UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------
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: 2-88526
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PETROLEUM HEAT AND POWER CO., INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 06-1183025
- ---------------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2187 Atlantic Street, Stamford, CT 06902
- ---------------------------------------- -----------------------------
(Address of principal executive Offices) (Zip Code)
Registrant's telephone number, including area code: (203) 325-5400
--------------
- --------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
- -
As of June 30, 1996 there were 22,932,763 shares of the Registrant's Class A
Common Stock, 12,548 shares of the Registrant's Class B Common Stock and
2,597,519 shares of the Registrant's Class C Common Stock outstanding.
<PAGE>
PETROLEUM HEAT AND POWER CO., INC. AND SUBSIDIARIES
INDEX TO Form 10-Q
Page
----
PART 1 FINANCIAL INFORMATION:
Item 1 - Financial Statements
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations for the
Three Months Ended
June 30, 1996 and June 30, 1995
and the Six Months Ended
June 30, 1996 and June 30, 1995 4
Consolidated Statement of Changes in Stockholders'
Equity (Deficiency) for the Six Months Ended
June 30, 1996 5
Consolidated Statements of Cash Flows for the
Six Months Ended
June 30, 1996 and June 30, 1995 6 - 7
Notes to Condensed Consolidated Financial Statements 8 - 10
Item 2 - Management's Discussion and Analysis of
Financial Conditions and Results of Operations 11 - 18
PART 2 OTHER INFORMATION:
Item 4 - Submission of Matters to a Vote of
Security Holders 19
Item 6 - Exhibits and reports on Form 8-K 19
Signature 20
<PAGE>
PETROLEUM HEAT AND POWER CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except per share data)
<TABLE><CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1996 1995
---------- -------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 24,404 $ 78,285
Restricted cash 4,500 6,000
Accounts receivable (net of allowance of $1,877 and $969) 87,205 95,361
Inventories 11,530 20,413
Prepaid expenses 6,017 6,115
Notes receivable and other current assets 1,763 1,617
---------- ---------
Total current assets 135,419 207,791
---------- ---------
Property, plant and equipment - net 30,194 30,263
---------- ---------
Intangible assets (net of accumulated amortization
of $276,673 and $264,456)
Customer lists 82,615 76,419
Deferred charges and pension costs 25,328 27,296
---------- ---------
107,943 103,715
---------- ---------
Investment in and advances to the Star Gas Partnership 11,884 14,648
---------- ---------
Other assets 772 824
---------- ---------
$ 286,212 $ 357,241
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Current debt $ 3,136 $ 47,001
Current maturities of cumulative redeemable
exchangeable preferred stock 4,167 4,167
Accounts payable 8,645 22,824
Customer credit balances 9,635 19,610
Unearned service contract revenue 13,121 15,535
Accrued expenses and other liabilities 30,126 33,246
---------- ---------
Total current liabilities 68,830 142,383
---------- ---------
Supplemental benefits and other liabilities 1,703 1,658
---------- ---------
Pension plan obligation 7,161 7,174
---------- ---------
Notes payable and other long-term debt 17,274 17,779
---------- ---------
Senior notes payable 34,150 35,200
---------- ---------
Subordinated notes payable 240,400 241,450
---------- ---------
Cumulative redeemable exchangeable preferred stock 12,500 12,500
---------- ---------
Common stock redeemable at option of stockholder 1,280 1,280
---------- ---------
Note receivable from stockholder (1,280) (1,280)
---------- ---------
Stockholders' equity (deficiency):
Class A common stock-par value $.10 per share; 40,000 shares
authorized, 22,771 and 22,653 shares outstanding 2,277 2,266
Class B common stock-par value $.10 per share; 6,500 shares
authorized, 13 and 14 shares outstanding 1 1
Class C common stock-par value $.10 per share; 5,000 shares
authorized, 2,558 shares outstanding 256 256
Additional paid-in capital 77,456 76,418
Deficit (170,924) (174,972)
Minimum pension liability adjustment (4,872) (4,872)
---------- ---------
Total stockholders' equity (deficiency) (95,806) (100,903)
---------- ---------
$ 286,212 $ 357,241
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
- 3 -
<PAGE>
PETROLEUM HEAT AND POWER CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
(In thousands, except per share data) THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------------------- ------------------------
1996 1995 1996 1995
---------- --------- ---------- ------
<S> <C> <C> <C> <C>
Net sales $ 91,345 $ 87,639 $371,000 $341,376
Cost of sales 69,393 61,242 248,210 208,574
--------- -------- --------- --------
GROSS PROFIT 21,952 26,397 122,790 132,802
Selling, general and administrative expenses 24,532 30,072 51,954 62,077
Direct delivery expense 5,663 6,492 20,149 20,171
Restructuring charges 1,150 - 1,150 -
Corporate identity expenses 792 - 792 -
Amortization of customer lists 4,740 5,244 9,529 10,696
Depreciation of plant and equipment 1,732 2,919 3,389 5,722
Amortization of deferred charges 1,336 1,551 2,688 3,028
Provision for supplemental benefits 245 336 437 671
--------- -------- --------- --------
OPERATING INCOME (LOSS) (18,238) (20,217) 32,702 30,437
Other income (expense):
Interest expense (8,453) (10,356) (17,567) (20,116)
Interest income 620 884 1,249 1,406
Other 1,812 (135) 1,847 723
--------- -------- --------- --------
Income (loss) before income taxes,
equity interest and extraordinary item (24,259) (29,824) 18,231 12,450
Income taxes (benefit) - (25) 400 375
---------- -------- --------- --------
Income (loss) before equity interest
and extraordinary item (24,259) (29,799) 17,831 12,075
Share of income(loss) of Star Gas Partnership (1,893) - 1,472 -
--------- --------- --------- ------
Income (loss) before extraordinary item (26,152) (29,799) 19,303 12,075
Extraordinary item-loss on early
extinguishment of debt - (1,436) (6,414) (1,436)
---------- -------- --------- --------
NET INCOME (LOSS) $ (26,152) $(31,235) $ 12,889 $ 10,639
========= ======== ========= ========
Net (loss) income applicable to common stock $ (26,152) $(31,235) $ 11,695 $ 8,869
Income (loss) before extraordinary item per common share:
Class A Common Stock $ (1.02) $ (1.17) $ .71 $ .41
Class B Common Stock - - - -
Class C Common Stock (1.02) (1.17) .71 .41
Extraordinary (loss) per common share:
Class A Common Stock $ - $ (.06) $ (.25) $ (.06)
Class B Common Stock - - - -
Class C Common Stock - (.06) (.25) (.06)
Net income (loss) per common share:
Class A Common Stock $ (1.02) $ (1.23) $ .46 $ .35
Class B Common Stock - - - -
Class C Common Stock (1.02) (1.23) .46 .35
Cash dividends declared per common share:
Class A Common Stock $ .15 $ .15 $ .30 $ .30
Class B Common Stock - - - -
Class C Common Stock .15 .15 .30 .30
Weighted average number of common shares outstanding:
Class A Common Stock 22,933 22,855 22,897 22,556
Class B Common Stock 13 15 13 16
Class C Common Stock 2,598 2,598 2,598 2,598
</TABLE>
See accompanying notes to condensed consolidated financial statements.
- 4 -
<PAGE>
PETROLEUM HEAT AND POWER CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1996
(In thousands)
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------------------------
CLASS A CLASS B CLASS C MINIMUM
---------------------------------------------- ADDITIONAL PENSION
NO. OF NO. OF NO. OF PAID-IN LIABILITY
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT ADJUSTMENT tOTAL
------ ------ ------ ------ ------ ------ ------- ------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 22,653 $2,266 14 $1 2,558 $256 $76,418 ($174,972) ($4,872) ($100,903)
Net income 12,889 12,889
Cash dividends declared
and paid (5,012) (5,012)
Cash dividends payable (3,829) (3,829)
Repurchase of Class B
Common Stock (1) (-) (24) (24)
Class A shares issued under the
Dividend Reinvestment Plan 118 11 821 832
Stock option compensation 241 241
------- ------- -- -- ------ ----- -------- ----------- --------- ---------
Balance at June 30, 1996 22,771 $2,277 13 $1 2,558 $256 $77,456 ($170,924) ($4,872) ($95,806)
======= ======= == == ====== ===== ======== =========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
- 5 -
<PAGE>
PETROLEUM HEAT AND POWER CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
(In thousands) June 30,
-----------------
1996 1995
---- -----
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES:
Net income $ 12,889 $ 10,639
Adjustments to reconcile net income to
net cash provided by (used in) operating activities:
Amortization of customer lists 9,529 10,696
Depreciation of plant and equipment 3,389 5,722
Amortization of deferred charges 2,688 3,028
Share of income of Star Gas Partnership (1,472) -
Provision for losses on accounts receivable 865 738
Provision for supplemental benefits 437 671
Loss on early extinguishment of debt 6,414 1,436
Gain on sale of business (1,801) (788)
Other (59) 52
Change in operating assets and liabilities,
net of effects of acquisitions and dispositions:
Decrease in accounts receivable 7,291 25,905
Decrease in inventory 8,883 2,839
Increase in other current assets (48) (1,330)
Decrease (increase) in other assets 52 (523)
Decrease in accounts payable (14,179) (11,997)
Decrease in customer credit balances (9,975) (7,329)
Decrease in unearned service contract revenue (2,414) (1,508)
Decrease in accrued expenses (3,113) (2,150)
--------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 19,376 36,101
--------- --------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Acquisitions (20,376) (12,893)
Capital expenditures (3,325) (4,960)
Proceeds from sale of business 4,073 1,477
Net proceeds from sales of fixed assets 365 298
Minimum quarterly distributions from Star Gas Partnership 1,559 -
------- ------
NET CASH USED IN INVESTING ACTIVITIES (17,704) (16,078)
------- -------
See accompanying notes to consolidated financial statements.
- 6 -
<PAGE>
PETROLEUM HEAT AND POWER CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
(In thousands) June 30,
-------------------------
1996 1995
---- ----
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 832 18,516
Net proceeds from issuance of subordinated notes - 120,350
Repayment of notes payable (1,050) (80,270)
Redemption of preferred stock - (19,966)
Repurchase of common stock (24) (13,689)
Repurchase of subordinated notes (49,612) -
Credit facility borrowings 29,000 -
Credit facility repayments (29,000) (5,100)
Decrease in restricted cash 1,500 -
Cash dividends paid (8,834) (9,071)
Other 1,635 (1,115)
-------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (55,553) 9,655
-------- --------
NET INCREASE (DECREASE) IN CASH (53,881) 29,678
CASH AT BEGINNING OF YEAR 78,285 15,474
-------- --------
CASH AT END OF PERIOD $ 24,404 $ 45,152
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 19,901 $14,601
Income taxes 159 219
See accompanying notes to consolidated financial statements
- 7 -
<PAGE>
PETROLEUM HEAT AND POWER CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for the fair
statement of results for the interim periods.
The results of operations for the six months ended June 30, 1996 are not
necessarily indicative of the results to be expected for the full year.
2. Per Share Data
Net income (loss) per common shares are computed utilizing the three class
method based upon the weighted average number of shares of Class A Common
Stock, Class B Common Stock and Class C Common Stock outstanding after
adjusting net income (loss) for preferred dividends declared aggregating
$1,194,000 and $1,770,000 for the six months ended June 30, 1996 and 1995
respectively. Fully diluted net income (loss) per common shares are not
presented because the effect is not material.
3. Acquisitions / Sale
During the six month period ending June 30, 1996, the Company acquired the
customer lists and equipment of four unaffiliated fuel oil dealers. The
aggregate consideration for these acquisitions, accounted for by the purchase
method, was approximately $19.5 million. Sales and net income of the acquired
companies are included in the consolidated statement of income from the
respective dates of acquisition.
In June 1996, the Company sold its Springfield Massachusetts operations to an
unaffiliated fuel oil dealer. The Company received proceeds of approximately
$4.1 million and realized a gain on this transaction of approximately $1.8
million.
Had these acquisitions and disposal occurred at the beginning of the period,
the pro forma unaudited results of operations for the six months ended June
30, 1996 would have been as follows:
(In thousands, Except Per Share)
--------------------------------
Net sales $ 370,592
Net income before extraordinary loss 18,608
Net income 12,194
Net income per common share:
Class A Common Stock $ 0.43
Class B Common Stock -
Class C Common Stock $ 0.43
- 8 -
<PAGE>
PETROLEUM HEAT AND POWER CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. Segment Information
From December 8, 1994 to December 19, 1995 the operations, assets and
liabilities of Star Gas Corporation ("Star Gas"), a wholly owned subsidiary,
were included in the consolidated financial statements of the Company.
Accordingly, for the six months ended June 30, 1995, the Company's operations
were classified into two business segments: Home Heating Oil and Propane.
However, as a result of the Star Gas Master Limited Partnership transaction
in December 1995 involving the conveyance of the Company's propane operations
to Star Gas Propane, L.P., a minority owned entity, for the six and three
months ended June 30, 1996 the Company had no propane revenues or expenses.
<TABLE>
<CAPTION>
Six Months Ended June 30, 1996 Six Months Ended June 30, 1995
Home Home
Heating Heating
Oil Propane* Consolidated Oil Propane Consolidated
-------- ------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $371,000 $ - $371,000 $286,328 $55,048 $341,376
Gross Profit 122,790 - 122,790 103,033 29,769 132,802
Operating Expenses 74,045 - 74,045 62,102 20,146 82,248
Depreciation and
Amortization 16,043 - 16,043 15,491 4,626 20,117
Operating Income 32,702 - 32,702 25,440 4,997 30,437
Assets 286,212 - 286,212 253,472 148,089 401,561
Capital Expenditures 3,325 - 3,325 1,508 3,452 4,960
</TABLE>
* For the six months ended June 30, 1996 the Propane operations had equity
income, which is presented in the Statement of Operations as non-operating
income, of approximately $1.5 million representing the Company's share of income
of the Star Gas Partners, L.P., the parent partnership of Star Gas Propane, L.P.
<TABLE>
<CAPTION>
Three Months Ended June 30, 1996 Three Months Ended June 30, 1995
--------------------------------------- ------------------------------------------
Home Home
Heating Heating
Oil Propane** Consolidated Oil Propane Consolidated
-------- --------- ------------ -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 91,345 $ - $ 91,345 $ 70,927 $ 16,712 $ 87,639
Gross Profit 21,952 - 21,952 17,287 9,110 26,397
Operating Expenses 32,137 - 32,137 27,071 9,493 36,564
Depreciation and
Amortization 8,053 - 8,053 7,711 2,339 10,050
Operating Loss (18,238) - (18,238) (17,495) (2,722) (20,217)
</TABLE>
** For the three months ended June 30, 1996 the Propane operations had equity
loss, which is presented in the Statement of Operations as non-operating loss,
of approximately $1.9 million representing the Company's share of loss of the
Star Gas partnership.
- 9 -
<PAGE>
PETROLEUM HEAT AND POWER CO., INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
5. Restructuring Charges
Under the guidance of the Chief Operating Officer and a leading consulting
firm, a major strategic study aimed at improving the Company's organizational
and marketing effectiveness and financial performance was completed in late
1995. The study provided management with certain recommendations regarding
improvements in structure, training and technology. The Company is utilizing
the relatively less operationally demanding non-heating season period from
April to September to begin implementation of the study's recommendations.
As part of the implementation program, Petro began undertaking certain
business improvement strategies in its Long Island, New York region. These
steps include the consolidation of the region's five home heating oil
branches into one central customer service center and three depots. The
regional customer service center has accounting, credit, customer service
and sales functions consolidated into a single, new facility in central Long
Island. All external communications and marketing previously undertaken in
the five branches will be centralized into this one location freeing the
three newly configured depots to focus on oil delivery and heating equipment
repair, maintenance and installation, in mutually exclusive operating
territories.
In April 1996, after finalizing all aspects of this plan the Company formally
announced to the employees its intention to restructure certain aspects of
its Long Island, New York operations and recorded a restructuring charge of
$1.2 million in the second quarter of 1996. These charges included accruals
and actual cash expenditures of $0.5 million for severance and outplacement
of employees displaced by the plan, $0.6 million for lease payments remaining
on non-cancelable non-strategic facilities, and $0.1 million for the
write-off and disposal of certain equipment not compatible with equipment in
the new region, along with other expenses directly related to the
restructuring plan.
- 10 -
<PAGE>
PETROLEUM HEAT AND POWER CO., INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
OVERVIEW
In analyzing Petro's results for the six-month and three-month periods ended
June 30, 1996, one should consider a variety of factors that are unique to the
Company and its industry. This section highlights two of these factors: the
Company's recent history with Star Gas and the seasonal nature of the demand for
residential heating.
Firstly, and as more fully described in the "Investment In Star Gas" section of
the Company's 1995 10-K, in December 1995 Petro transferred all of its propane
assets to Star Gas Propane, L.P. an operating subsidiary of Star Gas Partners,
L.P., which was then converted to a master limited partnership (the "Star MLP").
As a result of this transaction, Petro's six months and second quarter 1996
results account for Star's performance on an equity basis. In contrast, Petro's
six months and second quarter 1995 results include what had historically been
the Company's propane operations, including Star Gas, on a consolidated basis.
In an effort to make the following discussion more meaningful, the analysis of
operating results primarily compares Petro's core business home heating oil
results for the two periods.
Secondly, the seasonal nature of the Company's business results in the sale by
the Company of approximately 50% of its annual volume of fuel oil in the first
quarter, 30% in the fourth quarter, and 20% in the second and third quarters
combined. Unlike this pattern of distribution, however, many of the Company's
costs are incurred evenly throughout the year, resulting in non-heating season
operating and net losses.
SIX MONTHS ENDED JUNE 30, 1996
COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
- ------------------------------------------
Volume. Home heating oil volume increased 20.3% to 294.3 million gallons for the
- ------
six months ended June 30, 1996, as compared to 244.7 million gallons for the six
months ended June 30, 1995. This increase was largely due to 13.2% colder
weather, as temperatures were slightly colder than normal (4.1%) in the first
six months of 1996, in contrast to the warm weather experienced during the first
half of 1995. Volume was also impacted by the gallonage associated with the
Company's fourteen heating oil acquisitions since the beginning of the first
quarter of last year. Total retail gallons of heating oil and propane increased
only 1.4% from the first six months of 1995 to the first six months of 1996, as
propane volume, which amounted to 45.6 million gallons in the first six months
of 1995, was not included in Petro's 1996 financials as a result of the Star
MLP.
Net sales. Home heating oil net sales increased 29.6% to $371.0 million for the
- ---------
six months ended June 30, 1996, as compared to $286.3 million for the six months
ended June 30, 1995. This growth was due both to increased volume and to higher
selling prices associated with a significant rise in wholesale costs. Total
sales of heating oil and propane combined increased only 8.7% from the first six
months of 1995 to the first six months of 1996, as propane sales, which amounted
to $55.0 million in the first six months of 1995, were excluded from Petro's
1996 financials as a result of the Star MLP.
Gross profit. Home heating oil gross profit increased 19.2% to $122.8 million
- ------------
for the six months ended June 30, 1996, as compared to $103.0 million for the
six months ended June 30, 1995 due to the increased volume described above.
Gross profit did not increase to the same extent as volume due to a) an unusual
decline
- 11 -
<PAGE>
in first quarter home heating oil margins, caused by a significant and rapid
increase in supply costs during the cold first quarter of 1996, and b) the
effect of record winter storms in January and February of 1996 on net service
expense, which is included in the Company's calculation of gross profit. While
in previous years the Company has been able to respond to supply cost increases
by increasing selling prices, the sudden spike occurring in the first quarter of
1996 outpaced the Company's ability to maintain and increase its margins.
Significantly, margins in the second quarter of 1996 were 1.3 cents higher than
in the second quarter of 1995. Total heating oil and propane gross profit
declined 7.5% from the first six months of 1995 to the first six months of 1996,
as propane gross profit, which amounted to $29.8 million in the first six months
of 1995, was not included in Petro's 1996 financials as a result of the Star
MLP.
Selling, general and administrative expenses: Home heating oil selling, general
- --------------------------------------------
and administrative expenses increased 12.6% to $52.0 million for the six months
ended June 30, 1996, as compared to $46.1 million for the six months ended June
30, 1995. This increase was below the increase in volume despite the impact of
inflation and the effect of heavy winter storms in January and February 1996,
reflecting 6.3% lower per gallon costs. It is estimated that the impact of the
storms on branch expenses in the first six months of 1996 was approximately $0.5
million, and that, excluding the effect of the storms, per gallon costs during
the first six months of 1996 were 7.2% lower than the prior year period. This
improvement was due to the Company's efforts to take advantage of operational
economies in all major expense categories. Total selling, general and
administrative expenses decreased 16.3% from the first six months of 1995 to the
first six months of 1996, as propane expenses, which amounted to $15.9 million
in the first six months of 1995, were excluded from Petro's 1996 financials as a
result of the Star MLP.
Direct delivery expenses. Home heating oil direct delivery expenses increased
- ------------------------
26.2% to $20.1 million for the six months ended June 30, 1996, as compared to
$16.0 million for the six months ended June 30, 1995. In addition to the growth
in volume delivered, this increase was also as a result of the severe winter
storms, which impacted delivery productivity and required the Company to pay
additional overtime and retain temporary personnel. Excluding the estimated $1.0
million effect of the storms, delivery expenses remained constant on a per
gallon basis despite inflation. Total direct delivery expenses decreased 0.1%
from the first six months of 1995 to the first six months of 1996, as propane
delivery expenses, which amounted to $4.2 million in the first six months of
1995, and which were not included in Petro's 1996 financials as a result of the
Star MLP, were offset by the increase in heating oil delivery expenses.
Restructuring charges. Restructuring charges for the six months ended June 30,
- ---------------------
1996 were $1.2 million. These charges represent costs associated with the
Company's regionalization and consolidation of its five operationally
independent Long Island branches into one regional customer service center and
three strategically located vehicle depots. This restructuring, announced April
1, 1996, represents the implementation of a study of the Company's operational
effectiveness conducted by a nationally recognized consulting firm and senior
Company management in 1995.
Corporate identity expenses. Corporate identity expenses for the six months
- ---------------------------
ended June 30, 1996 were $0.8 million. These expenses represent costs associated
with the company's brand identity program in Long Island, wherein the Company
plans to use its size to build significant brand equity by marketing its
services throughout the region under one brand name rather than the twelve
currently in use. These expenses are expected to approximate a total of $2.3
million over the course of fiscal year 1996.
- 12 -
<PAGE>
Amortization of customer lists. Home heating oil amortization of customer lists
- ------------------------------
increased 2.7% to $9.5 million for the six months ended June 30, 1996, as
compared to $9.3 million for the six months ended June 30, 1995 due to the
Company's recent acquisitions, which were partially offset by the impact of
certain customer lists becoming fully amortized. Total amortization of customer
lists decreased 10.9% from the first six months of 1995 to the first six months
of 1996, as propane customer list amortization, which amounted to $1.4 million
in the first six months of 1995, was eliminated from Petro's 1996 financials as
a result of the Star MLP.
Depreciation and amortization of plant and equipment. Home heating oil
- ----------------------------------------------------
depreciation and amortization of plant and equipment increased 20.1% to $3.4
million for the six months ended June 30, 1996, as compared to $2.8 million for
the six months ended June 30, 1995 as a result of the Company's recent fixed
asset additions, which outpaced the impact of certain assets becoming fully
depreciated. Total depreciation and amortization of plant and equipment
decreased 40.8% from the first six months of 1995 to the first six months of
1996, as propane-related depreciation, which amounted to $2.9 million in the
first six months of 1995, was eliminated from Petro's 1996 financials as a
result of the Star MLP.
Amortization of deferred charges. Home heating oil amortization of deferred
- --------------------------------
charges remained virtually unchanged at $2.7 million for the six months ended
June 30, 1996. Total amortization of deferred charges decreased from $3.0
million for the first six months of 1995 to $2.7 million for the first six
months of 1996, as the impact of propane-related amortization of deferred
charges, which amounted to $0.3 million in the first six months of 1995, was not
included in Petro's 1996 financials as a result of the Star MLP.
Provision for supplemental benefits. Provision for supplemental benefits
- -----------------------------------
declined to $0.4 million for the six months ended June 30, 1996, as compared to
$0.7 million for the six months ended June 30, 1995. These supplemental benefits
reflect the extension of the exercise date of certain options previously issued,
and the change in provision is due to a reduction of the accrual required under
the vesting schedule of those options.
Operating income. Home heating oil operating income increased 28.5% to $32.7
- ----------------
million for the six months ended June 30, 1996, as compared to $25.4 million for
the six months ended June 30, 1995. This increase was largely a result of higher
volume and improved per gallon operating costs, which offset the effect of the
record storms and the restructuring and corporate identity charges. Total
operating income also increased 7.4%, despite the non-consolidation of Star
which, for the first six months of 1995, contributed $5.0 million.
Net interest expense. Net interest expense declined 12.8% to $16.3 million for
- --------------------
the six months ended June 30, 1996, as compared to $18.7 million for the six
months ended June 30, 1995. This decrease was due to the decline in average
borrowings over the periods resulting from the application of proceeds from the
Star MLP to debt repayment. Due to the fact that a significant portion of this
debt repayment occurred during the middle of the first quarter of 1996, however,
the impact of this repayment is not fully reflected, as interest expense was not
reduced for the entire six month period.
Other income. Other income increased from $0.7 million for the six months ended
- ------------
June 30, 1995 to $1.8 million for the six months ended June 30, 1996. The 1995
amount reflected the sale of the Company's New Hampshire heating oil operations
during the first quarter of 1995, and the 1996 amount reflects the sale of the
Company's Springfield, Massachusetts heating oil operations during the second
quarter of 1996, both of which were sub-performing, and for which the Company
received a premium value.
- 13 -
<PAGE>
Equity in earnings of Star Gas Partnership. Equity in earnings of Star Gas
- ------------------------------------------
Partnership were $1.5 million for the six months ended June 30, 1996. For the
six months ended June 30, 1995, Star Gas' results were consolidated with the
Company's. In May of 1996, the Company received a $1.6 million dividend from
Star Gas on its subordinate and general partnership interest for the period of
December 20, 1995 to March 31, 1996.
Income before extraordinary items. Income before extraordinary items increased
- ---------------------------------
59.9% to $19.3 million for the six months ended June 30, 1996, as compared to
$12.1 million for the six months ended June 30, 1995 due to the $7.3 million
increase in heating oil operating income and the $1.1 million increase in other
income. Partially offsetting these gains was the elimination of Star's $5.0
million of operating income in the first six months of 1995; this reduction was
largely recouped, however, through the recorded equity in earnings of Star Gas
Corporation of $1.5 million and the $2.4 reduction in interest expense.
Extraordinary item - loss on early extinguishment of debt. In February 1996, the
- ---------------------------------------------------------
Company recorded an extraordinary charge of $6.4 million in connection with the
retirement of $43.8 million of 12.25% debt due 2005. This amount includes both a
prepayment premium of $4.8 million and a write-off of deferred charges of $1.6
million associated with the issuance of that debt. The retirement occurred at an
approximate yield to maturity of 10.4% for the Company.
Net income. Net income increased 21.1% to $12.9 million for the six months ended
- ----------
June 30, 1996, as compared to $10.6 million for the six months ended June 30,
1995. This increase was despite the extraordinary item described above, and was
due to improvements in core business heating oil operating income, net interest
expense and other income.
EBITDA*. Home heating oil EBITDA increased 19.1% to $48.7 million for the six
- -------
months ended June 30, 1996, as compared to $40.9 million for the six months
ended June 30, 1995. This gain resulted from increased volume and improved per
gallon operating expense performance, and was despite the impact of the
restructuring and corporate identity costs. Excluding these one-time costs,
heating oil EBITDA increased 23.8% to $50.7 million. Total EBITDA decreased 3.6%
from the first six months of 1995 to the first six months of 1996, as the impact
of propane EBITDA, which amounted to $9.6 million in the first six months of
1995, was excluded from Petro's 1996 financials as a result of the Star MLP.
NIDA**. NIDA increased 12.6% to $34.2 million for the six months ended June 30,
- ------
1996, as compared to $30.4 million for the six months ended June 30, 1995.
Excluding the one-time restructuring and corporate identity costs, NIDA
increased 24.8% to $36.2 million. Despite the non-consolidation of Star Gas,
which contributed $9.6 million of EBITDA in the first six months of 1995, the
Company was able to achieve this increase due both to the volume and operating
expense related growth in heating oil EBITDA and to the improvement in net
interest expense and other income.
- --------------------------
* EBITDA is defined as operating income before depreciation and amortization,
non-cash charges relating to the grant of stock options to executives of the
Company, and the amount of non-cash expenses associated with key employees'
deferred compensation plans.
** NIDA is the Company's measure of cash flow and is defined as net income
(loss) before extraordinary items, plus depreciation, amortization, non-cash
charges relating to the grant of stock options to executives of the Company,
non-cash charges associated with deferred compensation plans and other non-cash
charges of a similar nature, if any, less dividends accrued on preferred stock,
excluding net income (loss) derived from investments accounted for by the equity
method, except to the extent of any cash dividends received by the Company.
- 14 -
<PAGE>
THREE MONTHS ENDING JUNE 30, 1996
COMPARED TO THREE MONTHS ENDING JUNE 30, 1995
- ---------------------------------------------
Volume: Retail home heating oil volume increased 19.2% to 62.3 million gallons
- ------
for the three months ended June 30, 1996, as compared to 52.2 million gallons
for the three months ended June 30, 1995. This increase was largely due to the
Company's acquisition of fourteen heating oil companies since the first quarter
of last year. In addition, second quarter 1996 weather was 6.5% colder than in
the second quarter of 1995, although it is difficult to analyze the impact of
such variations in degree days during the non-heating season. Total retail
gallons of heating oil and propane decreased 3.5% from the second quarter of
1995 to the second quarter of 1996, as propane volume, which amounted to 12.3
million gallons in the second quarter of 1995 was not included in Petro's 1996
financials as a result of the Star MLP.
Net Sales: Home heating oil net sales increased 28.8% to $91.3 million for the
- ---------
three months ended June 30, 1996, as compared to $70.9 million for the three
months ended June 30, 1995. This increase was due to increased volume and to
higher selling prices driven by the increased cost of supply. Total sales of
heating oil and propane increased only 4.2% from the second quarter of 1995 to
the second quarter of 1996, as propane sales, which amounted to $16.7 in the
first quarter of 1995, were not included in Petro's 1996 financials as a result
of the Star MLP.
Gross Profit: Home heating oil gross profit increased 27.0% to $22.0 million for
- ------------
the three months ended June 30, 1996, as compared to $17.3 million for the three
months ended June 30, 1995. This improvement in gross profit resulted from the
increase in volume, as well as from a 1.3 cent increase in home heating oil
gross profit margins over the prior year period. The increase in margin reflects
the Company's ability to adjust its selling prices in response to higher per
gallon costs without incurring margin erosion. Total heating oil and propane
gross profit declined 16.8% from the second quarter of 1995 to the second
quarter of 1996, as propane gross profit, which amounted to $9.1 million in the
second quarter of 1995, was not included in Petro's 1996 financials as a result
of the Star MLP.
Selling, General and Administrative Expenses: Home heating oil selling, general,
- --------------------------------------------
and administrative expenses increased 9.6% to $24.5 million for the three months
ended June 30, 1996, as compared to $22.4 million for the three months ended
June 30, 1995. On a per gallon basis, these costs declined by 8.0%, reflecting
the Company's ability to control operating costs despite a large increase in
volume and despite inflationary pressures. Total selling, general and
administrative expenses declined 18.4% from the second quarter of 1995 to the
second quarter of 1996, as propane expenses, which amounted to $7.7 million in
the second quarter 1995, were excluded from Petro's 1996 financials as a result
of the Star MLP.
Direct Delivery: Home heating oil direct delivery expenses increased 20.6% to
- ---------------
$5.7 million for the three months ended June 30, 1996, as compared to $4.7 for
the three months ended June 30, 1995. This increase is directly related to the
increase in volume over the two periods. Total direct delivery expenses declined
12.8% from the second quarter of 1995 to the second quarter of 1996, as propane
delivery expenses, which amounted to $1.8 million in the second quarter of 1995,
were not included in Petro's 1996 financials as a result of the Star MLP.
- 15 -
<PAGE>
Amortization of Customer Lists: Home heating oil amortization of customer lists
- ------------------------------
remained relatively unchanged at $4.7 million for the three months ended June
30, 1996, as the impact of the Company's recent acquisitions offset the effect
of certain customer lists becoming fully amortized. Total amortization of
customer lists decreased 9.6% from the second quarter of 1995 to the second
quarter of 1996, as propane customer list amortization, which amounted to $0.6
million in the second quarter of 1995, was excluded from Petro's 1996 financials
as a result of the Star MLP.
Depreciation and Amortization of Plant and Equipment: Home heating oil
- ----------------------------------------------------
depreciation and amortization of plant and equipment increased 21.5% to $1.7
million for the three months ended June 30, 1996, as compared to $1.4 million
for the three months ended June 30, 1995 as a result of the Company's recent
acquisitions, which outpaced the impact of certain assets becoming fully
depreciated. Total depreciation and amortization of plant and equipment
decreased 40.7% from the second quarter of 1995 to the second quarter of 1996,
as propane-related depreciation, which amounted to $1.5 million in the second
quarter of 1995, was excluded from Petro's 1996 financials as a result of the
Star MLP.
Amortization of Deferred Charges: Home heating oil amortization of deferred
- --------------------------------
charges remained virtually unchanged at $1.3 million for the three months ended
June 30, 1996. Total amortization of deferred charges decreased from $1.6
million in the second quarter of 1995 to $1.3 million in the second quarter of
1996, as the impact of propane-related amortization of deferred charges , which
amounted to $0.3 million in the second quarter of 1995, was not included in
Petro's 1996 financials as a result of the Star MLP.
Provision for Supplemental Benefits: Provision for supplemental benefits
- -----------------------------------
declined to $0.2 million for the three months ended June 30, 1996, as compared
to $0.3 million for the three months ended June 30, 1995. These supplemental
benefits reflect the extension of the exercise date of certain options
previously issued, and the change in provision is due to a reduction of the
accrual required under the vesting schedule of those options.
Operating Loss: Home heating oil operating loss increased 4.2% to $18.2 million
- --------------
for the three months ended June 30, 1996, as compared to $17.5 million for the
three months ended June 30, 1995. This increase was due to $1.9 million of
restructuring and corporate identity costs associated with the reorganization of
the Long Island region, which was announced April 1, 1996. Excluding these
charges, operating loss would have decreased 6.9% to $16.3 million, due
primarily to increased volume, higher gross profit margins and lower per gallon
operating costs. Total operating income increased by 9.8% as the impact of
propane operating loss, which amounted to $2.7 million in the second quarter of
1995, was not included in Petro's 1996 financials as a result of the Star MLP.
Net Interest Expense: Net interest expense declined 17.3% to $7.8 million for
- --------------------
the three months ended June 30, 1996, as compared to $9.5 million for the three
months ended June 30,1995. This decline was primarily due to a reduction in
average debt outstanding of $64.1 million, or 17.6% over the two periods. This
reduction in debt occurred largely as a result of the application of proceeds
from the Star MLP to debt repayment.
Other Income: Other income increased to $1.8 million for the three months ended
- ------------
June 30, 1996, as compared to other loss of $0.1 million for the three months
ended June 30, 1995, reflecting the sale of the Company's underperforming
Springfield, Massachusetts operations during the second quarter of 1996.
- 16 -
<PAGE>
Equity in Loss of Star Gas Partnership: Equity in loss of Star Gas Partnership
- --------------------------------------
was $1.9 million for the three months ended June 30, 1996. Star Gas' results
were consolidated --------------------------------------- with the Company's for
the three months ended June 30, 1995.
Income (Loss) Before Extraordinary Items: Income (loss) before extraordinary
- ----------------------------------------
items improved 12.2% to a loss of $26.2 million for the three months ended June
30, 1996, as compared to a loss of $29.8 million for the three months ended June
30, 1995. This improvement was despite the $1.9 million in restructuring and
corporate identity charges and was partially due to higher heating oil volume,
improved heating oil margins and per gallon operating costs, a decline in
interest expense and the gain on the sale of the Springfield, Massachusetts
operation. In addition, the elimination of Star's operating loss, which amounted
to $2.7 million in the second quarter of 1995, had a greater impact than the
recorded equity in loss of Star Gas Corporation of $1.8 million in the first
quarter of 1996.
Extraordinary Item - Loss on Early Extinguishment of Debt: In the second quarter
- ---------------------------------------------------------
of June 1995, the Company recorded an extraordinary loss of $1.4 million
representing the prepayment premium associated with the refinancing of $12.8
million of floating rate debt due 2000 (15.4% annual rate at time of repayment).
Net Income (Loss): Net income (loss) improved 16.3% to a loss of $26.1 million
- -----------------
for the three months ended June 30, 1996, as compared to a loss of $31.2 million
for the three ------------------ months ended June 30, 1995.
EBITDA: Home heating oil EBITDA loss increased 4.1% to $10.2 million for the
- ------
three months ended June 30, 1996, as compared to $9.8 million for the three
months ended June 30, 1995. This decline due to $1.9 million of restructuring
and corporate identity charges related to the Long Island regionalization.
Excluding these charges, EBITDA would have improved 15.7%, or $1.5 million, due
to the increased volume associated with acquisitions and colder weather, as well
as to the increase in gross profit margins. Total EBITDA loss was unchanged at
$10.2 million for the second quarter 1996, as Star Gas' second quarter 1995
EBITDA loss of $0.4 million was excluded from Petro's 1996 financials as a
result of the Star MLP.
NIDA: NIDA improved 25.6% to a loss of $15.2 million for the three months ended
- ----
June 30, 1996, as compared to a loss of $20.5 million for the three months ended
June 30, 1996. This improvement was due to a $1.6 million decrease in net
interest expense, the receipt of $1.6 million in distribution from Star Gas, the
gain on the sale of the Company's non-strategic Springfield, Massachusetts
operations, and the exclusion of $2.7 million of Star Gas NIDA loss due to the
Star MLP.
- 17 -
<PAGE>
LIQUIDITY AND FINANCIAL CONDITION
- ---------------------------------
In December 1995, the Company received net proceeds from the transfer of its
propane assets to the Star Gas Partnership of $134.7 million, $83.7 million from
Star Gas Corporation's First Mortgage Notes and $51.0 million from the Star Gas
MLP equity offering. Approximately $30.0 million of these funds were used in
1995, $24.0 million to repay long-term debt and $6.0 million reserved to
guarantee the Star Gas Partnership's minimum quarterly distribution. In February
1996, $48.6 million of these funds were used to retire $43.8 million of the
Company's $125.0 million 12 1/4% Subordinated Debentures due 2005 at an eleven
percent premium. Overall, the transaction had the effect of enabling Petro to
recoup virtually its entire investment in Star Gas, while allowing Petro to
retain operational control as general partner and a continuing equity ownership
interest of 46.5%. Furthermore, the net proceeds of $134.7 million allowed Petro
to reduce its outstanding debt by approximately $70.0 million by the first
quarter of 1996, and provided the Company with a significant amount of
additional working capital to fund future expansion.
For 1996, net cash provided by operating activities of $19.1 million, combined
with the opening cash balance at January 1, 1996 of $78.3 million, and the
receipt of Star Gas's minimum quarterly distribution of $1.6 million, amounted
to $99.0 million. These funds were utilized in investing activities for
acquisitions and purchase of fixed assets of $23.4 million; and in financing
activities to pay dividends of $8.8 million, to repay notes payable of $2.1
million, and to repurchase subordinated notes of $48.6 million (as described in
the preceding paragraph). These financing activities were partially offset by
cash provided by other financing activities of $4.2 million, which includes $0.8
million of dividend reinvestment proceeds and the release of $1.5 million from
the Star Gas minimum quarterly distribution guarantee based upon the fulfillment
of the guarantee provisions for the quarter. In addition, the sale of the
Company's Springfield Massachusetts operations generated $4.1 million of
proceeds. As a result of the above activities, the Company's cash balance
decreased by $53.9 million to $24.4 million at June 30, 1996.
The Company currently has available a $60.0 million working capital revolving
credit facility. At June 30, 1996, there were no working capital revolving
credit facility borrowings, and the Company had $66.6 million of working
capital.
For the remainder of 1996, the Company anticipates paying dividends on its
Common Stock before dividend reinvestment of approximately $7.7 million,
redeeming $4.2 million of Redeemable Preferred Stock, and paying $1.2 million in
preferred stock dividends. Based on the Company's current cash and working
capital position, and bank credit facility which is expected to be extended from
its August 28, 1996 expiration, the Company expects to be able to meet all of
the above mentioned obligations, as well as meet all of its other current
obligations as they become due.
STAR GAS STRATEGIC ALTERNATIVES
- -------------------------------
On August 1, 1996 Star Gas Partners, L.P. announced that it had retained a
nationally renowned investment banking firm to assist it in the development and
consideration of strategic alternatives designed to maximize the value of Star
Gas to its unitholders, including Petro which owns a 46.5% equity interest. The
alternatives to be investigated may include, but are not limited to, the sale or
merger of Star Gas.
- 18 -
<PAGE>
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) Annual Meeting of Shareholders May 29, 1996.
(c) Proposals
<TABLE>
<CAPTION>
Broker
Election of Directors For Against Withheld Abstain Nonvotes
--------------------- --- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Irik P. Sevin 36,406,504 * 57,242 * 50,600
Audrey L. Sevin 36,406,504 * 57,242 * 50,600
Phillip Ean Cohen 33,492,192 * 2,971,554 * 50,600
Thomas J. Edelman 36,406,504 * 57,242 * 50,600
Richard O'Connell 36,406,504 * 57,242 * 50,600
Wolfgang Traber 36,406,504 * 57,242 * 50,600
Paul Biddelman 36,406,504 * 57,242 * 50,600
Ratification of Appointment
of KPMG Peat Marwick LLP as
the Company's Independent
Auditors 36,405,290 7,270 * 586 50,600
</TABLE>
*Not Applicable
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits Included Within:
------------------------
(27) Financial Data Schedule
10.53 Lease dated January 25, 1996 with respect to
office located at 48 Harbor Park Drive, Port
Washington, New York
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
- 19 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized:
Signature Title Date
- --------- -----
Irik P. Sevin President, Chairman of the August 8, 1996
- -------------
Irik P. Sevin Board, Chief Executive Officer,
and Chief Financial and
Accounting Officer and Director
- 20 -
Exhibit 10.53
AGREEMENT OF LEASE
BETWEEN
RECKSON ASSOCIATES
AND
PETROLEUM HEAT AND POWER CO., INC.
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
SPACE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
USE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
LANDLORD'S REPAIRS AND MAINTENANCE . . . . . . . . . . . . . . 5
PARKING FIELD . . . . . . . . . . . . . . . . . . . . . . . . . 5
TAXES AND OTHER CHARGES . . . . . . . . . . . . . . . . . . . . 6
TENANT'S REPAIRS . . . . . . . . . . . . . . . . . . . . . . . 7
FIXTURES & INSTALLATIONS . . . . . . . . . . . . . . . . . . . 7
ALTERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 8
REQUIREMENTS OF LAW . . . . . . . . . . . . . . . . . . . . . 11
END OF TERM . . . . . . . . . . . . . . . . . . . . . . . . . 13
QUIET ENJOYMENT . . . . . . . . . . . . . . . . . . . . . . . 14
SIGNS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . 14
RIGHT TO SUBLET OR ASSIGN . . . . . . . . . . . . . . . . . . 15
LANDLORD'S ACCESS TO PREMISES . . . . . . . . . . . . . . . . 16
SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . 17
PROPERTY LOSS, DAMAGE REIMBURSEMENT . . . . . . . . . . . . . 19
TENANT'S INDEMNITY . . . . . . . . . . . . . . . . . . . . . 20
DESTRUCTION - FIRE OR OTHER CASUALTY . . . . . . . . . . . . 20
INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 22
EMINENT DOMAIN . . . . . . . . . . . . . . . . . . . . . . . 25
i
<PAGE>
NONLIABILITY OF LANDLORD . . . . . . . . . . . . . . . . . . 26
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
TERMINATION ON DEFAULT . . . . . . . . . . . . . . . . . . . 28
DAMAGES . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SUMS DUE LANDLORD . . . . . . . . . . . . . . . . . . . . . . 31
NO WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . 32
WAIVER OF TRIAL BY JURY . . . . . . . . . . . . . . . . . . . 33
NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
INABILITY TO PERFORM . . . . . . . . . . . . . . . . . . . . 34
INTERRUPTION OF SERVICE . . . . . . . . . . . . . . . . . . . 35
CONDITIONS OF LANDLORD'S LIABILITY . . . . . . . . . . . . . 35
TENANT'S TAKING POSSESSION . . . . . . . . . . . . . . . . . 35
ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 36
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 36
PARTNERSHIP TENANT . . . . . . . . . . . . . . . . . . . . . 37
SUCCESSORS, ASSIGNS, ETC. . . . . . . . . . . . . . . . . . . 38
BROKER . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 38
NOTICE OF ACCIDENTS . . . . . . . . . . . . . . . . . . . . . 38
TENANT'S AUTHORITY TO ENTER LEASE . . . . . . . . . . . . . . 39
RENEWAL OPTION . . . . . . . . . . . . . . . . . . . . . . . 39
REASONABLENESS STANDARD . . . . . . . . . . . . . . . . . . . 40
SCHEDULE "A" . . . . . . . . . . . . . . . . . . . . . . . . 42
SCHEDULE "B" . . . . . . . . . . . . . . . . . . . . . . . . 45
SCHEDULE "C" . . . . . . . . . . . . . . . . . . . . . . . . 47
SCHEDULE "D" . . . . . . . . . . . . . . . . . . . . . . . . 48
EXHIBIT 1 . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ii
<PAGE>
AGREEMENT OF LEASE, made as of this 25 day of January, 1996, between
RECKSON ASSOCIATES, a New York partnership, having its principal office at 225
Broadhollow Road, Suite 212 W, CS 5341, Melville, New York 11747-0983
(hereinafter referred to as "Landlord"), and PETROLEUM HEAT AND POWER CO., INC.,
a Minnesota corporation, having an office at 2187 Atlantic Street, Stamford,
Connecticut 06902 (hereinafter referred to as "Tenant").
WITNESSETH: Landlord and Tenant hereby covenant and agree as follows:
SPACE
1. Landlord hereby leases to Tenant and Tenant hereby hires from Landlord
the real property and the building and other improvements thereon known as and
located at 48 Harbor Park Drive, Port Washington, New York 11050 as shown on the
site plan annexed hereto as Exhibit 1 (such real property, building and
improvements being hereinafter referred to as the "Demised Premises" or the
"Premises" and such building being hereinafter referred to as the "Building").
The term "Tenant's Proportionate Share" as used in this lease shall mean 100% of
the charge or item in question.
TERM
2. The term ("Term" or "Demised Term" or "term") of this lease shall
commence on April 15, 1996, hereinafter referred to as the "Term Commencement
Date", and shall terminate on August 31, 2006, hereinafter referred to as the
"Expiration Date", unless the Term shall sooner terminate pursuant to any of the
terms, covenants or conditions of this lease or pursuant to law.
If on the foregoing date specified for the Term Commencement Date the
Demised Premises shall not be "substantially completed" in accordance with
Schedule A annexed hereto, then the Term Commencement Date shall be postponed
until the sooner to occur of (i) Tenant's occupancy of the Premises, or (ii) the
date on which the Demised Premises shall be "substantially completed" (which
date shall not be later than July 1, 1996) and the Term of this lease shall be
extended so that the Expiration Date shall be ten (10) years and four (4) months
after the last day of the month in which the Term Commencement Date occurs.
"Substantially completed" or "substantial completion" as used herein is defined
to mean when the only items to be completed are those which do not materially
interfere with the Tenant's use and occupancy of the Demised
1
<PAGE>
Premises; but if Landlord shall be delayed in such "substantial completion" as a
result of (i) the performance or completion of any work, labor or services by a
party employed by Tenant; (ii) Tenant's failure to approve final plans, working
drawings, reflective ceiling plans or specifications; or (iii) Tenant's changes
in said plans or specifications; then the commencement of the Term of this lease
and the payment of rent hereunder shall be accelerated by the number of days of
such delay. Tenant waives any right to rescind this lease under Section 223-a
of the New York Real Property Law or any successor statute of similar import
then in force and further waives the right to recover any damages which may
result from Landlord's failure to deliver possession of the Premises on the Term
Commencement Date.
A "Lease Year" shall comprise a period of twelve (12) consecutive months.
Notwithstanding the foregoing, the first Lease Year shall commence upon the Term
Commencement Date and if the Term Commencement Date is not the first day of a
month shall include the additional period from the Term Commencement Date to the
end of the then current month. Each succeeding Lease Year shall end on the
anniversary date of the last day of the preceding Lease Year. For example, if
the Term Commencement Date were January 1, 1996, the first Lease Year would end
on December 31, 1996 and each succeeding Lease Year would end on December 31st.
If, however, the Term Commencement Date were January 2, 1996 the first Lease
Year would end on January 31, 1997, the second Lease Year would commence on
February 1, 1997 and each succeeding Lease Year would end on January 31st.
RENT
3. The annual minimum rental ("Rent" or "rent") is as follows:
During the first Lease Year, the Rent shall be computed on an annual minimum
rental rate of $612,500.04 and shall be payable in monthly installments of
$51,041.67.
During the second Lease Year, the Rent shall be $637,000.08, payable in monthly
installments of $53,083.34.
During the third Lease Year, the Rent shall be $662,480.04, payable in monthly
installments of $55,206.67.
During the fourth Lease Year, the Rent shall be $688,979.28, payable in monthly
installments of $57,414.94.
During the fifth Lease Year, the Rent shall be $716,538.48, payable in monthly
installments of $59,711.54.
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During the sixth Lease Year, the Rent shall be $745,200.00, payable in monthly
installments of $62,100.00.
During the seventh Lease Year, the Rent shall be $775,008.00, payable in monthly
installments of $64,584.00.
During the eighth Lease Year, the Rent shall be $806,008.32, payable in monthly
installments of $67,167.36.
During the ninth Lease Year, the Rent shall be $838,248.60, payable in monthly
installments of $69,854.05.
During the tenth Lease Year (which for the purposes of this Article and Article
44 only shall comprise the last sixteen (16) full calendar months of the term of
this lease), the Rent shall be payable at the annual minimum rental rate of
$871,778.52 and shall be payable in monthly installments of $72,648.21.
Tenant agrees to pay the Rent to Landlord, without notice or demand, in
lawful money of the United States which shall be legal tender in payment of the
debts and dues, public and private, at the time of payment in advance on the
first day of each calendar month during the Demised Term at the office of the
Landlord, or at such other place as Landlord shall designate, except that Tenant
shall pay the first monthly installment on the execution hereof. Tenant shall
pay the Rent as above and as hereinafter provided, without any set off or
deduction whatsoever. Should the Term Commencement Date be a date other than
the first day of a calendar month, the Tenant shall pay a pro rata portion of
the Rent on a per diem basis, based upon the first full calendar month of the
first Lease Year, from such date to and including the last day of that current
calendar month, and the first Lease Year shall include said partial month. The
Rent payable for such partial month shall be in addition to the Rent payable
pursuant to the Rent schedule set forth above.
Notwithstanding the foregoing, provided Tenant is not then in default under
any provision of this lease beyond any applicable notice and cure period, Tenant
shall be relieved of its obligations to pay Rent for the first four full
calendar months of the Term of this lease.
USE
4. (A) Tenant shall use and occupy the Demised Premises only for
executive and administrative offices and for no other purpose.
(B) Tenant shall not use or occupy, suffer or permit the Premises, or
any part thereof, to be used in any manner which would in any way, in the
reasonable judgment of Landlord, (i)
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violate any laws or regulations of public authorities; (ii) make void or
voidable any insurance policy then in force with respect to the Building; (iii)
impair the appearance, character or reputation of the Building; (iv) discharge
objectionable fumes, vapors or odors into the Building, the air, or the air-
conditioning systems or flues or vents servicing the Building. The provisions
of this Section shall not be deemed to be limited in any way to or by the
provisions of any other Section or any Rule or Regulation.
(C) The emplacement of any equipment which will unreasonably impose an
unevenly distributed floor load shall be done only after written permission is
received from the Landlord. Such permission will be granted only after adequate
proof is furnished by a professional engineer that such floor loading will not
endanger the structure.
(D) Tenant will not at any time use or occupy the Demised Premises in
violation of the certificate of occupancy (temporary or permanent) issued for
the Building.
(E) Tenant acknowledges that the value of the Premises and the reputation
of Landlord will be seriously injured if the Premises are used for any obscene
or pornographic purposes or if any obscene or pornographic material is permitted
on the Premises in connection with any business conducted by Tenant on the
Premises. Tenant further agrees that Tenant will not permit any such uses by
Tenant or a sublessee of the Premises or an assignee of this lease. This
Paragraph shall directly bind any successors in interest to Tenant. Tenant
agrees that, if at any time, Tenant violates any of the provisions of this
Paragraph, such violation shall be deemed a breach of a substantial obligation
of the terms of this lease and objectionable conduct. Pornographic material is
defined for purposes of this Paragraph as any written or pictorial matter with
prurient appeal or any objects or instruments that are primarily concerned with
lewd or prurient sexual activity. Obscene material is defined here as it is in
Penal Law Sec.235.00.
LANDLORD'S INITIAL CONSTRUCTION
5. Landlord shall perform and make, at its expense and on a turn-key basis,
the construction work and installations set forth on the plans prepared by
Tenant's architect and approved by Landlord which are annexed hereto as Exhibit
2 (the "Tenant's Initial Plans"). Such work and installations shall be
performed on the basis of the specifications annexed hereto as Schedule A.
(Such work and installations are hereinafter referred to as "Landlord's Initial
Construction".) All such work shall be done pursuant to code and, if required
by law, a proper certificate of
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occupancy or compliance covering such work shall be delivered by Landlord to
Tenant.
UTILITIES
6. (a) Tenant shall provide, at its own expense, fuel, heat, water,
electricity and all other utilities required in connection with its use of the
Premises.
(b) Tenant shall be responsible for all deposits required by the
respective utilities for service. Tenant shall comply with all requirements of
the utilities supplying said service. Landlord shall have no responsibility for
the installation of telephone service.
LANDLORD'S REPAIRS AND MAINTENANCE
7. Landlord, at its expense, will make all the repairs to and provide the
maintenance for the Demised Premises (excluding painting and decorating) as set
forth in Schedule B, except such repairs and maintenance as may be necessitated
by the negligence, improper care or use of such premises by Tenant, its agents,
employees, licensees or invitees, which will be made by Landlord at Tenant's
expense. If Landlord shall fail to make any such repair within fifteen (15)
days after written notice from Tenant (or, if such repair cannot reasonably be
completed in such period, Landlord shall fail to commence the performance of
such repair in such fifteen (15) day period and thereafter diligently pursue the
completion of such repair), Tenant shall have the right to perform such repair
and Landlord shall reimburse Tenant for the reasonable costs of such repair
promptly after submission to Landlord by Tenant of invoices for such repair.
8. Intentionally Omitted.
PARKING FIELD
9. Tenant shall have the right to use the parking area servicing the
Building for the parking of automobiles of the Tenant, its employees and
invitees subject to the reasonable Rules and Regulations now or hereafter
adopted by Landlord.
10. Intentionally omitted.
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TAXES AND OTHER CHARGES
11. (A) As used in and for the purposes of this Article 11, the following
definitions shall apply:
(i) "Taxes" shall be the real estate taxes, assessments, special or
otherwise, sewer rents, rates and charges, and any other governmental charges,
general, specific, ordinary or extraordinary, foreseen or unforeseen, levied on
a calendar year or fiscal year basis against the Real Property. If at any time
during the Term the method of taxation prevailing at the date hereof shall be
altered so that there shall be levied, assessed or imposed in lieu of, or as in
addition to, or as a substitute for, the whole or any part of the taxes, levies,
impositions or charges now levied, assessed or imposed on all or any part of the
Real Property (a) a tax, assessment, levy, imposition or charge based upon the
rents received by Landlord, whether or not wholly or partially as a capital levy
or otherwise, or (b) a tax, assessment, levy, imposition or charge measured by
or based in whole or in part upon all or any part of the Real Property and
imposed on Landlord, or (c) a license fee measured by the rent payable by Tenant
to Landlord, or (d) with regard to substitute taxes only, any other tax, levy,
imposition, charge or license fee however described or imposed, then all such
taxes, levies, impositions, charges or license fees or any part thereof, so
measured or based, shall be deemed to be Taxes. The term "Taxes" shall not
include franchise, estate, succession, gift, corporation, capital levy,
inheritance, transfer, income or profit tax imposed on Landlord. Tenant's share
of Taxes for the first and last tax year contained in the term of this lease
shall be pro rated based on the proportion of the year that is part of the term
of this lease.
(ii) "Base Year Taxes" shall be the taxes actually due and payable in
the 1996 tax year for general taxes and in the 1996/97 tax year for school
taxes.
(iii) "Escalation Year" shall mean each calendar year which shall
include any part of the Demised Term.
(iv) "Real Property" shall be the land upon which the Building stands
and any part or parts thereof utilized for parking, landscaped areas or
otherwise used in connection with the Building, and the Building and other
improvements appurtenant thereto.
(B) Tenant shall pay the Landlord increases in Taxes levied against the Real
Property as follows: If the Taxes actually due and payable with respect to the
Real Property in any Escalation Year shall be increased above the Base Year
Taxes, then Tenant shall pay to Landlord, as additional rent for such Escalation
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Year, a sum equal to Tenant's Proportionate Share of said increase ("Tenant's
Tax Payment" or "Tax Payment").
(C) Landlord shall render to Tenant a statement containing a computation of
Tenant's Tax Payment ("Landlord's Statement"). Within fifteen (15) days after
the rendition of the Landlord's Statement, Tenant shall pay to Landlord the
amount of Tenant's Tax Payment. On the first day of each month following the
rendition of each Landlord's Statement, Tenant shall pay to Landlord, on account
of Tenant's next Tax Payment, a sum equal to one-twelfth (1/12th) of Tenant's
last Tax Payment due hereunder, which sum shall be subject to adjustment for
subsequent increases in Taxes.
(D) Tenant shall not, without Landlord's prior written consent, institute or
maintain any action, proceeding or application in any court or body or with any
governmental authority for the purpose of changing the Taxes.
(E) Landlord's failure to render a Landlord's Statement with respect to any
Escalation Year shall not prejudice Landlord's right to render a Landlord's
Statement with respect to any Escalation Year. The obligation of Landlord and
Tenant under the provisions of this Article with respect to any additional rent
for any Escalation Year shall survive the expiration or any sooner termination
of the Demised Term.
TENANT'S REPAIRS
12. Tenant shall take good care of the Demised Premises and, subject to the
provisions of Article 7 hereof, Landlord at the expense of Tenant, shall make as
and when needed as a result of misuse or neglect by Tenant or Tenant's servants,
employees, agents or licensees, all repairs in and about the Building or Demised
Premises necessary to preserve them in good order and condition. Except as
provided in Article 24 hereof, and provided Landlord shall use all reasonable
efforts (which shall not require the use of overtime or after-hour labor) not to
unreasonably interfere with the conduct of Tenant's business in the Premises,
there shall be no allowance to Tenant for a diminution of rental value and no
liability on the part of Landlord by reason of inconvenience, annoyance or
interference with business arising from Landlord making any reasonably necessary
repairs, alterations, additions or improvements in or to any portion of the
Building.
FIXTURES & INSTALLATIONS
13. All appurtenances, fixtures, improvements, additions
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and other property attached to or built into the Demised Premises, whether by
Landlord or Tenant or others, and whether at Landlord's expense, or Tenant's
expense, or the joint expense of Landlord and Tenant, shall be and remain the
property of Landlord (except for purposes of sales tax which shall remain
Tenant's obligation). All trade fixtures, furniture, furnishings and other
articles of movable personal property owned by Tenant and located within the
Premises (collectively, "Tenant's Property") may be removed from the Premises by
Tenant at any time during the Term. Tenant, before so removing Tenant's
Property, shall establish to Landlord's satisfaction that no structural damage
or change will result from such removal and that Tenant can and promptly will
repair and restore any damage caused by such removal without cost or charge to
Landlord. Any such repair and removal shall itself be deemed an Alteration (as
defined in Article 14 below) within the purview of this lease. Any Tenant's
Property for which Landlord shall have granted any allowance, contribution or
credit to Tenant shall, at Landlord's option, not be so removed. Tenant shall
enjoy full right of access to the Demised Premises through the public entrances,
public corridors and public areas within the Building.
ALTERATIONS
14. (A) After completion of Landlord's Initial Construction, Tenant shall
make no alterations, decorations, installations, additions or improvements
(hereinafter collectively referred to as "Alterations") in or to the Demised
Premises without Landlord's prior written consent, which consent shall not be
unreasonably withheld, and then only by contractors or mechanics approved by
Landlord. Notwithstanding the foregoing, Tenant shall not be required to obtain
Landlord's consent to nonstructural Alterations provided (i) Tenant shall give
Landlord, at least fifteen (15) days prior to the commencement of such
Alterations, written notice of such intended Alterations and copies of detailed
plans and specifications relating to such Alterations, and (ii) such Alterations
shall not affect the structure or exterior of the Building or the heating,
ventilation, air conditioning, electrical, plumbing, sprinkler or other
mechanical systems servicing the Building.
(B) All Alterations done by Tenant shall at all times comply with (i)
laws, rules, orders and regulations of governmental authorities having
jurisdiction thereof, and (ii) rules and regulations of the Landlord attached
as Schedule D.
(C) With respect to all Alterations, plans and specifications prepared
by and at the expense of Tenant shall be submitted to Landlord for its prior
written approval in accordance with the following requirements:
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(i) With respect to any Alterations to be performed by Tenant
pursuant to this lease, Tenant shall, at its expense, furnish Landlord with all
drawings, plans, layouts and specifications for work to be performed by Tenant,
including, without limitation, architectural, plumbing, electrical, mechanical
and heating, ventilating and air conditioning plans (the "Tenant's Plans"). All
of the Tenant's Plans shall: (a) be compatible with the Landlord's building
plans, (b) comply with all applicable laws and the rules, regulations,
requirements and orders of any and all governmental agencies, departments or
bureaus having jurisdiction, and (c) be fully detailed, including locations and
complete dimensions;
(ii) Tenant's Plans shall be subject to approval by Landlord;
(iii) Tenant shall, at Tenant's expense, (a) cause Tenant's Plans
to be filed with the governmental agencies having jurisdiction thereover, (b)
obtain when necessary all governmental permits, licenses and authorizations
required for the work to be done in connection therewith, and (c) obtain all
necessary certificates of occupancy, both temporary and permanent. Landlord
shall execute such documents as may be reasonably required in connection with
the foregoing and Landlord shall otherwise cooperate with Tenant in connection
with obtaining the foregoing, but without any expense to Landlord. Tenant shall
make no amendments or additions to Tenant's Plans without the prior written
consent of Landlord in each instance;
(iv) No work shall commence in the Premises until (a) Tenant has
procured all necessary permits therefor and has delivered copies of same to
Landlord, (b) Tenant has procured a paid builder's risk insurance policy naming
Landlord as an additional insured and has delivered to Landlord a certificate of
insurance evidencing such policy, and (c) Tenant or its contractor has procured
a worker's compensation insurance policy covering the activities of all persons
working at the Premises naming Landlord as an additional insured and has
delivered to Landlord a certificate of insurance evidencing such policy;
(v) Tenant may use any licensed architect or engineer to prepare
its plans and to file for permits. However, all such plans and permit
applications shall be subject to review, revision and approval by Landlord or
its architect; and
(vi) Tenant, at its expense, shall perform all work, in accordance
with Tenant's Plans, and all Alterations (with the exception of (a)
nonstructural Alterations which do not require Landlord's prior written consent
pursuant to Paragraph A of this Article and (b) Alterations performed by
Landlord) shall be subject to Landlord's supervisory fee charge of 7% of the
cost
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thereof. Such supervisory fee shall apply only to the cost of construction of
the applicable Alteration and not to the cost of trade equipment or trade
fixtures (such as computers and other business equipment) which are installed in
the Premises as part of the applicable Alteration. In receiving such fee,
Landlord assumes no responsibility for the quality or manner in which such work
has been performed.
(D) Tenant's right to make Alterations shall be subject to the
following additional conditions: (i) the Alterations will not result in a
violation of, or require a change in, any Certificate of Occupancy applicable to
the Premises or the Building; (ii) the outside appearance, character or use of
the Building shall not be affected; (iii) the proper functioning of any air-
conditioning, elevator, plumbing, electrical, sanitary, mechanical and other
service or utility system of the Building shall not be affected.
(E) Tenant shall defend, indemnify and save harmless Landlord against
any and all mechanics' and other liens filed in connection with its Alterations,
repairs or installations, including the liens of any conditional sales of, or
chattel mortgages upon, any materials, fixtures or articles so installed in and
constituting part of the Premises and against any loss, cost, liability, claim,
damage and expense, including reasonable counsel fees, penalties and fines
incurred in connection with any such lien, conditional sale or chattel mortgage
or any action or proceeding brought thereon.
(F) Tenant, at its expense, shall procure the satisfaction or discharge
of all such liens within thirty (30) days of the filing of such lien against the
Premises or the Building. If Tenant shall fail to cause such lien to be
discharged within the aforesaid period, then, in addition to any other right or
remedy, Landlord may, but shall not be obligated to, discharge the same by
procuring the discharge of such lien by deposit or by bonding proceedings. Any
amount so paid by Landlord, and all costs and expenses incurred by Landlord in
connection therewith, together with interest thereon at the maximum rate
permitted by law from the respective dates of Landlord's making of the payments
or incurring of the cost and expense, shall constitute additional rent and shall
be paid on demand.
(G) Nothing in this lease contained shall be construed in any way as
constituting the consent or request of Landlord, expressed or implied, to any
contractor, subcontractor, laborer or materialman for the performance of any
labor or the furnishing of any material for any improvement, alteration or
repair of the Premises, nor as giving any right or authority to contract for the
rendering of any services or the furnishing of any materials that would give
rise to the filing of any mechanics' liens against the Premises.
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REQUIREMENTS OF LAW
15. (A) Tenant, as Tenant's sole cost and expense, shall comply with all
statutes, laws, ordinances, orders, regulations and notices of Federal, State,
County and Municipal authorities, and with all directions, pursuant to law, of
all public officers, which shall impose any duty upon Landlord or Tenant with
respect to the Demised Premises or the use or occupation thereof, except that
Tenant shall not be required to make any alterations in order so to comply
unless such alterations shall be necessitated or occasioned, in whole or in
part, by the acts, omissions, or negligence of Tenant or any person claiming
through or under Tenant or any of their servants, employees, contractors,
agents, visitors or licensees, or by the use or occupancy or manner of use or
occupancy of the Demised Premises by Tenant, or any such person. Landlord shall
be responsible for the removal of asbestos from the Building as may be required
by applicable law and for all written violations of the environmental laws
referred to below except if such violation shall be caused by Tenant or its
employees, contractors, agents, visitors, licensees, sublesses or other persons
under Tenant's control.
(B) The parties acknowledge that there are certain Federal, State and
local laws, regulations and guidelines now in effect and that additional laws,
regulations and guidelines may hereafter be enacted, relating to or affecting
the Premises, the Building, and the land of which the Premises and the Building
may be a part, concerning the impact on the environment of construction, land
use, the maintenance and operation of structures and the conduct of business.
Tenant will not cause, or permit to be caused, any act or practice, by
negligence, omission, or otherwise, that would adversely affect the environment
or do anything or permit anything to be done that would violate any of said
laws, regulations, or guidelines. Any violation of this covenant shall be an
event of default under this lease.
(C) Tenant shall not introduce onto the Premises Hazardous Materials
(hereinafter defined) except in the ordinary course of its permitted use of the
Premises and in compliance with all applicable laws and regulations. Without
limiting the foregoing, Tenant shall not cause or permit the Premises to be used
to generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process Hazardous Materials, except in compliance with all
applicable Federal, State and Local laws or regulations, nor shall Tenant cause
or permit, as a result of any intentional or unintentional act or omission on
the part of Tenant or any person or entity claiming through or under Tenant or
any of their employees, contractors, agents, visitors, sublessees, or licensees
(collectively, "Related Parties"), a release of Hazardous Materials onto the
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Premises or onto any other property. Tenant shall comply with and ensure
compliance by all Related Parties, as to Hazardous Materials introduced by
Tenant or any of the Related Parties, with all applicable Federal, State and
Local laws, ordinances, rules and regulations, whenever and by whomever
triggered, and shall obtain and comply with, and ensure that all Related Parties
obtain and comply with, any and all approvals, registrations or permits required
thereunder. With respect to Hazardous Materials for which Tenant is responsible
hereunder, Tenant shall (i) conduct and complete all investigations, studies,
samplings, and testing, and all remedial removal and other actions necessary to
clean up and remove such Hazardous Materials, on, from, or affecting the
Premises (a) in accordance with all applicable Federal, State and Local laws,
ordinances, rules, regulations, policies, orders and directives, and (b) to the
satisfaction of Landlord, and (ii) defend, indemnify, and hold harmless
Landlord, its employees, agents, principals, officers, and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs, or expenses of whatever kind or nature, known or unknown,
contingent or otherwise, arising out of, or in any way related to, (a) the
presence, disposal, release, or threatened release of such Hazardous Materials
which are on, from, or affecting the soil, water, vegetation, buildings,
personal property, persons, animals, or otherwise; (b) any personal injury
(including wrongful death) or property damage (real or personal) arising out of
or related to such Hazardous Materials; (c) any lawsuit brought or threatened,
settlement reached, or government order relating to such Hazardous Materials;
and/or (d) any violation of laws, orders, regulations, requirements, or demands
of government authorities, or any policies or requirements of Landlord which are
based upon or in any way related to such Hazardous Materials, including, without
limitation, attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses. In the event this lease is terminated, or
Tenant is dispossessed, Tenant shall deliver the Premises to Landlord free of
any and all Hazardous Materials for which Tenant shall be responsible under this
lease so that the conditions of the Premises shall conform with the requirements
of this lease as to Hazardous Materials. For purposes of this paragraph,
"Hazardous Materials" includes, without limitation, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, or related materials defined in the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C.
Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended
(49 U.S.C. Sections 1801 et seq.), the Resource Conservation and Recovery Act,
as amended (42 U.S.C. Sections 9601, et seq.), and in the regulations adopted
and publications promulgated pursuant thereto, or any other Federal, State or
Local environmental law, ordinance, rule, or regulation.
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END OF TERM
16. (A) Upon the expiration or other termination of the Term of this lease,
Tenant shall, at its own expense, quit and surrender to Landlord the Demised
Premises, broom clean, in good order and condition, ordinary wear, tear and
damage by fire or other insured casualty excepted, and Tenant shall remove all
of its property and shall pay the cost to repair all damage to the Demised
Premises or the Building occasioned by such removal. Any property not removed
from the Premises shall be deemed abandoned by Tenant and may be retained by
Landlord, as its property, or disposed of in any manner deemed appropriate by
the Landlord. Any expense incurred by Landlord in removing or disposing of such
property shall be reimbursed to Landlord by Tenant on demand. Tenant's
obligation to observe or perform this covenant shall survive the expiration or
other termination of the Term of this lease. If the last day of the Term of
this lease or any renewal hereof falls on Sunday or a legal holiday, this lease
shall expire on the business day immediately preceding. Tenant's obligations
under this Article 16 shall survive the Expiration Date or sooner termination of
this lease.
(B) In the event of any holding over by Tenant after the expiration or
termination of this lease without the consent of Landlord, Tenant shall:
(i) pay as holdover rental for each month of the holdover tenancy an
amount equal to the greater of (a) the fair market rental value of the Premises
for such month (as reasonably determined by Landlord) or (b) one hundred fifty
(150%) percent of the Rent payable by Tenant for the third month prior to the
Expiration Date of the term of this lease, and otherwise observe, fulfill and
perform all of its obligations under this lease, including but not limited to,
those pertaining to additional rent, in accordance with its terms; and
(ii) be liable to Landlord for any payment or rent concession which
Landlord may be required to make to any tenant in order to induce such tenant
not to terminate an executed lease covering all or any portion of the Premises
by reason of the holdover over by Tenant.
No holding over by Tenant after the Term shall operate to extend the
Term.
The holdover, with respect to all or any part of the Premises, of a
person deriving an interest in the Premises from or through Tenant, including,
but not limited to, an assignee or subtenant, shall be deemed a holdover by
Tenant.
Notwithstanding anything in this Article contained to
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the contrary, the acceptance of any Rent paid by Tenant pursuant to this
Paragraph 16(B), shall not preclude Landlord from commencing and prosecuting a
holdover or eviction action or proceeding or any action or proceeding in the
nature thereof. The preceding sentence shall be deemed to be an "agreement
expressly providing otherwise" within the meaning of Section 232-c of the Real
Property Law of the State of New York and any successor law of like import.
QUIET ENJOYMENT
17. Landlord covenants and agrees with Tenant that upon Tenant paying the
Rent and additional rent and observing and performing all the terms, covenants
and conditions on Tenant's part to be observed and performed, Tenant may
peaceably and quietly enjoy the Demised Premises during the Term of this lease
without hindrance or molestation by anyone claiming by or through Landlord,
subject, nevertheless, to the terms, covenants and conditions of this lease
including, but not limited to, Article 22.
SIGNS
18. Tenant shall not install a sign on the exterior of or outside the
Building, or inside the Building if such sign can be seen outside the Building,
without Landlord's prior written consent which shall not be unreasonably
withheld. Any such sign shall be installed in compliance with applicable laws
and regulations. No such sign shall be installed on the roof of the Building.
RULES AND REGULATIONS
19. Tenant and Tenant's agents, employees, visitors, and licensees shall
faithfully observe and comply with, and shall not permit violation of, the Rules
and Regulations set forth on Schedule D annexed hereto and made part hereof, and
with such further reasonable Rules and Regulations as Landlord at any time may
make and communicate in writing to Tenant which, in Landlord's judgment, shall
be necessary for the reputation, safety, care and appearance of the Building and
the land allocated to it or the preservation of good order therein, or the
operation or maintenance of the Building and the equipment therein, or such
land.
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RIGHT TO SUBLET OR ASSIGN
20. (A) Tenant covenants that it shall not assign this lease nor sublet the
Demised Premises or any part thereof by operation of law or otherwise,
including, without limitation, an assignment or subletting as defined in (D)
below, without the prior written consent of Landlord in each instance, except on
the conditions hereinafter stated. Tenant may assign this lease or sublet all
or a portion of the Demised Premises with Landlord's written consent, provided:
(i) That such assignment or sublease is for a use which is in
compliance with this lease and the then existing zoning regulations and the
Certificate of Occupancy;
(ii) That, at the time of such assignment or subletting, there is no
default under the terms of this lease on the Tenant's part;
(iii) That, in the event of an assignment, the assignee shall assume in
writing the performance of all of the terms and obligations of the within lease;
(iv) That a duplicate original of said assignment or sublease shall be
delivered by certified mail to the Landlord at the address herein set forth
within ten (10) days from the said assignment or sublease and within ninety (90)
days of the date that Tenant first advises Landlord of the name and address of
the proposed subtenant or assignee, as required pursuant to subparagraph (B)
hereof;
(v) Such assignment or subletting shall not, however, release the
within Tenant or any successor tenant or any guarantor from their liability for
the full and faithful performance of all of the terms and conditions of this
lease;
(vi) If this lease be assigned, or if the Demised Premises or any part
thereof be underlet or occupied by anybody other than Tenant, Landlord may after
default by Tenant collect rent from the assignee, undertenant or occupant, and
apply the net amount collected to the rent herein reserved.
(B) Notwithstanding anything contained in this Article 20 to the
contrary, no assignment or underletting shall be made by Tenant in any event
until Tenant has offered to terminate this lease as of the last day of any
calendar month during the Term hereof and to vacate and surrender the Demised
Premises to Landlord on the date fixed in the notice served by Tenant upon
Landlord (which date shall be prior to the date of such proposed assignment or
the commencement date of such proposed lease). Simultaneously with said offer
to terminate this lease, Tenant
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shall advise the Landlord, in writing, of the name and address of the proposed
assignee or subtenant, a reasonably detailed statement of the proposed
subtenant/assignee's business, reasonably detailed financial references, and all
the terms, covenants, and conditions of the proposed sublease or assignment.
(C) Tenant may, without the consent of Landlord, assign this lease to
an affiliated (i.e., a corporation 20% or more of whose capital stock is owned
by the same stockholders owning 20% or more of Tenant's capital stock), parent
or subsidiary corporation of Tenant or to a corporation to which it sells or
assigns all or substantially all of its assets or stock or with which it may be
consolidated or merged, provided such purchasing, consolidated, merged,
affiliated or subsidiary corporation shall, in writing, assume and agree to
perform all of the obligations of Tenant under this lease and it shall deliver
such assumption with a copy of such assignment to Landlord within ten (10) days
thereafter, and provided further than Tenant shall not be released or discharged
from any liability under this lease by reason of such assignment.
(D) For purposes of this Article 20, (i) provided such entity is not a
publicly traded company, the transfer of a majority of the issued and
outstanding capital stock of any corporate tenant, or of a corporate subtenant,
or the transfer of a majority of the total interest in any partnership tenant or
subtenant, however accomplished, whether in a single transaction or in a series
of related or unrelated transactions, shall be deemed an assignment of this
lease, or of such sublease, as the case may be; (ii) any person or legal
representative of Tenant, to whom Tenant's interest under this lease passes by
operation of law or otherwise, shall be bound by the provisions of this Article
20; and (iii) a modification or amendment of a sublease shall be deemed a
sublease.
(E) Whenever Tenant shall claim under this Article or any other part of
this lease that Landlord has unreasonably withheld or delayed its consent to
some request of Tenant, Tenant shall have no claim for damages by reason of such
alleged withholding or delay, and Tenant's sole remedy thereof shall be a right
to obtain specific performance or injunction but in no event with recovery of
damages.
(F) Tenant shall not mortgage, hypothecate or pledge its interest in
this lease without the prior written consent of Landlord which shall not be
unreasonably withheld.
LANDLORD'S ACCESS TO PREMISES
21. (A) Landlord or Landlord's agents shall have the right
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to enter and/or pass through the Demised Premises at all reasonable times on
reasonable notice, except in an emergency, to examine the same, and to show them
to ground lessors, prospective purchasers or lessees or mortgagees of the
Building, and to make such repairs, improvements or additions as Landlord may
deem necessary or desirable, and Landlord shall be allowed to take all material
into and upon and/or through said Demised Premises that may be required
therefor. During the twelve (12) months prior to the expiration of the Term of
this lease, or any renewal term, Landlord may exhibit the Demised Premises to
prospective tenants or purchasers at all reasonable hours and without
unreasonably interfering with Tenant's business. If Tenant shall not be
personally present to open and permit an entry into said premises at any time,
when for any reason an entry therein shall be necessary or permissible, Landlord
or Landlord's agents may enter the same by a master key, or forcibly, without
rendering Landlord or such agent liable therefor (if during such entry Landlord
or Landlord's agents shall accord reasonable care to Tenant's property).
(B) The exercise by Landlord or its agents of any right reserved to
Landlord in this Article shall not constitute an actual or constructive
eviction, in whole or in part, or entitle Tenant to any abatement or diminution
of rent, or relieve Tenant from any of its obligations under this lease, or
impose any liability upon Landlord, or its agents, or upon any lessor under any
ground or underlying lease, by reason of inconvenience or annoyance to Tenant,
or injury to or interruption of Tenant's business, or otherwise.
SUBORDINATION
22. (A) Subject to Paragraph (E) of this Article, this lease and all rights
of Tenant hereunder are, and shall be, subject and subordinate in all respects
to all mortgages which may hereafter be placed on or affect the Real Property of
which the Demised Premises form a part, or any part or parts of such Real
Property, and/or Landlord's interest or estate therein, and to each advance made
and/or hereafter to be made under any such mortgages, and to all renewals,
modifications, consolidations, replacements and extensions thereof and all
substitutions therefor. This Section A shall be self-operative and no further
instrument of subordination shall be required. In confirmation of such
subordination, Tenant shall execute and deliver promptly any certificate that
Landlord and/or any mortgagee and/or their respective successors in interest may
request.
(B) Without limitation of any of the provisions of this lease, in the
event that any mortgagee or its assigns shall succeed to the interest of
Landlord or of any successor Landlord
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and/or shall have become lessee under a new ground or underlying lease, then, at
the option of such mortgagee, this lease shall nevertheless continue in full
force and effect and Tenant shall and does hereby agree to attorn to such
mortgagee or its assigns and to recognize such mortgagee or its respective
assigns as its Landlord.
(C) Tenant shall, at any time and from time to time, upon not less than
twenty (20) days prior notice by Landlord, execute, acknowledge and deliver to
Landlord a statement in writing certifying that this lease is unmodified and in
full force and effect (or if there have been modifications, that the same is in
full force and effect as modified and stating the modification) and the dates to
which the Rent, additional rent and other charges have been paid in advance, if
any, and stating whether or not to the best knowledge of the signer of such
certificate Landlord is in default in performance of any covenant, agreement,
term, provision or condition contained in this lease, and if so, specifying each
such default of which the signer may have knowledge, it being intended that any
such statement delivered pursuant hereto may be relied upon by any prospective
purchaser or lessee of said real property or any interest or estate therein, any
mortgagee or prospective mortgagee thereof, or any prospective assignee of any
mortgage thereof. If, in connection with obtaining financing for the Building
and the land allocated to it, a bank, insurance company, investment bank, or
other recognized institutional lender shall request customary and reasonable
modifications in this lease as a condition to such financing, Tenant will not
unreasonably withhold, delay or defer its consent thereof, provided that such
modifications do not increase the obligations of Tenant hereunder or adversely
affect the leasehold interest hereby created. If, in connection with such
financing, such institutional lender shall require financial audited information
on the Tenant, Tenant shall promptly comply with such request.
(D) The Tenant covenants and agrees that if by reason of a default
under any underlying lease (including an underlying lease through which the
Landlord derives its leasehold estate in the premises), such underlying lease
and the leasehold estate of the Landlord in the premises demised hereby is
terminated, providing notice has been given to the Tenant and leasehold
mortgagee, the Tenant will attorn to the then holder of the reversionary
interest in the premises demised by this lease or to anyone who shall succeed to
the interest of the Landlord or to the lessee of a new underlying lease entered
into pursuant to the provisions of such underlying lease, and will recognize
such holder and/or such lessee as the Tenant's landlord of this lease. The
Tenant agrees to execute and deliver, at any time and from time to time, upon
the request of the Landlord or of the lessor under any such underlying lease,
any instrument which may be necessary or appropriate to evidence such
attornment. The Tenant further
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waives the provision of any statute or rule of law now or hereafter in effect
which may give or purport to give the Tenant any right of election to terminate
this lease or to surrender possession of the premises hereby in the event any
proceeding is brought by the lessor under any underlying lease to terminate the
same, and agrees that unless and until any such lessor, in connection with any
such proceeding, shall elect to terminate this lease and the rights of the
Tenant hereunder, this lease shall not be affected in any way whatsoever by any
such proceeding.
(E) Landlord represents that there is currently no mortgage
encumbering the Real Property or the Building. Landlord shall use reasonable
efforts to deliver a subordination, attornment and nondisturbance agreement
("Nondisturbance Agreement") from Landlord's future mortgagees on each such
mortgagee's standard form, which shall provide, inter alia, that the leasehold
----------
estate granted to Tenant under this lease will not be terminated or disturbed by
reason of the foreclosure of the mortgage held by Landlord's lender, so long as
Tenant shall not be in default under this lease and shall pay all sums due under
this lease without offsets or defenses thereto and shall fully perform and
comply with all of the terms, covenants, and conditions of this lease on the
part of Tenant to be performed and/or complied with and, in the event a
subsequent mortgagee or its respective successors or assigns shall enter into
and lawfully become possessed of the Premises covered by this lease and shall
succeed to the rights of Landlord hereunder, Tenant will attorn to the successor
as its landlord under this lease and, upon the request of such successor
landlord, Tenant will execute and deliver an attornment agreement in favor of
the successor landlord. In the event a future mortgagee shall be unwilling to
enter into a Nondisturbance Agreement as aforesaid, this lease shall remain in
full force and effect and the obligations of Tenant shall not in any manner be
affected except that, anything to the contrary contained in this lease
notwithstanding, this lease shall not be subject and subordinate to such future
mortgage.
PROPERTY LOSS, DAMAGE REIMBURSEMENT
23. (A) Landlord or its agents shall not be liable for any damages to
property of Tenant or of others entrusted to employees of the Building, nor for
the loss of or damage to any property of Tenant by theft or otherwise. Landlord
or its agents shall not be liable for any injury or damage to persons or
property resulting from fire, explosion, falling plaster, steam, gas,
electricity, electrical disturbance, water, rain or snow or leaks from any part
of the Building or from the pipes, appliances or
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plumbing works or from the roof, street or subsurface or from any other place or
by dampness or by any other cause of whatsoever nature, unless caused by or due
to the negligence of Landlord, its agents, servants or employees; nor shall
Landlord or its agents be liable for any such damage caused by persons in the
Building or caused by operations in construction of any private, public or
quasi-public work; nor shall Landlord be liable for any latent defect in the
Demised Premises or in the Building. If at any time any windows of the Demised
Premises are temporarily closed or darkened incident to or for the purpose of
repairs, replacements, maintenance and/or cleaning in, on, to or about the
Building or any part or parts thereof, Landlord shall not be liable for any
damage Tenant may sustain thereby and Tenant shall not be entitled to any
compensation therefor nor abatement of rent nor shall the same release Tenant
from its obligations hereunder nor constitute an eviction. Tenant shall
reimburse and compensate Landlord as additional rent for all expenditures
(including, without limitation, reasonable attorneys' fees) made by, or damages
or fines sustained or incurred by, Landlord due to non-performance or non-
compliance with or breach or failure to observe any term, covenant or condition
of this lease upon Tenant's part to be kept, observed, performed or complied
with. Tenant shall give immediate notice to Landlord in case of fire or
accidents in the Demised Premises or in the Building or of defects therein or in
any fixtures or equipment.
TENANT'S INDEMNITY
(B) Tenant shall indemnify and save harmless Landlord against and from
any and all claims by or on behalf of any person or persons, firm or firms,
corporation or corporations arising from the conduct or management of or from
any work or other thing whatsoever done by Tenant or its agents, contractors,
employees, licensees, sublessees or invitees (other than by Landlord or its
contractors or the agents or employees of either) in and on the Demised Premises
during any other period of occupancy by Tenant including the Term of this lease
and during the period of time, if any, prior to the specified commencement date
that Tenant may have been given access to the Demised Premises for the purpose
of making installations, and will further indemnify and save harmless Landlord
against and from any and all claims arising from any condition of the Demised
Premises or Tenant's occupancy thereof due to or arising from any act or
omissions or negligence of Tenant or any of its agents, contractors, employees,
licensees, sublessees or invitees and against and from all costs, expenses, and
liabilities incurred in connection with any such claim or claims or action or
proceeding brought thereon; and in case any action or proceeding be brought
against Landlord by reason of any such claim, Tenant, upon notice from Landlord,
agrees that Tenant, at Tenant's expense, will resist or defend
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such action or proceeding and will employ counsel therefor reasonably
satisfactory to Landlord.
DESTRUCTION - FIRE OR OTHER CASUALTY
24. (A) If the Premises or any part thereof shall be damaged by fire or
other casualty and Tenant gives prompt notice thereof to Landlord, Landlord
shall proceed with reasonable diligence to repair or cause to be repaired such
damage. The Rent shall be abated to the extent that the Premises shall have
been rendered untenantable, such abatement to be from the date of such damage or
destruction to the date the Premises shall be substantially repaired or rebuilt,
in proportion which the area of the part of the Premises so rendered
untenantable bears to the total area of the Premises.
(B) If the Premises shall be substantially damaged or rendered
untenantable by fire or other casualty, and Landlord has not terminated this
lease pursuant to Subsection (C) and Landlord has not (i) given Tenant notice,
within thirty (30) days after the occurrence of the casualty, of its intention
to repair and restore the Premises, and (ii) completed the making of the
required repairs and restored and rebuilt the Premises and/or access thereto
within nine (9) months from the date of such damage or destruction, Tenant may
serve notice on Landlord of its intention to terminate this lease, and, if
within thirty (30) days thereafter Landlord shall not have completed the making
of the required repairs and restored and rebuilt the Premises, this lease shall
terminate on the expiration of such thirty (30) day period as if such
termination date were the Expiration Date, and the Rent and additional rent
shall be apportioned as of such date and any prepaid portion of Rent and
additional rent for any period after such date shall be refunded by Landlord to
Tenant.
(C) If the Premises shall be substantially damaged or rendered
substantially untenantable by fire or other casualty or if the Building shall
be so damaged by fire or other casualty that substantial alteration or
reconstruction of the Building shall be required, then in any of such events
Landlord may, at its option, terminate this lease and the Term and estate hereby
granted, by giving Tenant thirty (30) days notice of such termination within
ninety (90) days after the date of such damage. In the event that such notice
of termination shall be given, this lease and the Term and estate hereby
granted, shall terminate as of the date provided in such notice of termination
(whether or not the Term shall have commenced) with the same effect as if that
were the Expiration Date, and the Rent and additional rent shall be apportioned
as of such date or sooner termination and any prepaid portion of Rent and
additional rent for any period after such date shall be refunded by Landlord to
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Tenant.
(D) Landlord shall not be liable for any inconvenience or annoyance to
Tenant or injury to the business of Tenant resulting in any way from such damage
by fire or other casualty or the repair thereof. Landlord will not carry
insurance of any kind on Tenant's property, and Landlord shall not be obligated
to repair any damage thereto or replace the same.
(E) This lease shall be considered an express agreement governing any
case of damage to or destruction of the Building or any part thereof by fire or
other casualty, and Section 227 of the Real Property Law of the State of New
York providing for such a contingency in the absence of such express agreement,
and any other law of like import now or hereafter enacted, shall have no
application in such case.
INSURANCE
25. (A) Tenant shall not do anything, or suffer or permit anything to
be done, in or about the Premises which shall (i) invalidate or be in conflict
with the provisions of any fire or other insurance policies covering the
Building or any property located therein, or (ii) result in a refusal by fire
insurance companies of good standing to insure the Building or any such property
in amounts reasonably satisfactory to Landlord, or (iii) subject Landlord to any
liability or responsibility for injury to any person or property by reason of
any activity being conducted in the Premises or (iv) cause by actions or uses
not permitted under the terms of this lease any increase in the fire insurance
rates applicable to the Building or equipment or other property located therein
at the beginning of the Term or at any time thereafter. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
New York Board of Fire Underwriters and the New York Fire Insurance Rating
Organization or any similar body.
(B) If, by reason of any act or omission on the part of Tenant, the
rate of fire insurance with extended coverage on the Building or equipment or
other property of Landlord shall be higher than it otherwise would be, Tenant
shall reimburse Landlord, on demand, for the part of the premiums for fire
insurance and extended coverage paid by Landlord because of such act or omission
on the part of Tenant.
(C) In the event that any dispute should arise between Landlord and
Tenant concerning insurance rates, a schedule or make up of insurance rates for
the Building or the Premises, as the case may be, issued by the New York Fire
Insurance Rating
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Organization or other similar body making rates for fire insurance and extended
coverage for the Premises concerned, shall be conclusive evidence of the facts
therein stated and of the several items and charges in the fire insurance rates
with extended coverage then applicable to such Premises.
(D) Tenant shall obtain and keep in full force and effect during
the Term, at its own cost and expense, (i) Public Liability Insurance, such
insurance to afford protection in an amount of not less than Three Million
($3,000,000) Dollars for personal injury or death arising out of any one
occurrence, and Five Hundred Thousand ($500,000) Dollars for damage to property,
protecting Landlord and Tenant as insureds against any and all claims for
personal injury, death or property damage and (ii) Fire and Extended Coverage
Insurance on Tenant's property, insuring against damage by fire, and such other
risks and hazards as are insurable under present and future standard forms of
fire and extended coverage insurance policies, to Tenant's property for the full
insurable value thereof, protecting Landlord and Tenant as insureds.
(E) Said insurance is to be written in form and substance
satisfactory to Landlord by a good and solvent insurance company of recognized
standing, admitted to do business in the State of New York, which shall be
reasonably satisfactory to Landlord. Tenant shall procure, maintain and place
such insurance and pay all premiums and charges therefor and upon failure to do
so Landlord may, but shall not be obligated to, procure, maintain and place such
insurance or make such payments, and in such event the Tenant agrees to pay the
amount thereof, plus interest at the maximum rate permitted by law, to Landlord
on demand and said sum shall be in each instance collectible as additional rent
on the first day of the month following the date of payment by Landlord. Tenant
shall cause to be included in all such insurance policies a provision to the
effect that the same will be non-cancelable except upon twenty (20) days written
notice to Landlord. On the Term Commencement Date the original insurance
policies or appropriate certificates shall be deposited with Landlord. Any
renewals, replacements or endorsements thereto shall also be deposited with
Landlord to the end that said insurance shall be in full force and effect during
the Term. Tenant shall be permitted to provide the insurance coverage required
under this Article pursuant to blanket policies covering the Premises and other
locations, provided the coverage maintained under such blanket policies conforms
with the requirements of this Article.
(F) Each party agrees to use its best efforts to include in each of
its insurance policies (insuring the Building and Landlord's property therein,
in the case of Landlord, and insuring Tenant's property, in the case of Tenant,
against loss, damage or destruction by fire or other casualty) a waiver of the
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insurer's right of subrogation against the other party, or if such waiver should
be unobtainable or unenforceable (i) an express agreement that such policy shall
not be invalidated if the insured waives or has waived before the casualty, the
right of recovery against any party responsible for a casualty covered by the
policy, or (ii) any other form of permission for the release of the other party,
or (iii) the inclusion of the other party as an additional insured, but not a
party to whom any loss shall be payable. If such waiver, agreement or
permission shall not be, or shall cease to be, obtainable without additional
charge or at all, the insured party shall so notify the other party promptly
after learning thereof. In such case, if the other party shall agree in writing
to pay the insurer's additional charge therefor, such waiver, agreement or
permission shall be included in the policy, or the other party shall be named as
an additional insured in the policy, but not a party to whom any loss shall be
payable. Each such policy which shall so name a party hereto as an additional
insured shall contain, if obtainable, agreements by the insurer that the policy
will not be cancelled without at least twenty (20) days prior notice to both
insureds and that the act or omission of one insured will not invalidate the
policy as to the other insured.
(G) As long as Landlord's fire insurance policies then in force
include the waiver of subrogation or agreement or permission to release
liability referred to in Subsection (F) or name the Tenant as an additional
insured, Landlord hereby waives (i) any obligation on the part of Tenant to make
repairs to the Premises necessitated or occasioned by fire or other casualty
that is an insured risk under such policies, and (ii) any right of recovery
against Tenant, any other permitted occupant of the Premises, and any of their
servants, employees, agents or contractors, for any loss occasioned by fire or
other casualty that is an insured risk under such policies. In the event that
at any time Landlord's fire insurance carriers shall not include such or similar
provisions in Landlord's fire insurance policies, the waivers set forth in the
foregoing sentence shall be deemed of no further force or effect.
(H) As long as Tenant's fire insurance policies then in force
include the waiver of subrogation or agreement or permission to release
liability referred to in Subsection (F), or name the Landlord as an additional
insured, Tenant hereby waives (and agrees to cause any other permitted occupants
of the Premises to execute and deliver to Landlord written instruments waiving)
any right of recovery against Landlord, any other tenants or occupants of the
Building, and any servants, employees, agents or contractors of Landlord or of
any such other tenants or occupants, for any loss occasioned by fire or other
casualty which is an insured risk under such policies. In the event that at any
time Tenant's fire insurance carriers shall not include such or similar
provisions in Tenant's fire insurance
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policies, the waiver set forth in the foregoing sentence shall, upon notice
given by Tenant to Landlord, be deemed of no further force or effect with
respect to any insured risks under such policy from and after the giving of such
notice. During any period while the foregoing waiver of right of recovery is in
effect, Tenant, or any other permitted occupant of the Premises, as the case may
be, shall look solely to the proceeds of such policies to compensate Tenant or
such other permitted occupant for any loss occasioned by fire or other casualty
which is an insured risk under such policies.
EMINENT DOMAIN
26. (A) In the event that the whole of the Demised Premises shall be
lawfully condemned or taken in any manner for any public or quasi-public use,
this lease and the Term and estate hereby granted shall forthwith cease and
terminate as of the date of vesting of title. In the event that only a part of
the Demised Premises shall be so condemned or taken, then effective as of the
date of vesting of title, the Rent hereunder shall be abated in an amount
thereof apportioned according to the area of the Demised Premises so condemned
or taken. In the event that only a substantial part of the Building shall be so
condemned or taken, then (i) Landlord may, at its option, terminate this lease
and the Term and estate hereby granted as of the date of such vesting of title
by notifying Tenant in writing of such termination within sixty (60) days
following the date on which Landlord shall have received notice of vesting of
title, and (ii) if such condemnation or taking shall be of a substantial part of
the Demised Premises or a substantial part of the means of access thereto,
Tenant shall have the right, by delivery of notice in writing to Landlord within
sixty (60) days following the date on which Tenant shall have received notice of
vesting of title, to terminate this lease and the Term and estate hereby granted
as of the date of vesting of title, or (iii) if neither Landlord nor Tenant
elects to terminate this lease, as aforesaid, this lease shall be and remain
unaffected by such condemnation or taking, except that the Rent shall be abated
to the extent, if any, hereinabove provided in this Article 26. In the event
that only a part of the Demised Premises shall be so condemned or taken and this
lease and the Term and estate hereby granted are not terminated as hereinbefore
provided, Landlord will, at its expense, restore the remaining portion of the
Demised Premises as nearly as practicable to the same condition as it was in
prior to such condemnation or taking.
(B) In the event of a termination in any of the cases hereinabove
provided, this lease and the Term and estate granted shall expire as of the date
of such termination with the same effect as if that were the date hereinbefore
set for the
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expiration of the Term of this lease, and the Rent hereunder shall be
apportioned as of such date.
(C) In the event of any condemnation or taking hereinabove
mentioned of all or part of the Building or the Demised Premises, Landlord shall
be entitled to receive the entire award in the condemnation proceeding,
including any award made for the value of the estate vested by this lease in
Tenant, and Tenant hereby expressly assigns to Landlord any and all right, title
and interest of Tenant now or hereafter arising in or to any such award or any
part thereof, and Tenant shall be entitled to receive no part of such award,
except that the Tenant may file a claim for any taking of nonmovable fixtures
owned by Tenant and for moving expenses and interruption of business incurred by
Tenant, provided any claim for business interruption asserted by Tenant shall
not diminish Landlord's award. It is expressly understood and agreed that the
provisions of this Article 26 shall not be applicable to any condemnation or
taking for governmental occupancy for a limited period.
NONLIABILITY OF LANDLORD
27. (A) If Landlord or a successor in interest is an individual (which
term as used herein includes aggregates of individuals, such as joint ventures,
general or limited partnerships or associations), such individual shall be under
no personal liability with respect to any of the provisions of this lease, and
if such individual hereto is in breach or default with respect to its
obligations under this lease, Tenant shall look solely to the equity of such
individual in the Demised Premises (or the proceeds of such equity) for the
satisfaction of Tenant's remedies and in no event shall Tenant attempt to secure
any personal judgment against any such individual or any partner, employee or
agent of Landlord by reason of such default by Landlord.
(B) The word "Landlord" as used herein means only the owner of the
landlord's interest for the time being in the Demised Premises (or the owners of
a lease of the Building or of the land and Building), and in the event of any
sale of the Demised Premises, Landlord shall be and hereby is entirely freed and
relieved of all covenants and obligations of Landlord hereunder, and it shall be
deemed and construed without further agreement between the parties or between
the parties and the purchaser of the Demised Premises, that such purchaser has
assumed and agreed to carry out any and all covenants and obligations of
Landlord hereunder.
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DEFAULT
28. (A) Upon the occurrence, at any time prior to or during the
Demised Term, of any one or more of the following events (referred to as
"Events of Default"):
(i) If Tenant shall default in the payment when due of any
installment of Rent or in the payment when due of any additional rent, and such
default shall continue for a period of ten (10) days after notice by Landlord to
Tenant of such default; or
(ii) If Tenant shall default in the observance or performance of
any term, covenant or condition of this lease on Tenant's part to be observed or
performed (other than the covenants for the payment of Rent and additional rent)
and Tenant shall fail to remedy such default within twenty (20) days after
notice by Landlord to Tenant of such default, or if such default is of such a
nature that it cannot be completely remedied within said period of twenty (20)
days and Tenant shall not commence within said period of twenty (20) days, or
shall not thereafter diligently prosecute to completion, all steps necessary to
remedy such default; or
(iii) If Tenant shall file a voluntary petition in bankruptcy or
insolvency, or shall be adjudicated a bankrupt or become insolvent, or shall
file any petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
present or any future federal bankruptcy code or any other present or future
applicable federal, state or other statute or law, or shall make an assignment
for the benefit of creditors or shall seek or consent to or acquiesce in the
appointment of any trustee, receiver or liquidator of Tenant or of all or any
part of Tenant's property; or
(iv) If, within sixty (60) days after the commencement of any
proceeding against Tenant, whether by the filing of a petition or otherwise,
seeking any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
code or any other present or future applicable federal, state or other statute
or law, such proceedings shall not have been dismissed, or if, within sixty (60)
days after the appointment or any trustee, receiver or liquidator of Tenant, or
of all or any part of Tenant's property, such appointment shall not have been
vacated or otherwise discharged, or if any execution or attachment shall be
issued against Tenant or any of Tenant's property pursuant to which the Demised
Premises shall be taken or occupied or attempted to be taken or occupied; or
(v) If Tenant shall default in the observance or
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performance of any term, covenant or condition on Tenant's part to be observed
or performed under any other lease with Landlord of space in the Building and
such default shall continue beyond any grace period set forth in such other
lease for the remedying of such default; or
(vi) If the Demised Premises shall become vacant, deserted or
abandoned for a period of ten (10) consecutive days; or
(vii) If Tenant's interest in this lease shall devolve upon or pass
to any person, whether by operation of law or otherwise, except as expressly
permitted under Article 20;
then, upon the occurrence, at anytime prior to or during the Demised
Term, of any one or more of such Events of Default, Landlord, at any time
thereafter, at Landlord's option, may give to Tenant a five (5) days' notice of
termination of this lease and, in the event such notice is given, this lease and
the Term shall come to an end and expire (whether or not said term shall have
commenced) upon the expiration of said five (5) days with the same effect as if
the date of expiration of said five (5) days were the Expiration Date, but
Tenant shall remain liable for damages as provided in Article 30.
(B) If, at any time (i) Tenant shall be comprised of two (2) or
more persons, or (ii) Tenant's obligations under this lease shall have been
guaranteed by any person other than Tenant, or (iii) Tenant's interest in this
lease shall have been assigned, the word "Tenant", as used in subsection (iii)
and (iv) of Section 28(A), shall be deemed to mean any one or more of the
persons primarily or secondarily liable for Tenant's obligations under this
lease. Any monies received by Landlord from or on behalf of Tenant during the
pendency of any proceeding of the types referred to in said subsections (iii)
and (iv) shall be deemed paid as compensation for the use and occupation of the
Demised Premises and the acceptance of such compensation by Landlord shall not
be deemed an acceptance of Rent or a waiver on the part of Landlord of any
rights under Section 28(A).
TERMINATION ON DEFAULT
29. (A) If Tenant shall default in the payment when due of any
installment of rent or in the payment when due of any additional rent and such
default shall continue for a period of ten (10) days after notice by Landlord to
Tenant of such default, or if this lease and the Demised Term shall expire and
come to an end as provided in Article 28:
(i) Landlord and its agents and servants may immediately, or at any
time after such default or after the date
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upon which this lease and the Demised Term shall expire and come to an end, re-
enter the Demised Premises or any part thereof, without notice, either by
summary proceedings or by any other applicable action or proceeding, or by force
or other means provided such force or other means are lawful (without being
liable to indictment, prosecution or damages therefor), and may repossess the
Demised Premises and dispossess Tenant and any other persons from the Demised
Premises and remove any and all of their property and effects from the Demised
Premises; and
(ii) Landlord, at Landlord's option, may relet the whole or any part or
parts of the Demised Premises from time to time, either in the name of Landlord
or otherwise, to such tenant or tenants, for such term or terms ending before,
on or after the Expiration Date, at such rental or rentals and upon such other
conditions, which may include concessions and free rent periods, as Landlord, in
its sole discretion, may determine. Landlord shall have no obligation to relet
the Demised Premises or any part thereof and shall in no event be liable for
refusal or failure to relet the Demised Premises or any part thereof, or, in the
event of any such reletting, for refusal or failure to collect any rent due upon
any such reletting, and no such refusal or failure shall operate to relieve
Tenant of any liability under this lease or otherwise to affect any such
liability; Landlord, at Landlord's option, may make such repairs, replacements,
alterations, additions, improvements, decorations and other physical changes in
and to the Demised Premises as Landlord, in its sole discretion, considers
advisable or necessary in connection with any such reletting or proposed
reletting, without relieving Tenant of any liability under this lease or
otherwise affecting any such liability.
(B) Tenant, on its own behalf and on behalf of all persons claiming
through or under Tenant, including all creditors, does hereby waive any and all
rights which Tenant and all such persons might otherwise have under any present
or future law to redeem the Demised Premises, or to re-enter or repossess the
Demised Premises, or to restore the operation of this lease, after (i) Tenant
shall have been dispossessed by a judgment or by warrant of any court or judge,
or (ii) any re-entry by Landlord, or (iii) any expiration or termination of this
lease and the Demised Term, whether such dispossess, re-entry, expiration or
termination shall be by operation of law or pursuant to the provisions of this
lease. In the event of a breach or threatened breach by Tenant or any persons
claiming through or under Tenant, of any term, covenant or condition of this
lease on Tenant's part to be observed or performed, Landlord shall have the
right to enjoin such breach and the right to invoke any other remedy allowed by
law or in equity as if re-entry, summary proceeding and other special remedies
were not provided in this lease for such breach. The rights to invoke the
remedies hereinbefore set forth are cumulative and shall not preclude Landlord
from
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invoking any other remedy allowed at law or in equity.
(C) Notwithstanding any article, paragraph, or other provision or
clause in this lease to the contrary, and notwithstanding any notice of
termination of this lease and irrespective of whether Tenant has sought to
obtain a stay of the term of a notice to cure commonly known as a "yellowstone
injunction", the parties agree that, prior to the rendering of a judgment by the
applicable court in any summary holdover or nonpayment proceeding commenced by
Landlord by reason of Tenant's nonpayment of rent or additional rent, Tenant
may, at any time prior thereto, cure any such nonpayment default (whether or not
a Court may have determined same to exist), whereupon this lease shall be
reinstated for the balance of its term if it has been terminated, and in any
event shall continue in full force and effect as if no default had occurred. In
any such event, Tenant shall reimburse Landlord for court costs and reasonable
attorney fees.
DAMAGES
30. (A) If this lease and the Demised Term shall expire and come to an end
as provided in Article 28 or by or under any summary proceeding or any other
action or proceeding, or if Landlord shall re-enter the Demised Premises as
provided in Article 29 or by or under any summary proceedings or any other
action or proceeding, then, in any of said events:
(i) Tenant shall pay to Landlord all Rent, additional rent and other
charges payable under this lease by Tenant to Landlord to the date upon which
this lease and the Demised Term shall have expired and come to an end or to the
date of re-entry upon the Demised Premises by Landlord, as the case may be; and
(ii) Tenant shall also be liable for and shall pay to Landlord, as
damages, any deficiency (referred to as "Deficiency") between the Rent and
additional rent reserved in this lease for the period which otherwise would have
constituted the unexpired portion of the Demised Term and the net amount, if
any, of rents collected under any reletting effected pursuant to the provisions
of Section 29(A) for any part of such period (first deducting from the rents
collected under any such reletting all of Landlord's expenses in connection with
the termination of this lease or Landlord's re-entry upon the Demised Premises
and with such reletting including, but not limited to, all repossession costs,
brokerage commissions, legal expenses, attorneys' fees, alteration costs and
other expenses of preparing the Demised Premises for such reletting). Any such
Deficiency shall be paid in monthly installments by Tenant on the days specified
in this lease for payment of installments of Rent. Landlord shall be entitled
to recover from Tenant each monthly Deficiency as the same shall arise, and no
suit to collect the
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amount of the Deficiency for any month shall prejudice Landlord's rights to
collect the Deficiency for any subsequent month by a similar proceeding; and
(iii) At any time after the Demised Term shall have expired and come
to an end or Landlord shall have re-entered upon the Demised Premises, as the
case may be, whether or not Landlord shall have collected any monthly
Deficiencies as aforesaid, Landlord shall be entitled to recover from Tenant,
and Tenant shall pay to Landlord, on demand, as and for liquidated and agreed
final damages, a sum equal to the amount by which the Rent and additional rent
reserved in this lease for the period which otherwise would have constituted the
unexpired portion of the Demised Term exceeds the then fair and reasonable
rental value of the Demised Premises for the same period, both discounted to
present worth at the rate of four (4%) per cent per annum. If, before
presentation of proof of such liquidated damages to any court, commission, or
tribunal, the Demised Premises, or any part thereof, shall have been relet by
Landlord for the period which otherwise would have constituted the unexpired
portion of the Demised Term, or any part thereof, the amount of Rent reserved
upon such reletting shall be deemed, prima facie, to be the fair and reasonable
rental value for the part or the whole of the Demised Premises so relet during
the term of the reletting.
(B) If the Demised Premises, or any part thereof, shall be relet
together with other space in the Building, the rents collected or reserved under
any such reletting and the expenses of any such reletting shall be equitably
apportioned for the purposes of this Article 30. Tenant shall in no event be
entitled to any rents collected or payable under any reletting, whether or not
such rents shall exceed the rent reserved in this lease. Solely for the
purposes of this Article, the term "Rent" as used in Section 30(A) shall mean
the rent in effect immediately prior to the date upon which this lease and the
Demised Term shall have expired and come to an end, or the date of re-entry upon
the Demised Premises by Landlord, as the case may be, plus any additional rent
payable pursuant to the provisions of Article 11 for the Escalation Year (as
defined in Article 11) immediately preceding such event. Nothing contained in
Articles 28 and 29 of this lease shall be deemed to limit or preclude the
recovery by Landlord from Tenant of the maximum amount allowed to be obtained as
damages by any statute or rule of law, or of any sums or damages to which
Landlord may be entitled in addition to the damages set forth in Section 30(A).
SUMS DUE LANDLORD
31. If Tenant shall default in the performance of any covenants on
Tenant's part to be performed under this lease,
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Landlord may immediately, or at anytime thereafter, on at least fifteen (15)
days prior written notice (except in an emergency, when no such prior notice
shall be required), and without thereby waiving such default, perform the same
for the account of Tenant and at the expense of Tenant. If Landlord at any time
is compelled to pay or elects to pay any sum of money, or do any act which will
require the payment of any sum of money by reason of the failure of Tenant to
comply with any provision hereof, or, if Landlord is compelled to or elects to
incur any expense, including reasonable attorneys' fees, instituting,
prosecuting and/or defending any action or proceeding instituted by reason of
any default of Tenant hereunder, the sum or sums so paid by Landlord, with all
interest, costs and damages, shall be deemed to be additional rent hereunder and
shall be due from Tenant to Landlord on the first day of the month following the
giving of any notice required hereunder and the incurring of such respective
expenses or, at Landlord's option, on the first day of any subsequent month.
Any sum of money (other than rent) accruing from Tenant to Landlord pursuant to
any provisions of this lease, including, but not limited to, the provisions of
Schedule C, whether prior to or after the Term Commencement Date, may, at
Landlord's option, be deemed additional rent, and Landlord shall have the same
remedies for Tenant's failure to pay any item of additional rent when due as for
Tenant's failure to pay any installment of Rent when due. Tenant's obligations
under this Article shall survive the expiration or sooner termination of the
Demised Term. In any case in which the Rent or additional rent is not paid
within five (5) days of the day when same is due and such late payments shall
occur more than two (2) times in any twelve (12) calendar month period, Tenant
shall pay a late charge equal to 8-1/2 cents for each dollar of Rent or
additional rent thereafter overdue by more than five (5) days. This late
payment charge is intended to compensate Landlord for its additional
administrative costs resulting from Tenant's failure to pay in a timely manner
and has been agreed upon by Landlord and Tenant as a reasonable estimate of the
additional administrative costs that will be incurred by Landlord as a result of
Tenant's failure as the actual cost in each instance is extremely difficult, if
not impossible, to determine. This late payment charge will constitute
liquidated damages and will be paid to Landlord together with such unpaid
amounts. The payment of this late payment charge will not constitute a waiver
by Landlord of any default by Tenant under this lease.
NO WAIVER
32. No act or thing done by Landlord or Landlord's agents during the
term hereby demised shall be deemed an acceptance of a surrender of said Demised
Premises, and no agreement to accept
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such surrender shall be valid unless in writing signed by Landlord. No employee
of Landlord or of Landlord's agents shall have any power to accept the keys of
the Demised Premises prior to the termination of this lease. The delivery of
keys to any employee of Landlord or of Landlord's agents shall not operate as a
termination of this lease or a surrender of the Demised Premises. In the event
Tenant shall at any time desire to have Landlord underlet the Demised Premises
for Tenant's account, Landlord or Landlord's agents are authorized to receive
said keys for such purposes without releasing Tenant from any of the obligations
under this lease, and Tenant hereby relieves Landlord of any liability for loss
of or damage to any of Tenant's effects in connection with such underletting.
The failure of Landlord to seek redress for violation of, or to insist upon the
strict performance of, any covenants or conditions of this lease, or any of the
Rules and Regulations annexed hereto and made a part hereof or hereafter adopted
by Landlord, shall not prevent a subsequent act, which would have originally
constituted a violation, from having all the force and effect of an original
violation. The receipt by Landlord of rent with knowledge of the breach of any
covenant of this lease shall not be deemed a wavier of such breach. The failure
of Landlord to enforce any of the Rules and Regulations annexed hereto and made
a part hereof, or hereafter adopted, against Tenant shall not be deemed a waiver
of any such Rules and Regulations. No provision of this lease shall be deemed
to have been waived by Landlord, unless such waiver be in writing signed by
Landlord. No payment by Tenant or receipt by Landlord of a lesser amount than
the monthly Rent herein stipulated shall be deemed to be other than on account
of the earliest stipulated Rent nor shall any endorsement or statement on any
check or any letter accompanying any check or payment of Rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance of such Rent or pursue any
other remedy in this lease provided.
WAIVER OF TRIAL BY JURY
33. To the extent such waiver is permitted by law, Landlord and Tenant
hereby waive trial by jury in any action, proceeding or counterclaim brought by
Landlord or Tenant against the other on any matter whatsoever arising out of or
in any way connected with this lease, the relationship of landlord and tenant,
the use or occupancy of the Demised Premises by Tenant or any person claiming
through or under Tenant, any claim of injury or damage, and any emergency or
other statutory remedy. The provisions of the foregoing sentence shall survive
the expiration or any sooner termination of the Demised Term. If Landlord
commences any summary proceeding for nonpayment, Tenant agrees not to interpose
any counterclaim of whatever nature or description in any such
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proceeding, except mandatory counterclaims, or to consolidate such proceeding
with any other proceeding.
Tenant hereby expressly waives any and all rights of redemption granted
by or under any present or future laws in the event of Tenant being evicted or
dispossessed for any cause, or in the event of Landlord's obtaining possession
of the Demised Premises, by reason of the violation by Tenant of any of the
covenants and conditions of this lease or otherwise.
NOTICES
34. Except as otherwise expressly provided in this lease, any bills,
statements, notices, demands, requests or other communications (other than
bills, statements or notices given in the regular course of business) given or
required to be given under this lease shall be effective only if rendered or
given in writing, sent by regular, registered or certified mail (return receipt
requested), addressed (A) to Tenant, to the attention of Tenant's Chief
Financial Officer, (i) at Tenant's address set forth in this lease if mailed
prior to Tenant's taking possession of the Demised Premises, or (ii) at the
Building if mailed subsequent to Tenant's taking possession of the Demised
Premises with a copy as provided in (i) above, or (iii) at any place where
Tenant or any agent or employee of Tenant may be found if mailed subsequent to
Tenant's vacating, deserting, abandoning or surrendering the Demised Premises,
or (B) to Landlord, to the attention of Landlord's Chief Financial Officer, at
Landlord's address set forth in this lease, or (C) addressed to such other
address as either Landlord or Tenant may designate as its new address for such
purpose by notice given to the other in accordance with the provisions of this
Article. Any such bills, statements, notices, demands, requests or other
communications shall be deemed to have been rendered or given on the date when
it shall have been mailed as provided in this Article.
INABILITY TO PERFORM
35. (A) If, by reason of strikes or other labor disputes, fire or
other casualty (or reasonable delays in adjustment of insurance), accidents,
orders or regulations of any Federal, State, County or Municipal authority, or
any other cause beyond the responsible party's reasonable control, whether or
not such other cause shall be similar in nature to those hereinbefore
enumerated, Landlord or Tenant, as the case may be, is unable to furnish or is
delayed in furnishing any utility or service required to be furnished by such
party under the provisions of this lease or any collateral instrument or is
unable to perform
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or make or is delayed in performing or making any installations, decorations,
repairs, alterations, additions or improvements, whether or not required to be
performed or made under this lease, or under any collateral instrument, or is
unable to fulfill or is delayed in fulfilling any other obligations under this
lease, or any collateral instrument, no such inability or delay shall constitute
a default by the applicable party or, in the case of any such inability or delay
with respect to Landlord's performance, constitute an actual or constructive
eviction, in whole or in part, or entitle Tenant to any abatement or diminution
of rent, or relieve Tenant from any of its obligations under this lease, or
impose any liability upon Landlord or its agents, by reason of inconvenience or
annoyance to Tenant, or injury to or interruption of Tenant's business, or
otherwise.
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INTERRUPTION OF SERVICE
(B) Landlord reserves the right to stop the services of the air
conditioning, elevator, escalator, plumbing, electrical or other mechanical
systems or facilities in the Building when necessary by reason of accident or
emergency, or for repairs, alterations or replacements, which, in the judgment
of Landlord are desirable or necessary, until such repairs, alterations or
replacements shall have been completed. If the Tenant is in default in the
payment of the rent or additional rent, or in the performance of any other
provisions of this lease, and such default continues for ten (10) days after
notice by Landlord to Tenant, then Landlord reserves the right to discontinue
any or all of the services to the Demised Premises during the continuance of
such default.
CONDITIONS OF LANDLORD'S LIABILITY
(C) (i) In addition to the requirements for constructive eviction
imposed by law, Tenant shall not be entitled to claim a constructive eviction
from the Demised Premises unless Tenant shall have first notified Landlord of
the condition or conditions giving rise thereto, and if the complaints be
justified, unless Landlord shall have failed to remedy such conditions within a
reasonable time after receipt of such notice.
(ii) If Landlord shall be unable to give possession of the Demised
Premises on any date specified for the commencement of the term by reason of the
fact that the Premises have not been sufficiently completed to make the Premises
ready for occupancy, or for any other reason, Landlord shall not be subject to
any liability for the failure to give possession on said date.
TENANT'S TAKING POSSESSION
(D) (i) Tenant, by entering into occupancy of the Premises, shall be
conclusively deemed to have agreed that Landlord, up to the time of such
occupancy has performed all of its obligations hereunder and that the Premises
were in satisfactory condition as of the date of such occupancy, unless within
thirty (30) days after the such date Tenant shall have given written notice to
Landlord specifying the respects in which the same were not in such condition.
(ii) If Tenant shall use or occupy all or any part
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of the Demised Premises for the conduct of business prior to the Term
Commencement Date, such use or occupancy shall be deemed to be under all of the
terms, covenants and conditions of this lease, including the covenant to pay
rent for the period from the commencement of said use or occupancy to the Term
Commencement Date.
ENTIRE AGREEMENT
36. This lease (including the Schedules and Exhibits annexed hereto)
contains the entire agreement between the parties and all prior negotiations and
agreements are merged herein. Tenant hereby acknowledges that neither Landlord
nor Landlord's agent or representative has made any representations or
statements, or promises, upon which Tenant has relied, regarding any matter or
thing relating to the Building, the land allocated to it (including the parking
area) or the Demised Premises, or any other matter whatsoever, except as is
expressly set forth in this lease, including, but without limiting the
generality of the foregoing, any statement, representation or promise as to the
fitness of the Demised Premises for any particular use, the services to be
rendered to the Demised Premises, or the prospective amount of any item of
additional rent. No oral or written statement, representation or promise
whatsoever with respect to the foregoing or any other matter made by Landlord,
its agents or any broker, whether contained in an affidavit, information
circular, or otherwise, shall be binding upon the Landlord unless expressly set
forth in this lease. No rights, easements or licenses are or shall be acquired
by Tenant by implication or otherwise unless expressly set forth in this lease.
This lease may not be changed, modified or discharged, in whole or in part,
orally, and no executory agreement shall be effective to change, modify or
discharge, in whole or in part, this lease or any obligations under this lease,
unless such agreement is set forth in a written instrument executed by the party
against whom enforcement of the change, modification or discharge is sought.
All references in this lease to the consent or approval of Landlord shall be
deemed to mean the written consent of Landlord, or the written approval of
Landlord, as the case may be, and no consent or approval of Landlord shall be
effective for any purpose unless such consent or approval is set forth in a
written instrument executed by Landlord.
DEFINITIONS
37. The words "re-enter", "re-entry", and "re-entered" as used in this
lease are not restricted to their technical legal meanings. The term "business
days" as used in this lease shall
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exclude Saturdays (except such portion thereof as is covered by specific hours
in Article 6 hereof), Sundays and all days observed by the State or Federal
Government as legal holidays. The terms "person" and "persons" as used in this
lease shall be deemed to include natural persons, firms, corporations,
partnerships, associations and any other private or public entities, whether any
of the foregoing are acting on their behalf or in a representative capacity.
The various terms which are defined in other Articles of this lease or are
defined in Schedules or Exhibits annexed hereto, shall have the meanings
specified in such other Articles, Exhibits and Schedules for all purposes of
this lease and all agreements supplemental thereto, unless the context clearly
indicates the contrary.
PARTNERSHIP TENANT
38. If Tenant is a partnership (or is comprised of two (2)or more
persons, individually or as co-partners of a partnership) or if Tenant's
interest in this lease shall be assigned to a partnership (or to two (2) or more
persons, individually or as co-partners of a partnership) pursuant to Article 20
(any such partnership and such persons are referred to in this Section as
"Partnership Tenant"), the following provisions of this Section shall apply to
such Partnership Tenant: (a) the liability of each of the parties comprising
Partnership Tenant shall be joint and several, and (b) each of the parties
comprising Partnership Tenant hereby consents in advance to, and agrees to be
bound by, any modifications of this lease which may hereafter be made, and by
any notices, demands, requests or other communications which may hereafter be
given, by Partnership Tenant or by any of the parties comprising Partnership
Tenant, and (c) any bills, statements, notices, demands, requests and other
communications given or rendered to Partnership Tenant or to any of the parties
comprising Partnership Tenant shall be deemed given or rendered to Partnership
Tenant and to all such parties and shall be binding upon Partnership Tenant and
all such parties, and (d) if Partnership Tenant shall admit new partners, all
of such new partners shall, by their admission to Partnership Tenant, be deemed
to have assumed performance of all of the terms, covenants and conditions of
this lease on Tenant's part to be observed and performed, and (e) Partnership
Tenant shall give prompt notice to Landlord of the admission of any such new
partners, and upon demand of Landlord, shall cause each such new partner to
execute and deliver to Landlord an agreement in form satisfactory to Landlord,
wherein each such new partner shall assume performance of all of the terms,
covenants and conditions of this lease on Tenant's part to be observed and
performed (but neither Landlord's failure to request any such agreement nor the
failure of any such new partner to execute or deliver any such agreement to
Landlord shall vitiate the provisions of subdivision (d) of this Section).
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SUCCESSORS, ASSIGNS, ETC.
39. The terms, covenants, conditions and agreements contained in this
lease shall bind and inure to the benefit of Landlord and Tenant and their
respective heirs, distributees, executors, administrators, successors, and,
except as otherwise provided in this lease, their respective assigns.
BROKER
40. Landlord and Tenant each represents to the other that this lease
was brought about by United Realty as broker and all negotiations with respect
to this lease were conducted exclusively with said broker. Each party hereby
agrees that if any claim is made for commissions by any other broker on account
of any acts of the indemnifying party, such party will hold the other party free
and harmless from any and all liabilities and expenses in connection therewith,
including reasonable attorney's fees.
CAPTIONS
41. The captions in this lease are included only as a matter of
convenience and for reference, and in no way define, limit or describe the scope
of this lease nor the intent of any provisions thereof.
NOTICE OF ACCIDENTS
42. Tenant shall give notice to Landlord, promptly after Tenant learns
thereof, of (i) any accident in or about the Premises, (ii) all fires and other
casualties within the Premises, (iii) all damages to or defects in the Premises,
including the fixtures, equipment and appurtenances thereof for the repair of
which Landlord might be responsible, and (iv) all damage to or defects in any
parts or appurtenances of the Building's sanitary, electrical, heating,
ventilating, air-conditioning, elevator and other systems located in or passing
through the Premises or any part thereof.
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TENANT'S AUTHORITY TO ENTER LEASE
43. In the event that the Tenant hereunder is a corporation, Tenant
represents that the officer or officers executing this lease have the requisite
authority to do so.
RENEWAL OPTION
44. Tenant shall have the right, to be exercised as hereinafter
provided, to extend the term of this lease for one (1) period of five (5) years
(the "Renewal Term") upon the following terms and conditions:
(A) That at the time of the exercise of such right and at the
commencement of the Renewal Term, Tenant shall not be in default in the
performance of any of the terms, covenants or conditions which Tenant is
required to perform under this lease.
(B) That Tenant shall notify Landlord in writing that Tenant
intends to exercise the option at least twelve (12) months prior to the
termination of the initial term set forth in Article 2 of this lease.
(C) That the Renewal Term shall be upon the same terms, covenants
and conditions as in this lease provided, except that (a) there shall be no
further option to extend this lease beyond the one (1) Renewal Term referred to
above; (b) the Premises shall be delivered in its then "as is" condition at the
commencement of the Renewal Term; and (c) the Rent to be paid by Tenant during
the Renewal Term shall be as follows:
During the eleventh Lease Year of the term of this lease, the Rent shall
be $915,367.44, payable in monthly installments of $76,280.62.
During the twelfth Lease Year, the Rent shall be $961,135.80, payable in
monthly installments of $80,094.65.
During the thirteenth Lease Year, the Rent shall be $1,009,192.56,
payable in monthly installments of $84,099.38.
During the fourteenth Lease Year, the Rent shall be $1,059,652.20
payable in monthly installments of $88,304.35.
During the fifteenth Lease Year, the Rent shall be $1,112,634.84 payable
in monthly installments of $92,719.57.
This Renewal Option is personal to Petroleum Heat and Power Co., Inc.
and is non-transferable by operation of law or
40
<PAGE>
otherwise.
REASONABLENESS STANDARD
45. Whenever in this lease provisions require consent or approval, or
that something must be done to the satisfaction of a party, then such party
shall not unreasonably withhold or delay giving such consent or approval or
indicating such satisfaction. Whenever in this lease provisions require a party
to make an estimate or exercise discretion or judgment, then such party shall
make such estimate or exercise such discretion or judgment in a reasonable
manner. Whenever in this lease provisions allow a party to incur costs or
expenses which are to be paid or reimbursed by the other party, such party shall
only incur reasonable costs and expenses in connection therewith.
IN WITNESS WHEREOF, Landlord and Tenant have respectively signed and
sealed this lease as of the day and year first above written.
Witness for Landlord: RECKSON ASSOCIATES
__________________________ By:_______________________
Witness for Tenant: PETROLEUM HEAT AND POWER CO., INC.
__________________________ By:_______________________________
41
<PAGE>
STATE OF CONNECTICUT )
) ss.:
COUNTY OF )
On this day of , 1996, before me personally came
to me known, who being by me duly sworn, did depose and say
that he resides at ,
that he is the of Petroleum Heat and Power Co., Inc., the
corporation described in and which executed the foregoing instrument as
"Tenant"; that he knows the seal of said corporation; that the seal affixed to
said instrument is such corporate seal; that it was so affixed by order of the
Board of Directors of said corporation, and that he signed his name thereto by
like order.
_______________________________
Notary Public
42
<PAGE>
SCHEDULE "A"
LANDLORD'S INITIAL CONSTRUCTION
1. Initial Office Finishing Schedule
Landlord shall, at Landlord's expense, perform the work and installations set
forth on Tenant's Initial Plans (as defined in Article 5 above) using the
following specifications:
Erect the necessary dividing walls constructed of metal stud, 5/8" Fire X gypsum
board, with batts of 3" fiberglass for sound attenuation in Demising walls.
Finish exterior walls with 1/2" sheetrock. Erect per approved plan dry-wall
partitioning of 2-1/2" metal studs with 1/2" gypsum board on each side to
underside of hung ceiling not to exceed 1 linear foot of partitioning for every
20 square feet of usable space.
Spackle and tape walls three coats to a smooth and true finish. Paint walls two
coats flat latex and doors and trim coats matching enamel.
Install in executive offices, main conference room and reception area, over
padding, executive grade, 30 ounce cut pile carpet. Balance of space carpeted
with building standard 24 ounce loop pile carpet (glued down). Building
standard vinyl reinforced tile may be installed in place of carpet.
Install a 2' x 4' acoustical tile ceiling with a Travertine finish.
Provide interior building standard hollow core doors on Tenant's plan limited to
3 per 1,000 square feet.
2. Lavatory Area - Public Spaces
a) Separate male and female toilet facilities.
3. Landscaping
The building will be landscaped with trees, plantings and other materials as
presently exist at the building. An underground sprinkler system will be
provided with a time clock to maintain proper watering.
4. Electrical Specifications
All electrical work shall be installed in accordance with the National
Electrical Code, and the local building code. A "Certificate of Compliance"
shall be obtained from the New York Board of Fire Underwriters at the completion
of the project.
43
<PAGE>
Lighting throughout the entire finished office area shall be obtained by the use
of recessed light 2' by 4' fluorescent fixtures with parabolic lenses, not to
exceed one (1) fixture for each eighty (80) square feet of usable space. Local
wall switches shall be provided for control of lighting. Toilet, corridor,
lobby and other similar areas shall be lit to 50 foot candles.
Exit light lighting for all paths of egress shall be provided in accordance with
local building department regulations, if required.
All branch circuit wiring shall be above hung ceiling or within dry-wall
construction in finished areas and shall be type BX. All exposed conduits in
non-finished areas shall be thin-walled "EMT".
Wall-mounted duplex convenience outlets shall be provided on the basis of one
duplex outlet for each 120 square feet of rented area. This formula shall be
used to establish the quantity of outlets. However, the exact location of each
outlet shall be coordinated with the Tenant's furniture layout. All duplex
outlets are to be considered as normal convenience outlets and shall be wired up
with an average of 5 to 8 outlets on one 20 ampere, 120 volt circuit. Panel
capacity shall be adequate to handle all tenant lighting and equipment load,
providing such equipment load does not exceed 2 watts per square foot of usable
area.
No credit given for installation less than standard installation.
5. Heating, Ventilation and Air Conditioning Specifications
General
The intent of this specification is to define a design concept for the subject
area.
Design Criteria
Central air conditioning with modular systems with individual zone control shall
be capable of the following performance when the criteria noted are not
exceeded:
A) Between September 1 and June 1, the "heating system" shall be operative and
maintain a minimum of 70 degrees FDB when the outdoor temperature is 0 degrees
FDB and the prevailing wind velocity does not exceed 15 mph.
B) Between April 15 and October 14, the "cooling system" shall be operative
and maintain a maximum of 78 degrees FDB and 55%
44
<PAGE>
relative humidity when the outdoor temperature is 95 degrees FDB and 75 degrees
FDB with the prevailing wind velocity not exceeding 13 mph.
C) During the overlapping seasons (April 15 - June 1 and September 1 - October
15) both systems shall be operative (cooling and heating).
D) Zoning temperature and balancing controls shall be operated solely by the
Landlord to assure the conditions above.
E) Maintenance of the foregoing temperature conditions is conditioned upon the
following criteria, which shall not be exceeded by the Tenant in any room, or
area, within the demised premises:
a) Population Density .................... 1 person per 150
square feet
b) Lighting and Electrical Load Density... 4 watts per
square foot
c) Exhaust and Ventilation Load........... 5 cfm per person
6. Ventilation
Bathrooms and similar areas to be ventilated per code using rooftop fans.
7. System Design
Exterior Perimeter Zones
Heating/cooling of exterior offices and areas provided by variable air volume
terminals with integrated thermostats to meet Tenant's requirements for
individual control.
Interior Zones
Heating/cooling provided by variable air volume system terminals with integrated
thermostats for areas of 2,000 square feet.
45
<PAGE>
SCHEDULE "B"
LANDLORD'S CLEANING SERVICES AND MAINTENANCE OF PREMISES
(to be performed on all business days except those which are union holidays for
the employees performing cleaning services and maintenance in the Building and
grounds or those days in which the Building is closed)
I. CLEANING SERVICES - PUBLIC SPACES:
A. Floor of entrance lobby and public corridors will be vacuumed or swept and
washed nightly and waxed as necessary.
B. Entranceway glass and metal work will be washed and rubbed down daily.
C. Wall surfaces and elevator cabs will be kept in polished condition.
D. Lighting fixtures will be cleaned and polished annually. Bulbs will be
replaced as needed at Tenant's expense.
E. Elevators and restrooms will be washed and disinfected once a day. The
floors will be mopped as many times as required. All brightwork and mirrors
will be kept in polished condition. Dispensers will be continuously checked and
receptacles continuously emptied.
F. Exterior surfaces and all windows of the building will be cleaned
quarterly.
II. CLEANING SERVICES - TENANT SPACES:
A. Floors will be swept and spot cleaned nightly. Carpets will be swept daily
with carpet sweeper and vacuumed weekly.
B. Office equipment, telephones, etc. will be dusted nightly.
C. Normal office waste in receptacles and ashtrays will be emptied nightly.
D. Interior surface of windows and sills will be washed and blinds dusted
quarterly.
E. There shall be regularly scheduled visits by a qualified exterminator.
46
<PAGE>
III. EXTERIOR SERVICES:
A. Parking fields will be regularly swept, cleared of snow in excess of two
inches, and generally maintained so as to be well drained, properly surfaced and
striped.
B. All landscaping, gardening, exterior lighting and irrigation systems will
have regular care and servicing.
IV. EQUIPMENT SERVICE:
A. All air-conditioning and heating equipment and elevators will be regularly
serviced and maintained.
B. Plumbing and electrical facilities, doors, hinges and locks will be
repaired as necessary.
C. All appurtenances, such as rails, stairs, etc. will be maintained in a safe
condition.
V. EXTRA CLEANING SERVICES
Tenant shall pay to Landlord, on demand, Landlord's charges for (a) cleaning
work in the Premises required because of (i) misuse or neglect on the part of
Tenant or its employees or visitors, (ii) use of portions of the Premises for
preparation or serving of food or beverages, or other special purposes requiring
greater or more difficult cleaning work than office areas; and (iii) increases
in frequency or scope in any item set forth in Schedule B as shall have been
requested by Tenant; and (b) removal from the Premises and Building of (i) so
much of any refuse and rubbish of Tenant as shall exceed that normally
accumulated in the routine of ordinary business office activity and (ii) all of
the refuse and rubbish of any eating facility requiring special handling (wet
garbage).
47
<PAGE>
SCHEDULE "C"
[Intentionally omitted.]
48
<PAGE>
SCHEDULE "D"
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress to and egress from
the Demised Premises and for delivery of merchandise and equipment in a prompt
and efficient manner using elevators and passageways designated for such
delivery by Landlord. There shall not be used in any space, or in the public
hall of the building, either by any Tenant or by jobbers or others in the
delivery or receipt of merchandise, any hand trucks, except those equipped with
rubber tires and sideguards.
2. The water and wash closets and plumbing fixtures shall not be used for
any purposes other than those for which they were designed or constructed and no
sweepings, rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No Tenant shall sweep or throw or permit to be swept or thrown from
the Premises any dirt or other substances into any of the corridors or halls,
elevators, or out of the doors or windows or stairways of the building, and the
Tenant shall not use, keep or permit to be used or kept any noxious gas or
substance in the Demised Premises, or permit or suffer the Demised Premises to
be occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odors and/or vibrations, or
interfere in any way with other tenants (if any) or those having business
therein, nor shall any animals or birds be kept in or about the Building.
Smoking or carrying lighted cigars or cigarettes in the elevators of the
Building is prohibited.
4. No awnings or other projections shall be attached to the outside walls
of the Building without the prior written consent of the Landlord.
5. No sign, advertisement, notice or other lettering and/or window
treatment shall be exhibited, inscribed, painted or affixed by any Tenant on any
part of the outside of the Demised Premises or the Building or on the inside of
the Demised Premises if the same is visible from the outside of the Demised
Premises without the prior written consent of the Landlord. In the event of the
violation of the foregoing by any Tenant, Landlord may remove same without any
liability, and may charge the expense incurred by such removal to Tenant or
Tenants violating this rule. Interior signs on doors and directory tables shall
be inscribed, painted or affixed for each Tenant by Landlord at the expense of
such Tenant, and shall be of a size, color and style
49
<PAGE>
acceptable to Landlord.
6. Except as permitted pursuant to Article 14 of this lease, Tenant shall
not mark, paint, drill into, or in any way deface any part of the Demised
Premises or the Building of which they form a part, and no boring, cutting or
stringing of wires shall be permitted, except with the prior written consent of
Landlord, and as Landlord may direct. Tenant shall not lay linoleum or other
similar floor covering so that the same shall come in direct contact with the
floor of the Demised Premises and, if linoleum or other similar floor covering
is desired to be used, an interlining of builder's deadening felt shall be first
affixed to the floor, by a paste or other water soluble material, the use of
cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of
the doors or windows by Tenant, nor shall any changes be made in existing locks
or in the mechanisms thereof, except on prior notice to Landlord and the prompt
provision to Landlord of keys to any such locks or bolts. Each Tenant must,
upon the termination of his tenancy, restore to Landlord all keys of stores,
offices and toilet rooms, either furnished to, or otherwise procured by, such
Tenant, and in the event of the loss of any keys, so furnished, such Tenant
shall pay to Landlord the cost thereof.
8. Freight, furniture, business equipment, merchandise and bulky matter
of any description shall be delivered to and removed from the Premises only
through the service entrances and corridors.
9. Landlord shall have the right to prohibit any advertising by any
Tenant which, in Landlord's reasonable opinion, tends to impair the reputation
of the Building or its desirability as an office building, and upon written
notice from Landlord, Tenant shall refrain from or discontinue such advertising.
10. Except as permitted under Article 15 of this lease, Tenant shall not
bring or permit to be brought or kept in or on the Premises, any inflammable,
combustible, hazardous or explosive fluid, material, chemical or substance, or
cause or permit any odors of cooking or other processes, or any unusual or other
objectionable odors, to permeate in or emanate from the Premises.
50
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION (IN THOUSANDS EXCEPT PER
SHARE DATA) EXTRACTED FROM PETROLEUM HEAT AND POWER CO., INC. AND SUBSIDIARIES
FINANCIAL STATEMENTS AS OF JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 24,404
<SECURITIES> 0
<RECEIVABLES> 89,082
<ALLOWANCES> 1,877
<INVENTORY> 11,530
<CURRENT-ASSETS> 135,419
<PP&E> 69,715
<DEPRECIATION> 39,521
<TOTAL-ASSETS> 286,212
<CURRENT-LIABILITIES> 68,830
<BONDS> 291,824
12,500
0
<COMMON> 2,534
<OTHER-SE> (98,340)
<TOTAL-LIABILITY-AND-EQUITY> 286,212
<SALES> 350,427
<TOTAL-REVENUES> 371,000
<CGS> 208,649
<TOTAL-COSTS> 248,210
<OTHER-EXPENSES> 89,223
<LOSS-PROVISION> 865
<INTEREST-EXPENSE> 17,567
<INCOME-PRETAX> 18,231
<INCOME-TAX> 400
<INCOME-CONTINUING> 19,303
<DISCONTINUED> 0
<EXTRAORDINARY> 6,414
<CHANGES> 0
<NET-INCOME> 12,889
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
</TABLE>
