, Sublandlord does not incur any additional liability or obligations
under the Master Lease. Sublandlord shall cooperate with Subtenant in
obtaining the consent or approval of the Master Landlord, and shall, upon
request of Subtenant, promptly make any such request and submit any necessary
information (after Sublandlord's receipt of such information from Subtenant)
for the consent or approval of the Master Landlord. Subtenant shall be
required to send to Sublandlord a copy of any request for consent or approval
delivered to Master Landlord by it. Subtenant shall be responsible for any
costs or expenses payable under the Master Lease or otherwise reasonably
incurred by Sublandlord in connection with requesting for Master Landlord's
consent or approval on behalf of Subtenant with respect to any matter as to
which Master Landlord's consent or approval is required under the Master
Lease or hereunder.
Section 26. Intentionally Deleted
Section 27. Survival. Except as otherwise set forth in this Sublease, any
obligations of Subtenant (including, without limitation, rent and other
monetary obligations, repair, removal and restoration obligations and
obligations to indemnify Sublandlord) or Sublandlord, shall survive the
expiration or sooner termination of this Sublease, and the obligated party
shall immediately reimburse the other party for any expense incurred by the
other party in curing the obligated party's failure to satisfy any such
obligation (notwithstanding the fact that such cure might be effected by the
other party following the expiration or earlier termination of this
Sublease).
Section 28. Attorney's Fees. If Sublandlord or Subtenant shall commence an
action against the other arising out of or in connection with this Sublease,
the prevailing party shall be entitled to recover its costs of suit and
reasonable attorney's fees.
Section 29. Brokers. Sublandlord and Subtenant warrant and represent that
they have had no dealings with any real estate broker or agent in connection
with the negotiation of this Sublease except for Cushman & Wakefield, Inc.
("C&W") and DLJ Realty Services, Inc. ("DLJRS"), and that they know of no
other real estate broker or agent who is or might be entitled to a commission
in connection with this Sublease. Sublandlord shall be responsible for any
commission which may be owed to C&W and DLJRS in connection with this
Sublease pursuant to a separate agreement. Sublandlord and Subtenant each
agree to indemnify, defend and hold the other party harmless from and against
any and all liabilities or expenses, including, without limitation,
reasonable attorney's fees and disbursements, arising out of or in connection
with any inaccuracy or alleged inaccuracy in the foregoing representations.
Section 30. Conditions to Sublease. Notwithstanding any other provision
hereof, the effectiveness of this Sublease and the rights and obligations of
the parties hereto are subject to (i) Sublandlord's receipt of Master
Landlord's written consent to this Sublease pursuant to the terms of the
Master Lease on or before sixty (60) days from the date of the full execution
hereof with concomitant release of Sublandlord's liabilities under the Master
Lease (the "Condition
14
<PAGE>
Expiry Date"); (ii) unless waived in writing by Subtenant on or prior to the
Condition Expiry Date a "Landlord's Non-Disturbance Agreement" from Master
Landlord, as defined in and pursuant to Section 11.9 of the Master Lease;
(iii) unless waived in writing by Subtenant on or prior to (ninety (90) days
from the execution hereof) a subordination, non-disturbance and attornment
agreement from Master Landlord's current mortgagee (which will not obligate
such mortgagee, inter alia, to perform work or pay work allowances); and (iv)
unless waived in writing by Subtenant on or before the Condition Expiry Date,
an agreement by Master Landlord with respect to all of the items set forth on
EXHIBIT C attached hereto and made a part hereof (the "Master Landlord
Conditions Precedent"). In the event that any of the foregoing conditions (to
the extent not waived in writing by Subtenant, if so waivable) are not
satisfied within the stated time period, then Sublandlord and Subtenant shall
each have the right to terminate this Sublease upon notice to the other, and
upon any such termination this Sublease shall be null and void and of no
further force and effect. Upon Sublandlord's request, Subtenant shall
reasonably cooperate with Sublandlord in obtaining Master Landlord's consent
to this Sublease.
Section 31. Submission of Sublease to Subtenant. The submission by
Sublandlord to Subtenant of this Sublease shall have no binding force or
effect, shall not constitute an option for the subleasing of the Premises nor
confer any rights, or impose any obligations upon either party until the
execution thereof by Sublandlord and the delivery of an executed original
copy thereof to Subtenant or its representative.
Section 32. Improvements to Premises.
32.1 Subtenant's Work. Subtenant intends to install certain initial
Alterations in the Premises, at its sole cost and expense, subject to
Subtenant's right to reimbursement from Sublandlord pursuant to Section 32.3.
Subtenant hereby covenants and agrees that Subtenant will, in a good and
workmanlike manner, make and complete such work and installation in and to
the Premises in conformance with all the requirements of the Master Lease and
this Sublease, including, without limitation, the provisions of Section 19
hereof and Section 4 of Exhibit 1 of the First Amendment as such terms are
incorporated herein pursuant to Section 10 hereof. The work set forth in
Subtenant's final plans for its initial Alterations to the Premises approved
in writing by Master Landlord and Sublandlord shall hereinafter be called
"Subtenant's Work".
32.2 Work Allowance. Sublandlord shall provide to Subtenant an
allowance not to exceed the amount of Six Million Three Hundred Seventy-One
Thousand Five Hundred Twenty and no/100ths Dollars ($6,371,520.00) (the "Work
Allowance") to be applied solely against Subtenant's Work. In the event
Sublandlord fails to make required payments of the Work Allowance within
thirty (30) days of Subtenant's written notice to Sublandlord of its failure
so to do, Subtenant shall have the right to set-off said costs pursuant to
Section 21.10 of the First Amendment of the Master Lease in the event of a
default in said obligation by Sublandlord.
32.3. Payment. Provided that Subtenant is not in default of any
material obligation hereunder (beyond any applicable notice and cure
periods), the Work Allowance shall
15
<PAGE>
be payable in the same manner and pursuant to all the terms and conditions as
set forth for Master Landlord's payment of "Landlord's Contribution" to
Sublandlord contained in Section 4 of Exhibit 1 of the First Amendment and
otherwise in accordance with the terms of the Master Lease; provided,
however, in no event shall Sublandlord be liable for any payment of the Work
Allowance to Subtenant for Subtenant's Work unless and until Subtenant shall
have made a requisition for payment and met all the conditions for payment as
set forth in Section 4 of Exhibit 1 of the First Amendment, as incorporated
herein.
32.4 Inspection. At any reasonable time, upon reasonable prior
notice and in the company of a representative of Subtenant, during the
progress of Subtenant's Work, representatives of Sublandlord and Master
Landlord shall have the right of access to the Premises and inspection
thereof; provided, however, that neither Sublandlord nor Master Landlord
shall incur any liability, obligation or responsibility to Subtenant or any
third party by reason of such access and inspection.
33. Authority. Each signatory hereto represents that it has the
proper authority to enter into this Sublease and that its execution and
delivery hereof have been duly authorized by all necessary partnership or
corporate action, as the case may be; that no consents or authorizations are
required for the effectiveness of this Sublease; and that this Sublease is
binding and enforceable against it.
Section 34. Directory Listings. Sublandlord, subject to the provisions of
the Master Lease, shall use commercially reasonable and diligent efforts to
ensure that Master Landlord shall maintain listings on the Building directory
of the name of Subtenant, and the names of any of their officers and
employees, provided that the names so listed shall not take up more than
Subtenant's proportionate share of Sublandlord's space on the building
directory allotted to Sublandlord pursuant to the provisions of the Master
Lease.
Section 35. Asbestos. Sublandlord shall deliver to Subtenant within five
(5) days of the date hereof any ACP-5 certificates relating to the Premises
delivered to Sublandlord by Master Landlord pursuant to the Master Lease.
Section 36. No Recording. Neither this Sublease nor an abstract hereof
shall be recorded.
This Sublease has been executed on the day and year first written above.
[SIGNATURE ON NEXT PAGE]
<PAGE>
SUBLANDLORD:
FURMAN SELZ LLC
By: /s/ Steven D. Blecher
---------------------------------
Name: Steven D. Blecher
Title: Executive Vice President
By:
----------------------------------
Name:
Title:
SUBTENANT:
DONALDSON LUFKIN &
JENRETTE, INC.
By: /s/ George P. Twill
------------------------------
Name: George P. Twill
Title: Sr. Vice President
17
<PAGE>
EXHIBIT 11
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Computation of Basic Earnings Per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Weighted Average Common Shares (1):
Average Common Shares Outstanding 117,236 110,190 116,110 109,136
Average Restricted Stock Units Outstanding 158 44 134 44
-------- --------- --------- ---------
Weighted Average Common Shares Outstanding 117,394 110,234 116,244 109,180
========= ========= ========= =========
Earnings:
Net Income $ 142,300 $ 100,200 $ 276,450 $ 186,600
Less: Preferred Stock Dividend Requirement 5,289 2,970 10,732 6,204
--------- --------- --------- ---------
Earnings Applicable to Common Shares $ 137,011 $ 97,230 $ 265,718 $ 180,396
========= ========= ========= =========
Basic Earnings Per Common Share $ 1.17 $ 0.88 $ 2.29 $ 1.65
========= ========= ========= =========
</TABLE>
(1) In February 1998, the Board of Directors declared a two-for-one stock
split (the "stock split") of the Company's common stock, subject to
stockholder approval, to increase the number of authorized common shares.
In April 1998, the stockholders approved an amendment to the Company's
Certificate of Incorporation whereby the amount of total authorized shares
of common stock was increased to 300 million shares and the amount of
total authorized shares of preferred stock was increased to 50 million.
The stock split was effected in the form of a 100% stock dividend to
stockholders of record on April 27, 1998, and was paid on May 11, 1998.
All common share, per common share, restricted stock unit and option data
have been restated for the effect of the stock split.
<PAGE>
EXHIBIT 11-1
DONALDSON, LUFKIN & JENRETTE, INC. & SUBSIDIARIES
Computation of Diluted Earnings Per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30
1998 1997 1998 1997
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Weighted Average Common Shares (1):
Average Common Shares Outstanding 117,236 110,190 116,110 109,136
Average Restricted Stock Units Outstanding 2,087 6,566 2,880 7,621
Average Common Shares Issuable
Under Employee Benefit Plans 11,338 5,980 10,805 5,188
Average Common Shares Issuable
Upon Conversion of Convertible Debt - 1,370 - 689
--------- ---------- --------- ----------
Weighted Average Common Shares Outstanding 130,661 124,106 129,795 122,634
========= ========== ========= ==========
Earnings:
Net Income $ 142,300 $ 100,200 $ 276,450 $ 186,600
Less: Preferred Stock Dividend Requirement 5,289 2,970 10,732 6,204
--------- ---------- --------- ----------
Earnings Applicable to Common Shares $ 137,011 $ 97,230 $ 265,718 $ 180,396
========= ========== ========= ==========
Diluted Earnings Per Common Share $ 1.05 $ 0.79 $ 2.05 $ 1.47
========= ========== ========= ==========
</TABLE>
(1) In February 1998, the Board of Directors declared a two-for-one stock
split (the "stock split") of the Company's common stock, subject to
stockholder approval, to increase the number of authorized common shares.
In April 1998, the stockholders approved an amendment to the Company's
Certificate of Incorporation whereby the amount of total authorized shares
of common stock was increased to 300 million shares and the amount of
total authorized shares of preferred stock was increased to 50 million.
The stock split was effected in the form of a 100% stock dividend to
stockholders of record on April 27, 1998, and was paid on May 11, 1998.
All common share, per common share, restricted stock unit and option data
have been restated for the effect of the stock split.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> BD
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 808,137
<RECEIVABLES> 11,312,479
<SECURITIES-RESALE> 21,663,789
<SECURITIES-BORROWED> 24,220,198
<INSTRUMENTS-OWNED> 19,267,611
<PP&E> 426,520
<TOTAL-ASSETS> 79,559,838
<SHORT-TERM> 2,337,938
<PAYABLES> 10,392,751
<REPOS-SOLD> 36,692,568
<SECURITIES-LOANED> 8,530,793
<INSTRUMENTS-SOLD> 12,928,650
<LONG-TERM> 2,563,206
200,000
375,000
<COMMON> 11,736
<OTHER-SE> 2,152,032
<TOTAL-LIABILITY-AND-EQUITY> 79,559,838
<TRADING-REVENUE> 134,723
<INTEREST-DIVIDENDS> 1,168,240
<COMMISSIONS> 399,580
<INVESTMENT-BANKING-REVENUES> 801,861
<FEE-REVENUE> 49,737
<INTEREST-EXPENSE> 752,107
<COMPENSATION> 1,317,050
<INCOME-PRETAX> 447,750
<INCOME-PRE-EXTRAORDINARY> 447,750
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 276,450
<EPS-PRIMARY> 2.29<F1>
<EPS-DILUTED> 2.05<F1>
<FN>
<F1> Basic and diluted earnings per share amounts have been restated for the
implementation of SFAS No. 128 "Earnings Per Share" and for the effect of
the stock split. The restated basic and diluted earnings per share amounts
at June 30, 1997 totaled $1.65 and $1.47, respectively.
</FN>
</TABLE>
