<PAGE> 1
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 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 1-7367
PAINE WEBBER GROUP INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-2760086
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1285 Avenue of the Americas, New York, N.Y. 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 713-2000
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 _________
-----------------------
On May 3, 1996, the Registrant had outstanding 93,677,061 shares of common stock
of $1 par value, which is the Registrant's only class of common stock.
<PAGE> 2
PAINE WEBBER GROUP INC.
FORM 10-Q
March 31, 1996
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
----
Item 1. Financial Statements.
Consolidated Statements of Income
(unaudited) for the Three Months Ended
March 31, 1996 and 1995. 2
Consolidated Statements of Financial
Condition (unaudited) at March 31, 1996
and December 31, 1995. 3
Consolidated Statements of Cash Flows
(unaudited) for the Three Months Ended
March 31, 1996 and 1995. 4
Notes to Consolidated Financial Statements
(unaudited). 5-13
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. 14-16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. 17
Item 4. Submission of Matters to a Vote of Security Holders. 17
Item 6. Exhibits and Reports on Form 8-K. 17
Signature. 18
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Paine Webber Group Inc.
Consolidated Statements of Income (unaudited)
(In thousands of dollars except share and per share amounts)
Three Months Ended
March 31,
--------------------------
1996 1995
--------- ---------
Revenues
Commissions $ 368,185 $ 270,262
Principal transactions 296,376 213,670
Investment banking 81,855 49,800
Asset management 107,655 89,887
Other 30,496 35,887
Interest 545,459 574,404
--------- ---------
Total revenues 1,430,026 1,233,910
Interest expense 467,391 508,126
--------- ---------
Net revenues 962,635 725,784
--------- ---------
Non-interest expenses
Compensation and benefits 566,991 432,957
Office and equipment 68,741 64,680
Communications 38,691 35,157
Business development 18,551 21,550
Brokerage, clearing & exchange fees 25,492 23,532
Professional services 23,575 22,187
Other 65,978 72,936
--------- ---------
Total non-interest expenses 808,019 672,999
--------- ---------
Income before taxes 154,616 52,785
--------- ---------
Provision for income taxes:
Federal 37,353 11,329
State, local and foreign 16,762 7,146
--------- ---------
54,115 18,475
--------- ---------
Net income $ 100,501 $ 34,310
========= =========
Net income applicable to common shares $ 94,504 $ 27,273
========= =========
Earnings per common share:
Primary $ 0.96 $ 0.27
Fully diluted $ 0.92 $ 0.27
Weighted average common shares:
Primary 98,007,758 99,196,163
Fully diluted 104,465,206 107,706,052
Dividends declared per common share $0.12 $0.12
See notes to consolidated financial statements.
2
<PAGE> 4
Paine Webber Group Inc.
Consolidated Statements of Financial Condition (unaudited)
(In thousands of dollars except share and per share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 157,301 $ 222,497
Cash and securities segregated and on deposit for
federal and other regulations 456,525 427,068
Trading assets, at fair value 14,282,418 14,095,446
Securities purchased under agreements to resell 20,397,008 16,699,295
Securities borrowed 7,488,382 7,226,515
Receivables:
Clients, net of allowance for doubtful accounts of
$12,707 and $12,400 at March 31, 1996 and
December 31, 1995, respectively 4,209,722 4,070,599
Brokers and dealers 868,967 279,676
Dividends and interest 273,553 263,948
Fees and other 228,607 200,444
Office equipment and leasehold improvements, net of accumulated
depreciation and amortization of $302,555 and $288,807 at
March 31, 1996 and December 31, 1995, respectively 319,625 322,056
Other assets 1,741,497 1,863,750
------------ ------------
$ 50,423,605 $ 45,671,294
============ ============
Liabilities and Stockholders' Equity
Short-term borrowings $ 1,340,081 $ 991,227
Trading liabilities, at fair value 7,005,301 6,233,054
Securities sold under agreements to repurchase 28,103,046 25,199,377
Securities loaned 3,133,358 2,752,429
Payables:
Clients 3,684,394 3,698,477
Brokers and dealers 829,655 155,118
Dividends and interest 246,424 256,338
Other liabilities and accrued expenses 1,422,323 1,639,403
Accrued compensation and benefits 383,911 570,786
------------ ------------
46,148,493 41,496,209
Long-term borrowings 2,518,726 2,436,037
------------ ------------
48,667,219 43,932,246
------------ ------------
Commitments and contingencies
Redeemable Preferred Stock 186,984 186,760
Stockholders' Equity:
Convertible Preferred Stock 100,000 100,000
Common stock, $1 par value, 200,000,000 shares authorized;
issued 105,264,556 shares and 104,492,091 shares at
March 31, 1996 and December 31, 1995, respectively 105,265 104,492
Additional paid-in capital 840,250 831,763
Retained earnings 800,929 719,325
------------ ------------
1,846,444 1,755,580
Treasury stock, at cost; 11,260,885 shares at March 31, 1996
and 7,417,845 shares at December 31, 1995, respectively (230,382) (151,616)
Unamortized cost of restricted stock (48,745) (55,302)
Foreign currency translation adjustment 2,085 3,626
------------ ------------
1,569,402 1,552,288
------------ ------------
$ 50,423,605 $ 45,671,294
============ ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 5
Paine Webber Group Inc.
Consolidated Statements of Cash Flows (unaudited)
(In thousands of dollars)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 100,501 $ 34,310
Adjustments to reconcile net income to cash provided by (used for)
operating activities:
Noncash items included in net income:
Depreciation and amortization 15,058 13,054
Deferred income taxes 114,095 24,058
Amortization of deferred charges 41,397 41,084
Other 11,670 12,439
(Increase) decrease in operating receivables:
Clients (140,123) (869,934)
Brokers and dealers (589,291) 22,686
Dividends and interest (9,605) (37,813)
Fees and other (28,163) (7,198)
Increase (decrease) in operating payables:
Clients (14,083) 1,250,957
Brokers and dealers 674,537 115,505
Dividends and interest (9,914) 32,598
Other (408,594) (94,100)
(Increase) decrease in:
Trading assets (186,972) (714,521)
Securities purchased under agreements to resell (3,697,713) (6,901,611)
Securities borrowed (261,867) (809,778)
Cash and securities on deposit (29,457) (37,288)
Other assets (145,569) (171,309)
Increase (decrease) in:
Trading liabilities 772,247 2,026,418
Securities sold under agreements to repurchase 2,903,669 6,581,525
Securities loaned 380,929 771,293
----------- -----------
Cash provided by (used for) operating activities (507,248) 1,282,375
----------- -----------
Cash flows from investing activities:
Proceeds from (payments for):
Net assets acquired in business acquisition -- (624,090)
Sales of investments 122,032 --
Office equipment and leasehold improvements (11,727) (21,757)
----------- -----------
Cash provided by (used for) investing activities 110,305 (645,847)
----------- -----------
Cash flows from financing activities:
Net proceeds from (payments on):
Short-term borrowings 348,854 (741,334)
Proceeds from:
Long-term borrowings 113,436 145,396
Employee stock transactions 12,929 3,631
Payments for:
Long-term borrowings (31,235) (25,966)
Repurchases of common stock (93,342) (13,023)
Dividends (18,895) (19,466)
----------- -----------
Cash provided by (used for) financing activities 331,747 (650,762)
----------- -----------
Decrease in cash and cash equivalents (65,196) (14,234)
Cash and cash equivalents, beginning of period 222,497 259,238
----------- -----------
Cash and cash equivalents, end of period $ 157,301 $ 245,004
=========== ===========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 6
Paine Webber Group Inc.
Notes to Consolidated Financial Statements (unaudited)
(In thousands of dollars except share and per share amounts)
Note 1: Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements include the accounts of Paine Webber Group
Inc. ("PWG") and its wholly owned subsidiaries, including its principal
subsidiary, PaineWebber Incorporated ("PWI") (collectively, the "Company"). All
material intercompany balances and transactions have been eliminated. Certain
reclassifications have been made in prior year amounts to conform to current
year presentations. The financial information as of and for the periods ended
March 31, 1996 and 1995 is unaudited. All normal recurring adjustments which, in
the opinion of management, are necessary for a fair presentation have been made.
The consolidated financial statements are prepared in conformity with generally
accepted accounting principles which require management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could differ from those
estimates. These financial statements should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended December 31, 1995. The
results of operations reported for interim periods are not necessarily
indicative of the results of operations for the entire year. The Company's
principal line of business is to serve the investment and capital needs of
individual, corporate, institutional and public agency clients.
Stock Based Compensation
The Company grants stock options to employees and non-employee directors with an
exercise price not less than the fair market value at the date of grant. The
Company accounts for stock option grants in accordance with Accounting
Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to
Employees," and intends to continue to do so. In accordance with APB No. 25, the
Company recognizes no compensation expense related to the granting of such stock
options.
Accounting Changes
In January 1996, the Company adopted Financial Accounting Standards Board
("FASB") Statements of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." The adoption of SFAS No. 121 had no material impact on the
Company's consolidated financial statements, taken as a whole.
Note 2: Fair Value of Financial Instruments
Substantially all of the Company's financial instruments are carried at fair
value or amounts approximating fair value. Assets, including cash and cash
equivalents, cash and securities segregated for regulatory purposes, trading
assets, resale agreements, securities borrowed, and certain receivables, are
carried at fair value or contracted amounts which approximate fair value.
Similarly, liabilities, including short-term borrowings, trading liabilities,
repurchase agreements, securities loaned, and certain payables, are carried at
fair value or contracted amounts approximating fair value.
At March 31, 1996 and December 31, 1995, the fair values of long-term borrowings
were $2,510,086 and $2,478,095, respectively, as compared to the carrying
amounts of $2,518,726 and $2,436,037, respectively. The estimated fair value of
long-term borrowings is based upon quoted market prices for the same or similar
issues and pricing models. However, for the majority of its fixed rate debt, the
Company enters into interest rate swap agreements to convert its fixed rate
payments into floating payments, which partially offset the effect of the
changes in interest rates on the fair value of the Company's long-term
borrowings.
The fair value of interest rate swaps used to hedge the Company's long-term
borrowings is based upon the amounts the Company would receive or pay to
terminate the agreements, taking into account current interest rates and
creditworthiness of the counterparties. The fair values of the interest rate
swaps were $30,456 payable and $33,756 receivable at March 31, 1996 and December
31, 1995, respectively. The carrying amounts of the interest rate swap
agreements at March 31, 1996 and December 31, 1995 were net receivables of
$1,218 and $1,730, respectively, and are included in "Dividends and interest" in
the Company's Consolidated Statement of Financial Condition.
5
<PAGE> 7
Notes to Consolidated Financial Statements (continued)
Note 3: Trading Inventories
Trading assets and liabilities, recorded at fair value, consisted of the
following:
March 31, December 31,
1996 1995
----------- ------------
Trading assets:
U.S. government and agency obligations $ 5,056,795 $ 4,854,878
Mortgages and mortgage-backed securities 4,207,794 4,240,163
Corporate debt securities 2,709,162 2,364,597
State and municipal obligations 670,634 821,487
Corporate equity securities 637,958 561,669
Commercial paper and other short-term debt 1,000,075 1,252,652
----------- -----------
$14,282,418 $14,095,446
=========== ===========
Trading liabilities:
U.S. government and agency obligations $ 5,182,832 $ 4,570,733
Mortgages and mortgage-backed securities 246,620 127,708
Corporate debt securities 843,663 714,588
State and municipal obligations 14,839 21,467
Corporate equity securities 717,347 798,558
----------- -----------
$ 7,005,301 $ 6,233,054
=========== ===========
Note 4: Short-Term Borrowings
The Company meets its short-term financing needs by obtaining bank loans on
either a secured or unsecured basis; by issuing commercial paper and medium-term
notes; by entering into agreements to repurchase, whereby securities are sold
with a commitment to repurchase at a future date; and through securities lending
activity.
Short-term borrowings at March 31, 1996 and December 31, 1995 consisted of the
following:
March 31, December 31,
1996 1995
---------- ------------
Commercial paper $ 748,913 $ 547,554
Bank loans and other 591,168 443,673
---------- ----------
$1,340,081 $ 991,227
========== ==========
Note 5: Long-Term Borrowings
Long-term borrowings at March 31, 1996 and December 31, 1995 consisted of the
following :
March 31, December 31,
1996 1995
---------- ------------
Fixed Rate Notes due 1998-2014 $1,396,282 $1,289,478
Fixed Rate Subordinated Notes due 2002 174,434 174,412
Medium-Term Senior Notes 634,475 651,475
Medium-Term Subordinated Notes 277,450 283,150
Other 36,085 37,522
---------- ----------
$2,518,726 $2,436,037
========== ==========
6
<PAGE> 8
Notes to Consolidated Financial Statements (continued)
On January 23, 1996, the Company issued $100,000 of 6 3/4% Notes Due February 1,
2006. The Notes are not redeemable prior to maturity. Interest on the Notes is
payable semi-annually on February 1 and August 1. At March 31, 1996, interest
rates on the remaining fixed rate notes and subordinated notes due 1998 - 2014
range from 6 1/4% to 9 1/4% and the weighted average interest rate on these
notes outstanding at March 31, 1996 was 7.51%. Interest on the notes is payable
semi-annually.
At March 31, 1996, the Company had outstanding $735,725 of fixed rate
Medium-Term Notes and $176,200 of variable rate Medium-Term Notes. The
Medium-Term Notes outstanding at March 31, 1996 had an average maturity of 3.5
years and a weighted average interest rate of 6.97%.
Total interest payments relating to agreements to repurchase, short-term
borrowings, securities loaned and long-term borrowings were $477,305 and
$475,870 for the three months ended March 31, 1996 and 1995, respectively.
Note 6: Common Stock
As of March 31, 1996, the Company had 34,529,414 authorized shares of common
stock reserved for issuance in connection with convertible securities and stock
option and stock award plans.
On April 30, 1996, the Board of Directors declared a regular quarterly dividend
on the Company's common stock of $0.12 per share payable on July 3, 1996 to
stockholders of record on June 3, 1996. In addition, the Board authorized an
increase of 7 million shares to its current share repurchase program, bringing
the total amount of shares that can be purchased to approximately 10 million.
Note 7: Capital Requirements
PWI, a registered broker-dealer, is subject to the Securities and Exchange
Commission Uniform Net Capital Rule and New York Stock Exchange Growth and
Business Reduction capital requirements. Under the method of computing capital
requirements adopted by PWI, minimum net capital shall not be less than 2% of
combined aggregate debit items arising from client transactions, plus excess
margin collected on securities purchased under agreements to resell, as defined.
A reduction of business is required if net capital is less than 4% of such
aggregate debit items. Business may not be expanded if net capital is less than
5% of such aggregate debit items. As of March 31, 1996, PWI's net capital of
$719,787 was 15% of aggregate debit balances and its net capital in excess of
the minimum required was $619,185.
Note 8: Financial Instruments with Off-Balance-Sheet Risk
Held or Issued for Trading Purposes
In the normal course of business, the Company engages in a variety of derivative
and non-derivative financial instrument transactions in connection with its
market risk management, its principal trading activities and also on behalf of
its clients. Derivative financial instruments include forward and futures
contracts, options contracts, interest rate swaps and other contracts committing
the Company to purchase or deliver other instruments at specified future dates
and prices, or to make or receive payments based upon notional amounts and
specified rates or indices. As defined by the FASB in SFAS No. 119, "Disclosure
about Derivative Financial Instruments and Fair Value of Financial Instruments,"
a derivative financial instrument also includes unsettled purchase and sale
agreements and firm or standby commitments for the purchase of securities. It
does not include on-balance-sheet receivables and payables whose values are
derived from changes in the value of some underlying asset or index, such as
mortgage-backed securities and structured notes.
In connection with its market risk management and principal trading activities,
the Company may enter into a derivative contract to manage the risk arising from
other financial instruments or to take a position based upon expected future
market conditions. The Company also takes positions to facilitate client
transactions and acts as a market-maker in certain listed and unlisted
securities. These contracts are valued at market, and unrealized gains and
losses are reflected in the financial statements.
7
<PAGE> 9
Notes to Consolidated Financial Statements (continued)
A large portion of the Company's derivative financial instruments are "to be
announced" mortgage securities requiring forward settlement. As a principal in
the mortgage-backed securitization business, the Company has outstanding forward
purchase and sale agreements committing the Company to deliver participation
certificates and mortgage-backed securities.
Set forth below are the gross contract or notional amounts of all
off-balance-sheet derivative financial instruments held or issued for trading
purposes. These amounts are not reflected in the Consolidated Statement of
Financial Condition and are indicative only of the volume of activity at March
31, 1996 and December 31, 1995. They do not represent amounts subject to market
risks, and in many cases, limit the Company's overall exposure to market losses
by hedging other on- and off-balance-sheet transactions.
<TABLE>
<CAPTION>
Notional or Contract Amount
-----------------------------------------------------------
March 31, 1996 December 31, 1995
--------------------------- ---------------------------
Purchases Sales Purchases Sales
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Mortgage-backed forward contracts
and options written and purchased $23,764,785 $25,932,236 $13,140,269 $15,861,501
Foreign currency forward contracts,
futures contracts, and options
written and purchased 1,283,060 1,145,605 1,894,724 2,040,414
Equity securities contracts including
futures, forwards, and options written
and purchased 392,325 589,745 993,161 1,220,400
Other fixed income securities contracts
including futures, forwards, and options
written and purchased 3,856,220 6,408,429 2,647,504 3,148,312
Interest rate swaps, caps and floors 103,050 -- 104,050 --
</TABLE>
Set forth below are the fair values of derivative financial instruments held or
issued for trading purposes as of March 31, 1996 and December 31, 1995. The fair
value amounts are determined by quoted market prices and pricing models which
consider the time value and volatility of the underlying instruments. Changes in
fair value are reflected in trading revenues or net interest as incurred,
depending on the nature of the contract. The amounts are netted by counterparty
only when the criteria of FASB Interpretation No. 39, "Offsetting of Amounts
Related to Certain Contracts," are met.
<TABLE>
<CAPTION>
Fair Value at Fair Value at
March 31, 1996 December 31, 1995
------------------------- -------------------------
Assets Liabilities Assets Liabilities
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Mortgage-backed forward contracts and
options written and purchased $213,402 $246,974 $129,272 $116,536
Foreign currency forward contracts,
futures contracts, and options
written and purchased 37,916 40,062 83,222 48,710
Equity securities contracts including
futures, forwards, and options written
and purchased 41,040 31,069 135,977 52,250
Other fixed income securities contracts
including futures, forwards, and options
written and purchased 29,505 44,656 22,353 58,148
Interest rate swaps, caps and floors 4,508 -- 4,660 --
</TABLE>
8
<PAGE> 10
Notes to Consolidated Financial Statements (continued)
Set forth below are the average fair values of derivative financial instruments
held or issued for trading purposes for the three months ended March 31, 1996
and the twelve months ended December 31, 1995. The average fair value is based
upon the average of the month-end balances during the periods indicated.
<TABLE>
<CAPTION>
Average Fair Value Average Fair Value
Three Months ended Twelve Months ended
March 31, 1996 December 31, 1995
------------------------- -------------------------
Assets Liabilities Assets Liabilities
-------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Mortgage-backed forward contracts and
options written and purchased $209,528 $204,214 $118,784 $108,825
Foreign currency forward contracts,
futures contracts, and options
written and purchased 61,982 65,016 71,805 89,857
Equity securities contracts including
futures, forwards, and options written
and purchased 42,702 29,815 217,849 142,507
Other fixed income securities contracts
including futures, forwards, and options
written and purchased 27,547 40,947 16,620 21,449
Interest rate swaps, caps and floors 4,785 -- 2,132 --
</TABLE>
The Company also enters into agreements to sell securities, at predetermined
prices, which have not yet been purchased. The Company is exposed to market risk
since to satisfy the obligation, the Company must acquire the securities at
market prices, which may exceed the values reflected on the Consolidated
Statement of Financial Condition.
The off-balance-sheet derivative trading transactions are generally short-term.
At March 31, 1996 approximately 93% of the off-balance-sheet derivative trading
financial instruments were scheduled to mature during the second quarter of
1996.
The Company's risk of loss in the event of counterparty default is limited to
the current fair value or the replacement cost on contracts in which the Company
has recorded an unrealized gain. These amounts are reflected as assets on the
Company's Consolidated Statement of Financial Condition and amounted to $326,371
and $375,484 at March 31, 1996 and December 31, 1995, respectively. Options
written do not expose the Company to credit risk since they do not obligate the
counterparty to perform. Transactions in futures contracts are conducted through
regulated exchanges which have margin requirements, and are settled in cash on a
daily basis, thereby minimizing credit risk.
The table on the following page summarizes the Company's principal transaction
revenue (net trading revenues) by business activity for the three months ended
March 31, 1996 and 1995. Principal transaction revenues include realized and
unrealized gains and losses in the fair value of derivative and other financial
instruments.
9
<PAGE> 11
Notes to Consolidated Financial Statements (continued)
<TABLE>
<CAPTION>
Principal Transaction Revenue
March 31,
-----------------------------
1996 1995
-------- --------
<S> <C> <C>
Corporate equities (includes equity securities, equity index futures,
equity index options and swaps, and equity options contracts) $114,108 $ 82,055
Municipals (includes municipal and government securities) 32,871 42,557
U.S. government (includes U.S. government securities, financial
futures and options contracts) 56,448 26,197
Mortgage and mortgage-backed (includes mortgage-backed and
government securities, mortgage-backed forwards and options contracts) 41,675 17,205
Corporate debt and other (includes debt, foreign currency forwards, futures
and options contracts and other securities) 51,274 45,656
-------- --------
$296,376 $213,670
======== ========
</TABLE>
Held or Issued for Purposes Other Than Trading
The Company enters into interest rate swap agreements to ensure that the
interest rate characteristics of assets and liabilities are matched. As of March
31, 1996 and December 31, 1995, the Company had outstanding interest rate swap
agreements with commercial banks with notional principal amounts of $1,950,725
and $1,938,700, respectively, which effectively converted the majority of the
Company's fixed rate debt into floating rate debt. The interest rate swap
agreements entered into have had the effect of reducing net interest expense on
the Company's long-term borrowings by $1,921 and $585 for the three months ended
March 31, 1996 and 1995, respectively. The difference to be received or paid on
the swap agreements is included in interest expense as incurred and any related
receivable from or payable to counterparties is reflected as an asset or
liability, accordingly. The Company had no deferred gains or losses related to
terminated swap agreements at March 31, 1996 and December 31, 1995. The Company
is subject to market risk as interest rates fluctuate. The interest rate swaps
contain credit risk to the extent the Company is in a receivable or gain
position and the counterparty defaults. However, the counterparties to the
agreements are large financial institutions and the Company has not experienced
defaults in the past and management does not anticipate any counterparty
defaults in the foreseeable future. See Note 2 for further discussion of
interest rate swap agreements used for hedging purposes.
Note 9: Risk Management
Transactions involving derivative and non-derivative financial instruments
involve varying degrees of both market and credit risk. The Company monitors its
exposure to market and credit risk on a daily basis and through a variety of
financial, security position and credit exposure reporting and control
procedures.
Market Risk
Market risk is the potential change in value of the financial instrument caused
by unfavorable changes in interest rates, foreign currency exchange rates or the
fair values of the securities underlying the instrument. The Company has a
variety of methods to monitor its market risk profile. The senior management of
each business group is responsible for reviewing trading positions, exposures,
profits and losses, and trading strategies on a daily basis. The Company also
has an independent risk management group which aids in setting and monitoring
risk management policies of the Company, including monitoring adherence to the
established limits, performing market risk modeling, and reviewing trading
positions and hedging strategies. The Asset/Liability Management Committee,
comprised of senior corporate and business unit managers, is responsible for
establishing trading position and exposure limits.
Market risk modeling is based on estimating loss exposure through daily stress
testing. These results are compared to daily limits, and exceptions are subject
to review and approval by senior management. Other market risk control
procedures include monitoring inventory agings, reviewing traders' marks and
regular meetings between the senior management of the business groups and the
risk management group.
10
<PAGE> 12
Notes to Consolidated Financial Statements (continued)
Credit Risk in Proprietary Transactions
Counterparties to the Company's proprietary trading, hedging, financing and
arbitrage activities are primarily financial institutions, including brokers and
dealers, banks and institutional clients. Credit losses could arise should
counterparties fail to perform and the value of any collateral proves
inadequate. The Company manages credit risk by monitoring net exposure to
individual counterparties on a daily basis, monitoring credit limits and
requiring additional collateral where appropriate.
Derivative credit exposures are calculated, aggregated and compared to
established limits by the credit department. Credit reserve requirements are
determined by senior management in conjunction with the Company's continuous
credit monitoring procedures. Historically, reserve requirements arising from
instruments with off-balance-sheet risk have not been material.
Receivables and payables with brokers and dealers, and agreements to resell and
repurchase securities are generally collateralized by cash, U.S. government and
government-agency securities, and letters of credit. The market value of the
initial collateral received is, at a minimum, equal to the contract value.
Additional collateral is requested when considered necessary.
The Company may pledge clients' margined securities as collateral in support of
securities loaned and bank loans as well as to satisfy margin requirements at
clearing organizations. The amounts loaned or pledged are limited to the extent
permitted by applicable margin regulations. Should the counterparty fail to
return the clients' securities, the Company may be required to replace them at
prevailing market prices. At March 31, 1996, the market value of client
securities loaned to other brokers approximated the amounts due or collateral
obtained.
Credit Risk in Client and Other Activities
Client transactions are entered on either a cash or margin basis. In a margin
transaction, the Company extends credit to a client for the purchase of
securities, using the securities purchased and/or other securities in the
client's account as collateral for amounts loaned. Amounts loaned are limited by
margin regulations of the Federal Reserve Board and other regulatory authorities
and are subject to the Company's credit review and daily monitoring procedures.
Market declines could, however, reduce the value of any collateral below the
principal amount loaned, plus accrued interest, before the collateral can be
sold.
Client transactions include positions in commodities and financial futures,
trading liabilities and written options. The risk to the Company's clients in
these transactions can be substantial, principally due to price volatility which
can reduce the clients' ability to meet their obligations. Margin deposit
requirements pertaining to commodity futures and options transactions are
generally lower than those for exchange traded securities. To the extent clients
are unable to meet their commitments to the Company and margin deposits are
insufficient to cover outstanding liabilities, the Company may take market
action and credit losses could be realized.
Trades are recorded on a settlement date basis. Should either the client or
broker fail to perform, the Company may be required to complete the transaction
at prevailing market prices. Trades pending at March 31, 1996 were settled
without adverse effect on the Company's financial statements, taken as a whole.
In the normal course of business, clients may be extended lines of credit
collateralized by mortgages and other real estate interests. These commitments
are generally entered into at variable rates of interest based on LIBOR. At
March 31, 1996, the unused portion of such lines of credit amounted to $534,000.
The majority of the commitments terminate within one year. In meeting the
financing needs of certain of its clients, the Company may also issue standby
letters of credit which are fully collateralized by marginable securities. At
March 31, 1996 and December 31, 1995, the Company had outstanding $22,143 and
$20,322, respectively, of such standby letters of credit.
At March 31, 1996 and December 31, 1995, securities with a fair value of
$472,841 and $441,612, respectively, had been loaned or pledged as collateral
for securities borrowed of approximately equal fair value.
11
<PAGE> 13
Notes to Consolidated Financial Statements (continued)
Concentrations of Credit Risk
Concentrations of credit risk that arise from financial instruments (whether on-
or off-balance-sheet) exist for groups of counterparties when they have similar
economic characteristics that would cause their ability to meet obligations to
be similarly affected by economic, industry or geographic factors. As a major
securities firm, the Company engages in activities with a broad range of
corporations, governments, and institutional and individual investors. The
Company has no significant exposure to any individual counterparty. The Company
seeks to control its credit risk and the potential for risk concentration
through a variety of reporting and control procedures described above.
The Company's most significant industry concentration, which arises within its
normal course of business activities, is financial institutions including banks,
brokers and dealers, mutual funds and insurance companies. At March 31, 1996 and
December 31, 1995, the Company had outstanding resale agreements and securities
borrowed of $10,166,522 and $8,502,505, respectively, with brokers and dealers
and $8,849,003 and $7,032,233 respectively, with commercial banks which were
collateralized by cash and securities of approximately equal fair value.
Note 10: Commitments and Contingencies
At March 31, 1996 and December 31, 1995, the Company was contingently liable
under unsecured letters of credit totaling $123,582 and $114,090, respectively,
which approximates fair value. In addition, at March 31, 1996, certain of the
Company's subsidiaries were contingently liable as issuer of $86,160 of notes
payable to managing general partners of various limited partnerships pursuant to
Internal Revenue Service guidelines. There is no market for these guarantees,
therefore, it is not practicable to estimate their fair value. In the opinion of
management, these contingencies will not have a material adverse effect on the
Company's consolidated financial statements, taken as a whole. The Company also
had commitments to invest up to $8,508 in certain investment funds as of March
31, 1996.
In February 1996, two limited partnerships, in which a subsidiary of the Company
serves as the general partner and certain key employees serve as the limited
partners, entered into two unsecured credit facilities with a commercial bank
under which the bank agreed to make unsecured loans to the limited partnerships
of up to $77,525. The Company entered into an agreement with the bank to
purchase the loans under specific circumstances. At March 31, 1996, $32,882 had
been loaned to the limited partnerships.
In the normal course of business, the Company enters into when-issued
transactions and underwriting commitments. Settlement of these transactions at
March 31, 1996 would not have had a material impact on the Company's
consolidated financial statements, taken as a whole.
The Company has been named as defendant in numerous legal actions in the
ordinary course of business. While the outcome of such matters cannot be
predicted with certainty, in the opinion of management of the Company, after
consultation with various counsel handling such matters, these actions will be
resolved with no material adverse effect on the Company's consolidated financial
statements, taken as a whole.
Note 11: Income Taxes
The reconciliation of income taxes, computed at the statutory federal rates, to
the provision for income taxes recorded is as follows:
Three Months Ended
March 31,
--------------------
1996 1995
---- ----
Tax at statutory federal rates 35.0% 35.0%
State and local income taxes,
net of federal tax benefit 4.3 4.2
Foreign rate differential (0.8) 2.2
Nontaxable dividends & interest (1.0) (2.7)
Other, net (2.5) (3.7)
---- ----
35.0% 35.0%
==== ====
Income taxes paid were $47,742 and $1,243 for the three months ended March 31,
1996 and 1995, respectively.
12
<PAGE> 14
Notes to Consolidated Financial Statements (continued)
Note 12: Earnings Per Common Share
The Company computed its earnings per common share under the modified treasury
stock method in accordance with Accounting Principles Board Opinion No. 15 by
dividing net income, adjusted for preferred stock dividends and any interest
savings, by the weighted average common and common equivalent shares outstanding
during each period presented. Common equivalent shares include common shares
issuable under the Company's stock option and award plans, the conversion of
convertible debentures and preferred stock, and restricted stock outstanding.
13
<PAGE> 15
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
General
The Company's principal business activities are, by their nature, affected by
many factors, including general economic and financial conditions, the level and
volatility of interest rates, currency and security valuations, competitive
conditions, counterparty risk, transactional volume and market liquidity. As a
result, revenues and profitability have been in the past, and are likely to
continue to be, subject to fluctuations reflecting the impact of these factors.
Business conditions were generally good for the securities industry during the
first quarter of 1996 but less uniformly than in 1995. Bond yields increased
sharply in the first quarter of 1996, with the yield on the 30-year Treasury
bond increasing over 70 basis points. Despite the rise in interest rates, stock
prices increased in the first quarter with the S&P 500 and the NASDAQ Composite
rising nearly 5%. The NYSE average daily volume was 428 million shares in the
first quarter of 1996, versus 335 million shares in the first quarter of 1995.
In addition, new equity and debt issues remained strong during the first quarter
of 1996, reflecting a sharp increase from the 1995 first quarter volume.
Results of Operations
Quarter Ended March 31, 1996 compared to Quarter Ended March 31, 1995
The Company's net income for the quarter ended March 31, 1996 was $100.5
million, or $0.96 per primary share ($0.92 per fully diluted share) compared to
net income of $34.3 million, or $0.27 per primary and fully diluted share earned
during the first quarter of 1995. Total revenues were $1,430.0 million, 15.9%
higher than the $1,233.9 million earned during the first quarter of 1995.
Revenues, net of interest expenses increased 32.6% to $962.6 million. These
increases are primarily attributable to increased activity among retail clients,
higher asset levels in money market and managed or wrap accounts, an increased
level of investment banking activity and improved market conditions.
Commission revenues earned during the first quarter of 1996 were $368.2 million,
36.2% higher than the $270.3 million earned during the prior year quarter. This
increase is primarily due to increased sales of listed and over-the-counter
securities, insurance annuities and higher mutual fund commissions. Commissions
on the sale of listed securities increased $48.4 million or 30.6%, mutual fund
commissions increased $34.1 million or 93.4%, commissions from the sale of
over-the-counter securities increased $13.1 million or 68.9% and insurance
annuity commissions increased $5.4 million or 22.8%. These increases were offset
by slightly lower commodity commissions.
Principal transactions revenues increased $82.7 million or 38.7% reflecting
improved results in U.S. Government obligations and corporate equity securities.
These gains were partially offset by lower results in mortgages, corporate debt
and municipal securities.
Investment banking revenues were $81.9 million, as compared to $49.8 million
earned during the first quarter of 1995, reflecting an increased level of
corporate equity and commercial real estate underwriting, and a higher level of
financial advisory activity.
Asset management fees increased 19.8% to $107.7 million, primarily due to higher
revenues earned on wrap and trust accounts. Average assets in wrap and trust
accounts during the first quarter of 1996 were approximately 44% higher than
during the first quarter of 1995. The increase also reflects higher advisory
fees earned on money market accounts. The average assets under management in
money market, institutional and long-term mutual funds were approximately $45.4
billion during the first quarter of 1996 as compared to $39.6 billion during the
first quarter of 1995.
Net interest increased $11.8 million, or 17.8% primarily due to improved
interest spreads earned on fixed income positions and increased margin lending
to clients at improved spreads.
Compensation and benefit related expenses for the quarter ended March 31, 1996
were $567.0 million as compared to $433.0 million during the prior year quarter.
Compensation costs increased primarily due to higher revenue-driven compensation
paid to retail and institutional investment executives and higher
performance-based incentive compensation. Compensation and benefit expenses as a
percentage of net revenues were 58.9% during 1996, as compared to 59.7% during
the comparable period in 1995.
14
<PAGE> 16
Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
All other operating expenses were $241.0 million, as compared to $240.0 million
for the prior year quarter. Increased communications, and brokerage, clearing
and exchange fees reflect higher levels of business activity. Higher occupancy
and equipment depreciation costs are included in office and equipment expenses.
Lower litigation-related costs are reflected in other expenses.
Liquidity and Capital Resources
The primary objectives of the Company's funding policies are to insure ample
liquidity at all times and a strong capital base. These objectives are met by
maximization of self-funded assets, diversification of funding sources,
maintenance of prudent liquidity and capital ratios, and contingency planning.
Liquidity
The Company maintains a liquid balance sheet with the majority of assets
consisting of trading assets, securities borrowed, securities purchased under
agreements to resell, and receivables from clients, brokers and dealers, which
are readily convertible into cash. The nature of the Company's business as a
securities dealer results in carrying significant levels of trading inventories
in order to meet its client and proprietary trading needs. The Company's total
assets may fluctuate from period to period as a result of changes in the level
of trading positions held to facilitate client transactions, the volume of
resale and repurchase transactions, and proprietary trading strategies. These
fluctuations depend significantly upon economic and market conditions, and
transactional volume.
The Company's total assets at March 31, 1996 were $50.4 billion compared to
$45.7 billion at December 31, 1995, reflecting an increase primarily in
securities purchased under agreements to resell. The majority of the Company's
assets are financed by daily operations such as securities sold under agreements
to repurchase, free credit balances in client accounts and securities lending
activity. Additional financing sources are available through bank loans and
commercial paper, committed and uncommitted lines of credit, and the issuance of
long-term senior and subordinated debt.
The Company maintains committed and uncommitted credit facilities from a diverse
group of banks. The Company has an unsecured senior revolving credit agreement
to provide up to $1.2 billion, which expires in December 1996 with provisions
for renewal through December 1997. At March 31, 1996, there were no outstanding
borrowings under this credit facility. Additionally, the Company had more than
$5 billion in uncommitted lines of credit at March 31, 1996.
The Company maintains public shelf registration statements for the issuance of
debt securities with the Securities and Exchange Commission ("SEC"). During the
first quarter of 1996, the Company issued $100.0 million of debt under these
registration statements. At March 31, 1996, the Company had $684.6 million in
debt securities available for issuance.
Capital Resources and Capital Adequacy
The Company's businesses are capital intensive. In addition to a funding policy
which provides for diversification of funding sources and maximization of
liquidity, the Company maintains a strong capital base. At March 31, 1996, the
Company's total capital base, which includes long-term borrowings, redeemable
preferred stock and stockholders' equity, was $4.3 billion, an increase of
$100.0 million from December 31, 1995. The additions to capital primarily
reflect increases in both long-term borrowings and stockholders' equity of $82.7
million and $17.1 million, respectively.
The increase in long-term borrowings reflects the issuance of $100.0 million of
63/4% Notes in January 1996. This increase was offset by the maturity of $18.0
million of Medium-Term Notes. The increase in stockholders' equity is primarily
the result of net income for the three months ended March 31, 1996 of $100.5
million, the issuance of approximately 1,344,000 shares of common stock related
to employee compensation programs for $12.9 million, and net amortization of
restricted stock awards of $10.0 million. These increases were offset by the
repurchase of approximately 4,557,000 shares of common stock for $93.3 million
and dividends accrued and paid of $18.9 million. In April 1996, the Company's
Board of Directors increased the number of common shares authorized to be
repurchased by 7 million shares, bringing the total amount of shares that can be
purchased under this plan to approximately 10 million.
15
<PAGE> 17
Management's Discussion and Analysis of Financial
Condition and Results of Operations (continued)
PWI is subject to the net capital requirements of the SEC, the New York Stock
Exchange, Inc. and the Commodity Futures Trading Commission, which are designed
to measure the financial soundness and liquidity of broker-dealers. PWI has
consistently maintained net capital in excess of the minimum requirements as
imposed by these agencies. In addition, the Company has other banking and
securities subsidiaries, both domestic and foreign, which have also consistently
maintained net regulatory capital in excess of requirements.
Merchant Banking and Highly Leveraged Transactions
In connection with its merchant banking activities, the Company has provided
financing and made investments in companies, some of which are involved in
highly leveraged transactions. Positions taken or commitments made by the
Company may involve credit or market risk from any one issuer or industry.
At March 31, 1996, the Company had investments in merchant banking transactions
which were affected by liquidity, reorganization or restructuring issues
amounting to $58.0 million, net of reserves, compared to $85.5 million, net of
reserves, at December 31, 1995. These investments have not had a material effect
on the Company's results of operations. Included in the portfolio at March 31,
1996 was an investment of $27.7 million in a limited partnership which
specializes in investments in corporate restructurings and special situations.
The Company's activities include underwriting and market-making transactions in
high-yield securities. These securities generally involve greater risks than
investment-grade corporate debt securities because these issuers usually have
high levels of indebtedness and lower credit ratings and are, therefore, more
vulnerable to general economic conditions. At March 31, 1996, the Company held
$252.7 million of high-yield securities, with approximately 73% of such
securities attributable to four issuers. The Company continually monitors its
risk positions associated with high-yield securities and establishes limits with
respect to overall market exposure, industry group and individual issuer. The
Company accounts for these positions at fair value, with unrealized gains and
losses reflected in revenues. For the three months ended March 31, 1996 and
1995, the Company recorded pre-tax trading revenues on transactions in
high-yield securities of $2.7 million and $4.5 million, respectively.
Derivative Financial Instruments
A derivative financial instrument represents a contractual agreement between
counterparties and has value that is derived from changes in the value of some
other underlying asset such as the price of another security, interest rates,
currency exchange rates, specified rates (e.g. LIBOR) or indices (e.g. S&P 500),
or the value referenced in the contract. Derivatives, such as futures, certain
options contracts and structured products (e.g. indexed warrants) are traded on
exchanges, while derivatives such as forward contracts, interest rate swaps,
caps and floors, and other structured products are negotiated in
over-the-counter markets .
In the normal course of business, the Company engages in a variety of derivative
transactions in connection with its proprietary trading activities and asset and
liability management, as well as on behalf of its clients. As a dealer, the
Company regularly makes a market in and trades a variety of securities. The
Company is also engaged in creating structured products which are sold to
clients. In connection with these activities, the Company attempts to reduce its
exposure to market risk by entering into offsetting hedging transactions which
may include derivative financial instruments. The Company also enters into
interest rate swap contracts to hedge its fixed rate borrowings and reduce
overall borrowing costs.
The notional amount of a derivative contract is used to measure the volume of
activity and is not reflected on the Consolidated Statement of Financial
Condition. The Company had off-balance-sheet derivative contracts outstanding
with gross notional amounts of $65.4 billion and $43.0 billion at March 31, 1996
and December 31, 1995, respectively, which included $47.2 billion and $26.7
billion, respectively, related to "to be announced" mortgage securities
requiring forward settlement.
For a more detailed discussion and disclosure on derivative financial
instruments, see Note 8 "Financial Instruments with Off-Balance-Sheet Risk" and
Note 9 "Risk Management" in the Notes to Consolidated Financial Statements.
16
<PAGE> 18
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is involved in a number of proceedings concerning matters arising in
connection with the conduct of its business. Certain actions in which
compensatory damages of $145 million or more appear to be sought are described
in the Company's Form 10-K for the year ended December 31, 1995. The Company is
also involved in numerous proceedings in which compensatory damages of less than
$145 million appear to be sought, or in which punitive or exemplary damages,
together with the apparent compensatory damages alleged, appear to exceed $145
million. The Company has denied, or believes it has legitimate defenses and will
deny, liability in all significant cases pending against it, and intends to
defend actively each such case. During the first quarter of 1996, there were no
new developments in any of the pending cases previously reported in the
Company's Form 10-K for the year ended December 31, 1995.
ITEM 4. Submission of Matters to a Vote of Security Holders
(a) Proxies for the Annual Meeting of Stockholders held on April 30, 1996 were
solicited by the Company pursuant to Regulation 14A of the Securities Act
of 1934, as amended.
(c) Matters voted upon at the Annual Meeting of Stockholders:
(1) The election of five our directors to the Board of Directors to hold
office for a term of three years. There was no solicitation in
opposition of the nominees and all such nominees were elected. There
were no broker non-votes with respect to the election of Directors.
Votes For Votes Withheld
--------- --------------
T.S. Armour 74,057,098 1,140,451
R. Braun 74,156,742 1,040,807
J.J. Grano 74,011,367 1,186,182
J.W. Kinnear 72,805,559 2,391,990
D.B. Marron 74,021,707 1,175,842
(2) The ratification of the selection by the Board of Directors of Ernst &
Young LLP as the Company's independent public accountants for the 1996
fiscal year.
Votes for: 74,707,953
Votes against: 383,528
Abstentions: 106,068
Broker Non-Votes: 0
ITEM 6. Exhibits and Reports on Form 8-K
(a) The Following exhibits are filed herewith:
Exhibit 10.1 - Second Restated and Amended Agreement of Lease dated
May 1, 1996 between 1285 Associates Limited Partnership
and PaineWebber Incorporated relating to property
located at 1285 Avenue of the Americas, New York, New
York.
Exhibit 10.2 - Guarantee dated as of May 1, 1996 between Registrant
and 1285 Associates Limited Partnership relating to the
lease of property located at 1285 Avenue of the
Americas, New York, New York.
Exhibit 11 - Computation of Earnings Per Common Share
Exhibit 12.1 - Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
Exhibit 12.2 - Computation of Ratio of Earnings to Fixed Charges
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
17
<PAGE> 19
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Paine Webber Group Inc.
(Registrant)
Date: May 13, 1996 By: /s/ Regina A. Dolan
------------ ------------------------
Regina A. Dolan
Vice President,
Chief Financial Officer
18
<PAGE> 20
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
----------- -----------
Exhibit 10.1 - Second Restated and Amended Agreement of Lease dated
May 1, 1996 between 1285 Associates Limited Partnership
and PaineWebber Incorporated relating to property
located at 1285 Avenue of the Americas, New York, New
York.
Exhibit 10.2 - Guarantee dated as of May 1, 1996 between Registrant
and 1285 Associates Limited Partnership relating to the
lease of property located at 1285 Avenue of the
Americas, New York, New York.
Exhibit 11 - Computation of Earnings Per Common Share
Exhibit 12.1 - Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends
Exhibit 12.2 - Computation of Ratio of Earnings to Fixed Charges
Exhibit 27 - Financial Data Schedule
<PAGE> 1
EXHIBIT 10.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECOND RESTATED AND AMENDED
AGREEMENT OF LEASE
between
1285 ASSOCIATES LIMITED PARTNERSHIP,
Landlord
and
PAINEWEBBER INCORPORATED,
Tenant
Premises:
THE PAINEWEBBER BUILDING
1285 Avenue of the Americas
New York, New York 10019
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
PAGE
DEFINITIONS..................................................................2
ARTICLE 1 - DEMISE, PREMISES, TERM, RENT....................................23
ARTICLE 2 - USE AND OCCUPANCY...............................................27
ARTICLE 3 - ALTERATIONS.....................................................30
ARTICLE 4 - REPAIRS--FLOOR LOAD.............................................38
ARTICLE 5 - WINDOW CLEANING.................................................41
ARTICLE 6 - REQUIREMENTS OF LAW.............................................42
ARTICLE 7 - SUBORDINATION...................................................44
ARTICLE 8 - RULES AND REGULATIONS AND BUILDING RULES AND STANDARDS..........46
ARTICLE 9 - PROPERTY LOSS OR DAMAGE, REIMBURSEMENT..........................47
ARTICLE 10 - DESTRUCTION--FIRE OR OTHER CAUSE...............................51
ARTICLE 11 - EMINENT DOMAIN.................................................56
ARTICLE 12 - ASSIGNMENT; SUBLETTING; MORTGAGE; ETC..........................59
ARTICLE 13 - ELECTRICITY....................................................84
ARTICLE 14 - ACCESS TO PREMISES.............................................87
ARTICLE 15 - CERTIFICATE OF OCCUPANCY.......................................91
ARTICLE 16 - DEFAULT........................................................93
ARTICLE 17 - REMEDIES AND DAMAGES...........................................95
ARTICLE 18 - FEES AND EXPENSES..............................................97
ARTICLE 19 - NO REPRESENTATIONS BY LANDLORD................................100
ARTICLE 20 - END OF TERM...................................................100
ARTICLE 21 - QUIET ENJOYMENT...............................................101
ARTICLE 22 - DIRECTORY.....................................................102
ARTICLE 23 - NO WAIVER.....................................................102
ARTICLE 24 - WAIVER OF TRIAL BY JURY.......................................103
<PAGE> 3
ARTICLE 25 - INABILITY TO PERFORM..........................................104
ARTICLE 26 - BILLS AND NOTICES.............................................105
ARTICLE 27 - ESCALATION....................................................106
ARTICLE 28 - SERVICES......................................................122
ARTICLE 29 - INTENTIONALLY OMITTED.........................................133
ARTICLE 30 - VAULT SPACE...................................................133
ARTICLE 31 - PARTIES BOUND.................................................133
ARTICLE 32 - CAPTIONS......................................................134
ARTICLE 33 - BUILDING NAME.................................................134
ARTICLE 34 - PARTIES BOUND.................................................136
ARTICLE 35 - BROKER........................................................136
ARTICLE 36 - INDEMNITY.....................................................137
ARTICLE 37 - ADJACENT EXCAVATION--SHORING..................................139
ARTICLE 38 - MISCELLANEOUS.................................................139
ARTICLE 39 - RENT CONTROL..................................................143
ARTICLE 40 - CONCOURSE B SPACE.............................................143
ARTICLE 41 - RENEWAL TERM..................................................145
ARTICLE 42 - EXPANSION SPACE...............................................152
ARTICLE 43 - 2ND FLOOR SPACE/38TH FLOOR SPACE..............................162
ARTICLE 44 - CONTRACTION SPACE.............................................165
ARTICLE 45 - OFFER SPACE...................................................167
ARTICLE 46 - LOBBY RIGHTS..................................................173
ARTICLE 47 - ARBITRATION...................................................176
ARTICLE 48 - ROOF RIGHTS...................................................177
ARTICLE 49 - SHAFT SPACE...................................................182
ii
<PAGE> 4
ARTICLE 50 - HAZARDOUS MATERIALS...........................................183
ARTICLE 51 - GOVERNMENTAL INCENTIVES.......................................185
Schedule A - Rules and Regulations
Schedule B-1 - HVAC Specifications for the Office Space
Schedule B-2 - HVAC Specification for the Storage and Service Space
Schedule C - Cleaning Specifications
Schedule D - Elevator Specifications
Schedule E - Charges
Schedule F - Building Rules and Standards
Schedule G - Omitted
Schedule H - 2nd Floor Space Fixed Rent
Exhibit A - Property Description
Exhibit B-1 - Bank Vault Space
Exhibit B-2 - Concourse A Space
Exhibit B-3 - Concourse B Space
Exhibit B-4 - 18th Floor Space
Exhibit B-5 - Omitted
Exhibit B-6 - Partial 8th Floor Space
Exhibit B-7 - Omitted
Exhibit B-8 - 16th Floor Setback Space
Exhibit B-9 - Subconcourse Space
Exhibit B-10 - 39th Floor Space
Exhibit B-11 - 39th Floor Storage Space
Exhibit B-12 - 18th Floor Remainder Space
Exhibit B-13 - 2nd Floor Space
Exhibit C - Omitted
Exhibit D - Rentable Square Footage
Exhibit E - Approved Contractors, Subcontractors and Mechanics
Exhibit F-1 - Form of Mortgagee Nondisturbance Agreement
Exhibit F-2 - Form of Lessor Nondisturbance Agreement
Exhibit G - Schedule for Fixed Rent Calculations
Exhibit H - Omitted
Exhibit I - Omitted
Exhibit J - Certificate of Occupancy
Exhibit K - Form of Operating Statement
Exhibit L - Omitted
Exhibit M - Landlord's Contribution Procedures
Exhibit N - Roof Space
Exhibit O - Form of Subtenant Nondisturbance Agreement
Exhibit P - Omitted
Exhibit Q - Chilled Water System Space
Exhibit R - Designated Core and Shaft Space
iii
<PAGE> 5
Exhibit S - Omitted
Exhibit T - Omitted
Exhibit U - Omitted
Exhibit V - Art Areas/Tenant's Lobby Desk Area/Closed-Off Lobby Areas
Exhibit W - Omitted
Exhibit X - Omitted
Exhibit Y - Omitted
Exhibit Z - Supplemental Rent Credit
Exhibit AA - Option Provisions Affecting the Expansion Space and the 2nd
Floor Space
iv
<PAGE> 6
THIS SECOND RESTATED AND AMENDED AGREEMENT OF LEASE, made as of the
1st day of May, 1996, between 1285 ASSOCIATES, LIMITED PARTNERSHIP, a New York
limited partnership, having an office c/o Equitable Real Estate Investment
Management, Inc., 101 Park Avenue, New York, New York 10178 ("Landlord"), and
PAINEWEBBER INCORPORATED, a Delaware corporation, having an office at 1285
Avenue of the Americas, New York, New York 10019 ("Tenant").
WHEREAS, The Equitable Life Assurance Society of the United States
("Equitable"), the predecessor-in-interest to Landlord, and Tenant entered into
a certain lease, dated as of November 22, 1983 (the "Original Lease"), pursuant
to which Landlord leased to Tenant certain premises in the Building (as
hereinafter defined), all as more particularly described in the Original Lease;
and
WHEREAS, Equitable and Tenant entered into that certain Restated and
Amended Agreement of Lease, dated as of January 1, 1989 (the "First Restated
Lease"), pursuant to which Landlord and Tenant amended and restated the Original
Lease, as theretofore amended, in its entirety, all as more particularly
described in the First Restated Lease; and
WHEREAS, pursuant to that certain Assignment and Assumption of Lease
dated October 26, 1989 between The Equitable Life Assurance Society of the
United States, as assignor and Landlord, as assignee, Landlord succeeded to the
interest of Equitable; and
WHEREAS, the First Restated Lease was amended by Landlord and Tenant
pursuant to (i) that certain Amendment of Lease, dated as of May 30, 1990 (the
"First Amendment"), (ii) that certain Second Amendment to Lease, dated as of May
__, 1992 (the "Second Amendment"), and (iii) that certain 18th Floor Additional
Space Agreement (Third Lease Amendment), dated as of January 10, 1995 (the
"Third Amendment;" the First Amendment, the Second Amendment and the Third
Amendment are collectively referred to herein as the "Lease Amendments"); and
WHEREAS, (i) Equitable and Tenant entered into that certain license
agreement, dated as of June 9, 1986 (the "Roof License"), (ii) Equitable and
Tenant entered into that certain letter agreement, dated as of January 1, 1989
(the "Kiosk Letter"), (iii) Landlord and Tenant entered into that certain letter
agreement, dated as of January 29, 1991 (the "Dining Room Letter"), and (iv)
Landlord's managing agent delivered to Tenant a certain letter dated August 16,
1993 (the "Alterations Letter;" the Roof License, the Kiosk Letter, the Dining
Room Letter and the Alterations Letter are collectively referred to herein as
the "Supplemental Agreements"); and
<PAGE> 7
WHEREAS, Landlord and Tenant mutually desire to restate, amend and
supersede the First Restated Lease, as modified by the Lease Amendments, and the
Supplemental Agreements in their entirety.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
agreements herein contained, hereby restate and amend the First Restated Lease,
as modified by the Lease Amendments, and the Supplemental Agreements in their
entirety upon the agreements, terms, covenants and conditions hereinafter set
forth; and the parties hereby agree to forever waive and release each other from
any and all claims and liabilities which accrued or may accrue under the First
Restated Lease as modified by the Lease Amendments and Supplemental Agreements
(except with respect to the obligations of (i) Landlord to refund all (x) fixed
rental payments made by Tenant pursuant to Article 1 of the First Restated Lease
(as modified by the Lease Amendments) for periods from and after May 1, 1996,
and (y) overpayments made by Tenant pursuant to Article 27 of the First Restated
Lease (as modified by the Lease Amendments) on account of reductions in Taxes
for the 1995 Operating Year (and all prior Operating Years) as set forth in the
First Restated Lease (as modified by the Lease Amendments), (ii) Tenant to pay
Landlord amounts owed Landlord on account of services, utilities and supplies
furnished to Tenant during the period commencing January 1, 1995 and ending
April 30, 1996 as set forth in the First Restated Lease (as modified by the
Lease Amendments), and (iii) either party under Article 27 of the First Restated
Lease (as modified by the Lease Amendments) to pay or refund amounts on account
of adjustments required to be made with respect to any differences between
actual and estimated Operating Expenses for January, February, March and April,
1996).
W I T N E S S E T H :
The parties hereto, for themselves, their legal representatives,
successors and assigns, hereby covenant as follows.
DEFINITIONS
For the purpose of this Lease and all agreements supplemental
hereto, the following terms shall have the meanings specified herein:
"AAA" shall have the meaning set forth in Section 41.3 hereof.
"Actual Amount" shall have the meaning set forth in Section 1.2 hereof.
"Adjusted Expenses" shall have the meaning set forth in Section 1.2
hereof.
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"Affiliate" shall mean, with respect to a corporation or other
entity, a corporation or other entity which shall (1) control, (2) be under the
control of, or (3) be under common control with, such corporation or other
entity. As used herein, the term "control" shall have the meaning ascribed to it
in the definition of Related Entity.
"Alteration Fee" shall have the meaning set forth in Section 3.2
hereof.
"Alterations" shall mean alterations, installations, improvements,
additions or other physical changes (other than decorations such as painting,
carpeting, wall coverings and the like) made by Tenant in or about the Premises.
"Alterations Letter" shall have the meaning set forth in the fifth
Whereas clause hereof.
"Anticipated Offer Space Commencement Date" shall have the meaning
set forth in Section 45.1 hereof.
"Applicable Rate" shall mean the lesser of (x) two percentage points
(2%) per annum above the then current Base Rate, and (y) the maximum rate
permitted by applicable law.
"Art Areas" shall have the meaning set forth in Section 46.2 hereof.
"Assessed Valuation" shall have the meaning set forth in Section
27.1(A) hereof.
"Assignment Proceeds" shall have the meaning set forth in Section
12.9 hereof.
"Assignment Profit" shall have the meaning set forth in Section 12.2
hereof.
"Assignment Statement" shall have the meaning set forth in Section
12.8(B) hereof.
"Bank Vault Space" shall mean the portion of the subconcourse of the
Building indicated by the hatching on the floor plan annexed hereto as Exhibit
B-1.
"Bankruptcy Code" shall mean 11 U.S.C. ss. 101 et seq.
"Base Building HVAC" shall have the meaning set forth in Section
13.1 hereof.
"Base Capacity" shall have the meaning set forth in Section 13.1
hereof.
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<PAGE> 9
"Base Index" shall mean the Consumer Price Index in effect for the
month of January, 1997, for all purposes under this Lease except with respect to
Article 28 hereof, in which event Base Index shall mean the consumer price index
in effect for the month in which this Lease commences.
"Base Operating Expenses" shall have the meaning set forth in
Section 27.1(B) hereof.
"Base Operating Year" shall have the meaning set forth in Section
27.1(C) hereof.
"Base Rate" shall mean the rate of interest publicly announced from
time to time by Citibank, N.A., or its successor, as its "base rate" (or such
other term as may be used by Citibank, N.A., from time to time, for the rate
presently referred to as its "base rate").
"Base Taxes" shall have the meaning set forth in Section 27.1(D)
hereof.
"BBDO" shall mean BBDO Worldwide Inc.
"BBDO Space" shall have the meaning set forth in Section 43.1
hereof.
"Block" shall have the meaning set forth in Section 12.6(G) hereof.
"Brokers" shall have the meaning set forth in Section 35.1 hereof.
"Building" shall mean all the buildings, equipment and other
improvements and appurtenances of every kind and description now located or
hereafter erected, constructed or placed upon the land described on Exhibit A
attached hereto and made a part hereof and any and all alterations and
replacements thereof, additions thereto and substitutions therefor, known as,
and subject to Article 33 hereof, to be known as, The PaineWebber Building, and
by the street address 1285 Avenue of the Americas, New York, New York.
"Building common areas" shall have the meaning set forth in Section
1.3 hereof.
"Building Rules and Standards" shall mean Landlord's "Building Rules
and Standards" annexed hereto and made a part hereof as Schedule F, as the same
may be reasonably amended by Landlord from time to time on reasonable notice by
Landlord to Tenant, subject to Tenant's rights to dispute the reasonableness
thereof (giving due regard to Tenant's rights and obligations under this Lease)
as provided in Article 8 hereof. Notwithstanding anything herein contained to
the contrary, any amendment to the Building Rules and Standards by Landlord
prior to the completion of the Initial Alterations which adversely affects
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<PAGE> 10
Tenant's performance of the Initial Alterations (unless such amendment is
required by Requirements or becomes necessary for the safe operation of the
Building), shall not be applicable to Tenant's performance or completion of the
Initial Alterations.
"Building Standard" shall have the meaning set forth in Section 2.5
hereof.
"Building Systems" shall mean, to the extent in existence in or
serving the Building, the mechanical, electrical (including, without limitation,
the buss duct distribution equipment up to and including the transformers which
are part of the original Building installation, or which replaced the original
Building installation), sanitary, heating, steam, air conditioning, ventilating,
elevator, escalator, plumbing, sprinkler, emergency generation, Class E and
life-safety (to the point of connection) and other service systems of the
Building (excluding the distribution portions of such systems within the
Premises or installed by Tenant).
"Business Days" shall mean all days excluding Saturdays, Sundays,
and days observed as the holiday with respect to New Year's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas, provided that with
respect to the furnishing of cleaning services, "Business Days" shall mean all
days excluding Saturdays, Sundays and all days observed by the applicable labor
union representing the employees of the Building's Cleaning Contractor (as
hereinafter defined), as holidays.
"Business Hours" shall have the meaning set forth in Section 28.1(B)
hereof.
"Casualty Rent Commencement Date" shall have the meaning set forth
in Section 10.1 hereof.
"Chilled Water System" shall have the meaning set forth in Section
28.2(C) hereof.
"Cleaning Contractor" shall mean the Building's then cleaning
contractor.
"Cleaning Contractor Default" shall have the meaning set forth in
Section 28.4(B) hereof
"Closed-Off Lobby Areas" shall have the meaning set forth in Section
46.4 hereof.
"Communications Equipment" shall have the meaning set forth in
Section 48.1 hereof.
"Compass" shall mean Compass Management and Leasing, Inc.
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<PAGE> 11
"Concourse A Space" shall mean that portion of the concourse floor
of the Building indicated by hatching on the floor plan annexed hereto as
Exhibit B-2.
"Concourse B Space" shall mean that portion of the concourse floor
of the Building indicated by hatching on the floor plan annexed hereto as
Exhibit B-3.
"Concourse B Space Commencement Date" shall be the date of this
Lease.
"Condenser Water System" shall mean the existing condenser water
system installed, maintained and operated by Tenant to exclusively serve
Tenant's supplemental HVAC units in the Premises that is located in the 15th
Floor Mechanical Space and the 16th Floor Setback Space (including, without
limitation, the cooling tower, pumps, piping, electrical facilities and wiring
and all other existing equipment necessary to operate and maintain such
condenser water system and all equipment necessary to hook-up such condenser
water system to Tenant's supplemental HVAC units), as such condenser water
system may be replaced, supplemented and/or expanded in accordance with the
terms of this Lease during the Term in accordance with the provisions of this
Lease, including, without limitation, Articles 3 and 6 hereof.
"Consumer Price Index" shall mean the Consumer Price Index for All
Urban Consumers published by the Bureau of Labor Statistics of the United States
Department of Labor, New York, N.Y. - Northeastern N.J. Area, All Items
(1982-84=100), or any successor index thereto, appropriately adjusted. In the
event that the Consumer Price Index is converted to a different standard
reference base or otherwise revised, the determination of adjustments provided
for herein shall be made with the use of such conversion factor, formula or
table for converting the Consumer Price Index as may be published by the Bureau
of Labor Statistics or, if said Bureau shall not publish the same, then with the
use of such conversion factor, formula or table as may be published by
Prentice-Hall, Inc., or any other nationally recognized publisher of similar
statistical information. If the Consumer Price Index ceases to be published, and
there is no successor thereto, such other index as Landlord and Tenant shall
agree upon in writing shall be substituted for the Consumer Price Index. If
Landlord and Tenant are unable to agree as to such substituted index, such
matter shall be submitted for arbitration in accordance with Article 47.
"Contraction Exercise Date" shall have the meaning set forth in
Section 44.1 hereof.
"Contraction Space" shall have the meaning set forth in Section 44.1
hereof.
"Contraction Space Notice" shall have the meaning set forth in
Section 44.1 hereof.
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<PAGE> 12
"Contraction Space Option" shall have the meaning set forth in
Section 44.1 hereof.
"Contraction Space Termination Date" shall have the meaning set
forth in Section 44.2 hereof.
"Control" or "control" shall have the meaning set forth in Section
12.4(A) hereof.
"Controlled Percentage" shall have the meaning set forth in Section
12.4(A) hereof.
"Current Year" shall have the meaning set forth in Section 27.4(D)
hereof.
"Cushman" shall mean Cushman Realty Corporation.
"Deemed Amount" shall have the meaning set forth in Section 27.7
hereof.
"Deficiency" shall have the meaning set forth in Section 17.2(A)
hereof.
"Definitive Agreement" shall have the meaning set forth in Section
41.1 hereof.
"Delay Notice" shall have the meaning set forth in the definition of
"Landlord Delay."
"Dining Facilities" shall have the meaning set forth in Section 2.3
hereof.
"Dining Room Letter" shall have the meaning set forth in the fifth
Whereas clause hereof.
"18th Floor Remainder Space" shall mean the portion of the
eighteenth (18th) floor of the Building indicated by hatching on the floor plan
annexed hereto as Exhibit B-12.
"18th Floor Space" shall mean the portion of the eighteenth (18th)
floor of the Building indicated by hatching on the floor plan annexed hereto as
Exhibit B-4.
"8th Floor Space" shall mean the entire rentable portion of the
eighth (8th) floor of the Building.
"Electricity Additional Rent" shall have the meaning set forth in
Section 13.2(A) hereof.
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<PAGE> 13
"11th Floor Space" shall mean the entire rentable portion of the
eleventh (11th) floor of the Building.
"Environmental Laws" shall mean all applicable federal, state and
local environmental, health or safety statutes, laws, rules, ordinances and
codes (whether now existing or hereafter enacted or promulgated) of all
Governmental Authorities and all judicial and administrative and regulatory
decrees, judgments and orders that are applicable to the Real Property, relating
to injury to, or the protection of, real or personal property or human health or
the environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq., the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. ss. 11001
et seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq.,
the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the Clean Air Act,
42 U.S.C. ss. 7401 et seq., the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the
Safe Water Drinking Act, 42 U.S.C. ss. 300f et seq., the Occupational Safety and
Health Act, 29 U.S.C. ss. 641 et seq., Local Laws 76 and 80 of The City of New
York and the New York Industrial Waste Management Act, ECL ss. 27-0900 et seq.
"Equitable " shall have the meaning set forth in Recitals hereof.
"Ernst & Young" shall mean Ernst & Young U.S. LLP.
"Escalation Rent" shall mean either individually or collectively, as
the case may be, the Tax Payment and the Operating Payment.
"Estoppel Certificate" shall have the meaning set forth in Section
7.5 hereof.
"Event of Default" shall have the meaning set forth in Section 16.1
hereof.
"Excusable Interruption" shall have the meaning set forth in Section
14.3(A) hereof.
"Expansion Cancellation Date" shall have the meaning set forth in
Section 42.4(A) hereof.
"Expansion Expiration Date(s)" shall have the meaning set forth in
Section 42.1 hereof.
"Expansion Notice" shall have the meaning set forth in Section 42.2
hereof.
"Expansion Option" shall have the meaning set forth in Section
42.3(E) hereof.
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<PAGE> 14
"Expansion Rental Period" shall have the meaning set forth in
Section 42.1 hereof.
"Expansion Space" shall have the meaning set forth in Section 42.1
hereof.
"Expansion Space Commencement Date" shall have the meaning set forth
in Section 42.1 hereof.
"Expiration Date" shall mean the Fixed Expiration Date or such
earlier or later date on which the Term shall sooner or later end pursuant to
any of the terms, conditions or covenants of this Lease or pursuant to law.
"Fair Market Rent" shall have the meaning set forth in Article 12
hereof for purposes of said Article 12, Article 41 hereof for purposes of said
Article 41, the meaning set forth in Article 42 hereof for purposes of said
Article 42 and the meaning set forth in Article 45 hereof for the purposes of
said Article 45.
"fair market rental value" shall have the meaning set forth in
Article 41 hereof for purposes of said Article 41, the meaning set forth in
Article 42 hereof for purposes of said Article 42 and the meaning set forth in
Article 45 hereof for the purposes of said Article 45.
"15th Floor Mechanical Space" shall mean the portion of the
fifteenth (15th) floor of the Building indicated by hatching on the floor plan
annexed hereto as Exhibit Q.
"15th Floor Space" shall mean the entire rentable portion of the
fifteenth (15th) floor of the Building.
"15 Month Date" shall have the meaning set forth in Section 10.3(A)
hereof.
"First Amendment" shall have the meaning set forth in the fourth
Whereas clause hereof.
"First Exercise Date" shall have the meaning set forth in Section
41.1 hereof.
"First 5-Year Renewal Term" shall have the meaning set forth in
Section 41.1 hereof.
"First Restated Lease" shall have the meaning set forth in the
second Whereas clause hereof.
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<PAGE> 15
"5-Year Renewal Terms" shall have the meaning set forth in Section
41.1 hereof.
"Fixed Expiration Date" shall mean December 31, 2015.
"Fixed Rent" shall have the meaning set forth in Section 1.1 hereof.
"14th Floor Space" shall mean the entire rentable portion of the
fourteenth (14th) floor of the Building.
"Free Sublet Space" shall mean, at any one time, up to 100,000 (in
the aggregate) rentable square feet of the Premises, as to which Tenant is
entitled to certain rights more particularly described in Article 12 hereof.
Notwithstanding the foregoing, if Tenant sublets space which constitutes Free
Sublet Space, then the number of rentable square feet comprising such space
shall once again constitute Free Sublet Space upon the subleasing by Tenant of
the same or other space comprised of the same or less rentable square feet
following the expiration or termination of such prior sublease.
"Gap Fraction" shall have the meaning set forth in Section 27.7
hereof.
"Gap Period" shall have the meaning set forth in Section 27.2(A)
hereof.
"Goldman" shall mean Goldman, Sachs & Co.
"Governmental Authorities" shall mean any agency, department,
commission, board, bureau, instrumentality or political subdivision of the
United States of America, the State of New York or The City of New York, now
existing or hereafter created, having jurisdiction over the Real Property or any
portion thereof.
"Government Package" shall have the meaning set forth in Article 51
hereof.
"Hazardous Materials" shall mean any pollutants, contaminants, toxic
or hazardous or extremely hazardous substances, material, wastes, constituents,
forces, agents or chemicals (including, without limitation, petroleum or any
by-products or fractions thereof, any form of natural gas, lead, refrigerants,
asbestos and asbestos-containing materials, polychlorinated biphenyls, radon,
and other radioactive elements, infectious, carcinogenic, mutagenic, or
etiologic agents, pesticides, defoliants, explosives, flammables, corrosives and
urea formaldehyde foam insulation) that are regulated by or may form the basis
of liability under, any Environmental Laws, but expressly excluding materials
and supplies used in connection with the Operation of the Property and the
Premises (provided the same are used and stored in commercially reasonable
quantities in accordance with all applicable Environmental Laws).
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<PAGE> 16
"Holdover Amount" shall have the meaning set forth in Section 20.2
hereof.
"Holdover Costs" shall mean all out-of-pocket costs and expenses
incurred by Landlord in connection with the commencement and prosecution of
holdover or other similar proceedings and/or the collection of holdover rent
(including, without limitation, reasonable attorneys' fees and disbursements).
"HVAC" shall mean heat, ventilation and air-conditioning.
"HVAC System" shall mean the Building Systems providing HVAC.
"Indemnified Liabilities" shall have the meaning set forth in
Section 36.1 hereof.
"indemnified party and indemnifying party" shall have the meaning
set forth in Section 36.2 hereof.
"Independent Party" shall have the meaning set forth in Section
10.3(A) hereof.
"Initial Alterations" shall mean the Alterations to be made by
Tenant to initially renovate and refurbish the Premises after the date hereof
for Tenant's continued occupancy (it being acknowledged that the current
schedule for such Alterations contemplates a 3 year construction period).
"Initial Estimate" shall have the meaning set forth in Section
10.3(A) hereof.
"Kiosk Letter" shall have the meaning set forth in the fifth Whereas
clause hereof.
"Landlord", on the date as of which this Lease is made, shall mean
1285 Associates, Limited Partnership, a New York limited partnership having an
office c/o Equitable Real Estate Investment Management, Inc., 101 Park Avenue,
New York, New York 10178, but thereafter "Landlord" shall mean only the fee
owner of the Real Property or, if there shall exist a Superior Lease, the tenant
thereunder.
"Landlord Default" shall have the meaning set forth in Section 18.4
hereof.
"Landlord Delay" shall mean any actual delay which Tenant encounters
in the completion of the Initial Alterations in or with respect to the Premises
(or applicable portion thereof) or Alterations performed in Expansion Space,
Offer Space, 2nd Floor Space or Concourse B Space in connection with Tenant's
initial occupancy thereof or in its rearrangement or restacking of the Premises
in connection with the Initial Alterations,
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<PAGE> 17
which is caused by any act or omission of Landlord, its agents, servants,
employees or contractors unless such act or omission does not constitute a
breach of the terms of this Lease on Landlord's part to observe or perform and
such act or omission is consistent with the operation of a comparable
first-class office building and the equitable treatment of tenants therein, by
a reasonably prudent owner (excluding delays caused by Landlord's Violations
which shall be governed by Section 3.5); provided that no such act or omission
or condition shall be deemed a "Landlord Delay" until Tenant shall have
delivered to Landlord written notice (the "Delay Notice") (promptly after
Tenant's knowledge of the act or omission or condition in question) of any such
act, omission or condition that would cause or has caused such delay and a
reasonably detailed description of the delay being experienced by Tenant and
Landlord fails to remedy such delay within one (1) Business Day after notice
therefor from Tenant (such one (1) Business Day being subject to extensions due
to delays caused by the acts of Tenant, Tenant's Indemnitees or Permitted
Occupants). Notwithstanding the foregoing, Landlord's cure period shall not
apply in the event a Landlord Delay is caused by a Landlord Default or any
negligent act or omission of Landlord or its agents, servants, employees or
contractors, and Landlord shall only be entitled to such one (1) Business Day
cure period once in any sixty (60) day period. In the event of such Landlord
Delay, the delay shall be deemed to have commenced upon the expiration of the
one (1) Business Day cure period, if applicable, otherwise the date of receipt
by Landlord of the Delay Notice. Notwithstanding anything contained in this
Lease to the contrary, a Delay Notice may be sent by facsimile, provided
receipt is confirmed.
"Landlord's Appraiser" shall have the meaning set forth in Section
41.3(B) hereof.
"Landlord's Contribution" shall have the meaning set forth in
Exhibit M hereof.
"Landlord's Determination" shall have the meaning set forth in
Section 41.3(B) hereof.
"Landlord's Expansion Space Contribution" shall have the meaning set
forth in Section 42.3(A) hereof.
"Landlord's Indemnitees" shall mean Landlord, the Persons comprising
Landlord, and its and their respective shareholders, officers, directors,
employees, agents (including, without limitation, leasing and managing agents),
contractors, Mortgagees and Superior Lessors the names and addresses of which
Landlord shall have provided to Tenant.
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<PAGE> 18
"Landlord's 19th Floor Contribution" shall have the meaning set
forth in Section 42.3(A) hereof.
"Landlord's Notice" shall have the meaning set forth in Section
41.3(B) hereof.
"Landlord's 20th Floor Contribution" shall have the meaning set
forth in Section 42.3(A) hereof.
"Landlord's Violations" shall have the meaning set forth in Section
3.5 hereof.
"Lease Amendments" shall have the meaning set forth in the fourth
Whereas clause hereof.
"Lessor" shall mean the lessor under any Superior Lease.
"Lobby Kiosk" shall have the meaning set forth in Section 46.1
hereof.
"Long Lead Work" shall mean any item of a repair to Tenant's
Alterations to be made by Landlord pursuant to Section 10.1 hereof which is not
a stock item and must be specially manufactured, fabricated or installed
(thereby creating a substantial risk that there will be a delay in its
manufacture, fabrication, delivery or installation of such item) so that in the
judgment of the Independent Party (as reflected in the Initial Estimate) the
item in question cannot be completed when the standard items are completed even
though the item of Long Lead Work in question is (1) ordered together with the
other items required for the repair and (2) installed or performed (after the
manufacture or fabrication thereof) in the order and sequence that such Long
Lead Work and other items of repair are normally installed or performed in
accordance with good construction practice, provided that non-completion of the
same does not interfere with Tenant's use of the Premises or the performance by
Tenant of any Specialty Alterations therein. In addition, "Long Lead Work" shall
include any standard item which in accordance with good construction practice
should be completed after the completion of any item of work in the nature of
the items described in the immediately preceding sentence, provided that
non-completion of the same does not interfere with Tenant's use of the Premises
or the performance by Tenant of any Specialty Alterations therein.
"Major Business Event" shall have the meaning set forth in Section
45.5 hereof.
"Material Alteration" shall have the meaning set forth in Section
3.1 hereof.
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"Materially Revised Estimate" shall have the meaning set forth in
Section 10.3(A) hereof.
"Monthly Rent" shall have the meaning set forth in Section 1.1
hereof.
"Mortgage(s)" shall mean every trust indenture and mortgage which
may hereafter affect the Real Property, the Building or any Superior Lease and
the leasehold interest created thereby, and all renewals, extensions,
supplements, amendments, modifications, consolidations and replacements thereof
or thereto and substitutions therefor.
"Mortgagee" shall mean the holder of any Mortgage.
"Mutual Determination" shall have the meaning set forth in Section
41.3(B) hereof.
"19th Floor Space" shall mean the entire rentable portion of the
nineteenth (19th) floor of the Building.
"9th Floor Space" shall mean the entire rentable portion of the
ninth (9th) floor of the Building.
"Non-Control Entity" shall have the meaning set forth in Section
12.4(A) hereof.
"Nondisturbance Agreement" shall have the meaning set forth in
Section 7.1(A) hereof.
"Non-Material Alteration" shall have the meaning set forth in
Section 3.1 hereof.
"Offer Cancellation Date" shall have the meaning set forth in
Section 45.3 hereof.
"Offer Excess" shall have the meaning set forth in Section 45.3
hereof.
"Offer Space" shall have the meaning set forth in Section 45.1
hereof.
"Offer Space Commencement Date" shall have the meaning set forth in
Section 45.1.
"Offer Space Holdover Amount" shall have the meaning set forth in
Section 45.3 hereof.
"Offer Space Notice" shall have the meaning set forth in Section
45.1.
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"Offer Space Rental Period" shall have the meaning set forth in
Section 45.1.
"Office(s)" shall mean any above-grade premises other than premises
used as a store or stores for the sale or display, at any time, of goods, wares
or merchandise, of any kind (it being understood that stocks, bonds, securities
or any other investment or banking products shall not be deemed to be goods,
wares or merchandise), or as a restaurant, shop, booth, bootblack or other
stand, barber shop, or for other similar purposes or for manufacturing.
"Office Space" shall mean the 9th Floor Space, the 10th Floor Space,
the 11th Floor Space, the 12th Floor Space, the 13th Floor Space, the 14th Floor
Space, the 15th Floor Space, the 16th Floor Space, the 17th Floor Space, the
18th Floor Space, the 38th Floor Space and the 39th Floor Space, as same may be
increased or decreased pursuant to the terms hereof.
"Operating Expenses" shall have the meaning set forth in Section
27.1(E) hereof.
"Operating Payment" shall have the meaning set forth in Section
1.1(F) hereof.
"Operating Statement" shall have the meaning set forth in Section
27.1(F) hereof.
"Operating Year" shall have the meaning set forth in Section 27.1(G)
hereof.
"Operation of the Property" shall mean the operation, maintenance,
repair, replacement, protection, improvement and management of the Real Property
or the Building and the curbs, sidewalks, plazas and areas adjacent thereto.
"Original Lease" shall have the meaning set forth in the first
Whereas clause hereof.
"Overtime Periods" shall have the meaning set forth in Section
28.3(A) hereof.
"Parties" shall have the meaning set forth in Section 38.2 hereof.
"Partner" or "partner" shall mean any partner of Tenant for as long
as Tenant shall be a partnership, and any shareholder of Tenant if Tenant shall
become a professional corporation, or any member of Tenant if Tenant shall
become a limited liability company, any employee of a professional corporation
or limited liability company who is a shareholder or a member of such
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<PAGE> 21
professional corporation or limited liability company, as the case may be, and
which professional corporation or limited liability company is a partner or
shareholder or member, as the case may be, of Tenant.
"Paul Weiss" shall mean Paul, Weiss, Rifkind, Wharton & Garrison.
"Permitted Function" shall mean, in connection with any use of the
Building or the Premises, any corporate, business, promotional, charitable or
community (and not exclusively social) function or event in accordance with the
terms of this Lease.
"Permitted Occupant" or "Permitted Occupants" shall have the meaning
set forth in Section 12.13 hereof.
"Person(s) or person(s)" shall mean any natural person or persons, a
partnership, a corporation and any other form of business or legal association
or entity.
"Premises" shall mean (i) the Office Space, subject to Tenant's
early cancellation option with respect to the Contraction Space pursuant to
Article 44, (ii) the Storage and Service Space, (iii) on the Concourse B Space
Commencement Date, the Concourse B Space, and (iv) the 2nd Floor Space, as of
the 2nd Floor Commencement Date, (y) any or all of the Expansion Space, as of
the applicable Expansion Space Commencement Date, and (z) any or all of the
Offer Space, as of the applicable Offer Space Commencement Date, subject to
change as expressly provided herein and subject further to all other terms and
conditions of this Lease.
"Prevailing Rate" shall have the meaning set forth in Section
12.6(A) hereof.
"Qualified Building Service Interruption" shall have the meaning set
forth in Section 14.3(A) hereof.
"Real Property" shall mean the Building together with the plot of
land, described in Exhibit A annexed hereto, upon which it stands.
"Recapture Assignment Profit" shall have the meaning set forth in
Section 12.7(B) hereof.
"Recapture Rent" shall have the meaning set forth in Section 12.6(C)
hereof.
"Recapture Right" shall have the meaning set forth in Section
12.6(B) hereof.
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"Recapture Space" shall have the meaning set forth in Section
12.6(B) hereof.
"Recapture Sublease" shall have the meaning set forth in Section
12.6(C) hereof.
"Recapture Sublease Profit" shall have the meaning set forth in
Section 12.7(B) hereof.
"Recapture Sublet Right" shall have the meaning set forth in Section
12.6(B) hereof.
"Recapture Termination Right" shall have the meaning set forth in
Section 12.6(B) hereof.
"Related Entity" shall have the meaning set forth in Section 12.4(A)
hereof.
"Renewal Notice" shall have the meaning set forth in Section 41.1
hereof.
"Renewal Option" shall have the meaning set forth in Section 41.1
hereof.
"Renewal Terms" shall have the meaning set forth in Section 41.1
hereof.
"Rent Abatement" shall have the meaning set forth in Section 1.2
hereof.
"Rentable Square Foot" for each floor of the Premises shall be as
shown on Exhibit D attached hereto and made a part hereof (it being agreed that
the rentable square footage of any partial floor demised to Tenant hereunder
shall equal an equitable pro-ration of the total rentable square footage for
such floor set forth on Exhibit D hereto and there shall be no inequitable
allocation of the square footage of any common or public areas on any such
floor).
"Rental" shall mean and be deemed to include Fixed Rent, Escalation
Rent, all additional rent and any other sums payable by Tenant hereunder.
"Rent Notice" shall have the meaning set forth in Section 41.3(B)
hereof.
"Rent Per Square Foot" shall have the meaning set forth in Section
12.7(B) hereof.
"Requirements" shall mean all present and future laws, rules,
orders, ordinances, regulations, statutes, requirements, codes and executive
orders, extraordinary as well as ordinary, of all Governmental Authorities now
existing or hereafter created, and of any and all of their departments and
bureaus, and of any applicable fire rating
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bureau, or other body exercising similar functions, affecting the Real Property
or any portion thereof, or any street, avenue or sidewalk comprising a part of
or in front thereof or any vault in or under the same, or requiring removal of
any encroachment, or affecting the Operation of the Property or the use or
occupation of the Real Property or any portion thereof.
"Revised Estimate" shall have the meaning set forth in Section
10.3(A) hereof.
"Roof License" shall have the meaning set forth in the fifth Whereas
clause hereof.
"Roof Space" shall have the meaning set forth in Section 48.1
hereof.
"Rules and Regulations" shall mean the rules and regulations annexed
hereto as Schedule A, and such other and further reasonable rules and
regulations as Landlord or Landlord's agents may from time to time adopt on such
notice to be given as Landlord may elect, subject to Tenant's right to dispute
the reasonableness thereof as provided in Article 8 hereof.
"Second Amendment" shall have the meaning set forth in the fourth
Whereas clause hereof.
"Second Exercise Date" shall have the meaning set forth in Section
41.1 hereof.
"Second 5-Year Renewal Term" shall have the meaning set forth in
Section 41.1 hereof.
"2nd Floor Commencement Date" shall have the meaning set forth in
Section 43.1 hereof.
"2nd Floor Space" shall mean the portion of the second (2nd) floor
of the Building indicated by hatching on the floor plan annexed hereto as
Exhibit B-13.
"Setback Charge" shall have the meaning set forth in Section 1.1(F)
hereof.
"17th Floor Space" shall mean the entire rentable portion of the
seventeenth (17th) floor of the Building.
"16th Floor Setback Space" shall mean the portion of the sixteenth
(16th) floor setback of the Building indicated by hatching on the floor plan
annexed hereto as Exhibit B-8 (as same may be expanded pursuant to the terms of
this Lease).
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"16th Floor Space" shall mean the entire rentable portion of the
sixteenth (16th) floor of the Building.
"Special Event of Default" shall have the meaning set forth in
Section 12.6(A) hereof.
"Specialty Alterations" shall mean all Alterations consisting of
trading floors, kitchens, kitchen equipment, computer/data centers, vaults,
elevators, escalators, emergency generators, computer and communications wiring,
the Condenser Water System, Chilled Water System (if applicable) and the
Communications Equipment located on the Roof Space and all related equipment,
facilities and wiring in connection therewith, in each case, which have been
installed by or for the benefit of Tenant.
"Specialty Removal Alterations" shall mean all Alterations (and
equipment and facilities ancillary thereto) consisting of kitchens, kitchen
equipment, vaults, elevators, escalators, internal stairs, Communications
Equipment, and emergency generators installed by or for the benefit of Tenant.
"Storage and Service Space" shall mean the Subconcourse Space, the
Concourse A Space, the Bank Vault Space and the 39th Floor Storage Space.
"Subconcourse Space" shall mean that portion of the subcellar in the
Building indicated by hatching on the floor plan annexed hereto as Exhibit B-9.
"Sublease Expenses" shall have the meaning set forth in Section
12.7(B) hereof.
"Sublease Profit" shall have the meaning set forth in Section
12.7(B) hereof.
"Sublease Rent" shall have the meaning set forth in Section 12.7(B)
hereof.
"Sublease Rent Per Square Foot" shall have the meaning set forth in
Section 12.7(B) hereof.
"Sublease Statement" shall have the meaning set forth in Section
12.6(B) hereof.
"Substantial Completion" or "Substantially Completed" or words of
similar import shall, subject to the inspection by and reasonable approval of
Tenant, mean that work to be performed by Landlord has been substantially
completed, it being agreed that work to be performed by Landlord shall be deemed
substantially complete notwithstanding the fact that (a) minor or insubstantial
details of construction and/or mechanical adjustment and/or decorative items
remain to be performed or completed
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(provided that the noncompletion of the same does not unreasonably interfere
with Tenant's use of the Premises or with the performance by Tenant of
Alterations within the Premises), and (b) in the case of a casualty (as
described in Article 10 hereof), Long Lead Work remains to be performed.
"Successor-in-interest" or "successor-in-interest" shall mean, as
part of a bona-fide business transaction, an entity that results from the merger
or consolidation with the then Tenant hereunder or an entity which acquires all
or substantially all of the then Tenant hereunder's assets and liabilities
(including this Lease), or all or substantially all of the assets and
liabilities (including this Lease) of the then Tenant hereunder's stock
brokerage operations, provided the stock brokerage operations constitute the
primary business of the then Tenant hereunder at the time.
"Superior Lease" shall mean all ground or underlying leases of the
Real Property or the Building heretofore or hereafter made, and all extensions,
supplements, amendments and modifications thereof.
"Supplemental Agreements" shall have the meaning set forth in the
fifth Whereas clause hereof.
"Supplemental Rent Credit" shall mean the rent credits set forth on
Exhibit Z that are provided to Tenant by Landlord in connection with the
exercise of the Renewal Options, the leasing of Offer Space and the leasing of
Additional Space, which rent credits shall be applied against payments of Rental
due under this Lease as more particularly set forth in this Lease.
"Tax Payment" shall have the meaning set forth in Section 27.2(A)
hereof.
"Tax Rate" shall have the meaning set forth in Section 27.1(J)
hereof.
"Tax Statement" shall have the meaning set forth in Section 27.1(I)
hereof.
"Taxes" shall have the meaning set forth in Section 27.1(H) hereof.
"Tax Year" shall mean the period July 1 through June 30 (or such
other period as hereafter may be duly adopted by The City of New York as its
fiscal year for real estate tax purposes), to the extent such period occurs
during the Term.
"10-Year Renewal Term" shall have the meaning set forth in Section
41.1 hereof.
"Tenant" on the date as of which this Lease is made, shall mean
PaineWebber Incorporated, a Delaware corporation, having an office at 1285
Avenue of the Americas, New York, New York 10019, but thereafter, subject to the
provisions of
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Section 12.1 hereof, "Tenant" shall mean only the tenant under this Lease at
the time in question.
"Tenant Named Herein" shall mean PaineWebber Incorporated or any
Successor-in-interest to Paine Webber Incorporated or any such
Successor-in-interest (provided, however, the rights of a Successor-in-interest
are subject to the express limitations contained in this Lease).
"Tenant's Appraiser" shall have the meaning set forth in Section
41.3(B) hereof.
"Tenant's Determination" shall have the meaning set forth in Section
41.3(B) hereof.
"Tenant's Holdover Payment" shall have the meaning set forth in
Section 42.4(A) hereof.
"Tenant's Indemnitees" shall mean Tenant, the shareholders,
managers, agents and contractors of Tenant, and its and their partners, members,
managers, shareholders, officers, directors, employees, agents and contractors.
"Tenant's Lobby Desk" shall have the meaning set forth in Section
46.3 hereof.
"Tenant's Offer Notice" shall have the meaning set forth in Section
45.1 hereof.
"Tenant's Notice" shall have the meaning set forth in Section
41.3(B) hereof.
"Tenant's Operating Share" as of the date hereof shall mean
34.2428%, as the same may be increased or decreased pursuant to the terms hereof
(including, without limitation, Section 43.4 hereof). For purposes of
calculating Tenant's Operating Share only (and in no way a representation of the
actual square foot area of the Building or the Premises), the parties agree that
the rentable area of the entire Building (less retail space) shall be deemed to
be 1,478,672 rentable square feet, (it being agreed that only the Office Space
shall be used in calculating Tenant's Operating Share).
"Tenant's Property" shall mean movable fixtures, equipment,
furniture, furnishings or other personal property owned by Tenant.
"Tenant's Tax Share" as of the date hereof shall mean 33.9415%, as
the same may be increased or decreased pursuant to the terms hereof (including,
without limitation. Section 43.4 hereof). For purposes of calculating Tenant's
Tax Share only
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(and in no way a representation of the actual square foot area of the Premises
or the Building), the parties agree that the rentable area of the entire
Building shall be deemed to be 1,491,800 rentable square feet (it being agreed
that only the Office Space shall be used in the numerator in calculating
Tenant's Tax Share provided, however, if Tenant subsequently leases retail
space, then such space shall be used in calculating adjustments to Tenant's Tax
Share).
"Tentative Monthly Escalation Charge" shall have the meaning set
forth in Section 27.4(D) hereof.
"10th Floor Space" shall mean the entire rentable portion of the
tenth (10th) floor of the Building.
"Term" shall mean a term which has commenced and which shall expire
on the Expiration Date, subject to extension as provided in Article 42 hereof.
"Third Amendment" shall have the meaning set forth in the fourth
Whereas clause hereof.
"Third Appraiser" shall have the meaning set forth in Section
41.3(B) hereof.
"Third Party Recapture Right" shall have the meaning set forth in
Section 12.12 hereof.
"Third Party Recapture Space" shall have the meaning set forth in
Section 12.12(A) hereof.
"13th Floor Space" shall mean the entire rentable portion of the
thirteenth (13th) floor of the Building.
"38th Floor Space" shall mean the entire rentable portion of the
thirty-eighth (38th) floor of the Building.
"38th Floor Surrender Date" shall have the meaning set forth in
Section 43.4 hereof.
"38th Floor Termination Date" shall have the meaning set forth in
Section 43.4 hereof.
"39th Floor Space" shall mean the portion of the thirty-ninth (39th)
floor of the Building indicated by hatching on the floor plan annexed hereto as
Exhibit B-10.
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"39th Floor Storage Space" shall mean the portion of the
thirty-ninth (39th) floor of the Building indicated by hatching on the floor
plan annexed hereto as Exhibit B-11.
"Total Holdover Amount" shall have the meaning set forth in Section
45.3 hereof.
"Total Offer Holdover Amount" shall have the meaning set forth in
Section 42.4(A) hereof.
"12th Floor Space" shall mean the entire rentable portion of the
twelfth (12th) floor of the Building.
"20th Floor Space" shall mean the entire rentable portion of the
twentieth (20th) floor of the Building.
"21st Floor Space" shall mean the entire rentable portion of the
twenty-first (21st) floor of the Building.
"Unavoidable Delays" shall have the meaning set forth in Article 25
hereof.
"Waiver Lease" shall have the meaning set forth in Section 42.7
hereof.
"WSR" shall mean Wall Street Realty.
ARTICLE 1
DEMISE, PREMISES, TERM, RENT
Section 1.1 Landlord has leased to Tenant and Tenant has hired from
Landlord the Premises, for the Term which has commenced and which shall end on
the Expiration Date, at an annual rent (the "Fixed Rent") of:
(A) for the period commencing on the date hereof and ending on June
30, 1997:
(1) with respect to the Subconcourse Space, Two Hundred
Forty-Five Thousand Dollars ($245,000) ($20,416.67 per month),
(2) with respect to the 39th Floor Space, One Hundred
Sixty-Nine Thousand Four Hundred Six and 16/100 Dollars
($169,406.16) ($14,117.18 per month),
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(3) with respect to the 39th Floor Storage Space,
Forty-Eight Thousand Six Hundred Twenty-Five Dollars ($48,625)
($4,052.08 per month),
(4) with respect to the Concourse A Space, Twenty-Two
Thousand One Hundred Twenty Dollars ($22,120) ($1,843.33 per month),
(5) with respect to the Bank Vault Space, One Hundred
Eight Thousand Six Hundred Dollars ($108,600) ($9,050 per month),
(6) with respect to the 38th Floor Space, One Million
Four Hundred Eighty-Five Thousand Dollars ($1,485,000) ($123,750 per
month),
(7) with respect to the 10th Floor Space, Three Million
Two Hundred Seventy-Five Thousand Six Hundred Fifty Dollars
($3,275,650) ($272,970.83 per month),
(8) with respect to Tenant's permitted use of the Roof
Space, Seventy-Five Thousand Dollars ($75,000) ($6,250 per month),
and
(9) with respect to the 9th Floor Space, the 11th Floor
Space, the 12th Floor Space, the 13th Floor Space, the 14th Floor
Space, the 15th Floor Space, the 16th Floor Space, the 17th Floor
Space, and the 18th Floor Space, Twenty Million Forty-Eight Thousand
Three Hundred Fifty Dollars ($20,048,350) ($1,670,695.83 per month),
(B)(i) for the period commencing on July 1, 1997 and ending on June
30, 2002:
(1) with respect to the Storage and Service Space, Two
Hundred Ninety-Nine Thousand Five Hundred Fifty-Six Dollars
($299,556.00) ($24,963 per month), and
(2) with respect to the Office Space, Twenty Million
Three Hundred Seventy-Four Thousand Four Hundred Fifty-Seven and
50/100 Dollars ($20,374,457.50) ($1,697,871.46 per month), and
(ii) for the period commencing on July 1, 1997 and ending on
December 31, 1997 with respect to the 38th Floor Space, One Million One Hundred
Forty Seven Thousand Five Hundred Dollars ($1,147,500) ($95,625 per month),
(C) for the period commencing on July 1, 2002 and ending on June 30,
2007:
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(1) with respect to the Storage and Service Space, Three
Hundred Forty-Nine Thousand Four Hundred Eighty-Two Dollars
($349,482) ($29,123.50 per month), and
(2) with respect to the Office Space, Twenty-Two Million
Fifty-Two Thousand Three Hundred Fifty-Four Dollars ($22,052,354)
($1,837,696.17 per month),
(D) for the period commencing on July 1, 2007 and ending on June 30,
2012:
(1) with respect to the Storage and Service Space, Three
Hundred Ninety-Nine Thousand Four Hundred Eight Dollars ($399,408)
($33,284 per month), and
(2) with respect to the Office Space Twenty-Three
Million Nine Hundred Sixty-Nine Thousand Nine Hundred Fifty Dollars
($23,969,950) ($1,997,495.83 per month),
(E) for the period commencing on July 1, 2012 and ending on the
Fixed Expiration Date:
(1) with respect to the Storage and Service Space, Four
Hundred Forty-Nine Thousand Three Hundred Thirty-Four Dollars
($449,334) ($37,444.50 per month), and
(2) with respect to the Office Space, Twenty-Five
Million Four Hundred Eight Thousand One Hundred Forty-Seven Dollars
($25,408,147) ($2,117,345.58 per month),
(F) With respect to Tenant's permitted use of the 15th Floor
Mechanical Space and the 16th Floor Setback Space, Seventy Thousand Dollars
($70,000) ($5,833.33 per month) (the "Setback Charge") for the period commencing
on the date hereof and ending on the Fixed Expiration Date. The Setback Charge
shall be increased every five years commencing January 1, 2001 (and continuing
on each fifth anniversary thereafter), by the percentage increase in the
Consumer Price Index in effect on the applicable January 1st over the Base
Index,
(G) With respect to the 2nd Floor Space and the Concourse B Space,
as set forth in Articles 40 and 43 respectively,
which Tenant agrees to pay in lawful money of the United States (and if by
check, drawn on a reputable commercial bank branch in New York City or New
Jersey) which shall be
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legal tender in payment of all debts and dues, public and private, at the time
of payment, in equal monthly installments in advance, on the first (1st) day of
each calendar month during the Term (except as hereinafter otherwise provided)
at the office of Landlord or such other place as Landlord may designate,
without any set-off, offset, abatement or deduction whatsoever (except as
otherwise specifically provided in this Lease). Landlord, at Landlord's option,
may require Tenant to wire transfer Fixed Rent and monthly installments of the
Operating Payment, electricity (and other charges billed with the Fixed Rent)
("Monthly Rent") in the event Tenant pays at any time or from time to time
Monthly Rent after the 1st of the month in which same is due on two (2)
consecutive occasions or on three (3) occasions in any twelve (12) month
period, until Tenant has paid Monthly Rent by the 1st of the month in which
same is due for twelve (12) consecutive months thereafter.
Section 1.2 Notwithstanding anything to the contrary contained in
this Lease, Tenant shall receive a total rent abatement with respect to the
Fixed Rent payable for the Premises initially demised hereunder, in the amount
of $14,883,915.00 (collectively, the "Rent Abatement") to be applied against the
payments of Fixed Rent due under this Lease as follows: (i) $12,483,915.00
against the first accruing installments of Fixed Rent payable from and after the
date hereof, (ii) $1,200,000 against the first accruing installments of Fixed
Rent payable from and after November 1, 1996, and (iii) $1,200,000 against the
first accruing installments of Fixed Rent payable from and after November 1,
1997; until all such amounts comprising the Rent Abatement have been fully
credited.
Section 1.3 The leasing of the Premises by Tenant shall include (a)
the right of Tenant to use the Building common areas in common with other
tenants in the Building and (b) all fixtures, improvements and betterments owned
or leased by Landlord which, at any time during the Term, are attached to or
installed in the Premises, in accordance with the terms, covenants and
conditions of this Lease, the Rules and Regulations and all Requirements. In
addition, subject to the terms of this Lease, Tenant shall have, as appurtenant
to the Premises, the exclusive right to construct, use, operate, maintain and
dismantle internal staircases connecting contiguous floors of the Premises in
accordance with the terms, covenants and conditions of this Lease, the Rules and
Regulations and all Requirements. The term "Building common areas" means all of
the common facilities in or around the Real Property designed and intended for
use by tenants in the Building in common with Landlord and each other,
including, without limitation, hallways on floors not occupied or used
exclusively by any tenant or occupant or Landlord, elevators, fire stairs,
telephone and electrical closets which are not allocated exclusively to Landlord
or any tenant or occupant, aisles, walkways, truck docks, plazas, courts,
restrooms on floors not occupied or used exclusively by Landlord or any tenant
or occupant, service areas, lobbies, landscaped areas and all other common and
service areas of the Building designed and intended to be used in common by
Building tenants.
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ARTICLE 2
USE AND OCCUPANCY
Section 2.1 Tenant shall use and occupy the Premises only as
general, executive and administrative offices, and uses incidental or ancillary
thereto and such use and occupancy shall always be consistent with the operation
of a first-class office building in midtown Manhattan.
Section 2.2 Tenant shall not use the Premises or any part thereof,
or permit the Premises or any part thereof to be used, (1) for the business of
photographic, multilith or multigraph reproductions or offset printing, except
in connection with, either directly or indirectly, Tenant's (and its Affiliates'
and permitted subtenants') own business and/or activities, (2) for a banking,
trust company, depository, guarantee or safe deposit business, if (in each case)
open to the general public for off-the-street transactions, (3) as a savings
bank, savings and loan association or loan company, if (in each case) open to
the general public for off-the-street transactions, (4) for the sale of
travelers checks, money orders, drafts, foreign exchange or letters of credit to
the general public for off-the-street transactions, (5) for the preparation,
dispensing or consumption of food or beverages in any manner whatsoever, except
for consumption by Tenant's (and its Affiliates' and permitted subtenants')
officers, employees and business guests and guests permitted pursuant to Section
2.4, (6) as an employment agency or similar enterprise (other than an executive
search firm), travel agency (except solely for use by officers and employees and
business guests of Tenant) labor union, school or vocational training center
(except for the training of employees of Tenant (and its Affiliates' and
permitted subtenants')), (7) as a barber shop or beauty salon, or (8) by any
agency or department of the United States government or the county, city or
state of New York or any foreign government or agency thereof.
Section 2.3 In connection with and ancillary to Tenant's use of the
Premises for general, executive and administrative offices as provided in this
Article 2, Tenant, at Tenant's sole cost and expense, and upon compliance with
all applicable Requirements, Rules and Regulations and the terms of this Lease,
may use certain portions of the Premises: (a) for the storage and preparation of
food necessary to service the dining rooms and other food service facilities in
the Premises, which shall include, without limitation, the existing kitchen in
the 39th Floor Space and the existing dining rooms in the 38th Floor Space and
other areas of the Premises not located at the time when installed directly
above another tenant, which are reasonably practicable for such kitchen facility
based on Tenant's ability to connect to the steam riser (if required by Tenant
or applicable Requirements) and install an appropriate duct and exhaust system,
as mutually reasonably determined by Tenant and Landlord in cooperation with
each other (all such facilities described in this clause (a) are collectively
referred to herein as the "Dining Facilities"), (b) as a messenger and mail room
facility for Tenant's and its
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Affiliates' and permitted subtenants' own business requirements, any such
messenger facility to be located on the concourse level, (c) as a reproduction
and copying facility for Tenant's and its Affiliates' and permitted subtenants'
business requirements, (d) for the operation of a trading floor or floors and
trading support systems, (e) as a securities trading and sales facility, other
than a sales facility open to the general public for off-the-street
transactions, (f) a word processing center, (g) a computer and communication
system center, (h) employee lounges, (i) executive, employee and guest dining
rooms, (j) libraries, (k) file rooms, (l) pantries, (m) meeting and conference
centers and rooms, and (n) all other business facilities which Tenant considers
necessary or desirable for the conduct of its (or its Affiliates' or permitted
subtenants') business. Notwithstanding the foregoing, Tenant may use up to
three (3) floors of the Office Space as a retail securities trading and sales
facility as long as the principal method of the conduct of business of such
facility shall be by telephone, mail, facsimile, telex or other method of
communication not requiring face-to-face contact with the public and not
resulting in an unreasonable volume of off-the-street customers or clients.
Tenant may install vending machines in the Premises for the exclusive use of
the officers, employees and business guests of Tenant, its Affiliates and its
permitted subtenants provided same are properly installed and maintained and,
if any such machine dispenses beverages or other liquids, it shall have a
waterproof pan thereunder (or other similar device) or be connected to a drain.
Provided Tenant obtains all necessary permits and approvals for the
installation of a kitchen duct and exhaust system in the Building from the New
York City Buildings Department and such kitchen or dining use does not
otherwise violate the Certificate of Occupancy of the Building, and any
applicable Requirements, and is not at the time when installed on a floor
directly above another tenant's premises, then Tenant may operate a kitchen
facility in the Premises in a manner that will prevent odors and smoke from
escaping into areas of the Building outside the Premises, and shall, at its
expense (i) in accordance with the provisions of Article 3 hereof, install (to
the extent not already performed) and maintain (a) an appropriate vertical
exhaust flue and duct in the existing location or if not in the existing
location, then a location reasonably approved by Landlord, and (b) appropriate
filters and grease traps to prevent accumulation of grease in any duct, stack
or flue used to exhaust fumes and vapors resulting from such food preparation
and to prevent clogging of the sewerage ejecting system of the Building, if
any, (ii) keep all range hoods and ducts therefrom, if any, clean and free of
grease at all times so as to avoid fire hazard, and (iii) clean out the
vertical exhaust flue and duct, at least once a year, or more frequently as
conditions or Requirements require. The discharge of any fumes, vapors and
odors, which, by Requirements, must be discharged into a separate stack or
flue, will not be permitted unless Tenant, at its expense, shall provide for
such discharge in the manner required by Requirements. Tenant shall be
responsible for the maintenance and repair of the flue pursuant to Article 4
hereof as if the same were an Alteration of Tenant.
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Section 2.4 Notwithstanding anything to the contrary contained
herein, Tenant and its Affiliates shall have the right to use, in compliance
with all Requirements and the terms and provisions of this Lease, the Dining
Facilities for any Permitted Function at such times and on such days as Tenant
may elect, upon reasonable prior notice to Landlord and subject to compliance
with the following terms. Tenant shall obtain required permits and approvals, if
any, prior to the Permitted Function and deliver same to Landlord. If Tenant
shall use the Dining Facilities for any Permitted Function other than during
Business Hours on Business Days, Tenant shall provide at least five (5) Business
Days notice to Landlord, and if Landlord shall reasonably require any additional
security or lobby personnel for such Permitted Function, Landlord shall notify
Tenant within two (2) Business Days thereafter. If Landlord requires additional
security, Tenant shall have the right to either provide such additional security
(using a contractor reasonably approved by Landlord) or lobby personnel or to
have Landlord provide same, the reasonable out of pocket costs of Landlord to be
paid by Tenant. Tenant shall reimburse Landlord within thirty (30) days after
submission of a bill therefor for all reasonable out-of-pocket costs and
expenses incurred by Landlord in connection with the Permitted Function and/or
the use of such Dining Facilities other than during Business Hours on Business
Days. If Tenant shall fail to notify Landlord that Tenant shall be providing
such additional security or lobby personnel within two (2) Business Days after
Landlord notifies Tenant of the requirement for such personnel, Landlord shall
provide such personnel at Tenant's cost as provided above. Tenant shall not
advertise in any public media or otherwise publicly list the availability of the
Dining Facilities for any Permitted Function.
Section 2.5 Landlord shall maintain and operate the Building in a
manner which is in keeping with comparable first-class office buildings in
midtown Manhattan that are used in whole or material part as the corporate
headquarters of a major public company (the "Building Standard"). Without
limiting the foregoing, and for as long as Tenant maintains art exhibits in the
lobby of the Building in accordance with the Building Standard and Section 46.2
hereof, Landlord shall not change (except to a de minimis extent) the current
character or configuration of the lobby of the Building without Tenant's prior
consent (which shall not be unreasonably withheld or delayed provided such
change is in keeping with the Building Standard). If Tenant fails to maintain
the art exhibit, as aforesaid (other than for reasonable periods of time when
exhibits are being changed or substituted), then during such time as Tenant
fails to so maintain such an art exhibit, Landlord may change the lobby without
restriction, provided such change is in keeping with the Building Standard and
such change does not substantially change the character and configuration of the
lobby. Nothing contained herein shall be deemed to prevent Landlord from making
minor changes or replacements to the lobby in accordance with the Building
Standard from time to time throughout the Term. During the Term, Landlord shall
not lease, license or grant any other occupancy
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rights to any ground floor or other retail space in the Building, or consent to
any assignment of a lease or any sublease of any tier of any ground floor or
other retail space in the Building, to any other stock brokerage or investment
banking firm, provided that Tenant and its Related Entities (except second tier
Non-Control Entity subtenants) are then in occupancy of at least 100,000
rentable square feet of Office Space for the conduct of their stock brokerage
and/or investment banking business and Tenant is then leasing at least 250,000
rentable square feet of Office Space (it being agreed that the foregoing shall
not be deemed to prohibit Landlord from leasing, licensing or granting any
other occupancy rights in or to any such retail space to any Person who uses a
non-material portion of such space for retail stock brokerage or investment
banking operations provided that stock brokerage or investment banking
operations is ancillary to such Person's main business (e.g., a commercial
bank)).
Section 2.6 Landlord shall not lease, license, grant occupancy
rights, nor to the extent permitted in the applicable agreements, consent to
assignments of leases and subleases of any tier, in each case affecting any
portion of the Building, to a Person not in keeping with the Building Standard
and the current character or profile of the Building.
ARTICLE 3
ALTERATIONS
Section 3.1 (A) (1) Subject to the provisions of this Article 3,
Tenant shall not make any Material Alterations without Landlord's prior consent
and all Alterations permitted hereunder must be performed in compliance with all
applicable Requirements, the Rules and Regulations, the Building Rules and
Standards and the terms and conditions of this Article 3. Landlord agrees not to
unreasonably withhold its consent to any proposed Material Alterations. The term
"Material Alteration" as used in this Lease shall mean the Initial Alterations
and any Alteration that (i) affects any part of the Building other than the
Premises (except to a de minimis extent, as reasonably determined by Landlord),
or requires any alterations to be performed by Landlord at Landlord's expense
in, or made to, any portion of the Building or the Real Property other than the
Premises, (ii) affects the Building Systems (except to a de minimis extent, as
reasonably determined by Landlord), (iii) subject to the provisions of Article
15 hereof, affects or violates the certificate of occupancy for the Building or
the Premises, or (iv) affects any structural components of the Building (except
to a de minimis extent, as reasonably determined by Landlord). Tenant hereby
acknowledges that if Landlord withholds consent to a proposed Alteration that
adversely affects a Building System, Landlord shall be deemed to be reasonable
in withholding such consent.
(2) Anything contained in this Lease to the contrary
notwithstanding, Landlord's consent shall not be required with respect to any
Alteration
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that is not a Material Alteration (herein referred to as a "Non-Material
Alteration"). Notwithstanding the foregoing, at least ten (10) Business Days
prior to making any Non-Material Alteration, Tenant shall submit to Landlord
the plans and specifications or schematics or drawings (sealed, signed and
otherwise ready for filing if the same are required to be filed pursuant to
applicable Requirements) for the Non-Material Alteration (but only to the
extent that Tenant has prepared such plans and specifications or schematics or
drawings or is required to do so by Requirements), and any Non-Material
Alteration shall otherwise be performed in compliance with all applicable
Requirements, the Rules and Regulations, the Building Rules and Standards and
with the provisions of this Article 3, including without limitation, Section
(B)(1)(iii) and (iv) below. In the event that Landlord reasonably determines
that Tenant's proposed Non-Material Alteration is a Material Alteration,
Landlord must notify Tenant in writing (including reasonable detail for
Landlord's determination) within ten (10) Business Days after Landlord's
receipt of Tenant's plans and specifications or schematics or drawings therefor
(subject to the notification requirements set forth in subsection (B)(2) below)
or such Alteration shall be deemed to be a Non-Material Alteration. Landlord
hereby agrees that it shall review and respond to said plans and specifications
as expeditiously as reasonably practicable. Any disputes as to whether an
Alteration is a Material Alteration or a Non-Material Alteration shall be
determined by arbitration pursuant to Article 47 below.
(B) (1) Prior to making any Material Alteration, Tenant shall (i)
submit to Landlord detailed plans and specifications (including layout,
architectural, mechanical, electrical and structural drawings) and all other
information reasonably requested by Landlord for each proposed Material
Alteration and shall not commence any such Material Alteration without first
obtaining Landlord's approval of such plans and specifications, which approval
shall not be unreasonably withheld (it being agreed that once such approval is
obtained Tenant may commence such Material Alteration in accordance with this
Article 3 without first obtaining Landlord's approval of any shop drawings,
provided that the foregoing shall not preclude Landlord from requesting shop
drawings thereafter), (ii) supply such additional information regarding the
Material Alteration as Landlord shall reasonably request, (iii) at Tenant's
expense, obtain all permits, approvals and certificates required by any
Governmental Authorities, and (iv) furnish to Landlord duplicate original
policies, or certificates thereof of worker's compensation in statutory limits
(covering all persons to be employed by Tenant, and Tenant's contractors and
subcontractors and all persons to be employed by Tenant's contractors and
subcontractors, in connection with such Material Alteration); and comprehensive
public liability (including property damage coverage) insurance in customary
form, with companies that satisfy the requirements set forth in Article 9
hereof, for the period in which such Material Alteration is being performed, in
commercially reasonable amounts taking into consideration the size of the
project (it being agreed that Landlord shall be reasonable in considering
requests by Tenant for
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insurance limits which are lower than those set forth in the Building Rules
and Standards taking into account the limits of such insurance carried by
reputable construction managers, contractors or subcontractors performing work
similar to the type of work being performed by the relevant construction
managers, contractors or subcontractors in comparable first class office
buildings), and naming Landlord and its agents, any Lessor and any Mortgagee,
as additional insureds. Upon completion of an Alteration, Tenant, at Tenant's
expense, shall obtain certificates of final approval of such Alteration
required by any Governmental Authority and shall furnish Landlord with copies
thereof, together with shop drawings thereof marked to show field conditions
for such Alteration. All Alterations shall be made and performed in a good and
workerlike manner and substantially in accordance with the plans and
specifications therefor as approved by Landlord (if required) and in compliance
with all Requirements, the Rules and Regulations and the Building Rules and
Standards (provided the Building Rules and Standards are, to the extent
applicable, uniformly enforced by Landlord (it being agreed that in the event
of any conflict between this Lease and such Building Rules and Standards, this
Lease shall control)). All materials and equipment to be incorporated in the
Premises as a result of any Alterations or a part thereof shall be first
quality and no such materials or equipment (other than Tenant's Property) shall
be subject to any lien, encumbrance, chattel mortgage or title retention or
security agreement, except that Tenant may lease, or finance purchases of,
Tenant's Property (except affixed leasehold improvements) and Tenant's systems
and equipment. If, as a result of any Alterations performed by Tenant, any
alterations are required to be performed in or made to any portion of the
Building or the Real Property or Building Systems other than the Premises in
order to comply with any Requirement(s), or necessary for the proper operation
or safety of the Building, which Alterations would not otherwise have had to be
performed or made pursuant to the applicable Requirement(s), at such time,
Landlord, at Tenant's reasonable cost and expense, may perform or make such
alterations and take such action as Landlord shall deem reasonably necessary,
provided that Landlord shall have notified Tenant of the need for such
alteration(s) and action(s) and the estimated cost thereof at the time of
Landlord's review of Tenant's plans and specifications for the Alteration or
promptly after Landlord becoming aware of the same. All Material Alterations
shall be performed only under the supervision of an independent licensed
architect and/or engineer reasonably satisfactory to Landlord (and for purposes
of the Initial Alterations, Gensler & Associates, Gwathmey Siegel & Associates
and Jaros, Baum & Bolles are deemed approved), and all filings with respect to
the Initial Alterations shall be performed by Brookbridge Consultants. Landlord
acknowledges that Tenant may use Jerome S. Gillman Consulting Architects, as a
consultant to work with Brookbridge Consultants in connection with certain
Initial Alteration filings.
(2) If Landlord shall fail to disapprove Tenant's final plans and
specifications for any Material Alteration within fifteen (15) Business Days
with
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respect to base floors (i.e. floors below the 16th floor) and within ten
(10) Business Days with respect to tower floors (i.e. floors above the 15th
floor), and within five (5) (unless such revisions materially change the scope
of work depicted on the approved plans originally submitted to Landlord, then
within ten (10)) Business Days with respect to any resubmissions or revisions of
plans (it being agreed that Landlord shall reserve and respond to such plans and
specifications and resubmissions as expeditiously as reasonably possible) after
Landlord's receipt thereof and all other information reasonably requested by
Landlord with respect to such Alteration, Landlord shall be deemed to have
approved such plans and specifications. The time periods set forth above are
based on Tenant submitting final plans and specifications for not more than two
(2) full floors during any consecutive ten (10) Business Day period. If Tenant
submits plans and specifications for space in excess of two (2) full floors
during such ten (10) Business Day period, then Landlord's time periods to
respond shall be equitably increased as to an additional floor, but in no event
more than an additional 10 Business Days per two (2) additional floors. The
aforesaid time periods (to the extent reasonably required by Landlord) shall be
extended for a reasonable period of time in connection with the review of plans
and specifications depicting alterations of a complex nature or non-standard
office type alterations. Any disapproval given by Landlord shall be accompanied
by a statement setting forth in reasonable detail the reasons for such
disapproval. Landlord reserves the right to disapprove any plans and
specifications in whole or in part (but, if practicable, Landlord shall
disapprove plans in part rather than in whole), to reserve approval of items
shown thereon pending its review and approval of other plans and specifications
pertaining directly to work for which Landlord's consent is requested, and to
condition its approval upon Tenant making revisions to the plans and
specifications or supplying additional information, in each case, as reasonably
requested by Landlord. Any review or approval by Landlord of any plans and/or
specifications or preparation of any plans by an architect or engineer
designated by Landlord with respect to any Alteration is solely for Landlord's
benefit, and without any representation or warranty whatsoever to Tenant or any
other Person with respect to the compliance thereof with any Requirements, the
adequacy, correctness or efficiency thereof or otherwise.
(C) (1) Tenant shall be permitted to perform Alterations during such
hours as Tenant may elect, provided that if any such work unreasonably
interferes (i.e., more than a de minimis amount) with or unreasonably interrupts
the operation and maintenance of the Building or the performance by Landlord of
repairs, alterations or other work in the Building, or unreasonably interferes
with or unreasonably interrupts the use and occupancy of the Building by other
tenants of space in the Building, then such work shall be performed at Tenant's
expense and at such times and in such manner as Landlord may from time to time
reasonably designate in a manner consistent with the custom and practice
followed in other comparable first-class office buildings; it being expressly
understood and agreed that all chopping, coring and any other similar
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work affecting the slab shall be performed after 6:00 p.m. and before 8:00 a.m.
or on non-Business Days, unless otherwise permitted by Landlord.
(2) All Tenant's Property installed by Tenant, and all Alterations
and Specialty Alterations in and to the Premises which are made by Tenant at its
own cost and expense prior to and during the Term, upon the Expiration Date may
be (but shall not be required to be, except with respect to Tenant's Property
and except as otherwise expressly set forth below) removed from the Premises by
Tenant at Tenant's option, provided, however, that Tenant shall repair and
restore in a good and workerlike manner to a condition which is customary and
reasonable for such removal and in keeping with the Building Standard (provided
that Tenant shall not be required to repair or restore any such damage to any
portion of the Premises Landlord intends to demolish as determined by Landlord
in its good faith discretion) any damage to the Premises or the Building caused
by such removal. All Alterations in and to the Premises whether made at Tenant's
cost and expense or Landlord's cost and expense, at any time during the Term
shall (if not previously removed by Tenant) become the property of Landlord upon
the expiration of the Term; provided, however, that Tenant shall be responsible
for insuring all Specialty Alterations and Tenant's Property in accordance with
the provisions of Section 9.2 below, and repairing and replacing any Specialty
Alterations and Tenant's Property damaged by fire or other casualty in
accordance with Section 10.1 below. Notwithstanding the foregoing, however,
Landlord, upon notice given to Tenant at least one hundred eighty (180) days
prior to the Fixed Expiration Date or upon such shorter notice as is reasonable
under the circumstances upon the earlier expiration of the Term, may require
Tenant to remove any Specialty Removal Alterations and to repair and restore in
a good and workerlike manner any damage to the Premises or the Building caused
by such removal.
(D) (1) All Alterations shall be in keeping with the Building
Standard and performed by reputable contractor(s), subcontractors or mechanics
approved by Landlord (acting reasonably and promptly and if Landlord fails to
respond to a request for approval of such contractors, subcontractors or
mechanics within ten (10) Business Days after notice, such approval shall be
deemed given), using labor which will ensure harmony with existing labor in the
Building, at Tenant's expense. Prior to making each Alteration, at Tenant's
request, Landlord shall furnish Tenant with a list of not less than three (3)
third party contractors, subcontractors and mechanics per trade who may perform
Alterations to the Premises on behalf of Tenant, except only one (1) contractor
will be provided for the Class E proprietary system. If Tenant engages any
contractor set forth on the list, Tenant shall not be required to obtain
Landlord's consent for such contractor (and Tenant shall have no obligations
under the second (2nd) and fourth (4th) sentences of Section 3.1(E) hereof with
respect to such contractor except to the extent such labor disharmony results
from any action by Tenant or its agents, employees, or contractors (other than
such contractor)) unless, prior to the earlier of (a) entering into a
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contract with such contractor, (b) the commencement of work by the contractor
and (c) the bidding of the Alteration work by Tenant, Landlord shall notify
Tenant that such contractor has been removed from the list and shall advise
Tenant of a substitute for the contractor who shall have been removed from the
list, if applicable.
(2) Notwithstanding the foregoing, with respect to the final tie-in
of any Alteration to any Building System, Tenant shall select a contractor from
Exhibit E attached hereto and made a part hereof or from a list of approved
contractors furnished by Landlord to Tenant (containing at least three (3)
contractors per trade, except with respect to the Class E proprietary system in
the Building, in which case Landlord shall notify Tenant of the
contractor/servicer required to perform that portion of such Alteration relating
to such system), provided that in the event that the approved contractors
designated by Landlord do not charge commercially competitive rates (as
determined by Landlord and Tenant acting reasonably) and Tenant notifies
Landlord prior to the commencement of any such Alteration that in Tenant's
reasonable determination said contractors' rates are not competitive, Landlord
shall use reasonable efforts to cause such contractor to charge commercially
competitive rates. In the event Landlord is unsuccessful in its efforts to cause
such contractor to reduce its rates, the terms and conditions of this Lease
shall be unaffected thereby.
(3) With respect to the Initial Alterations, Landlord hereby
approves as of the date hereof the contractors, subcontractors and mechanics set
forth on Exhibit E hereto, subject to Landlord's right to add to or, subject to
Section 3.1(D), subtract from said list.
(E) Any mechanic's lien filed against the Premises or the Real
Property for work claimed to have been done for, or materials claimed to have
been furnished to, Tenant shall be discharged, removed or bonded by Tenant
(unless the same shall have been caused by any act or omission of Landlord)
within forty-five (45) days after Tenant shall have received notice thereof, at
Tenant's expense (which discharge is not required to be of record within such
forty-five (45) day period). Tenant shall not, at any time prior to or during
the Term, directly or indirectly employ, or permit the employment of, any
contractor, mechanic or laborer in the Premises, whether in connection with any
Alteration or otherwise, if such employment would interfere or cause any labor
conflict or dispute with other contractors, mechanics or laborers engaged in the
construction, maintenance or operation of the Building by Landlord or Tenant or,
other than in connection with the Initial Alterations, any other occupant of the
Building. Landlord and Tenant shall attempt (and shall cause all affected
parties to attempt) to promptly resolve any labor disputes in a commercially
reasonable manner. In the event of any such conflict and the failure of the
parties to resolve the same pursuant to the immediately preceding sentence,
Tenant, upon demand of Landlord, shall cause all contractors, mechanics or
laborers causing such interference or conflict to leave the
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Building promptly or shall take such other action as may be necessary to end
such conflict and preserve labor harmony in the Building; provided, however, to
the extent that such interference or conflict is the result of labor affiliation
or non-affiliation, and if Landlord shall have theretofore approved Tenant's
contractors, mechanics or laborers, as the case may be, and such approval was
given (or deemed given) prior to the approval of any other contractors,
mechanics or laborers which are the cause of the interference or conflict,
Tenant's contractors, mechanics or laborers, as the case may be, may remain at
the Building. Landlord represents and warrants to Tenant that it will only
employ contractors, mechanics and laborers in the Building which are compatible
with other approved contractors, subcontractors, mechanics and laborers
performing work in the Building.
Section 3.2 Tenant shall pay to Landlord, within thirty (30) days of
demand and as additional rent, in connection with any Alteration, a fee equal to
the amount of Landlord's reasonable out-of-pocket costs and expenses to
unrelated third parties incurred to review the plans and specifications therefor
(the "Alteration Fee"). Notwithstanding the foregoing, Landlord shall use
in-house personnel (at no charge to Tenant) to review the plans and
specifications for any Alteration to the greatest extent practical, as
reasonably determined by Landlord.
Section 3.3 Landlord, upon the request of Tenant, shall join in any
applications for any permits, approvals or certificates required to be obtained
by Tenant in connection with any permitted Alteration (provided that the
provisions of the applicable Requirement shall require that Landlord join in
such application) and shall otherwise cooperate with Tenant in connection
therewith (even though plans for such Alteration may not have been approved by
Landlord (it being agreed that Tenant may file such plans with the New York City
Building Department and any other applicable Governmental Authority prior to
Landlord's approval of the same)), provided that such plans have not been
disapproved and further provided Landlord shall not be obligated to incur any
out-of-pocket cost or expense including, without limitation, attorneys' fees and
disbursements, unless Tenant shall pay such reasonable cost or expense.
Section 3.4 Notwithstanding anything to the contrary contained in
this Lease, Tenant shall have the right to use the loading docks and freight
elevators to transport materials and personnel in connection with the
performance of the Initial Alterations and Tenant's rearrangement and restacking
of the Premises, in accordance with the conditions contained in Article 28
hereof and in connection therewith Tenant shall not be required to pay for the
first 600 hours of overtime freight elevator and loading dock use on an
aggregated basis.
Section 3.5 (A) If, in connection with the performance of any
Alterations, plans for which have been approved or deemed approved by Landlord
or for which
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approval is not required, there is any violation of Requirements, the compliance
with which is the responsibility of Landlord in accordance with the terms of
this Lease and is not the responsibility of Tenant ("Landlord's Violations"),
which shall actually delay Tenant in completing such Alterations and in
occupying such portion of the Premises (which affected portion must exceed 5,000
rentable square feet) for the conduct of its business (whether by reason of
delays in obtaining required permits or approvals (including any amendment to
the certificate of occupancy for the Building requested by Tenant and approved
by Landlord, in accordance with Article 15 hereof in connection with its Initial
Alterations or required by Tenant to perform such Initial Alterations), or
delays in construction or otherwise based on a customary non-overtime
commercially prudent construction schedule, provided if Tenant accelerates such
schedule to mitigate such delays then it shall be entitled to be reimbursed by
Landlord for the additional costs incurred by Tenant in connection with such
acceleration, not to exceed the rent abatement Tenant would have otherwise been
entitled to had it not so accelerated such schedule) then, provided that
Landlord is not delayed or prevented from complying with any such Requirements
by reason of any acts or omissions of Tenant, its agents, servants, employees,
contractors, subtenants, Permitted Occupants or licensees, and further provided
that Tenant shall have delivered to Landlord notice of the nature of such delay
promptly after the occurrence of the same (including a reasonably detailed
description of the delay being experienced by Tenant) and Landlord fails within
thirty (30) days after the receipt of said notice to remedy such condition, the
Fixed Rent and Escalation Rent allocable to such portion of the Premises shall
be abated from the expiration of such cure period to the date that Tenant is no
longer delayed in performing or completing such Alterations or in occupying such
portion of the Premises, as the case may be, by reason of the existence of such
Landlord Violation. Landlord shall diligently pursue the cure of such Landlord
Violation after notice thereof from Tenant. Tenant shall use good faith efforts
to minimize the effect of any such Landlord Violation. The provisions of this
Section 3.5 shall not be applicable to the performance of any Alterations (other
than the Initial Alterations) relating to a change in the certificate of
occupancy for the Building. However, Landlord covenants to use due diligence to
promptly remove any Landlord's Violation which adversely affects the performance
of any Alterations by Tenant (including, without limitation, any Alteration
requiring a change in the certificate of occupancy for the Building).
(B) In the event that Tenant discovers the existence of
asbestos in the Premises during the performance of any Alterations required to
be removed in order for Tenant to perform such Alterations, and in the further
event that both (i) such asbestos prevents the completion of work in not less
than 5,000 rentable square feet of the Premises and (ii) such asbestos is not
removed by Landlord in accordance with all applicable Requirements within five
(5) Business Days following receipt of notice from Tenant as to the existence
thereof (provided Landlord is given prompt access to the
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affected area upon request (which may be oral)), then the existence of such
asbestos shall be deemed a Landlord's Violation for purposes of Section 3.5(A)
(but Landlord shall not be entitled to any additional time to cure such
violation prior to Tenant's receipt of the rent abatement set forth in Section
3.5(A) above).
(C) In addition to Tenant's rights and remedies set forth in
Sections 3.5(A) and (B) and to the extent not covered by Sections 3.5(A) and
(B), if there occurs any Landlord Delay (other than as a result of a Landlord's
Violation which shall be governed by Section 3.5(A) hereof) during the
performance of the Initial Alterations to unoccupied space, then the Fixed Rent
and Escalation Rent allocable to the portion of the Premises in which such
Initial Alterations are actually delayed in being completed shall be abated one
(1) day for each day of the Landlord Delay. Landlord hereby covenants and agrees
not to cause any Landlord Delay, to the extent within Landlord's reasonable
control.
(D) Provided Landlord complies with all of its obligations
under this Section 3.5, any abatement of Fixed Rent and Escalation Rent to which
Tenant shall be entitled pursuant to this Section 3.5, together with Tenant's
right to seek injunctive relief, shall be Tenant's sole remedy with respect to
such Landlord's Violation and/or Landlord Delay and Landlord shall not be
subject to any additional liability by reason thereof.
(E) The provisions of Article 25 hereof shall not be
applicable with respect to Landlord's obligations under this Section 3.5.
Section 3.6 In the event Tenant fails to spend at least
$14,883,915.00 on "hard" construction costs in connection with the performance
of the Initial Alterations by the third (3rd) anniversary of the date hereof, as
such date shall be extended by reason of Landlord Delays, Landlord's Violations
and Unavoidable Delay, (reasonable proof of which shall be provided by Tenant's
architect to Landlord upon completion or during performance of the Initial
Alterations), Tenant shall pay to Landlord with the next monthly installment of
Fixed Rent due under the Lease after substantial completion of the Initial
Alterations or the third (3rd) anniversary of the date hereof (as such date
shall be extended as provided above) whichever occurs earlier, the difference
between $14,883,915.00 and the "hard" construction costs incurred by Tenant in
connection with the performance of the Initial Alterations.
ARTICLE 4
REPAIRS--FLOOR LOAD
Section 4.1 Landlord shall operate, maintain and make all necessary
repairs and replacements (both structural and non-structural, ordinary and
extraordinary,
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foreseen and unforeseen) to the Building Systems (excluding maintenance, repairs
and replacements necessitated by Tenant's Alterations (including the Initial
Alterations), whether presently existing or installed by Tenant, all of which
shall be the responsibility of Tenant to maintain and repair), and the
structural (including structural repairs to the Premises) and public portions of
the Building, both exterior and interior (including, without limitation, the
roof, exterior Building walls, windows, site paving, curbs, walks, landscaping,
lighting, all core areas, common areas, lobbies (excluding those in the
Premises), hallways (excluding those in the Premises), core restrooms including
those located on the full floors of the Premises (excluding private toilet rooms
installed by Tenant and existing private toilet rooms in the Premises),
elevators and all related items, in conformance with the Building Standard.
Tenant, at Tenant's sole cost and expense, shall take good care of the Premises
and the fixtures, equipment and appurtenances therein and make all (i)
nonstructural repairs thereto and (ii) structural repairs to any structural
Alteration made by Tenant, in any such case as and when needed to preserve them
in good working order and condition, except for obsolescence and damage for
which Tenant is not responsible pursuant to the provisions of Article 10 hereof.
Notwithstanding the foregoing, but subject to the release and waivers contained
in Section 10.5 hereof, all damage or injury to any part of the Building (other
than the Premises), or to the Building's fixtures, equipment and appurtenances
(whether requiring structural or nonstructural repairs), caused by or resulting
from the negligence or willful misconduct of Tenant, or its agents, employees,
subtenants, licensees or contractors, or Alterations made by or on behalf of,
Tenant, Tenant's agents, contractors, employees, subtenants or licensees, shall
be repaired at Tenant's sole cost and expense, by Landlord, (or at Landlord's
option, by Tenant to the reasonable satisfaction of Landlord). Tenant shall also
repair all damage to the Building and the Premises caused by the moving of
Tenant's Property by Tenant. All the aforesaid repairs by Landlord and Tenant
shall be of first quality and class consistent with first class office building
work or construction and shall be made in accordance with all applicable
Requirements and the provisions of Article 3 hereof and shall be performed with
reasonable diligence. Tenant shall give Landlord prompt notice of any defective
condition in the Premises and/or any Building System, located in, servicing or
passing through the Premises promptly after Tenant becomes aware of the same.
The design and decoration of the elevator access and public corridors of any
floor of the Premises, a portion of which is occupied by a third party which is
not a subtenant, Permitted Occupant or licensee of Tenant, shall be subject to
Landlord's approval, which shall not be unreasonably withheld or delayed (and if
Landlord fails to respond to a request for consent within ten (10) Business Days
after submission of plans and specifications in connection therewith, such
consent shall be deemed given).
Section 4.2 Tenant shall not place a load upon any floor of the
Premises exceeding (a) in the 38th Floor Space, the 39th Floor Space and the
39th Floor Storage
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Space, 120 pounds per square foot "live load", (b) in the Subconcourse Space,
500 pounds per square foot "live load", (c) in the Concourse A Space, the
Concourse B Space and the Bank Vault Space, 150 pounds per square foot "live
load", and (d) in each other floor in the Premises, 100 pounds per square foot
"live load", unless Tenant shall have reinforced such floor in a satisfactory
manner determined by Tenant and Landlord acting reasonably and otherwise in
accordance with the provisions of this Lease, including, without limitation,
Article 3 hereof then not in excess of such reinforced capacity. Landlord
reserves the right, acting reasonably, to prescribe the weight and position of
all safes, heavy business machines and heavy equipment and installations to the
extent the same would adversely affect the Building Systems, the structure of
the Building, or the reasonable use and occupancy of the Building by other
tenants or occupants (now or hereafter), in each case other than to a de minimis
extent. Business machines and mechanical equipment shall be placed and
maintained by Tenant at Tenant's expense in settings sufficient in Landlord's
reasonable judgment to absorb and prevent unreasonable vibration, noise and
annoyance.
Section 4.3 Except as expressly provided in this Lease, 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 injury to business
arising from Landlord, Tenant or others making, or failing to make, any repairs,
alterations, additions or improvements in or to any portion of the Building or
the Premises, or in or to fixtures, appurtenances or equipment thereof.
Section 4.4 Landlord shall use its reasonable efforts to minimize
interference with Tenant's access and use and occupancy of the Premises in
making any repairs, alterations, additions or improvements; provided, however,
that Landlord shall have no obligation to employ contractors or labor at
so-called overtime or other premium pay rates or to incur any other overtime
costs or expenses whatsoever, except that Landlord, at its expense, shall employ
contractors or labor at so-called overtime or other premium pay rates (subject
to recoupment pursuant to Article 27 below) if necessary to make any repair or
remedy any condition required to be made by Landlord, at Landlord's expense,
hereunder that either (i) results in a denial of access to the Premises, (ii)
immediately or imminently threatens the health or safety of any occupant of the
Premises, or (iii) materially interferes with Tenant's ability to conduct its
business in a material portion of the Premises. In all other cases, upon
Tenant's reasonable prior written request, Landlord shall employ contractors or
labor at so-called overtime or other premium pay rates and incur any other
overtime costs or expenses in making any repairs, alterations, additions or
improvements, provided Tenant shall pay to Landlord, as additional rent, within
thirty (30) days after demand, an amount equal to the difference between (i) the
overtime or other premium pay rates, including all fringe benefits and other
elements of such pay rates, and (ii) the regular pay rates for such labor,
including all fringe benefits and other elements of such pay rates. In making
any repairs, alterations, additions or
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improvements, Landlord shall use all reasonable efforts to cause its contractors
or labor to cover and secure such repair areas and equipment in such a manner to
minimize interference with Tenant's business operations during its daytime
business hours. If more than one occupant of the Building, including Tenant, is
chargeable by Landlord for the same overtime costs and expenses relating to the
same work for which Tenant is chargeable, then Tenant shall only be charged for
a proportionate share of such overtime costs and expenses, which apportionment
shall be based on the amount of overtime work requested by such parties and the
scope of the repair project for each party. Subject to the release and waivers
contained in Section 10.5 hereof, and the other applicable limitations and
conditions contained in this Lease, Landlord shall indemnify and hold Tenant
harmless from and against any and all damage to Tenant's Property or from any
and all other damage, fine, suit, loss, claim, liability, cost or expense of any
kind or nature (including, without limitation, reasonable attorneys' fees and
disbursements), arising out of the negligent performance or willful misconduct
by Landlord, or Landlord's employees, agents or contractors of repairs required
to be performed by Landlord hereunder. Tenant shall have the right to designate,
by written notice to Landlord, a reasonable number of areas within the Office
Space (including, without limitation, any area containing a safe or any computer
or telephone equipment) as secure areas to which Landlord shall not have access
without being accompanied by a representative of Tenant (except in the case of
an emergency or if necessary to comply with any Requirement). Landlord shall
have no responsibility or obligation to perform repairs or provide services to
such secure areas required of it hereunder (including, without limitation,
cleaning) unless Landlord or its agents, employees or contractors are provided
reasonable access to such secure areas to the extent access is needed to perform
such obligation.
Section 4.5 In the case of damage by fire or other casualty, the
provisions of Article 10 hereof shall govern in the case of any conflict with
the provisions of this Article 4.
ARTICLE 5
WINDOW CLEANING
Tenant shall not clean, nor require, permit, suffer or allow any
window in the Premises to be cleaned from the outside in violation of Section
202 of the Labor Law, or any other applicable law, or of the rules of the Board
of Standards and Appeals, or of any other board or body having or asserting
jurisdiction, provided, however, that Tenant shall not be responsible for the
manner in which Landlord, its agents, contractors or employees clean such
windows and Landlord shall cause such windows to be cleaned in accordance with
Schedule C attached hereto and made a part hereof.
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ARTICLE 6
REQUIREMENTS OF LAW
Section 6.1 (A) Subject to those other provisions of this Lease that
expressly require Landlord's compliance with applicable Requirements with
respect to the Premises, Tenant, at its sole expense, shall comply with all
Requirements applicable to the use or occupancy of the Premises, and in
connection with Tenant's particular manner of use of areas outside the Premises
in accordance with the terms of this Lease, such areas of the Building, or the
making of Alterations therein or the installation of Tenant's signage in, on or
about the Building, or result from or arise out of the making thereof, or those
applicable by reason of the nature or type of business conducted by Tenant in
the Premises (whether imposed upon Landlord or Tenant). Notwithstanding the
foregoing, Tenant shall not be required to comply with Requirements of general
applicability to all the office tenants of the Building (i.e., not arising out
of Tenant's particular manner of use or occupancy of the Premises), to the
extent compliance requires the making of structural Alterations within the
Premises and/or the Building. Tenant shall, at Tenant's expense, cause all areas
within the Premises (including, without limitation, bathrooms and elevator call
buttons) to comply with the Americans with Disabilities Act of 1990, Public Law
101-336, 42 U.S.C. ss.ss.12101 et seq. at such times and to the extent required
to do so by applicable Requirements. Tenant shall not do or permit to be done
any act or thing upon the Premises which is not permitted hereunder or which is
not in keeping with the Building Standard or which will invalidate or be in
conflict with a standard Insurance Services Office all-risk insurance policy,
provided such insurance policy does not prohibit any of the permitted uses under
Article 2 hereof; and shall not do, or permit anything to be done in or upon the
Premises, or bring or keep anything therein, except as now or hereafter
permitted by the New York City Fire Department, New York Board of Fire
Underwriters, the Insurance Services Office or other authority having
jurisdiction and then only in such quantity and manner of storage as not to
increase the rate for fire insurance applicable to the Building, or use the
Premises in a manner other than as permitted hereunder which specifically
because of such use shall increase the rate of fire insurance on the Building or
on property located therein, over the rate that would otherwise then be in
effect (unless Tenant reimburses Landlord for the increased fire insurance
premiums resulting therefrom, as provided below). Landlord represents and
warrants to Tenant that the use and occupancy of the Premises for the permitted
uses under Article 2 hereof shall not cause an increase in the rate for fire
insurance applicable to the Building for which Tenant shall be responsible. If
solely by reason of Tenant's failure to comply with the provisions of this
Article (prior to the expiration of any applicable notice or cure period), the
fire insurance rate shall be higher than it otherwise would be, then upon notice
from Landlord, Tenant shall desist from doing or permitting to be done any such
act or thing and shall reimburse Landlord, as additional rent hereunder, for
that part of all fire insurance premiums thereafter paid by Landlord which
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shall have been charged because of such failure by Tenant, and shall make such
reimbursement within thirty (30) days after demand by Landlord. In any action or
proceeding wherein Landlord and Tenant are parties, a schedule or "make up" of
rates for the Building or the Premises issued by the Insurance Services Office,
or other body fixing such fire insurance rates, shall be presumptive evidence of
the facts therein stated and of the several items and charges in the fire
insurance rates then applicable to the Building. Landlord shall use reasonable
efforts to prevent any such increase in the fire insurance rate.
(B) Landlord, at its sole cost and expense (but subject to
recoupment to the extent provided in Article 27 hereof), shall comply, or cause
compliance, with all other Requirements applicable to the Premises and the
Building, other than those Requirements which Tenant shall be required to comply
with pursuant to the terms of this Lease, subject to Landlord's right to contest
the applicability or legality thereof in accordance with the provisions of
Section 6.2 hereinbelow.
Section 6.2 (A) Tenant, at its sole cost and expense and after
notice to Landlord, may contest by appropriate proceedings prosecuted diligently
and in good faith, the legality or applicability of any Requirement with which
Tenant is required to comply under the terms of the Lease provided that (a)
Landlord (or any Landlord's Indemnitees) shall not be subject to imprisonment or
to prosecution for a crime, nor shall the Real Property or any part thereof be
subject to being condemned or vacated, nor shall the certificate of occupancy
for the Premises or the Building be suspended or threatened to be suspended by
reason of such noncompliance or by reason of such contest; (b) before the
commencement of such contest, if Landlord or any Landlord's Indemnitees may be
subject to any civil fines or economic penalties or other criminal penalties or
if Landlord may be liable to any independent third party as a result of such
noncompliance, Tenant shall indemnify Landlord (and any Landlord's Indemnitees)
against the cost of such noncompliance and liability resulting from or incurred
in connection with such contest or noncompliance; and (c) Tenant shall keep
Landlord regularly advised as to the status of such proceedings.
(B) Landlord, at its sole cost and expense, may contest by
appropriate proceedings prosecuted diligently and in good faith, the legality or
applicability of any Requirement with which Landlord is required to comply under
the terms of the Lease provided that (a) Tenant (or any Tenant's Indemnitees)
shall not be subject to imprisonment or to prosecution for a crime, nor shall
the Premises or any part thereof be subject to being condemned or vacated, nor
shall the certificate of occupancy for the Building be suspended or threatened
to be suspended by reason of such noncompliance or by reason of such contest;
(b) before the commencement of such contest, if Tenant or any Tenant's
Indemnitees may be subject to any civil fines or economic penalties or other
criminal penalties or if Tenant may be liable to any
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independent third party as a result of such noncompliance, Landlord shall
indemnify Tenant (and any Tenant's Indemnitees) against the cost of such
noncompliance and liability resulting from or incurred in connection with such
contest or noncompliance. At Tenant's request, Landlord shall advise Tenant as
to the status of such proceedings.
Section 6.3 In the case of damage by fire or other casualty, the
provisions of Article 10 hereof shall govern in the case of any conflict with
the provisions of this Article 6.
ARTICLE 7
SUBORDINATION
Section 7.1 (A) This Lease shall be superior to each and every
Superior Lease and Mortgage hereafter affecting the Real Property and the
Building, and to any renewals, modifications, replacements consolidations,
substitutions, supplements, or extensions thereof, provided that, at Landlord's
election, this Lease shall be made subject and subordinate to any such Superior
Lease or Mortgage, as the case may be, and to all renewals, modifications,
replacements, consolidations, substitutions, supplements and extensions thereof,
provided that, and for so long as, (i) the Mortgagee or Lessor, as the case may
be, shall have entered into a nondisturbance agreement with Tenant in
substantially the form attached hereto as Exhibit F-1 or F-2, respectively, and
made a part hereof (a "Nondisturbance Agreement") provided such agreement may
contain other customary terms and conditions reasonably required by such
Mortgagee or Superior Lessor or be on Mortgagee's or Lessor's form if
substantially the same in substance (provided, in each case, the same do not
materially increase the obligations of Tenant, adversely affect the rights of
Tenant or decrease the obligations of Landlord hereunder) and (ii) such
Nondisturbance Agreement continues to be in full force and effect.
(B) Landlord hereby represents to Tenant that as of the date
hereof there are no Mortgages or Superior Leases affecting the Real Property or
the Building.
(C) Tenant hereby irrevocably waives any and all right(s) it
may have in connection with any zoning lot merger or transfer of development
rights with respect to the Real Property including, without limitation, any
rights it may have to be a party to, to contest, or to execute, any Declaration
of Restrictions (as such term is defined in Section 12-10 of the Zoning
Resolution of The City of New York effective December 15, 1961, as amended) with
respect to the Real Property, which would cause the Premises to be merged with
or unmerged from any other zoning lot pursuant to such Zoning Resolution or any
document of a similar nature and purpose, and this Lease shall be subject and
subordinate to any Declaration of Restrictions or any other document of
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similar nature and purpose now or hereafter affecting the Real Property. This
clause shall be self-operative and no further instrument of subordination or
waiver shall be required. In confirmation, however, of such subordination and
waiver, Tenant shall execute and deliver promptly any certificate or instrument
that Landlord reasonably may request.
Section 7.2 If at any time prior to the expiration of the Term, any
Superior Lease shall terminate or be terminated for any reason, or any Mortgagee
comes into possession of the Real Property or the Building or the estate created
by any Superior Lease by receiver or otherwise, Tenant agrees, provided such
party shall have executed and delivered a Nondisturbance Agreement, at the
election and upon demand of any owner of the Real Property or the Building, or
of the Lessor, or of any Mortgagee in possession of the Real Property or the
Building, to attorn, subject to and in accordance with the terms of the
Nondisturbance Agreement, from time to time, to any such owner, Lessor or
Mortgagee or any person acquiring the interest of Landlord as a result of any
such termination, or as a result of a foreclosure of the Mortgage or the
granting of a deed in lieu of foreclosure, upon the then executory terms and
conditions of this Lease, subject to the provisions of Section 7.1 hereof and
this Section 7.2, for the remainder of the Term, provided that such owner,
Lessor or Mortgagee, as the case may be, or receiver caused to be appointed by
any of the foregoing, shall then be entitled to possession of the Premises and
provided further that such owner, Lessor or Mortgagee, as the case may be, or
anyone claiming by, through or under such owner, Lessor or Mortgagee, as the
case may be, including a purchaser at a foreclosure sale, shall have agreed to
assume the obligations of Landlord hereunder (subject to the terms hereof and
the provisions of the Non-Disturbance Agreement). Tenant, upon demand of any
such owner, Lessor or Mortgagee shall execute from time to time, instruments in
confirmation of the provisions hereof and acknowledging such attornment and
setting forth the conditions of the tenancy, if applicable, provided such
instruments are in form reasonably satisfactory to Tenant.
Section 7.3 Notwithstanding the foregoing, this Lease shall not
terminate solely by reason of the termination of any Superior Lease hereafter
affecting the Real Property and the Building subject to the terms of the
applicable Non-Disturbance Agreement. The provisions of this Section 7.3 shall
inure to the benefit of any such owner, Lessor or Mortgagee, shall apply
notwithstanding that, as a matter of law, this Lease may terminate upon the
termination of any such Superior Lease, and shall be self-operative, and no
further instrument shall be required to give effect to said provisions.
Section 7.4 If requested by any Mortgagee, any Lessor or Landlord,
Tenant agrees to promptly execute and deliver at its own cost and expense a
Nondisturbance Agreement.
Section 7.5 (A) From time to time, within ten (10) days after
request therefor by Landlord, any Mortgagee or any Lessor, Tenant shall deliver
to Landlord,
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such Mortgagee or such Lessor a written statement (an "Estoppel Certificate")
executed and acknowledged by Tenant, in form reasonably satisfactory to
Landlord, Tenant and such Mortgagee or such Lessor, (l) stating that this Lease
is then in full force and effect and has not been modified (or if modified,
setting forth all modifications), (2) setting forth the date to which the Fixed
Rent and Escalation Rent have been paid and the current amounts thereof, (3)
stating whether or not, to the best knowledge of Tenant, Landlord is in default
under this Lease, and, if Landlord is in default, setting forth the specific
nature of all such defaults, and (4) as to any other matters reasonably
requested by Landlord, such Mortgagee or such Lessor. Tenant acknowledges that
any statement delivered pursuant to this Section 7.5(A) may be relied upon by
any purchaser or owner of the Real Property or the Building, or Landlord's
interest in the Real Property or the Building or any Superior Lease, or by any
Mortgagee, or by an assignee of any Mortgagee, or by any Lessor, and that Tenant
may be estopped by reason of such statement, provided Tenant shall have no
liability to any of the foregoing parties for misrepresentation as a result of
any unintentional misstatement contained in any such Estoppel Certificate. As
long as any Superior Lease or Mortgage shall exist, then, subject to the terms
of the Non-Disturbance Agreement, Tenant shall not seek to terminate this Lease
by reason of an act or omission of Landlord until Tenant shall have given
written notice of such act or omission to all Lessors or Mortgagees at such
address as shall have been furnished to Tenant, and if any such Lessor or
Mortgagee shall notify Tenant within ten (10) Business Days following the
receipt of such notice that such Lessor or Mortgagee intends to cure or remedy
such act or omission, then prior to the expiration of a reasonable period of
time following receipt of such notice by such Lessor or Mortgagee (not to exceed
thirty (30) days after Landlord's right to cure has elapsed), such Lessor or
Mortgagee shall have the right but not the obligation to cure such act or
omission.
(B) From time to time, within ten (10) days after request
therefor by Tenant, Landlord shall deliver to Tenant a written statement made by
Landlord, in form reasonably satisfactory to Landlord and Tenant, which includes
substantially the same information, mutatis mutandis, as the Estoppel
Certificate. Landlord acknowledges that any statement delivered pursuant to this
Section 7.5(B) may be relied upon by any assignee or subtenant of Tenant and
that Landlord may be estopped by reason of such statement, provided Landlord
shall have no liability to any of the foregoing parties for misrepresentations
as a result of any unintentional misstatement contained in any such statement.
ARTICLE 8
RULES AND REGULATIONS AND BUILDING RULES AND STANDARDS
Tenant and Tenant's contractors, employees, agents and licensees
shall comply with the Rules and Regulations and the Building Rules and
Standards. If Tenant
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disputes the reasonableness of any additional Rule or Regulation or Building
Rule and Standard hereafter adopted by Landlord, the dispute shall be determined
by arbitration in accordance with Article 47, and pending such determination,
Tenant shall comply with such contested Rule or Regulation or Building Rule or
Standard. Any such determination shall be final and conclusive upon the parties
hereto. The right to dispute the reasonableness of any additional Rule or
Regulation or Building Rule or Standard upon Tenant's part shall be deemed
waived unless the same shall be asserted by service of a notice upon Landlord
within sixty (60) days after the later of (i) receipt by Tenant of notice of the
adoption of any such additional Rule or Regulation or Building Rule or Standard
and (ii) the commencement of the enforcement of such Rule or Regulation or
Building Rule or Standard by Landlord with respect to a Rule or Regulation or
Building Rule or Standard not then applicable to Tenant's use or occupancy of
the Premises, otherwise such notice shall be given to Landlord within sixty (60)
days after receipt by Tenant of the adoption of such additional Rule or
Regulation or Building rule or Standard. Provided Landlord complies with clause
(iv) of the penultimate sentence of this paragraph, Landlord shall not be liable
to Tenant for violation of any Rule or Regulation or any Building Rule or
Standard by any other tenants, their employees, agents, visitors or licensees.
Landlord shall not enforce any Rule or Regulation or any Building Rule or
Standard against Tenant in a discriminatory manner in comparison to Landlord's
treatment of other office tenants in the Building. In addition, Landlord shall
(i) not adopt any new Rules and Regulations or Building Rules and Standards
which are applicable against only Tenant (unless reasonably required under the
circumstances), (ii) not unreasonably withhold or delay its consent to any
approval required under the Rules and Regulations or Building Rules and
Standards, (iii) exercise its judgment in good faith in any instance providing
for the exercise of its judgment in the Rules and Regulations and Building Rules
and Standards, and (iv) use all reasonable efforts to enforce the Rules and
Regulations and Building Rules and Standards against other tenants and occupants
if Tenant is being adversely affected by reason of any breach thereof. In case
of any conflict or inconsistency between the provisions of this Lease and any of
the Rules and Regulations or Building Rules and Standards the provisions of this
Lease shall control.
ARTICLE 9
PROPERTY LOSS OR DAMAGE, REIMBURSEMENT
Section 9.1 Except as otherwise expressly provided herein, neither
Landlord nor its agents shall be liable for any damage to property of Tenant or
of others nor for the loss of any property of Tenant (including artwork) by
theft or otherwise. Except as otherwise expressly provided herein, neither
Landlord nor its agents shall be liable for injury or damage to persons or
property, or interruption of Tenant's business, resulting from fire or other
casualty, nor shall Landlord or its agents be liable for any such damage caused
by other tenants or persons in the Building or caused by construction of
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any private, public or quasi-public work, nor shall Landlord be liable for any
latent defect in the Premises or in the Building (except to the extent Landlord
shall be required to repair same pursuant to Article 4 hereof). Anything in this
Article 9 to the contrary notwithstanding, except as otherwise set forth in
Articles 4, 10, 13, 28 and 36 of this Lease and otherwise as expressly provided
herein, Landlord shall not be relieved from responsibility directly to Tenant
for any loss or damage caused directly to Tenant wholly or in part by the
willful or negligent acts or omissions of Landlord, Landlord's agents,
employees, servants, contractors or licensees. Nothing in the foregoing shall
affect any right of Landlord or Tenant to the indemnity to which either shall be
entitled under Article 36 hereof in order to recoup for payments made in
connection with third party claims. If at any time a limited number of windows
of the Premises are temporarily closed, darkened or bricked-up due to any
Requirement (i.e, for one (1) year or less) or by reason of required repairs,
maintenance, alterations or improvements to the Building, (i.e., for sixty (60)
days or less) and not by reason of any default by Landlord hereunder, Landlord
shall not be liable for any damage Tenant may sustain thereby. If at any time
the windows of the Premises are temporarily closed, darkened or bricked-up, as
aforesaid, Landlord shall perform such repairs, maintenance, alterations or
improvements and comply with the applicable Requirements with all reasonable
diligence and otherwise take such action as may be reasonably necessary to
minimize the period during which such windows are temporarily closed, darkened,
or bricked-up. Tenant shall immediately notify Landlord of any fire, smoke
condition or accident in the Premises, promptly upon becoming aware of same.
Section 9.2 Tenant shall obtain and keep in full force and effect
(i) an "all risk" insurance policy for Tenant's Initial Alterations (but only
prior to the substantial completion of the Initial Alterations), Specialty
Alterations and Tenant's Property at the Premises which shall insure against the
full replacement cost thereof, and (ii) a policy of commercial general liability
insurance (covering bodily injury and property damage) on an occurrence basis
with a broad form contractual liability endorsement. Such policies shall provide
that Tenant is named as the insured. Landlord, Landlord's managing agent and any
Lessors and any Mortgagees (whose names shall have been furnished to Tenant)
shall be added as additional insureds (but not as a loss payee), as their
respective interests may appear, with respect to the insurance required to be
carried pursuant to clause (ii) above. Such policy with respect to clause (ii)
above shall include a provision under which the insurer agrees to indemnify and
hold Landlord, Landlord's managing agent, and such Lessors and Mortgagees
harmless from and against, subject to the limits of liability set forth in this
Section 9.2, all cost, expense and/or liability arising out of or based upon any
and all claims, accidents, injuries and damages mentioned in Article 36 to the
extent the same relate to bodily injury, death or property damage. In addition,
the policy required to be carried pursuant to clause (ii) above shall contain a
provision that no act or omission of Tenant shall affect or limit the obligation
of the insurance company to pay
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the amount of any loss sustained and that the policy shall be non-cancelable and
non-modifiable with respect to Landlord, such managing agent, and such Lessors
and Mortgagees (whose names and addresses shall have been furnished to Tenant)
unless thirty (30) days' written notice shall have been given to Landlord by
certified mail, return receipt requested, which notice shall contain the policy
number and the names of the insured and additional insureds. All such insurance
shall be (i) written as "occurrence policies", (ii) written as "primary policy
coverage" and not contributing with or in excess of any coverage which Landlord
may carry, and (iii) effected under valid and enforceable policies. In addition,
upon receipt by Tenant of any notice of cancellation or any other notice from
the insurance carrier which may adversely affect the coverage of the insureds
under such policy of insurance (except to a de minimis extent), Tenant shall,
within five (5) Business Days thereafter, deliver to Landlord and any other
additional insureds thereunder a copy of such notice. The minimum limits of
liability under the policy of insurance required to be carried pursuant to
clause (ii) above shall, including any umbrella coverage permitted to be
maintained by Tenant hereunder, be a combined single limit with respect to each
occurrence in an amount of not less than Ten Million Dollars ($10,000,000) for
injury or death to persons and damage to property, which amount shall be
increased from time to time (but not more frequently than once every three (3)
years) to that amount of insurance which is then being customarily required by
prudent landlords of comparable first-class office buildings in Midtown
Manhattan taking into consideration the size and use by Tenant of the Premises.
All insurance required to be carried by Tenant pursuant to the terms of this
Lease may be effected pursuant to blanket policies covering other locations
(provided the limits of liability required to be maintained by Tenant are always
available with respect to the Premises and will not be reduced by a loss at
another location covered by such policy) and shall be effected under valid and
enforceable policies issued by reputable and independent insurers permitted to
do business in the State of New York, and rated in Best's Insurance Guide, or
any successor thereto (or if there be none, an organization having a national
reputation), as having a general policyholder rating of "A-" and a financial
rating of at least "X."
Section 9.3 Landlord shall obtain and keep in full force and effect
(i) insurance against loss or damage by fire and other casualty to the Building,
including, Tenant's Alterations and, after substantial completion of Tenant's
Initial Alterations, Tenant's Initial Alterations (exclusive of Specialty
Alterations and Tenant's Property), as may be insurable under then available
standard forms of "all-risk" insurance policies, in an amount equal to one
hundred percent (100%) of the replacement value thereof (with a deductible in an
amount not to exceed $50,000) or in such lesser amount as will avoid
co-insurance (including a replacement cost and "agreed amount" endorsement),
(ii) a policy of commercial general liability insurance (covering bodily injury
and property damage) on an occurrence basis, with a broad form contractual
liability endorsement (with a deductible in an amount not to exceed $50,000),
and (iii) rental loss insurance in an
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amount equal to not less than eighteen (18) months fixed rent and additional
rent payable to Landlord from all tenants and occupants of the Building.
Notwithstanding the foregoing, Landlord shall not be liable to Tenant for any
failure to insure, replace or restore any Alterations unless Tenant shall have
delivered to Landlord plans and specifications of such Alterations to the extent
required pursuant to Article 3 hereof or otherwise notified Landlord in
reasonable detail of such Alterations, and shall maintain adequate records with
respect to such Alterations to facilitate the adjustment of any insurance claims
with respect thereto. Tenant shall reasonably cooperate with Landlord and
Landlord's insurance companies in the adjustment of any claims for any damage to
the Building or such Alterations. The policy described in clause (ii) above
shall include a provision under which the insurer agrees to insure Landlord with
respect to any cost, expense or liability arising out of, or based upon, any and
all claims, accidents, injuries and damages for which Landlord is required to
indemnify Tenant under the provisions of Article 36. In addition, such policy
shall contain a provision that no act or omission of Landlord shall affect or
limit the obligation of the insurer to pay the amount of any loss sustained and
the policy shall be non-cancelable and non-modifiable with respect to Tenant
unless thirty (30) days' prior written notice shall have been given to Tenant by
certified mail, return receipt requested, which notice shall contain the policy
number and the names of the insured and additional insureds. All such insurance
shall be (i) written as "occurrence policies", (ii) written as "primary policy
coverage" and not contributing with or in excess of any coverage which Tenant
may carry, and (iii) effected under valid and enforceable policies. In addition,
upon receipt by Landlord of any notice of cancellation or any other notice from
the insurance carrier which may adversely affect the coverage of the insureds
under such policy of insurance (except to a de minimis extent), Landlord shall,
within five (5) Business Days thereafter, deliver to Tenant a copy of such
notice. The minimum amounts of liability under the policy of insurance required
to be carried pursuant to clause (ii) above shall be a combined single limit
with respect to each occurrence in an amount of $50,000,000 for injury or death
to persons, which amount shall be increased from time to time (but not more
frequently than once every three (3) years), if applicable, to that amount of
insurance which is then being customarily carried by prudent landlords of
comparable first class office buildings in midtown Manhattan. All insurance
required to be carried by Landlord pursuant to the terms of this Lease shall be
effected under valid and enforceable policies issued by reputable and
independent insurers permitted to do business in the State of New York and rated
in Best's Insurance Guide, or any successor thereto (or if there be none, an
organization having a national reputation), as having a general policyholder
rating of "A-" and a financial rating of at least "X". All insurance required to
be maintained by Landlord hereunder may be effected pursuant to blanket policies
covering other locations, provided that such blanket policies (i) provide that
the amount of insurance allocable to the Building shall at all times not be less
than the amounts set forth above, and that such amounts will not be reduced by
any loss at any other location, and (ii) shall comply with the provisions of
this
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Section 9.3. Notwithstanding anything herein contained to the contrary, in no
event shall Landlord carry separate or additional insurance, concurrent in form
or contributing in the event of any loss or damage, with any insurance required
to be maintained hereunder with respect to Tenant's Specialty Alterations and
Tenant's Property.
Section 9.4 Each party shall deliver to the other party appropriate
certificates evidencing such insurance, including evidence of waivers of
subrogation required pursuant to Section 10.5, required to be carried by each
party pursuant to this Article 9 within ten (10) days after the date hereof.
Evidence of each renewal or replacement of a policy shall be delivered by each
party to the other at least ten (10) days prior to the expiration of such
policy, and a copy of such renewal or replacement certificate shall be delivered
by each party to the other upon request.
ARTICLE 10
DESTRUCTION--FIRE OR OTHER CAUSE
Section 10.1 (A) If the Premises (including Alterations (and after
substantial completion of the Initial Alterations, Tenant's Initial
Alterations), other than Specialty Alterations and Tenant's Property) or the
Building (in such a manner that materially interferes with Tenant's use of the
Premises or reasonable access to the Premises) shall be damaged by fire or other
casualty, and, in the case of the Premises, if Tenant shall give prompt notice
thereof to Landlord, the damages shall be diligently repaired by and at the
expense of Landlord, with reasonable dispatch, to substantially the condition
prior to the damage, with such modifications as shall be required in order to
comply with Requirements. At the written request of Tenant, Landlord shall, from
time to time (but not more frequently than once in every thirty (30) day
period), inform Tenant of the progress of Landlord's restoration work and of the
estimated date of Substantial Completion of the same. Until the earlier of
(herein referred to as the "Casualty Rent Commencement Date") (i) the date which
is one hundred twenty (120) days after such repairs which are required to be
performed by Landlord shall be Substantially Completed (of which Substantial
Completion Landlord shall promptly notify Tenant) and (ii) the date on which
Tenant shall move into such portion of the Premises for the conduct of its
business, the Fixed Rent and Escalation Rent shall be reduced in the proportion
which the Rentable Square Foot area of the part of the Premises which is not
usable or reasonably accessible by Tenant for the conduct of its business and is
not so used by Tenant (it being agreed that if any portion of the Premises then
being used by Tenant as its computer/data center or as a network hub room is not
reasonably usable by Tenant and is not so used by Tenant, then, the portion of
the Premises served by each affected network hub room or computer data center,
as the case may be, shall be deemed to be unusable by Tenant for the conduct of
its business, but only if, and for so long as, Tenant shall be unable to and
actually ceases to operate its business in such portion of the Premises served
by the
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affected network hub room or computer/data center), bears to the total Rentable
Square Foot area of the Premises (giving due regard to the fact that the Fixed
Rent for the Premises has been calculated using different rates of Fixed Rent
for certain floors of the Premises and the fact that Escalation Rent is payable
only with respect to the Office Space). Upon the substantial completion of such
repairs, Landlord shall diligently prosecute to completion, within sixty (60)
days (provided such time period is reasonable under the circumstances in
connection with good construction practice) after the date of Substantial
Completion, any agreed upon items of repair work not completed (i.e. "punchlist"
items) and any items of Long Lead Work remaining to be completed.
Notwithstanding anything to the contrary contained herein, Landlord shall have
no obligation to repair any damage to, or to replace, any Specialty Alterations
or Tenant's Property. Landlord shall use its reasonable efforts to minimize
interference with Tenant's use and occupancy in making any repairs pursuant to
this Section.
(B) At the earliest practical time (as determined by Landlord
acting reasonably) prior to the Substantial Completion of any such repair,
Landlord shall provide Tenant and Tenant's contractor, subcontractors and
materialmen access to the Premises to perform Specialty Alterations (or Initial
Alterations, if the Premises shall be damaged at any time prior to the
substantial completion of the Initial Alternations) on the following terms and
conditions (but not to occupy the same for the conduct of business):
(1) Tenant shall not commence work in any portion of the
Premises until the date specified in a notice from Landlord to Tenant
stating that the repairs required to be made by Landlord have been or will
be completed to the extent reasonably necessary, in Landlord's reasonable
discretion, to permit the commencement of the Specialty Alterations (or
Initial Alterations, if the Premises shall be damaged at any time prior to
the substantial completion of the Initial Alterations) then prudent to be
performed in accordance with good construction practice in the portion in
question without unreasonable interference with, and consistent with the
performance of, the repairs remaining to be performed;
(2) Such access by Tenant shall be deemed to be subject
to all of the applicable provisions of this Lease, except that there shall
be no obligation on the part of Tenant solely because of such access to
pay any Fixed Rent, Escalation Rent or Electricity Additional Rent, with
respect to the affected portion of the Premises for any period prior to
the Casualty Rent Commencement Date; and
(3) It is expressly understood that if Landlord shall be
prevented from Substantially Completing the repairs due to any act or
omission of Tenant, its agents, servants, employees or contractors,
including without limitation by reason of the performance of any Specialty
Alteration (or Initial Alterations, if
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the Premises shall be damaged at any time prior to the substantial
completion of the Initial Alterations), or by reason of Tenant's failure
or refusal to comply or to cause its architects, engineers, designers and
contractors to comply with any of Tenant's obligations described or
referred to in this Lease, or, subject to the provisions of this Lease, if
such repairs are not completed, because under good construction scheduling
practice such repairs should be performed after completion of any
Specialty Alteration (or Initial Alterations, if the Premises shall be
damaged at any time prior to the substantial completion of the Initial
Alterations), then such work shall be deemed Substantially Complete on the
date when the work would have been Substantially Complete but for such
delay or delays and the expiration of the abatement of the Tenant's
obligations hereunder shall not be postponed by reason of such delay.
Landlord shall provide Tenant with written notice of delays caused by
Tenant promptly after knowledge thereof by Landlord.
(C) It is expressly understood that if Tenant shall be
actually delayed from substantially completing the repairs to the Specialty
Alterations (or Initial Alterations, if the Premises shall be damaged at any
time prior to the substantial completion of the Initial Alterations) due to any
act or omission of Landlord, its agents, servants, employees or contractors
(unless Landlord is acting in accordance with the terms of this Lease, and
otherwise in a manner consistent with the operation of a comparable first-class
office building and equitable treatment of tenants therein by a reasonably
prudent owner), including, without limitation by reason of Landlord's failure or
refusal to comply or to cause its architects, engineers, designers and
contractors to comply with any of Landlord's obligations described or referred
to in this Lease, then the one hundred twenty (120) day period (or such earlier
date on which Tenant shall reoccupy the Premises for the conduct of its
business) referred to in Section 10.1(A) hereof shall be postponed by the number
of days of such actual delay in completion of the Specialty Alterations (or
Initial Alterations, if applicable) performed by Tenant. Tenant shall provide
Landlord with written notice of delays caused by Landlord promptly after
knowledge thereof by Tenant.
Section 10.2 Anything contained in Section 10.1 to the contrary
notwithstanding, if the Building shall be so damaged by fire or other casualty
(i.e., for this purpose, damage which costs more than seventy-five percent (75%)
(or fifty percent (50%) in the event Landlord elects to demolish the Building
and terminate all the other office tenants' leases in the Building) of the
replacement cost of the Building to repair) that, in Landlord's reasonable
opinion, substantial alteration, demolition, or reconstruction of the Building
shall be required (whether or not the Premises shall have been damaged or
rendered untenantable), then Landlord, at Landlord's option, may, not later than
sixty (60) days following the damage, give Tenant a notice in writing
terminating this Lease, provided that Landlord may not terminate this Lease
unless it shall elect to terminate
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leases (including this Lease) affecting at least seventy-five percent (75%) of
the remaining office space in the Building. If Landlord elects to terminate this
Lease, the Term shall expire upon a date set by Landlord, but not sooner than
the thirtieth (30th) day after such notice is given or, if the Premises shall
not be substantially damaged and rendered substantially untenantable and the
same are usable for the conduct of business, the twelve (12) month anniversary
of the date on which such notice is given or such shorter period as specified by
Tenant in a notice to Landlord, and Tenant shall vacate the Premises and
surrender the same to Landlord in accordance with the provisions of Article 20
hereof. Upon the termination of this Lease under the conditions provided for in
this Section 10.2, Tenant's liability for Fixed Rent, Escalation Rent and all
other items of Rental shall thereupon cease and any prepaid portion of Fixed
Rent, Escalation Rent and all other items of Rental for any period after such
date shall be refunded by Landlord to Tenant.
Section 10.3 (A) Within forty-five (45) days after notice to
Landlord of any damage described in Section 10.1 hereof, Landlord shall deliver
to Tenant a statement (the "Initial Estimate") prepared by a reputable
independent third party licensed engineer or architect selected by Landlord
having at least ten (10) years' experience in such matters (the "Independent
Party") setting forth its estimate as to the time required to repair such
damage, exclusive of time required to repair any Specialty Alterations (which
are Tenant's obligation to repair) or to perform Long Lead Work. If the
estimated time period exceeds the date (the "15 Month Date") which is fifteen
(15) months from the date of such fire or other casualty then Tenant may elect
to terminate this Lease by notice to Landlord not later than thirty (30) days
following receipt of the Initial Estimate. If Tenant makes such election, the
Term shall expire upon the thirtieth (30th) day after notice of such election is
given, and Tenant shall vacate the Premises and surrender the same to Landlord
in accordance with the provisions of Article 20 hereof. If this Lease shall not
have been terminated pursuant to this Article 10, the damages required to be
repaired by Landlord shall be diligently repaired by and at the expense of
Landlord as set forth in Section 10.1 hereof. Notwithstanding anything in this
Section 10.3(A) to the contrary, if (i) Tenant shall not have elected to
terminate this Lease pursuant to this Section 10.3(A), or (ii) Tenant shall not
have had the right to terminate the Lease pursuant to this Section 10.3(A),
Tenant may from time to time (but in no event more often than once in any sixty
(60) day period) request in writing from Landlord that Landlord deliver to
Tenant updated estimates with respect to the anticipated Substantial Completion
date of the repair work, or Landlord, at Landlord's initiative, may send to
Tenant such updated estimates (but in no event more often than once in any sixty
(60) day period) (each of such updated estimates, a "Revised Estimate"). All
Revised Estimates shall contain the Independent Party's good faith estimate of
the Substantial Completion date of the repair work, excluding the time to repair
any Specialty Alterations, Tenants Property, or to perform Long Lead Work. A
"Materially Revised Estimate" shall be a Revised Estimate with an
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anticipated Substantial Completion date of such repair work later than the later
of (i) the 15 Month Date, subject to extensions (not to exceed ninety (90) days
in the aggregate) by reason of Unavoidable Delays and (ii) sixty (60) days after
the estimate of the Substantial Completion date set forth in the immediately
preceding Revised Estimate. In the event that Tenant (at Tenant's request or at
Landlord's initiative) shall have received a Materially Revised Estimate, Tenant
shall have a further right to terminate this Lease upon written notice to
Landlord given not later than thirty (30) days following Tenant's receipt of
such Materially Revised Estimate, and such termination shall be effective on the
date which is thirty (30) days next following the date Landlord receives
Tenant's notice. In the event Tenant shall not elect to terminate this Lease
within the thirty (30) day period set forth above, Tenant also shall not
thereafter have a right to terminate this Lease under this Section 10.3 with
respect to the casualty in question unless and until Tenant (at Tenant's request
or at Landlord's initiative) shall receive another Materially Revised Estimate.
Anything to the contrary notwithstanding, Tenant also shall have the right
contained herein to terminate this Lease upon written notice to Landlord if (i)
Landlord shall fail to deliver to Tenant a Revised Estimate which contains the
Independent Party's good faith estimate of the Substantial Completion date of
the repair work within thirty (30) days after Tenant's request therefor provided
such request states that Tenant may terminate this Lease in the event Landlord
fails to deliver a Revised Estimate with the Independent Party's estimate of the
date of Substantial Completion of Landlord's repair work, and (ii) Tenant
provides Landlord with a Materially Revised Estimate and notice of termination
within thirty (30) days after Landlord's failure to provide a Revised Estimate,
as aforesaid. Such termination shall be effective on the date which is thirty
(30) days next following the date on which Landlord receives Tenant's
termination notice.
(B) Notwithstanding the foregoing, if the Premises shall be
substantially damaged during the last two (2) years of the Term (as the same may
be extended pursuant to Article 41 hereof), Landlord or Tenant may elect by
notice, given within thirty (30) days after the occurrence of such damage, to
terminate this Lease and if either party makes such election, the Term shall
expire upon the thirtieth (30th) day after notice of such election is given by
such party and Tenant shall vacate the Premises and surrender the same to
Landlord in accordance with the provisions of Article 20 hereof. Except as set
forth in this Section 10.3, Tenant shall have no other options to cancel this
Lease under this Article 10. Subject to Landlord's right to terminate this Lease
set forth in Section 10.2 hereinabove, if Landlord has elected to terminate this
Lease as provided in this Section 10.3(B), such election shall be deemed void
and of no force and effect if Tenant shall, within thirty (30) days after
receipt of Landlord's notice of termination, elect to exercise a Renewal Option
pursuant to Article 41 hereof.
Section 10.4 This Article 10 constitutes an express agreement
governing any case of damage or destruction of the Premises or the Building by
fire or other
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casualty, and Section 227 of the Real Property Law of the State of New York,
which provides for such contingency in the absence of an express agreement, and
any other law of like nature and purpose now or hereafter in force shall have no
application in any such case.
Section 10.5 The parties hereto shall procure an appropriate clause
in, or endorsement on, any fire or extended coverage insurance covering the
Premises, the Building and personal property, fixtures and equipment located
thereon or therein and any rent insurance carried by Landlord and business
interruption insurance carried by Tenant, pursuant to which the insurance
companies waive subrogation or consent to a waiver of right of recovery.
Provided that its right of full recovery under its insurance policies is not
adversely affected thereby, the parties hereto hereby release and will not make
any claim against or seek to recover from the other for any loss or damage to
its property resulting from fire or other hazards to the extent covered by such
fire and extended coverage insurance that each party is required hereunder to
maintain (or to the extent the same would have been covered if the parties
hereunder were carrying all insurance required hereunder); provided, however,
that the release, discharge, exoneration and covenant not to sue herein
contained shall be limited by and coextensive with the terms and provisions of
the waiver of subrogation clause or endorsements or clauses or endorsements
consenting to a waiver of right of recovery. The waivers of subrogation, waivers
of recovery and release of claims provided in this Section 10.5 shall extend to
both Landlord's Indemnitees and Tenant's Indemnitees. If the payment of an
additional premium is required for the inclusion of such waiver of subrogation
provision, each party shall advise the other of the amount of any such
additional premiums and the other party at its own election may, but shall not
be obligated to, pay the same. If such other party shall not elect to pay such
additional premium, the first party shall not be required to obtain such waiver
of subrogation provision. Notwithstanding anything to the contrary contained
herein, Tenant acknowledges that Landlord shall not carry insurance on and shall
not be responsible for damage to, Tenant's Property or Specialty Alterations or
any other Alterations prior to the completion of the Initial Alterations, and
that Landlord shall not carry insurance against, or be responsible for any loss
suffered by Tenant due to, interruption of Tenant's business, except as
otherwise expressly provided herein.
ARTICLE 11
EMINENT DOMAIN
Section 11.1 If the whole of the Real Property, the Building or the
Premises shall be acquired or condemned by a Governmental Authority for any
public or quasi-public use or purpose, this Lease and the Term shall end as of
the date of the vesting of title with the same effect as if said date were the
Expiration Date. If only a part of the Real Property and not the entire Premises
shall be so acquired or condemned then,
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(1) except as hereinafter provided in this Section 11.1, this Lease and the Term
shall continue in force and effect but, if a part of the Premises is included in
the part of the Real Property so acquired or condemned, from and after the date
of the vesting of title, the Fixed Rent shall be reduced in the proportion which
the Rentable Square Foot area of the part of the Premises so acquired or
condemned bears to the total Rentable Square Foot area of the Premises
immediately prior to such acquisition or condemnation and Tenant's Operating
Share and Tenant's Tax Share shall be redetermined based upon the proportion in
which the ratio between the Rentable Square Foot area of the Office Space
remaining after such acquisition or condemnation bears to the Rentable Square
Foot area of the Building remaining after such acquisition or condemnation
(giving due regard to the fact that the Fixed Rent for the Premises has been
calculated using different rates of Fixed Rent for certain floors of the
Premises and the fact that Escalation Rent is payable only with respect to the
Office Space); (2) whether or not the Premises shall be affected thereby,
Landlord, at Landlord's option, may give to Tenant, within sixty (60) days next
following the date upon which Landlord shall have received notice of vesting of
title, a thirty (30) days' notice of termination of this Lease, provided that,
if the Premises shall not be substantially affected or rendered substantially
untenantable by reason of such taking, Landlord may not terminate this Lease
unless Landlord shall elect to terminate leases (including this Lease) affecting
at least seventy-five percent (75%) of the remaining office space in the
Building; and (3) if the part of the Real Property so acquired or condemned
shall contain more than fifteen percent (15%) of the total Rentable Square Foot
area of the Premises immediately prior to such acquisition or condemnation, or
if, by reason of such acquisition or condemnation, Tenant no longer has
reasonable means of access to the Premises, or if the portion of the Premises
containing Tenant's computer/data center or any network hub rooms is not
reasonably usable by Tenant and by reason thereof Tenant shall be unable to
operate its business in substantially the entire remaining Premises, Tenant, at
Tenant's option, may give to Landlord, within sixty (60) days next following the
date upon which Tenant shall have received notice of vesting of title, not less
than thirty (30) nor more than one hundred eighty (180) days' notice of
termination of this Lease. If any such notice of termination is given, by
Landlord or Tenant, this Lease and the Term shall come to an end and expire upon
the expiration of (i) with respect to Landlord, said thirty (30) days (or, if
the Premises were not substantially affected and rendered substantially
untenantable and the same are usable for the conduct of business, the six (6)
month anniversary of the date on which such notice is given or such shorter
period (if permitted by applicable Requirements) as specified by Tenant in a
notice to Landlord), or (ii) with respect to Tenant, the number of days set
forth in Tenant's notice, in each case, with the same effect as if such date of
expiration were the Expiration Date hereunder. If a part of the Premises shall
be so acquired or condemned and this Lease and the Term shall not be terminated
pursuant to the foregoing provisions of this Section 11.1, Landlord, at
Landlord's expense, shall restore that part of the Premises not so acquired or
condemned to a self-contained rental unit inclusive of Tenant's Alterations
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(other than Specialty Alterations and Tenant's Property) to substantially the
condition as existed as of the date hereof with such modifications as shall be
required in order to comply with Requirements. In the event of any termination
of this Lease and the Term pursuant to the provisions of this Section 11.1, the
Fixed Rent, Escalation Rent and all other items of Rental shall be apportioned
as of the date of sooner termination and any prepaid portion of Fixed Rent,
Escalation Rent and all other items of Rental for any period after such date
shall be refunded by Landlord to Tenant, which obligation shall survive the
Expiration Date.
Section 11.2 In the event of any such acquisition or condemnation of
all or any part of the Real Property, Landlord shall be entitled to receive the
entire award for any such acquisition or condemnation, Tenant shall have no
claim against Landlord or the condemning authority for the value of any
unexpired portion of the Term and Tenant hereby expressly assigns to Landlord
all of its right in and to any such award. Nothing contained in this Section
11.2 shall be deemed to prevent Tenant from making a separate claim in any
condemnation proceedings for the then value of any Tenant's Property included in
such taking, and for any moving expenses, and for Tenant's improvements,
Alterations and additions which are not the property of Landlord pursuant to the
terms of this Lease and provided such claim does not reduce Landlord's claims
against the condemning authority. If Tenant shall not be permitted to make a
separate claim in such proceeding, Landlord shall prosecute all claims in such
proceeding on behalf of both Landlord and Tenant in which event Tenant may, if
it so elects, join with Landlord in such proceeding, retain co-counsel, attend
hearings, present arguments, and generally participate in the conduct of the
proceeding.
Section 11.3 If the whole or any part of the Premises shall be
temporarily acquired or condemned by a Governmental Authority during the Term
for any public or quasi-public use or purpose, this Lease shall continue in full
force and effect; provided that all items of Rental payable by Tenant hereunder
shall be abated as to the portion of the Premises so taken for the period of
such taking giving due regard to the different rental rates for different space
included in the Premises. The Rentable Square Foot area of the Office Space for
purposes of calculating Tenant's Operating Share and Tenant's Tax Share shall be
reduced by the area of the part of the Office Space so taken. Notwithstanding
the foregoing, if the temporary use or occupancy is for a period of greater than
one (1) year, and either the (i) the portion of the Premises so taken shall
contain more than fifteen percent (15%) of the total Rentable Square Foot area
of the Premises immediately prior to such acquisition, or (ii) if a portion of
the Premises containing Tenant's computer/data center or any network hub room
shall not be reasonably usable by Tenant and rendered substantially untenantable
and by reason thereof Tenant shall be unable to operate its business in
substantially the entire remaining Premises, then Tenant, at Tenant's option,
may give to Landlord, within thirty (30) days next following the date upon which
Tenant shall have received notice of such taking, a
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notice of termination of this Lease as of a date set forth in such notice, which
date shall not be less than thirty (30) nor more than one hundred eighty (180)
days from the date of such notice. If Tenant shall give such notice of
termination, this Lease and the Term shall come to an end and expire upon the
termination date set forth in such notice as if such termination date were the
date originally set forth in this Lease as the Expiration Date. If a part of the
Premises shall be so acquired or condemned and this Lease and the Term shall not
be terminated pursuant to this Section 11.3, Landlord, at Landlord's expense,
shall restore that part of the Premises not so acquired or condemned to a
self-contained rental unit inclusive of Tenant's Alterations (other than
Specialty Alterations and Tenant's Property). In the event of any termination of
this Lease and the Term pursuant to the provisions of this Section 11.3, the
Fixed Rent, Escalation Rent and all other items of Rental shall be apportioned
as of the date of sooner termination and any prepaid portion of Fixed Rent,
Escalation Rent and all other items of Rental for any period after such date
shall be refunded by Landlord to Tenant, which obligation shall survive the
Expiration Date.
ARTICLE 12
ASSIGNMENT; SUBLETTING; MORTGAGE; ETC.
Section 12.1 Except as expressly permitted herein, Tenant, without
the prior consent of Landlord in each instance in accordance with this Article
12, shall not (a) assign its rights or delegate its duties under this Lease
(whether by operation of law, transfers of interests in Tenant or otherwise),
mortgage or encumber its interest in this Lease, in whole or in part, (b)
sublet, or permit the subletting of, the Premises or any part thereof, or (c)
permit the Premises or any part thereof to be occupied, or used for desk space,
mailing privileges or otherwise, by any person other than Tenant, except as
otherwise expressly provided herein.
Section 12.2 (A) If Tenant's interest in this Lease is assigned in
violation of the provisions of this Article 12, such assignment shall be void
and of no force and effect against Landlord; provided, however, that Landlord
may, in addition to all the other rights and remedies provided to Landlord
hereunder, at law or in equity, collect an amount equal to the then Fixed Rent
plus any other item of Rental from the assignee as a fee for its use and
occupancy, and shall apply the amount collected to the Fixed Rent and other
items of Rental reserved in this Lease. If the Premises or any part thereof are
sublet to, or occupied by, or used by, any person other than Tenant, whether or
not in violation of this Article 12, Landlord, after default by Tenant under
this Lease beyond the expiration of any applicable notice and grace period, may
collect any item of Rental or other sums paid by the subtenant, user or occupant
as a fee for its use and occupancy, and shall apply the net amount collected to
the Fixed Rent and other items of Rental reserved in this Lease. No such
assignment, subletting, occupancy or use, whether with or without
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Landlord's prior consent, nor any such collection or application of Rental or
fee for use and occupancy, shall be deemed a waiver by Landlord of any term,
covenant or condition of this Lease or, if Landlord has consented to the same,
the acceptance by Landlord of such assignee, subtenant, occupant or user as
tenant hereunder. The consent by Landlord to any assignment, subletting,
occupancy or use shall not relieve Tenant from its obligation to obtain the
express prior consent of Landlord to any further assignment, subletting,
occupancy or use to the extent required hereunder.
(B) Tenant shall pay to Landlord the reasonable attorneys'
fees and disbursements incurred by or on behalf of Landlord in connection with
any proposed assignment of Tenant's interest in this Lease or any proposed
subletting of the Premises or any part thereof. If Landlord and Tenant shall
disagree as to the reasonableness of such fees or disbursements, Landlord shall
nevertheless grant or deny its consent to such proposed assignment or subletting
provided such disputed fees and/or disbursements had been paid by Tenant and
either Landlord or Tenant may submit the dispute to arbitration, as provided in
Article 47 hereof.
(C) Neither any assignment of Tenant's interest in this Lease
nor any subletting, occupancy or use of the Premises or any part thereof by any
person other than Tenant, nor any collection of Rental by Landlord from any
person other than Tenant as provided in this Section 12.2, nor any application
of any such Rental as provided in this Section 12.2 shall, in any circumstances,
except as otherwise expressly provided herein, relieve Tenant of its obligations
under this Lease on Tenant's part to be observed and performed. Any person or
entity to which this Lease is assigned pursuant to the provisions of the
Bankruptcy Code shall be deemed without further act or deed to have assumed all
of the obligations arising under this Lease on and after the date of such
assignment. Any such assignee shall execute and deliver to Landlord upon demand
an instrument confirming such assumption. Except as expressly provided herein,
no assignment of this Lease shall relieve Tenant of its obligations hereunder
and, subsequent to any assignment, Tenant's liability hereunder shall continue
in accordance with the terms of this Lease at the time the same is assigned
notwithstanding any subsequent modification or amendment hereof or the release
of any subsequent tenant hereunder from any liability by Landlord, to all of
which Tenant hereby consents in advance (except that Tenant shall be liable for
all the obligations under (i) any such subsequent modifications and amendments
entered into by a Related Entity having a 100% control relationship to Tenant
(i.e., a wholly owned subsidiary or parent entity) and (ii) Section 12.12, and
Articles 41, 42, and 45 hereof in the event any subsequent Tenant exercises any
of the rights or options described in said Section or Articles in accordance
therewith); provided, however, that no such modification, amendment or release
shall diminish or impair Tenant's rights or remedies in any respect against any
assignee.
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(D) If this Lease is assigned to any person or entity pursuant
to the provisions of the Bankruptcy Code, 50% of all Assignment Proceeds (as
hereinafter defined) paid to Tenant in connection with such assignment shall be
paid or delivered to Landlord less the allocable portion of the Assignment
Profit attributable to Free Sublet Space, shall be and remain the exclusive
property of Landlord and shall not constitute property of Tenant or of the
estate of Tenant within the meaning of the Bankruptcy Code. Any and all monies
or other consideration constituting Landlord's property under the preceding
sentence not paid or delivered to Landlord shall be held in trust for the
benefit of Landlord and shall be promptly paid to or turned over to Landlord.
(E) If Tenant assumes this Lease and proposes to assign the
same pursuant to the provisions of the Bankruptcy Code to any Person who shall
have made a bona fide offer to accept an assignment of this Lease on terms
acceptable to Tenant, then notice of such proposed assignment shall be given to
Landlord by Tenant no later than ten (10) days prior to the date that Tenant
shall make application to a court of competent jurisdiction for authority and
approval to enter into such assignment and assumption. Such notice shall set
forth (a) the name and address of such Person, and (b) all of the terms and
conditions of such offer. Landlord shall have the prior right and option, to be
exercised by notice to Tenant given at any time prior to the effective date of
such proposed assignment, to accept an assignment of this Lease upon the same
terms and conditions and for the same consideration, if any, as the bona fide
offer made by such Person, less any brokerage commissions which would otherwise
be payable by Tenant out of the consideration to be paid by such Person in
connection with the assignment of this Lease and which are not payable by Tenant
in connection with such assignment to Landlord.
Section 12.3 In the event of an assignment of this Lease (other than
to a Related Entity or Successor-in-interest or pursuant to the provisions of
the Bankruptcy Code), then prior to a termination of this Lease by Landlord (a)
Landlord shall send copies of all "default notices" given to an assignee of the
Lease to the Tenant Named Herein at the address herein stated or at any
subsequent address furnished to Landlord, (b) the Tenant Named Herein shall have
the right to cure any such defaults of such defaulting assignee which cure
rights shall be concurrent with the rights of the assignee, and (c) the Tenant
Named Herein shall have an additional ten (10) days to cure such default if the
same is a monetary default and an additional twenty (20) days to cure such
default if the same is a non-monetary default (commencing, in each case, on the
day immediately succeeding the expiration of such defaulting assignee's grace
period). Landlord may not terminate this Lease for a default of an assignee
(other than a Related Entity of the Tenant Named Herein) until the Tenant Named
Herein is given copies of such "default notices" and the ten (10) day or thirty
(30) day cure period, as applicable, to cure such default as provided
hereinabove has expired. The provisions of this Section 12.3 shall survive the
termination of this Lease after an Event of Default hereunder.
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Section 12.4 (A) Tenant shall have the right, subject to the terms
and conditions hereinafter set forth, without the consent of Landlord but
subject to Tenant's satisfaction of conditions set forth in clauses (1), (2),
(3) and (4) of Section 12.8(A) hereof, to assign its entire interest in this
Lease (i) to a Successor-in-interest or (ii) to a Person which shall (1)
Control, (2) be under the Control of, or (3) be under common Control with Tenant
(any such Person referred to in clauses (i) and (ii) being a "Related Entity").
The terms "Control" or "control" shall mean ownership of more than twenty
percent (20%) (the "Control Percentage") of the outstanding voting stock of a
corporation or other equity interest if not a corporation or the possession of
power to direct or cause the direction of the management and policy of such
corporation or other entity, whether through the ownership of voting securities,
by statute or according to the provisions of a contract. Notwithstanding the
foregoing, in the event of an assignment of this lease or subletting of space by
Tenant or a Related Entity to an entity (the "Non-Control Entity") that (i) is
not a Successor-in-interest, and (ii) does not have at least a 50% control
relationship to its assignor or sublessor, then with respect to all future
sublettings and/or assignments by or through such Non-Control Entity the Control
Percentage shall be deemed to be fifty (50%) percent or more in order to qualify
as a Related Entity for purposes of this Section 12.4. Tenant also shall have
the right, subject to the terms and conditions hereinafter set forth, without
the consent of Landlord but subject to Tenant's satisfaction of conditions set
forth in clauses (2), (3), (4), (5), (6), (7) and (8) of Section 12.6(A) to
sublease or license all or any portion of the Premises to a Related Entity. Any
assignment or subletting or licensing described above may only be made upon the
condition that (a) any such assignee or subtenant or licensee shall use the
Premises only for the purposes permitted hereunder, (b) the principal purpose of
such assignment or sublease or license is not to circumvent the provisions of
Section 12.1 of this Article, (c) any such assignee shall assume in writing all
terms, covenants and conditions of this Lease on Tenant's part to be observed or
performed from and after the effective date of such assignment, (d) Tenant shall
deliver to Landlord within thirty (30) days after such assignment or sublease
either (x) a copy of the proposed instrument of assignment and assumption, or
(y) a copy of the sublease or license in order to permit Landlord to determine
that such assignment or sublease complies with the provisions of this Section
12.4(A), and (e) with respect to clause (i) above in the first sentence of this
paragraph, such assignee shall have a net worth of at least equal to the lesser
of (i) assignor's net worth immediately prior to the assignment, (ii)
seventy-five percent (75%) of Tenant's net worth as of the date hereof, and
(iii) $500,000,000 (which amount would appear on the consolidated balance sheet
of such assignee and its subsidiaries as "consolidated stockholders equity"
determined in accordance with generally accepted accounting principles).
Notwithstanding the foregoing, Sections 12.7 and 12.9 shall apply to assignments
and sublettings by Tenant to Related Entities having less than a fifty percent
(50%) control relationship to Tenant provided that neither the assignment of
this Lease
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nor the subletting of all or any portion of the Premises to a
Successor-in-interest shall be subject to either Section 12.7 or Section 12.9.
(B) If Tenant hereafter becomes a partnership, limited
partnership, limited liability company or a limited liability partnership
pursuant to the terms of this Lease, the admission, withdrawal, retirement,
death, incompetency or bankruptcy of any Partner, or the reallocation of
partnership interests among the Partners, shall not constitute an assignment of
this Lease, provided that the principal purpose of any of the foregoing is not
to circumvent the restrictions on assignment set forth in the provisions of this
Article 12. The reorganization of Tenant into a limited or general partnership
or a professional corporation or a limited liability company or a limited
liability partnership, shall not constitute an assignment of this Lease provided
that the principal purpose of the foregoing is not to circumvent the
restrictions on assignment set forth in this Article 12.
(C) Except as set forth above, either a transfer (whether
directly or indirectly) of a majority of the total interest in Tenant (if Tenant
is any type of partnership or limited liability company) or a transfer
(including the issuance of treasury stock or the creation and issuance of new
stock) of a controlling interest in the shares of Tenant (if Tenant is any type
of corporation or trust) at any one time or over a period of one year or less
through related series of transfers, shall be deemed an assignment of this Lease
and shall be subject to all of the provisions of this Article 12, including,
without limitation, the requirement that Tenant obtain Landlord's prior consent
thereto. The transfer of shares of Tenant (if Tenant is a corporation or trust)
for purposes of this Section 12.4 shall not include the sale of shares effected
through any recognized "over-the-counter market" or through any recognized stock
exchange. Notwithstanding anything to the contrary contained in this Lease, (i)
no consent of Landlord shall be required for the transfer of any interest or
interests of any kind in the Tenant Named Herein and (ii) no transfer of an
interest or interests of any kind in the Tenant Named Herein shall constitute or
be deemed to constitute an assignment of this Lease or a subletting of all or
any portion of the Demised Premises.
Section 12.5 If, at any time after Tenant may have assigned Tenant's
interest in this Lease, this Lease shall be disaffirmed or rejected in any
proceeding of the types described in Section 16.1(B) hereof, or in any similar
proceeding, or in the event of termination of this Lease by reason of any such
proceeding or by reason of lapse of time following notice of termination given
pursuant to said Article 16 based upon any of the Events of Default set forth in
such paragraph, Tenant, upon request of Landlord given within sixty (60) days
next following any such disaffirmance, rejection or termination (and actual
notice thereof to Landlord in the event of a disaffirmance or rejection or in
the event of termination other than by act of Landlord), shall (l) pay to
Landlord all Fixed Rent, Escalation Rent and other items of Rental due and owing
by the assignee to
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Landlord under this Lease and cure all outstanding defaults by Tenant under this
Lease to and including the date of such disaffirmance, rejection or termination
(it being agreed that Landlord shall thereupon assign to Tenant all of
Landlord's rights and claims therefor against the assignee) and (2) as "tenant",
enter into a new lease with Landlord of the Premises for a term commencing on
the effective date of such disaffirmance, rejection or termination and ending on
the Fixed Expiration Date, unless sooner terminated as in such lease provided,
at the same Fixed Rent and upon the then executory terms, covenants and
conditions as are contained in this Lease, except that (a) Tenant's rights under
the new lease shall be subject to the possessory rights of the assignee under
this Lease and the possessory rights of any person claiming through or under
such assignee or by virtue of any statute or of any order of any court (it being
agreed that Landlord shall, at the direction of Tenant and at Tenant's expense,
use all reasonable efforts to obtain possession of the Premises for Tenant), and
(b) such new lease shall require that all defaults existing under this Lease
(that are susceptible of being cured) be cured by Tenant with due diligence, and
(c) such new lease shall require Tenant to pay all Escalation Rent reserved in
this Lease which, had this Lease not been so disaffirmed, rejected or
terminated, would have accrued under the provisions of Article 27 hereof after
the date of such disaffirmance, rejection or termination with respect to any
period prior thereto. If Tenant shall default in its obligation to enter into
said new lease for a period of thirty (30) days next following Landlord's
request therefor, then, in addition to all other rights and remedies by reason
of such default, either at law or at equity, Landlord shall have the same rights
and remedies against Tenant as if Tenant had entered into such new lease and
such new lease had thereafter been terminated as of the commencement date
thereof by reason of Tenant's default thereunder. Notwithstanding the foregoing,
in no event shall the liability of Tenant pursuant to this Section 12.5 exceed
the liability Tenant would otherwise have pursuant to Section 12.2(C).
Section 12.6 (A) Notwithstanding the provisions of Section 12.1
hereof, if Landlord is not entitled, or has elected not, to exercise its rights
pursuant to paragraph (B) of this Section 12.6, then Landlord shall not
unreasonably withhold its consent to any subletting (and, such consent shall be
deemed granted if not denied within (i) ten (10) Business Days for sublettings
of less than a full floor and (ii) fifteen (15) Business Days for sublettings of
a full floor or more, after request therefor and receipt of all other
information reasonably required and requested by Landlord in order to grant or
withhold consent to such subletting in accordance with this Section 12.6,
including the name and address of the proposed subtenant and its intended use of
the Premises (or portion thereof) and a description of its business; any such
denial to be accompanied by a statement of Landlord setting forth in reasonable
detail the reasons for such denial), provided that:
(1) The Premises shall not, without Landlord's prior
consent, have been advertised in the public media (i.e., newspapers,
journals or magazines) or publicly listed with brokers or real estate
agents or sales persons for
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subletting at a rental rate less than the prevailing rental rate then
being asked by Landlord for comparable space in the Building (and Landlord
shall upon request of Tenant, notify Tenant of Landlord's good faith
determination of said prevailing rate (the "Prevailing Rate")).
(2) No Event of Default with respect to (i) the payment
of Fixed Rent or Escalation Rent, (ii) other sums or charges in excess of
$25,000 as such amount shall be increased on January 1st of each calendar
year during the Term by the percentage increase in the Consumer Price
Index on each such January 1st over the Base Index, and (iii) material
non-monetary obligations (a "Special Event of Default") shall have
occurred and be continuing.
(3) The proposed subtenant shall be of a character, be
engaged in a business and propose to use the Premises in a manner
consistent with the Building Standard.
(4) The character of the business to be conducted or the
proposed use of the Premises by the proposed subtenant shall not require
any Alterations to be performed by Landlord, at Landlord's expense, in, or
made to, any portion of the Building or the Real Property (unless Tenant
shall pay the reasonable cost thereof).
(5) The subletting shall be expressly subject and
subordinate to this Lease and to all of the terms, covenants, conditions
and obligations on Tenant's part to be observed and performed under this
Lease (including, without limitation, this Article 12); and the further
condition and restriction that the sublease shall not be assigned,
encumbered or otherwise transferred or the subleased premises further
sublet by the subtenant in whole or in part, or any part hereof suffered
or permitted by the subtenant to be used or occupied by others, without
the prior written consent of Landlord in each instance, provided, however,
that, subject to Landlord's recapture rights set forth in this Section
12.6, subtenants under permitted subleases of Tenant Named Herein of 5,000
Rentable Square Feet or more of space or any permitted subsubtenant of
12,500 Rentable Square Feet or more of space, for a term of not less than
two (2) years, shall have the same rights to assign such subtenant's
sublease or sublet such subtenant's subleased premises as Tenant has with
respect to this Lease and the Premises, subject to the provisions hereof.
(6) The subletting shall end no later than one (1) day
before the Expiration Date and shall not be for a term of less than one
(1) year unless it commences less than one (1) year before the Expiration
Date.
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(7) At no time shall there be more than four (4)
occupants per floor, including Tenant, in the Premises.
(8) Such sublease shall expressly provide that in the
event of termination, re-entry or dispossess of Tenant by Landlord under
this Lease, Landlord may, at its option, take over all of the right, title
and interest of Tenant, as sublessor under such sublease and such
subtenant shall, at Landlord's option, attorn to Landlord pursuant to the
then executory provisions of such sublease, except that Landlord shall not
(i) be liable for any act or omission of or default by Tenant or any prior
sublandlord under such sublease, except to the extent such act, omission
or default is continued by Landlord and accrues during or is otherwise
applicable to the period after the date that Tenant's interest in such
sublease shall have been transferred to Landlord; (ii) be subject, except
to the extent expressly provided in such sublease, to any credits, claims,
setoffs or defenses which such subtenant might have against Tenant or any
prior sublandlord as a result of any acts or omissions of Tenant or any
prior sublandlord; (iii) be, subject to clause (vi) hereinbelow, bound by
any fixed rent, basic rent, additional rent or other amounts which such
subtenant may have paid to Tenant more than thirty (30) days in advance of
the month to which such payments relate, and all such prepaid rent and
additional rent shall remain due and owing without regard to such
prepayment, except for payment of the first month's fixed rent or basic
rent upon the execution of such sublease and prepayments of additional
rent made on account of operating expenses and real estate taxes in
accordance with the terms of such sublease; (iv) be bound by any
amendment, modification or cancellation of such sublease or surrender of
such subleased premises made without Landlord's prior written consent (and
provided that communications between Tenant and such subtenant of an
administrative nature relating to the ordinary course of operation or
tenancy of the subleased premises that do not purport to be amendments or
modifications of such sublease and do not materially affect the rights of
Tenant or Landlord shall not be deemed amendments or modifications for
purposes of the foregoing); (v) be responsible for the making of repairs
in or to the Real Property in the case of damage or destruction of the
Real Property or any part thereof due to fire or other casualty occurring
prior to the date Landlord succeeds to the interest of Tenant under such
sublease or by reason of a condemnation occurring prior to the date
Landlord succeeds to the interest of Tenant under such sublease unless
Landlord shall be obligated under the Lease to make such repairs; (vi) be
obligated to make any payment to such subtenant required to be made by
Tenant except for (x) the timely return of any security deposit actually
received by Landlord and (y) the credit or refund to such subtenant as
provided in such sublease of any prepayment of rent or other charges paid
by subtenant if such prepayment is actually received by Landlord; and
(vii) be responsible for any obligation of Sublessor to perform
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any improvement in the space affected by the sublease in order to prepare
the same for sublessee's occupancy thereof (subject to the provisions of
clause (ii) above and any set off expressly provided in such sublease
therefor).
(9) The proposed subtenant or assignee is not then a
party which dealt with Landlord or Landlord's agent (directly or through a
broker) with respect to space of comparable size in the Building, during
the three (3) months immediately preceding Tenant's request for Landlord's
consent. Solely for purposes of this subdivision (9) "dealt" shall mean
any instance where Landlord and the proposed subtenant or assignee have
within such three (3) month period entered into a non-binding letter of
intent with respect to such comparable space or Landlord has forwarded to
such proposed subtenant or assignee a first draft of a lease for such
comparable space reflecting terms agreed to by Landlord and such proposed
subtenant or assignee.
(10) The proposed subtenant or assignee is not then an
occupant of any part of the Building, if Landlord has available for direct
leasing comparable space in the Building. For purposes of this Article 12,
comparable space must be substantially of the same size, be available for
substantially the same term and either be in the same elevator bank as the
space that Tenant proposes to sublease to such occupant or be in the same
elevator bank as other space in the Building then occupied by such
occupant.
(B) If Tenant desires to sublet (other than to a Related
Entity) one (1) full floor or more of the Premises, at least (i) thirty (30)
days with respect to proposed subleases of less than 50,000 Rentable Square
Feet, (ii) sixty (60) days with respect to proposed subleases of between 50,000
and 100,000 Rentable Square Feet, and (iii) ninety (90) days with respect to
proposed subleases over 100,000 Rentable Square Feet, prior to the commencement
date of the proposed sublease, Tenant shall submit a statement to Landlord (a
"Sublease Statement") containing the following information: (a) a description of
the portion of the Premises available to be sublet (the "Recapture Space"), (b)
the exact term such space is available for subleasing, (c) Tenant's
determination of the fair market sublet value (based on an "as is" sublease
transaction for the term proposed by Tenant with no work allowance or free rent
and for the term set forth in the Sublet Statement) for such portion of the
Premises, taking into consideration all relevant factors, including without
limitation, the fact that no work allowance or free rent is given, and no
brokerage commission is being incurred by Tenant, and (d) any other information
that Landlord may reasonably request. Landlord shall have the right, except with
respect to Free Sublet Space unless subleased in conjunction with space that is
not Free Sublet Space, exercisable within (i) thirty (30) days for proposed
subleases of less than 50,000 Rentable Square Feet, (ii) sixty (60) days for
proposed subleases of between 50,000 and 100,000 Rentable Square Feet, and (iii)
ninety (90) days for proposed subleases of over 100,000
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Rentable Square Feet, after Landlord's receipt of the Sublease Statement, to
either (i) sublet (in its own name or that of its designee or replacement
subtenant) the Recapture Space from Tenant on the terms and conditions set forth
in the Sublease Statement, subject to the further provisions of Section 12.6(D)
(which Recapture Sublet Right may be exercised under any circumstance with
respect to the Recapture Space) (the "Recapture Sublet Right"), or (ii)
terminate this Lease if the proposed subletting is for all or substantially all
of the Premises for a term with an expiration date occurring within the 180-day
period immediately preceding the Expiration Date (the "Recapture Termination
Right") (the Recapture Sublet Right and Recapture Termination Right are herein
sometimes collectively referred to as the "Recapture Right"). If Landlord shall
elect not to exercise the Recapture Right, or if Landlord shall fail to notify
Tenant within the aforesaid time periods (i.e., 30, 60, and 90 days, as the case
may be) of Landlord's intention to exercise its rights pursuant to this Section
12.6 hereof, then, subject to the terms and conditions of Section 12.6(A) and to
the other terms and conditions of this Lease, Tenant shall be free to sublease
that portion of the Premises to a proposed subtenant for a term that commences
within fifteen (15) months of the term set forth in the Sublease Statement
subject to Landlord's consent to such sublease, as set forth in Section 12.6(A).
If Tenant shall not enter into such sublease within fifteen (15) months after
the receipt by Tenant of Landlord's response to the Sublease Statement, then the
provisions of Section 12.1 and this Section 12.6 shall again be applicable. If
Tenant shall enter into such sublease within fifteen (15) months, as aforesaid,
Tenant shall deliver a true, complete and fully executed counterpart of such
sublease to Landlord for consent within thirty (30) days after the full
execution thereof.
(C) (1) If Landlord exercises its Recapture Sublet Right to
sublet the Recapture Space, such sublease to Landlord or its designee or
replacement subtenant (each, a "Recapture Sublease") shall:
(a) be in a form reasonably satisfactory to both
Landlord and Tenant and be upon the same terms and conditions as
those contained in this Lease, except such as are irrelevant or
inapplicable and except as otherwise expressly set forth to the
contrary in this Section 12.6(C);
(b) provide that the fixed rent and the escalation
rent ("Recapture Rent") payable for the term of the Recapture
Sublease be upon the terms contained in the Sublease Statement
(subject to Landlord's right to dispute such terms pursuant to
Section 12.14 below);
(c) give the subtenant the unqualified and
unrestricted right, without Tenant's permission, to assign such
sublease and to further sublet the Recapture Space or any part
thereof to any assignee or
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sublessee of a character, engaged in a business and proposing to use
the Recapture Space in a manner consistent with the Building
Standard and to make any and all changes, alterations, and
improvements in the Recapture Space (it being agreed that Tenant
shall not be responsible for any act or omission of such subtenant
or any other subtenant or occupant of or through Landlord (or its
designee) of the Recapture Space);
(d) provide in substance that any such changes,
alterations, and improvements made in the Recapture Space may be
removed, in whole or in part, prior to or upon the expiration or
other termination of the Recapture Sublease, provided that any
damage and injury caused thereby shall be repaired by Landlord;
(e) provide that (i) the parties to such sublease
expressly negate any intention that any estate created under such
sublease be merged with any other estate held by either of said
parties, (ii) prior to the commencement of the term of the Recapture
Sublease, Tenant, at its expense (unless the Sublease Statement
provides otherwise), shall make such alterations as may be required
or reasonably deemed necessary by the subtenant to physically
separate the Recapture Space from the balance of the Premises and to
provide appropriate means of ingress to and egress thereto and to
the public portions of the balance of the floor such as lavatories,
janitor's closets, telephone and electrical closets, fire stairs,
elevator lobbies, etc., and (iii) at the expiration of the term of
such sublease, (x) if the term of such sublease was for five (5)
years or less and not expiring within the last year of the Term as
same may be extended pursuant to Article 41 below, Landlord shall
deliver vacant broom-clean possession of the Recapture Space to
Tenant in substantially the same condition that existed prior to the
commencement of the term of such sublease (subject to reasonable
wear and tear and any non-material and decorative modifications made
to the Recapture Space), (y) if the term of such sublease was for
more than five (5) years, and not expiring within the last year of
the Term as same may be extended pursuant to Article 41 below,
Tenant
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will accept the Recapture Space in its then existing condition,
vacant and broom clean provided same is reasonably usable for
general office use (with, if required by Tenant, the removal of
Specialty Removal Alterations therefrom, which were installed by
Landlord or its designee or subtenant or any party claiming through
them and the repair and restoration in a good and workerlike manner
of any damage caused by such removal to a condition which is
customary and reasonable with respect to such removal and in keeping
with the Building Standard), and (z) if expiring within the last
year of the Term as same may be extended pursuant to Article 41
below, Tenant will accept the Recapture Space in its then existing
condition, vacant and broom clean; and
(f) provide that the subtenant or occupant shall
use and occupy the Recapture Space for any of the permitted uses
hereunder.
(2) Performance by Landlord, or its designee or any replacement
subtenant, under a Recapture Sublease shall be deemed performance by Tenant of
any similar obligation under this Lease and Tenant shall not be liable for any
default under this Lease or deemed to be in default hereunder if such default is
occasioned by or arises from any act or omission of Landlord, its designee or
the subtenant under the Recapture Sublease or is occasioned by or arises from
any act or omission of any occupant under the Recapture Sublease. Tenant shall,
upon prior notice to Landlord, have the right to offset against Rental due under
this Lease any amounts payable to Tenant by Landlord under a Recapture Sublease
that are not paid by Landlord within five (5) business days after notice that
same are past due.
(3) If Landlord is unable to give Tenant possession of the Recapture
Space at the expiration of the term of the Recapture Sublease by reason of the
holding over or retention of possession of any tenant or other occupant, then
(w) during the holdover period Landlord shall pay to Tenant, as rental, the
Recapture Holdover Amount (as defined below) and Landlord shall comply with all
other obligations, under the Recapture Sublease until the date upon which
Landlord shall give Tenant possession of such Recapture Space free of
occupancies, (x) neither the Expiration Date nor the validity of this Lease
shall be affected, (y) Tenant waives any rights under Section 223-a of the Real
Property Law of New York, or any successor statute of similar import, to rescind
this Lease and further waives the right to recover any damages from Landlord
which may result from the failure of Landlord to deliver possession of the
Recapture Space at the end of the term of the Recapture Sublease, and (z)
Landlord, at Landlord's expense, shall use all reasonable efforts to deliver
possession of such Recapture Space to Tenant and in connection therewith shall,
to the extent reasonably required, institute, and diligently and in good faith
prosecute, holdover and any other appropriate proceedings against the occupant
of such Recapture Space. The Recapture Holdover Amount payable during each month
of the holdover shall be the same percentages set forth in Section 20.2 below
comprising the Holdover Amount, as such percentages are applied to the rent
payable by Landlord to Tenant for the Recapture Space.
(D) If Landlord exercises its Recapture Termination Right, then:
(1) this Lease shall terminate as of the date set forth
in the Sublease Statement as the commencement date of the proposed
subletting as if said date were the Expiration Date hereunder and the
terms and conditions of Article 20
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hereof shall apply to the Recapture Space and neither party shall have any
further obligation to the other except as otherwise expressly provided in
this Lease;
(2) notwithstanding anything contained in this Lease to
the contrary, Tenant shall be released from all liabilities accruing under
this Lease from and after the date of such termination; and
(3) Landlord shall pay to Tenant fifty percent (50%) of
the Recapture Sublease Profit with respect to the Recapture Space, if any.
(E) (1) If Landlord exercises the Recapture Sublet Right, then
Landlord shall deduct from the Recapture Rent, fifty percent (50%) of any
Recapture Sublease Profit with respect to the Recapture Space (it being the
intention of the parties that Recapture Rent shall be treated as Sublease Rent
for purposes hereof) except for that portion of the Recapture Sublease Profit
attributable to the Free Sublet Space.
(2) Notwithstanding anything herein contained to the contrary,
if Landlord exercises a Recapture Right with respect to any Recapture Space
which also covers Free Sublet Space, then the Recapture Sublease Profit shall be
equitably prorated so that Tenant receives the benefit of 100% of the Recapture
Sublease Profit allocable to the Free Sublet Space. Recapture Sublease Profit
shall be calculated on an annualized basis and shall be deducted by Landlord, as
aforesaid, as and when Recapture Rent is due and payable.
(F) The failure by Landlord to exercise its Recapture Right
with respect to any proposed subletting shall not be deemed a waiver of such
Recapture Right (to the extent exercisable under this Section 12.6) with respect
to any extension of such subletting (other than any extension(s) expressly set
forth in such sublease) or any subsequent subletting of the premises affected
thereby.
(G) Within ten (10) Business Days after request therefor
Landlord shall execute and deliver a nondisturbance agreement in the form
attached hereto as Exhibit O to any subtenants under approved subleases (except
in connection with subleases to Related Entities) of one (1) full floor or more
of space in the Premises, provided that:
(a) either (i) the fixed rent and escalation rent under
any such sublease is at least equal to the Fixed Rent and Escalation Rent
payable under this Lease with respect to the portion of the Premises to be
sublet for the applicable portion of the term or (ii) as a condition to
Landlord's agreeing not to disturb such tenancy, the subtenant under such
sublease agrees to pay at the time of such attornment a fixed rent and
escalation rent under such sublease at least equal to the Fixed Rent and
Escalation
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Rent payable under this Lease with respect to the portion of the
Premises to be sublet for the remainder of the term of such sublease;
(b) the sublessee attorns to Landlord either upon, at
Landlord's election, (a) all of the terms and conditions of this Lease (modified
to reflect the space covered by sublease) or (b) upon all the terms and
conditions set forth in such sublease;
(c) Landlord shall be reimbursed for its reasonable out
of pocket expenses, including reasonable legal fees, in connection therewith;
(d) the sublessee is not a Related Entity of Tenant and
has gross revenues equal to at least ten (10) times the aggregate annual Fixed
Rent and Escalation Rent payable under this Lease if the sublease is for the
entire Premises, or such proportionately lower gross revenues in the event the
area to be sublet is less than the entire Premises, for the year immediately
preceding the year in which the non-disturbance agreement is executed (or other
reasonably satisfactory financial condition when taking into consideration the
security deposit and/or guaranties to be provided in connection therewith),
reasonably adequate proof of which (which must consist of certified financial
statements for the prior three (3) years) shall be furnished to Landlord;
(e) has an original term of five (5) years or more; and
(f) provides for the demise of either (i) an entire "end
floor" (that is, the then highest or lowest floor of the largest block of
contiguous floors of the Premises as constituted at the time in question (the
"Block")) together with any portion of the Premises on any one or more floors
which are contiguous to such "end floor", or (ii) any entire floor (together
with any portion of the Premises on any one or more floors contiguous thereto)
which is contiguous to an "end floor" which is the subject of a sublease with
respect to which Landlord previously gave a non-disturbance and attornment
agreement to a subtenant not then in default beyond any applicable notice and
grace period provided in its sublease, or (iii) any entire floor of the Premises
not contiguous to any other floor of the Premises located within the Block, and
if leased together with such entire floor, all of the Premises on any one or
more partial floors contiguous to such entire floor.
Such non-disturbance agreement shall provide that Landlord
shall not (i) be liable for any act or omission of or default by Tenant or any
prior sublandlord under such sublease, except to the extent such act, omission
or default is continued by Landlord and accrues during or is otherwise
applicable to the period after the date that Tenant's interest in such sublease
shall have been transferred to Landlord; (ii) be subject to any credits, claims,
setoffs or defenses which such subtenant might have against
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Tenant or any prior sublandlord as a result of any acts or omissions of Tenant
or any prior sublandlord (except to the extent that (1) same are expressly set
forth in the sublease, (2) the terms of such sublease conform to a fair market
sublease transaction at the time, and (3) the rental payable to Landlord by the
subtenant (taking into consideration such credits, claims, setoffs and defenses)
is not less than the rental payable by Tenant under this Lease on a per Rentable
Square Foot basis for the balance of the term of the sublease from and after
such attornment); (iii) subject to clause (vi) hereinbelow, be bound by any
fixed rent, basic rent, additional rent or other amounts which such subtenant
may have paid to Tenant more than thirty (30) days in advance of the month to
which such payments relate, and all such prepaid rent and additional rent shall
remain due and owing without regard to such prepayment, except for payment of
the first month's fixed rent or basic rent upon the execution of such sublease
and prepayments of additional rent made on account of operating expenses and
real estate taxes in accordance with the terms of such sublease; (iv) be bound
by any amendment, modification or cancellation of such sublease or surrender of
such subleased premises made without Landlord's prior written consent (and
provided that communications between Tenant and such subtenant of an
administrative nature relating to the ordinary course of operation or tenancy of
the subleased premises that do not purport to be amendments or modifications of
such sublease and do not materially affect the rights of Tenant or Landlord
shall not be deemed amendments or modifications for purposes of the foregoing);
(v) be responsible for the making of repairs in or to the Real Property in the
case of damage or destruction of the Real Property or any part thereof due to
fire or other casualty occurring prior to the date Landlord succeeds to the
interest of Tenant under such sublease or by reason of a condemnation occurring
prior to the date Landlord succeeds to the interest of Tenant under such
sublease unless Landlord shall be obligated under the Lease to make such
repairs; (vi) be obligated to make any payment to such subtenant required to be
made by Tenant except for (x) the timely return of any security deposit actually
received by Landlord and (y) the credit or refund to such subtenant as provided
in such sublease of any prepayment of rent or other charges paid by subtenant if
such prepayment is actually received by Landlord; and (vii) be responsible for
any obligation of sublessor to perform any improvement in the space affected by
the sublease in order to prepare the same for sublessee's occupancy thereof
(subject to the provisions of clause (ii) above and any set-off expressly
provided in such sublease therefor).
The obligations of Landlord with respect to any such
non-disturbance agreement may be conditioned upon the existence of any one or
more of the following circumstances at the time of the termination of the Lease:
(1) any such sublessee shall not be in default in the
observance or performance of any of the monetary or material non-monetary
covenants of the sublease on the part of such sublessee to be observed or
performed beyond the applicable notice and grace periods provided therein for
the curing of such default; and
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(2) any such sublessee shall have furnished to Landlord a
statement, in writing, as to the above circumstance (1) within thirty (30) days
after Landlord shall have made written demand for such statement.
Section 12.7 (A) In connection with any subletting of all or any
portion of the Premises (other than sublettings (i) pursuant to a Recapture
Sublease, (ii) to Related Entities which are not Non-Control Entities or (iii)
to a Successor-in-interest) in excess of the Free Sublet Space, Landlord shall
be entitled to, and Tenant shall pay to Landlord, a sum equal to fifty percent
(50%) of any Sublease Profit derived therefrom. All sums payable hereunder by
Tenant shall be calculated on an annualized basis, but shall be paid to
Landlord, as additional rent, within ten (10) days after receipt thereof by
Tenant. Notwithstanding anything to the contrary contained in this Article 12,
in the event that Tenant enters into a sublease which covers both Free Sublet
Space and space that is not Free Sublet Space or Tenant assigns this Lease, then
the Sublease Profit or Assignment Profit, as the case may be, shall be equitably
prorated so that Tenant receives the benefit of 100% of the Sublease Profit or
Assignment Profit allocable to the Free Sublet Space.
(B) For purposes of this Lease:
(1) "Rent Per Square Foot" shall mean the sum of the
then Fixed Rent (calculated as set forth on Exhibit G or as otherwise
determined pursuant to the terms of this Lease), Escalation Rent and
Electricity Additional Rent and other Rental, if any, for services or
other benefits allocable (on a pro rata basis) to the portion of the
Premises sublet by Tenant divided by the number of Rentable Square Feet
constituting the portion of the Premises sublet by Tenant.
(2) "Sublease Profit" shall mean the product of (x) the
Sublease Rent Per Square Foot less the Rent Per Square Foot, and (y) the
number of Rentable Square Feet constituting the portion of the Premises
sublet by Tenant.
(3) "Sublease Rent" shall mean any rent or other
consideration paid to Tenant directly or indirectly, by any subtenant, or
any other amount received by Tenant from or in connection with any
subletting (including, but not limited to sums paid for the sale or
rental, or consideration received on account of any contribution, of
Alterations, Specialty Alterations or Tenant's Property or sums paid in
connection with the supply of electricity or HVAC) after first deducting
therefrom the following sublease expenses (the "Sublease Expenses"): (i)
the reasonable out-of-pocket cost and expenses of Tenant in making such
sublease, such as brokers' fees, attorneys' fees and advertising fees paid
to unrelated third parties, (ii) any sums paid to Landlord pursuant to
Section 12.2(B) hereof, (iii) the cost of improvements or alterations made
by Tenant for
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the purpose of preparing that part of the Premises for the
initial occupancy of such subtenancy, (iv) the amount of rent concessions,
(v) any moving expenses of the subtenant paid for by Tenant, (vi) any
"takeover" expenses incurred by Tenant in connection with such subtenant's
then existing leases, (vii) any payments required to be, and actually
made, by Tenant in connection with such sublease pursuant to Article 31-B
of the Tax Law of the State of New York or any real property transfer tax
of the United States or the City or State of New York (other than any
income tax), and (viii) the amount of Rental attributable to the period
("Down Time"), if any, commencing on the sixtieth (60th) day that such
portion of the Premises has been vacated and is unused by Tenant for any
purpose and not sublet and continuing until the day immediately preceding
the rent commencement date of the sublease, provided Tenant uses
reasonable efforts to market and sublease such portion of the Premises.
(4) "Sublease Rent Per Square Foot" shall mean the
Sublease Rent divided by the Rentable Square Feet of space to be demised
under a sublease.
(5) Sublease Profit shall be recalculated from time to
time to reflect any corrections in the prior calculation thereof due to
(i) subsequent payments received or made by Tenant, (ii) the final
adjustment of payments to be made by or to Tenant or (iii) mistake.
Promptly upon the making or receipt of any such discovery of any such
mistake, Tenant shall submit to Landlord a recalculation of the Sublease
Profit as the case may be, and an adjustment shall be made between
Landlord and Tenant, if applicable with respect thereto on account of
prior payments made or credits received pursuant to this Section 12.7.
(6) "Recapture Sublease Profit" shall mean the Sublease
Profit Tenant would have received if it consummated the transaction set
forth in the Sublease Statement, subject to Landlord's right to dispute
the terms of the Sublease Statement pursuant to Section 12.14 below.
(7) "Recapture Assignment Profit" shall mean the
Assignment Proceeds Tenant would have received if it consummated the
transaction set forth in the Assignment Statement, subject to Landlord's
right to dispute the terms of the Assignment Statement pursuant to Section
12.14 below.
(C) In the event that there shall then be any subleases in effect
during the Term, the Tenant shall deliver to the Landlord a statement within
sixty (60) days after the end of each calendar year in which any part of the
term of this Lease occurs specifying as to such calendar year, and within (60)
days after the expiration or earlier termination of the term of this Lease
specifying with respect to the elapsed portion of the
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calendar year in which such expiration or termination occurs, each sublease (or
further sublease, if applicable) in effect during the period covered by such
statement and, as to all such subleases (or further subleases, if applicable),
the term thereof and, with respect to any subletting (or further subletting, if
applicable) for which Tenant is obligated to make payments to Landlord pursuant
to Section 12.7(A), a computation in reasonable detail showing whether or not
anything is payable by the Tenant to the Landlord pursuant thereto with respect
to such subleases (or further subleases, if applicable) for the period covered
by such statement.
Section 12.8 (A) Notwithstanding the provisions of Section 12.1
hereof, if Landlord shall not exercise its rights pursuant to paragraph (B) (1)
of this Section 12.8, Landlord shall not unreasonably withhold its consent to an
assignment of this Lease in its entirety (and such consent shall be deemed
granted if not denied within fifteen (15) Business Days after request therefor;
any such denial to be accompanied by a statement of Landlord setting forth in
reasonable detail the reasons for such denial), provided that:
(1) no Special Event of Default shall have occurred and
be continuing;
(2) the proposed assignee shall be of a character, and
be engaged in a business and propose to use the Premises in a manner
consistent with the Building Standard;
(3) the character of the business to be conducted or the
proposed use of the Premises by the proposed assignee shall not require
any Alterations to be performed by Landlord, at Landlord's expense, in, or
made to, any portion of the Building or the Real Property (unless Tenant
shall pay the reasonable cost thereof).
(4) the assignee shall agree in writing to assume all of
the obligations of Tenant under this Lease arising from and after the
effective date of the assignment; and
(5) the Premises shall not, without Landlord's prior
consent, have been advertised in the public media (i.e., newspapers,
journals or magazines) or publicly listed with brokers or real estate
agents or sales persons for assignment at a rental rate less than the
Prevailing Rate then being asked by Landlord for comparable space in the
Building (and Landlord shall upon request of Tenant, notify Tenant of
Landlord's determination of said Prevailing Rate.
(B) (1) If Tenant desires to assign this Lease in its entirety
(other than to a Related Entity), at least one hundred (100) days prior to the
effective date of the proposed assignment, Tenant shall submit a written notice
to Landlord (the
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"Assignment Statement") of Tenant's desire to assign this Lease in its entirety
for the remaining balance of the Term hereof, together with Tenant's
determination of the fair market assignment value of this Lease (based on an
"as-is" transaction with no work allowance or free rent and taking into account
any rights pursuant to this Lease which are not transferable to the assignee and
all other relevant factors), and any other information Landlord may reasonably
request. Landlord shall have the right exercisable within ninety (90) days after
Landlord's receipt of the Assignment Statement, to either terminate the lease
effective as of the effective date of the assignment or take an assignment of
this Lease (either in its own name or that of its designee or replacement
tenant), the form of which shall be reasonably satisfactory to both Landlord and
Tenant. Landlord shall pay to Tenant a sum equal to fifty percent (50%) of the
Recapture Assignment Profit, if any, based on the Assignment Statement, (but
subject to Landlord's right to dispute same pursuant to Section 12.14 below )
(which sums shall be calculated on an annualized basis) and same shall be paid
to Tenant as and when same would have been received by Tenant. Notwithstanding
anything contained in this Lease to the contrary, Tenant shall be released from
all obligations accruing under this Lease from and after the date of such
assignment or termination.
(2) If Landlord shall elect not to take an assignment of
this Lease or, if, within said ninety (90) day period, Landlord shall fail to
notify Tenant of Landlord's intention to exercise its rights pursuant to Section
12.8(B)(1), Tenant shall be free to assign this Lease, subject to the terms and
conditions of this Section 12.8 and the terms and conditions of this Lease,
including Landlord's right to consent. If Tenant shall not deliver such
assignment within fifteen (15) months after the receipt by Tenant of Landlord's
response to the Assignment Statement, then the provisions of this Section 12.8
shall again be applicable in their entirety to any proposed assignment.
(3) The failure by Landlord to exercise its option under
Section 12.8(B)(1) with respect to an assignment of this Lease shall not be
deemed a waiver of such option with respect to any further or subsequent
assignment of this Lease.
(C) If Tenant assigns this Lease pursuant to this Section
12.8, Tenant shall deliver to Landlord for consent a true copy of the executed
assignment agreement (which agreement shall contain the assumption required
pursuant to Section 12.8(A)(4)) within thirty (30) days of the date of execution
and delivery thereof.
Section 12.9 If Tenant assigns this Lease in its entirety (other
than (i) to a Related Entity which is not a Non-Control Entity or (ii) to a
Successor-in-interest) and Landlord cannot or has elected not to terminate or
take an assignment of this Lease pursuant to Section 12.8(B)(1) hereof, Tenant
shall pay to Landlord, upon receipt thereof, fifty percent (50%) of all
Assignment Proceeds. For purposes of this Section 12.9, "Assignment Proceeds"
shall mean all consideration payable to Tenant, directly or
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indirectly, by any assignee, or any other amount received by Tenant from or in
connection with any assignment (including, but not limited to, sums paid for the
sale or rental or consideration received on account of any contribution of the
Alterations, Specialty Alterations or Tenant's Property) after first deducting
therefrom: (a) the reasonable out-of-pocket costs and expenses of Tenant in
making such assignment, such as brokers' fees, attorneys' fees, and advertising
fees paid to unrelated third parties, (b) any payments required to be made by
Tenant in connection with the assignment of its interest in this Lease pursuant
to Article 31-B of the Tax Law of the State of New York or any real property
transfer tax of the United States or the City or State of New York (other than
any income tax), (c) any sums paid by Tenant to Landlord pursuant to Section
12.2(B) hereof, (d) the cost of improvements or alterations made by Tenant for
the purpose of preparing the Premises for such assignment, or cash allowances in
lieu thereof, (e) any reasonable moving expenses of the assignee paid for by
Tenant, (f) any "takeover" expenses incurred by Tenant in connection with such
assignee's then existing lease, (g) the amount of Rental attributable to the
Downtime, if any, commencing on the sixtieth (60th) day that such portion of the
Premises has been vacated and is unused by Tenant for any purpose and continuing
until the day immediately preceding the effective date of the approved
assignment, provided that Tenant uses reasonable efforts to market and dispose
of the Premises.
Section 12.10 Notwithstanding anything contained herein or in any
other lease of space in the Building to the contrary, in the event that Tenant
elects to sublease all or a portion of the Premises or assign this Lease in its
entirety to any tenant of the Building under a direct lease of space with
Landlord of not less than 10,000 rentable square feet of office space in the
Building, the provisions of Section 12.6(A)(3), (4) and (9) and Sections
12.8(A)(2) and (3) of this Article 12 shall not apply and Landlord's consent
thereto shall not be required if the conditions set forth in Sections
12.6(A)(1), (2), (5), (6), (7), (8) and (10) and/or Sections 12.8(A)(1), (4) and
(5), as applicable, shall be satisfied.
Section 12.11 Landlord shall have the right, upon at least ten (10)
days' prior notice, to examine the Tenant's books and records relating to
Assignment Proceeds and Sublease Profits to determine the accuracy of the
determinations. If, after such examination, Landlord still disputes any
determination of Assignment Proceeds or Sublease Profits, Landlord may elect to
have the decision of the issues raised determined by arbitration pursuant to
Article 47 hereof.
Section 12.12 (A) Subject to Landlord's recapture rights, if any,
pursuant to another tenant's lease (a "Third Party Recapture Right"), and in
compliance with the applicable terms of such lease, nothing contained in this
Lease (or in any other lease with another tenant in the Building) shall be
deemed to prohibit Tenant from subleasing any portion of the Building from
another tenant of the Building, or from taking any
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assignment of such tenant's lease and Landlord shall promptly consent to, and
not otherwise intentionally interfere with, such subletting or assignment,
provided an Event of Default hereunder is not continuing. In the event that
Landlord exercises a Third Party Recapture Right with respect to a proposed
subletting or assignment by another tenant in the Building to Tenant, then
Landlord agrees that it will offer to lease such recaptured space to Tenant at
100% of the Fair Market Rent thereof for the remaining term (the "Third Party
Recapture Term") of this Lease commencing on the effective date of such
recapture. Landlord's offer shall be made to Tenant within thirty (30) days
after Landlord's exercise of the Third Party Recapture Right and such offer
shall set forth Landlord's determination of Fair Market Rent. Tenant shall have
ten (10) days from receipt of Landlord's notice within which to elect to lease
such space from Landlord (time being of the essence with respect to Tenant's
election).
(B) Provided that Tenant timely elects to lease such space, as
aforesaid, then on the commencement of the Third Party Recapture Term: (i) the
Third Party Recapture Space so leased shall be added to and be deemed part of,
the Premises, for all purposes of this Lease; (ii) the Fixed Rent shall be
recalculated and increased so as to include the Third Party Recapture Space so
leased, provided that the Fixed Rent with respect to such space so leased shall
be at 100% of the "fair market rental value" (as defined and described herein);
(iii) if the Third Party Recapture Space is not located on the Subconcourse
Level or Concourse Level, Tenant's Operating Share and Tenant's Tax Share shall
be increased to include the Third Party Recapture Space so leased; (iv) Tenant
shall receive the Supplemental Rent Credit (if applicable) in the amount and
during the period of time set forth on Exhibit Z; (v) Landlord shall provide
electricity to the Third Party Recapture Space so leased in accordance with
Section 13.1, such electricity to be measured by submeters measuring only
Tenant's consumption of electricity in the Third Party Recapture Space so
leased, (vi) the Third Party Recapture Space so leased shall be delivered to
Tenant by Landlord in compliance with all Requirements (for unoccupied space)
and in broom-clean condition (it being agreed that, on or prior to the first day
of the Third Party Recapture Term, Landlord shall deliver to Tenant such number
of original ACP-5 Certificates (provided that Tenant has delivered to Landlord
such documentation and information as Landlord may reasonably require to deliver
said ACP-5 Certificates) applicable to the Third Party Recapture Space in
question as required to be filed by Tenant in order to permit Tenant to perform
its initial Alterations therein and thereafter to occupy each floor of the Third
Party Recapture Space, together with all other documents and certificates
required by any Governmental Authority to cause the performance of any
Alterations therein to be referred to as a so-called "non-asbestos" project (it
being understood that if Tenant shall fail to deliver such documentation and
information to Landlord, Landlord's obligation to deliver such ACP-5
Certificates shall not be affected other than Landlord shall not be obligated to
deliver such ACP-5 Certificates until Tenant shall deliver such documentation
and information)), but otherwise in its "as is" condition
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and Landlord shall not be obligated to perform any other work with respect
thereto; and (vii) Tenant shall not be entitled to any allowance or contribution
with respect thereto.
(C) The Fair Market Rent for such space shall be determined as
follows:
(1) The Fair Market Rent shall be determined as if the Third
Party Recapture Space were available in the then rental market for comparable
first-class office buildings in midtown Manhattan and assuming that Landlord has
had a reasonable time to locate a tenant not a tenant of the Building who rents
with the knowledge of the uses to which the Third Party Recapture Space can be
adapted under the terms hereof, and that neither Landlord nor the prospective
tenant is under any compulsion to rent, taking into account:
(i) the term Fair Market Rent shall mean the annual fair
market rental value of the Third Party Recapture Space as of the
date Landlord exercises such recapture right;
(ii) the Base Operating Year shall be the Base Operating
Year set forth in Section 27.1(B);
(iii) Base Taxes shall mean the Base Taxes set forth in
Section 27.1(D);
(iv) Landlord shall be required to deliver the Third
Party Recapture Space in compliance with all Requirements (for
vacant space only), broom-clean and with ACP-5 Certificates, but
otherwise in "as is" condition and the fact that Tenant shall not be
entitled to any allowance or contribution, with respect thereto;
(v) the fact that Tenant shall not be entitled to any
rent abatement or rent credit against the Fixed Rent or any other
concessions (except the Supplemental Rent Credit, if applicable) and
taking into account rent abatements or rent credits then customarily
being offered by landlords in comparable transactions;
(vi) the actual brokerage commission payable by
Landlord, if any, with respect to such space;
(vii) the fact that Landlord and Tenant will be
incurring legal fees that are less than the legal fees which would
be incurred in connection with a new lease with a new tenant;
(viii) the length of the Third Party Recapture Term;
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(ix) the existing condition of the Third Party Recapture
Space;
(x) rent then being charged by owners of comparable
first class office buildings in midtown Manhattan for comparable
space; and
(xi) all other factors deemed relevant by either party
not inconsistent with the foregoing.
(2) For purposes of determining the Fair Market Rent pursuant
to this Section 12.12, the following procedures shall apply:
(i) The Fair Market Rent shall be determined as of the
date Landlord exercises such recapture right, taking into account
the applicable factors described in Section (C)(1) above on the
basis of the uses of the Third Party Recapture Space permitted
hereunder and assuming that the Third Party Recapture Space is free
and clear of all leases and tenancies (including this Lease) and
taking into account that the Third Party Recapture Space is leased
by a single tenant.
(ii) The provisions of paragraphs (3), (4) and (5) of
Section 41.3(B) shall apply to the determination of Fair Market Rent
for the Third Party Recapture Space, as if expressly stated in this
Section 12.12(B), however all references to "sixty (60)" in
paragraphs (3) and (4) thereof shall be "thirty (30)" for purposes
of this Section 12.12.
(iii) It is expressly understood that any determination
of the Fair Market Rent pursuant to this Section 12.12 shall be
based on the criteria stated in Sections 12.12(B) and (C) above.
(D) After a determination has been made of the Fair
Market Rent, the parties shall execute and deliver to each other an instrument
setting forth the Fixed Rent hereinabove determined for the Third Party
Recapture Space.
(E) If the final determination of the Fair Market Rent
shall not be made on or before the first day of the Third Party Recapture Term,
pending such final determination Tenant shall pay, as the Fixed Rent for such
Third Party Recapture Term, an amount equal to the average of Landlord's
Determination and Tenant's Determination. If, based upon the final determination
hereunder of the Fair Market Rent, the payments made by Tenant on account of the
Fixed Rent for such portion of the Third Party Recapture Term were (i) less than
the Fixed Rent payable for the applicable Third Party Recapture Term, Tenant
shall pay to Landlord the amount of such deficiency within
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ten (10) days after demand therefor together with interest thereon at the Base
Rate or (ii) greater than the Fixed Rent payable for the applicable Third Party
Recapture Term, Landlord promptly shall refund to Tenant the amount of such
excess together with interest thereon at the Base Rate.
(F) If Landlord is unable to deliver possession of the
Third Party Recapture Space so leased on the commencement of the Third Party
Recapture Term because of the holding over or retention of possession of any
tenant, undertenant or occupant in the Third Party Recapture Space so leased or
otherwise or for any other cause outside Landlord's reasonable control, subject
to compliance with the provisions of this Section 12.12(F), (i) Landlord shall
not be subject to any liability for failure to give possession on said date,
(ii) Tenant waives the right to recover any damages which may result from the
failure of Landlord to deliver possession of the Third Party Recapture Space so
leased and agrees that the provisions of this Section shall constitute an
"express provision to the contrary" within the meaning of Section 223(a) of the
New York Real Property Law, (iii) the Fixed Rent and other items of Rental
payable with respect to the Third Party Recapture Space so leased shall be
abated and the commencement of the Third Party Recapture Term shall be postponed
until the Third Party Recapture Space so leased is, in fact, available for
Tenant's occupancy and (iv) Landlord, at Landlord's expense, shall use all
reasonable efforts to timely deliver possession of the Third Party Recapture
Space to Tenant, and, in connection therewith, if necessary, shall institute and
diligently and in good faith prosecute holdover and any other appropriate
proceedings against the occupant of such space. Notwithstanding the foregoing,
if Landlord shall be unable to timely deliver possession of the Third Party
Recapture Space Landlord shall deliver to Tenant at least fifteen (15) days
prior notice of the commencement of the Third Party Recapture Term. If Landlord
shall fail to deliver possession of such Third Party Recapture Space within
ninety (90) days after the effective date of the recapture in question (the
"Recapture Cancellation Date"), Tenant shall have the right, in addition to its
other rights at law or in equity, to elect to cancel its leasing of the Third
Party Recapture Space in question by delivering a notice of termination to
Landlord within fifteen (15) days thereafter (time being of the essence with
respect to the giving of such notice). If Tenant shall not timely deliver a
notice of its election to cancel its leasing of the Third Party Recapture Space
in question to Landlord following the expiration of such ninety (90) day period,
Tenant shall have waived its right to cancel the leasing of the Third Party
Recapture Space in question pursuant to this Section 12.12 for the next sixty
(60) day period (and each sixty (60) day period thereafter, if applicable), in
which event the Recapture Cancellation Date shall be deemed to be the expiration
of such applicable sixty (60) day period; provided, however, Landlord shall pay
to Tenant, within thirty (30) days after receiving same, all amounts payable by
the tenant(s) or occupant(s) of such space so holding over for such holdover
period (the "Total Recapture Holdover Amount"), in excess of the Fixed Rent and
Escalation Rent that would be payable by
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Tenant for such Third Party Recapture Space ("Recapture Space Rent") pursuant to
the terms of this Section 12.12 (without taking into account any free rent
period or rent abatement that Tenant would be entitled to upon the leasing of
such Third Party Recapture Space) ("Recapture Space Holdover Amount") less
Holdover Costs with respect thereto; with respect to the 61st through 180th day
of any such holdover, the Recapture Space Holdover Amount shall be increased by
fifty percent (50%) of the amount (the "Recapture Excess"), if any, by which the
Recapture Space Rent exceeds the rents which were paid by the tenants or
occupants of such Third Party Recapture Space immediately prior to the holdover
period; and with respect to each day after the 180th day of such holdover, the
Offer Space Holdover Amount shall be increased if applicable, by 100% of the
Recapture Excess, if any.
Section 12.13 Tenant may permit up to 25,000 rentable square feet in
the aggregate of the Premises to be occupied for desk space, on a temporary
basis, at any time and from time to time, by any clients, agents, or business
guests of Tenant (such persons who shall be permitted to occupy portions of the
Premises pursuant to this Section 12.13 being hereinafter referred to as
"Permitted Occupant", or collectively as the "Permitted Occupants"), without the
consent of Landlord, provided that (i) the portion of the Premises occupied by
any such occupant and the portion of the Premises occupied by Tenant shall not
be required to (pursuant to Requirements) and shall not, be separated by
demising walls in such manner as to create separate entrances from the elevator
lobby, if the entire floor is otherwise occupied solely by Tenant, or from the
common hallway, if the entire floor is not otherwise occupied solely by Tenant,
(ii) there shall be no separate identification of such occupants in the lobby of
the Building (other than the permitted listings for Tenant in the Building
directory), (iii) Tenant shall receive no rent, payment or other consideration
in connection with such occupancy in excess of the pro rata portion of the
Rental payable by Tenant hereunder in respect of such space other than any
nominal rent payments or other consideration for actual services rendered or
provided by or for such occupant, and (iv) the Permitted Occupants shall use the
Premises subject to and in conformity with all of the applicable provisions of
this Lease.
Section 12.14 In the event that Landlord disputes Tenant's
determination of the fair market sublet value of the Recapture Space set forth
in the Sublease Statement or the fair market assignment value of this Lease set
forth in the Assignment Statement, as the case may be, Landlord shall, together
with Landlord's exercise of its Recapture Right or its rights under Section
12.8(B) advise Tenant of Landlord's determination thereof. Any dispute as to the
determination of Recapture Sublet Profit or Recapture Assignment Profit shall be
determined substantially in accordance with the provisions of Section 41.3(B)
below, except that any determination of (i) Recapture Sublease Profit shall be
based upon the factors set forth in Section 12.6(B) above and (ii) Recapture
Assignment Profit shall be based upon the factors set forth in Section 12.8(B)
above.
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Section 12.15 Notwithstanding any provision of this Lease to the
contrary (but subject to the provisions of Article 51 hereof), subleases and
sub-subleases between Tenant and the New York City Industrial Development Agency
(together with any successor thereto, the "IDA") wherein Tenant sublets the
Premises (or a portion thereof) to the IDA and the IDA sub-sublets the Premises
(or such portion thereof) back to the Tenant and which are required to be
entered into in connection with the incentive package described in Article 51
hereof, shall not be considered to be subleases or sub-subleases for purposes of
this Article 12 and shall not be subject to, inter alia, the prior consent of
Landlord.
ARTICLE 13
ELECTRICITY
Section 13.1 Tenant shall at all times comply with the rules,
regulations, terms and conditions applicable to service, equipment, wiring and
requirements of the public utility supplying electricity to the Building. The
parties acknowledge and agree that (i) the demand load electrical capacity
(exclusive of electricity required for Base Building HVAC) for each floor of the
Premises is, and with respect to the Concourse B Space, the Expansion Space, the
2nd Floor Space, the 39th Floor Storage Space and the Offer Space shall be, 5.1
watts per rentable square foot on a demand load basis (except that the capacity
available to (a) the 2nd Floor Space is 750 kilowatts, (b) the 10th floor Space
is 1,031 kilowatts, (c) the Bank Vault Space is 200 kilowatts, (d) the 39th
Floor Space is 80 kilowatts, and (e) the Subconcourse Space will be at least
equivalent to the capacity available to the Subconcourse Space as of the date
hereof (as same may be increased pursuant to this Section 13.1, the "Base
Capacity"), (ii) the electric buss duct risers, taps, disconnects, transformers
and panels are capable of delivering the Base Capacity to the floors of the
Premises as set forth above, (iii) Landlord shall supply a quantity of
electricity of at least the Base Capacity to the Premises (as the same may be
increased as provided in this Section 13.1) and (iv) throughout the Term,
Landlord shall maintain transformers which are part of the Building Systems.
Tenant shall have the right to allocate the Base Capacity within the Premises as
it desires. Tenant shall not use any electrical equipment which shall, nor shall
its electrical usage in the Premises, exceed the Base Capacity (as the same may
be increased as provided in this Section 13.1) or interfere with the electrical
service to other tenants of the Building. If Tenant requires additional
electrical capacity (as substantiated by reasonably detailed load calculations
for such additional electrical requirements performed by Tenant's electrical
consultant, and which calculations are furnished to Landlord, and subject to
Landlord's reasonable approval), Landlord shall provide Tenant (to the extent
reasonably required by Tenant) up to one (1) additional watt per rentable square
foot on a demand load basis, which additional power shall be distributed by
Landlord to the Premises, from the Building electrical switchboard reasonably
designated by Landlord, and the commercially reasonable out-of-pocket costs
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thereof shall be payable by Tenant to Landlord, as additional rent, within
thirty (30) days after completion of the work and rendition of a bill to Tenant
therefor. Any additional electrical capacity in excess of such one (1) watt
shall only be provided to Tenant to the extent it exists within the capacities
of the Building's buss duct system, is not committed to any Building requirement
or tenant under an existing lease obligation or is not reasonably reserved for
future tenants or Building requirements; provided, however, if Landlord
reasonably determines that such additional electrical capacity is not available
on the Building's buss duct system and Tenant's requirements necessitate
installation of an additional riser, risers or other proper and necessary
equipment, then subject to Landlord's reasonable approval, such installation
shall be made by Landlord at Tenant's sole expense, and the commercially
reasonably out-of-pocket costs thereof shall be payable by Tenant to Landlord,
as additional rent within thirty (30) days after completion of the work and the
rendition of a bill to Tenant therefor. Except as otherwise expressly provided
herein, Landlord shall not be liable in any way to Tenant for any failure or
defect in the supply or character of electric service furnished to the Premises
by reason of any requirement, act or omission of the utility serving the
Building or for any other reason not attributable to the negligence or willful
misconduct of Landlord, whether electricity is provided by public or private
utility or by any electricity generation system owned and operated by Landlord.
Landlord shall not take any action or permit another tenant in the Building to
take any action which would diminish the capacity of the electrical risers and
other electrical wiring installations serving the Premises below the Base
Capacity, unless necessitated by Requirements or the safe operation of the
Building. If Landlord shall breach its obligations under the terms of the
immediately preceding sentence, Landlord shall be responsible for the costs of
providing the Base Capacity to the Premises.
Section 13.2 (A) Unless Landlord is required to have Tenant obtain
electricity from the public utility company furnishing electricity to the
Building pursuant to the provisions of Section 13.3 hereof, electricity shall be
supplied by Landlord to the Premises and Tenant shall pay to Landlord, as
additional rent for such service (i.e., the furnishing of electricity to the
Premises and any equipment or facilities outside the Premises), an amount (the
"Electricity Additional Rent"), equal to Tenant's on-peak and off-peak
consumption and demand for electricity, respectively, as registered on time of
day submeter(s) (currently in place or to be installed) multiplied by the
consumption and demand charges as stated in the public utility's rate schedule
applicable for the electric service to the entire Building during such times of
consumption and pursuant to which Landlord purchases electricity from the public
utility. Tenant shall also pay when due all sales or other taxes, fuel
adjustments, surcharges and any other costs or expenses which shall be payable
by Landlord or Tenant as a result of electricity purchased by Landlord and
furnished to Tenant pursuant to this Article 13.
(B) Landlord shall pass along to Tenant all benefits, rebates
and discounts received by Landlord from the public utility serving the Building
for lighting
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and other equipment installed in the Premises to the extent such rebates are not
already reflected in the definition of Electricity Additional Rent. Landlord and
Tenant shall reasonably cooperate with each other in attempting to obtain such
benefits, rebates and discounts.
(C) Where more than one (1) submeter measures the electricity
supplied to the Premises, the consumption and demand charges rendered through
each submeter shall be computed and billed separately in accordance with the
provisions hereinabove set forth. Bills for the Electricity Additional Rent
shall be rendered to Tenant at such time as Landlord may elect, and Tenant shall
pay the amount shown thereon to Landlord within thirty (30) days after receipt
of such bill, unless such charges are made a part of a Fixed Rent invoice, then
such charges shall be paid with the Fixed Rent. Tenant shall pay to Landlord,
Landlord's actual out-of-pocket costs incurred to have an independent
third-party meter reading company read the meters serving the Premises,
calculate the charges to be paid by Tenant pursuant to this Article 13 for
electricity and prepare electric bills. If additional meters or submeters are
required to measure Tenant's consumption of electricity in the Premises,
Landlord shall install same, and Tenant shall pay Landlord's out-of-pocket costs
therefor, as additional rent, within thirty (30) days after demand.
Section 13.3 If Landlord shall be required by any Requirement or the
public utility furnishing electricity to the Building, to discontinue furnishing
electricity to Tenant, this Lease shall continue in full force and effect and
shall be unaffected thereby, except only that from and after the effective date
of such discontinuance, Landlord shall not be obligated to furnish electricity
to Tenant and Tenant shall not be obligated to pay the Electricity Additional
Rent. If Landlord so discontinues furnishing electricity to Tenant, Tenant shall
diligently obtain electric energy directly from the public utility furnishing
electric service to the Building. The costs of such service shall be paid by
Tenant directly to such public utility. Such electricity may be furnished to
Tenant by means of the existing electrical facilities serving the Premises, at
no charge by Landlord, to the extent the same are safe for such purposes as
reasonably determined by Landlord and Tenant. All meters and all additional
panel boards, feeders, risers, wiring and other conductors and equipment which
may be required to obtain electricity in such instance shall be installed by
Landlord. Tenant shall pay the portion of the cost incurred to install such
additional electrical facilities, which equals the amount obtained by
multiplying the entire cost thereof by a fraction the numerator of which is the
number of months remaining in the term after the discontinuance and the
denominator of which is the entire number of months during the Term. Landlord,
to the extent permitted by applicable Requirements or the public utility, shall
not discontinue furnishing electricity to the Premises until such installations
have been made and Tenant shall be able to obtain electricity directly from the
public utility. Tenant agrees to act with due diligence in connection therewith.
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Section 13.4 Landlord shall during the Term, at no out-of-pocket
cost to Landlord, cooperate with Tenant (to the extent such cooperation does not
adversely affect Landlord's interest in or Operation of the Property and same is
commercially reasonable) to enable Tenant to obtain any electric utility
incentives (including benefits under the Con Edison "Business Incentive Rate
Program" or any similar program) for which Tenant is eligible from local
governmental agencies and/or public utilities. Such cooperation shall include
(a) permitting Tenant to contract for the supply of electric energy directly
from the utility company supplying the Building, (b) allowing the Premises to be
separately sub-metered, (c) permitting Tenant to use the Building's electrical
risers, conduits, feeders, switchboards and appurtenances, and (d) making
reasonable modifications to this Lease (which do not increase Landlord's
obligations hereunder or reduce its rights hereunder), to enable Tenant to
receive and enjoy any such benefits or incentives, all at Tenant's sole cost and
expense, subject to and in accordance with the applicable terms of this Lease,
including, without limitation Articles 3 and 13. If Tenant qualifies for any
such benefits or incentives, then, Landlord shall cooperate with Tenant at no
out-of-pocket costs to Landlord (i.e., Tenant shall pay or reimburse Landlord
for such costs, if any), in the filing and processing of any benefit or
incentive applications with local governmental agencies and/or public utilities
and, at Tenant's request, in arranging a procedure (to be memorialized in an
addendum or amendment to this Lease mutually acceptable to both Landlord and
Tenant) whereby the benefits or incentives obtained therefrom by Landlord, to
the extent the same relate solely to the Premises and Tenant's receipt of
electricity with respect thereto, shall be passed on to Tenant (not to exceed
such benefits actually received by Landlord therefrom) through a reduction in
monthly utility bills issued by Landlord and delivered to Tenant hereunder.
ARTICLE 14
ACCESS TO PREMISES
Section 14.1 (A) Subject to the terms of Sections 4.4, 14.1(B) and
14.1(C) hereof, Tenant shall permit Landlord, Landlord's agents and public
utilities servicing the Building to erect, use and maintain, concealed ducts,
pipes and conduits in and through the Premises if no space in the Building core
and shafts is available or the location in the core and shafts is not
commercially reasonable as reasonably determined by Landlord. Landlord or
Landlord's agents shall have the right to enter the Premises during Tenant's
ordinary business hours upon reasonable prior notice (except in case of an
emergency, in which event no notice is required and Landlord may enter at any
time, but Landlord shall endeavor to give such notice as is reasonably
practicable under the circumstances), which notice may be oral, to examine the
same, to show them to prospective purchasers, ground lessors, Mortgagees or
lessees of the Building or space therein, and to make such repairs, alterations,
improvements or additions (i) as Landlord may deem necessary or desirable to the
Premises or to any other portion of the Building,
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or (ii) which Landlord may elect to perform following ten (10) days except in
case of emergency after notice following Tenant's failure to make repairs or
perform any work which Tenant is obligated to make or perform under this Lease
(after the expiration of any applicable notice and grace periods except in case
of emergency), or (iii) for the purpose of complying with all Requirements, and
Landlord shall be allowed to take all material into and upon the Premises that
may be required therefor without the same constituting a breach by Landlord of
any provisions of this Lease, a breach of Tenant's quiet enjoyment, an eviction
or constructive eviction of Tenant in whole or in part, or a release of Tenant's
obligations to pay Fixed Rent, Escalation Rent, or any item of Rental, and,
except as herein expressly provided, the Fixed Rent, Escalation Rent (and any
other item of Rental) shall not abate while said repairs, alterations,
improvements or additions are being made, by reason of loss or interruption of
business of Tenant, or otherwise.
(B) Any work performed or installations made pursuant to this
Article 14 or otherwise shall be made with reasonable diligence and otherwise
pursuant to Article 4 hereof. Landlord shall (i) promptly repair any damage to
the Premises, the Specialty Alterations or Tenant's Property (including, without
limitation, any Tenant finishes) caused by such work or installations or by any
of the parties performing the same; (ii) take reasonable care to safeguard the
affected portion of the Premises and the property of Tenant; (iii) upon
completion of such activity, restore the portion of the Premises that is the
subject of such activity to substantially the condition existing before such
activity to the extent reasonably practicable; and (iv) not cause a reduction in
the usable square footage of the Premises which exceed fifty (50) rentable
square feet per full floor, except to the extent necessary to cure an Event of
Default. In the event of such a reduction in the rentable square footage of the
Premises by more than fifty (50) rentable square feet per full floor, thereafter
Tenant shall receive a proportionate reduction in the Fixed Rent, Tax Share and
Operating Share. Notwithstanding anything herein to the contrary, in the event
that Landlord and its agents, representatives, contractors and employees desire
to enter the Premises in order to perform work on portions of the Building other
than the Premises, then Landlord shall have the right to enter the Premises in
such case only if it is reasonably necessary to enter the Premises in order to
perform such work.
(C) Any pipes, ducts, or conduits installed in or through the
Premises pursuant to this Article 14, shall either be concealed behind, beneath
or within partitioning, columns, ceilings or floors located or to be located in
the Premises, or completely furred at points immediately adjacent to
partitioning columns or ceilings located or to be located in the Premises,
provided that the installation of such pipes, ducts, or conduits, when
completed, shall not (i) reduce the rentable area of the Premises beyond fifty
(50) rentable square feet per full floor, except to the extent necessary to cure
an Event of Default, or (ii) otherwise adversely affect (except to a de minimis
extent) the appearance of the Premises or adversely affect (except to a de
minimis extent) Tenant's
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existing or then contemplated future installations or wiring. In the event of
such a reduction in the rentable square footage of the Premises by more than
fifty (50) rentable square feet per full floor, thereafter Tenant shall receive
a proportionate reduction in the Fixed Rent, Tax Share and Operating Share. In
no event shall Landlord install any wet pipes over Tenant's computer/data areas,
trading floors or network hub rooms (meaning in the ceiling under the slab of
the floor over said computers, trading floors and network hub rooms) unless such
location is the only practical and available location therefor and Landlord
takes all necessary steps (in accordance with good construction practice) to
protect such areas.
Section 14.2 Upon reasonable prior notice to Tenant (which may be
oral), Landlord may exhibit the Premises (other than the Secured Areas) during
Tenant's ordinary business hours to prospective tenants thereof during the
twenty-four (24) month period (unless Tenant prior thereto has entered into a
Definitive Agreement, then on the date Tenant executed and unconditionally
delivered a Definitive Agreement, but not earlier than thirty-six (36) months)
prior to the Expiration Date (as same may be extended) in a manner that
minimizes interference with Tenant's use of the Premises. Except in the event of
an emergency or if necessary in order to comply with any Requirement, Landlord
shall enter the Premises accompanied by a representative of Tenant (to the
extent one is provided after reasonable prior notice of the need therefor).
Landlord or Landlord's agents may enter the Premises in accordance with the
preceding sentence of this Section 14.2 without rendering Landlord or such
agents liable therefor (except to the extent of their negligence or willful
misconduct) and during such entry Landlord or Landlord's agents shall accord
reasonable care under the circumstances to Tenant's Property, and without in any
manner affecting this Lease. In an emergency or if necessary in order to comply
with any Requirement, Landlord shall use reasonable efforts to give to Tenant
such notice, if any, as is reasonable under the circumstances of Landlord's need
to enter the Premises. Nothing herein contained, however, shall be deemed or
construed to impose upon Landlord any obligation, responsibility or liability
whatsoever, for the care, supervision or repair of the Building or any part
thereof, other than as herein provided.
Section 14.3 (A) Notwithstanding anything to the contrary contained
in Article 25 hereof, if (1) due to (a) any work, repair or installation
performed by Landlord or failure by Landlord to perform its obligations
hereunder or (b) an interruption (a "Qualified Building Service Interruption")
of any service required to be provided to Tenant hereunder, including, without
limitation, elevator, electricity, water, HVAC, cleaning or other utility
services from the public utility company, there occurs an interruption of such
service (other than an interruption of electricity, water, HVAC or other utility
services affecting the Building together with other buildings in the area of the
Building or an interruption in any service due to an industry wide labor strike
or dispute) (an "Excusable Interruption"), such that all or a portion (except to
a de minimis extent) of
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the Premises becomes untenantable for at least five (5) consecutive Business
Days and provided that (i) Tenant shall be unable to operate its business in all
or any portion of the Premises and (ii) Tenant shall have relocated all of its
employees from that portion of the Premises which is the subject of such work or
installation or such failure or such Qualified Building Service Interruption
during such time, and (2) Tenant shall have promptly notified Landlord of the
same, then the Fixed Rent and Escalation Rent with respect to the Premises shall
be reduced on a per diem basis in the proportion in which the area of the
portion of the Premises which is unusable and not used bears to the total area
of the Premises for each day that such portion of the Premises remains unusable
and not used, commencing on the sixth (6th) consecutive Business Day on which
Tenant is unable to operate its business in such portion of the Premises (taking
into account the amount of Fixed Rent that is payable for each portion of the
Premises and the fact that Escalation Rent is payable only with respect to the
Office Space). The time periods set forth in this Section 14.3(A) shall not be
subject to extension by reason of Unavoidable Delays (other than an Excusable
Interruption).
(B) Notwithstanding anything contained herein to the contrary,
Landlord hereby acknowledges that Tenant does not waive any rights or remedies
it has under law or in equity with respect to a failure of services which
materially affect Tenant's use or occupancy of the Premises, other than with
respect to an Excusable Interruption. Notwithstanding anything to the contrary
contained in this Section 14.3, if, pursuant to Sections 14.3(A) hereinabove,
Tenant is entitled to any reduction of Fixed Rent and Escalation Rent with
respect to the portion of the Premises then being used by Tenant as its
computer/data center or any network hub rooms, then any such reduction of Fixed
Rent and Escalation Rent shall also apply with respect to all other portions of
the Premises in which Tenant is unable to operate its business in substantially
the same manner as such business was previously operated by reason of such event
affecting the computer/data center or network hub rooms provided that (i) Tenant
shall, in fact, be unable to operate its business from such other portions of
the Premises after exercising diligent efforts to so operate, and (ii) Tenant
shall have notified Landlord of the same.
Section 14.4 Notwithstanding anything herein to the contrary,
Landlord shall not: (i) maintain the lobby of the Building in other than a
first-class manner consistent with the Building Standard; (ii) permanently close
the Avenue of the Americas entrance to the Building or, in the event that the
Galleria public entrance to the westerly portion of the Building is closed, any
other main entrance on 51st or 52nd Street (subject to compliance with
applicable Requirements); (iii) materially impair access to the Premises as a
result of the reconfiguration of public corridors on the floors on which the
Premises is located or otherwise, or (iv) take any action which would reduce the
usable square footage (except by a de minimis amount) of the Premises, unless
such act is taken in accordance with Requirements or caused by an Event of
Default. Landlord hereby agrees not to voluntarily close such Galleria public
entrance
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unless required by applicable Requirements, or other existing
agreements, or circumstances outside Landlord's reasonable control. All parts
(except surfaces facing the interior of the Premises) of all floors, ceilings,
walls, windows and doors bounding the Premises (including exterior Building
walls, exterior core corridor walls, exterior doors and entrances), all
balconies, terraces and roofs adjacent to the Premises (other than the 16th
Floor Setback Space), all space in or adjacent to the Premises used for common
(as opposed to for Tenant's sole use) shafts, stacks, stairways, chutes, pipes,
conduits, ducts, fan rooms, heating, air cooling, plumbing and other mechanical
facilities, service closets and other common (as opposed to for Tenant's sole
use) Building systems or facilities are not part of the Premises, and Landlord
shall, subject to the provisions of this Lease, have the use thereof, as well as
reasonably unimpeded access thereto through the Premises, for the purposes of
operation, maintenance, alteration and repair. Notwithstanding the fact that the
corridor designated "P" on Exhibit B-10 annexed hereto is included in the 39th
Floor Space, Tenant acknowledges that, in accordance with applicable
Requirements, such corridor is required as a secondary means of egress for the
39th Floor of the Building and accordingly agrees that (a) Tenant shall not
construct any walls or partitions which block access of Landlord, its agents,
employees and invitees and any other tenant of the 39th Floor of the Building or
of the Building, its agents, employees and invitees to such corridor, and (b)
Tenant shall allow Landlord and the public access across such corridor to the
secondary fire stairs located adjacent to such corridor. Tenant shall not
construct partitions or other obstructions which may unreasonably interfere with
Landlord's reasonably unimpeded access to any Building Systems or facilities.
ARTICLE 15
CERTIFICATE OF OCCUPANCY
Section 15.1 Tenant shall not at any time use or occupy the Premises
in violation of the certificate of occupancy at such time issued for the
Premises or for the Building and in the event that any department of the City or
State of New York shall hereafter contend or declare by notice, violation, order
or in any other manner whatsoever that the Premises are used for a purpose which
is a violation of such certificate of occupancy, Tenant shall, within five (5)
Business Days' written notice from Landlord or any Governmental Authority,
discontinue such use of the Premises. Landlord warrants and covenants that,
subject to any action taken by Tenant with respect thereto or compliance with
Requirements on the date hereof and throughout the Term, Landlord will maintain
and keep in force and effect a temporary or permanent certificate of occupancy
covering the Building; provided, however, neither such certificate, nor any
provision of this Lease, nor any act or omission of Landlord, shall be deemed to
constitute a representation or warranty that the Premises, or any part thereof,
lawfully may be used or occupied for any particular purpose or in any particular
manner, in contradiction to mere
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"office" or "storage" use, as the case may be. Landlord represents and warrants
that attached hereto as Exhibit J is a true, correct and complete copy of the
permanent certificate of occupancy and that the same is in full force and effect
on the date hereof. Landlord shall not seek any amendment to the certificate of
occupancy for the Premises or for the Building which may adversely affect
Tenant's ability to use the Premises for the uses permitted under this Lease
without Tenant's consent, which shall not be unreasonably withheld or delayed.
Section 15.2 Tenant shall have the right, at its sole cost and
expense, on prior written notice to Landlord and subject to any pending
application(s) (as of the date hereof, to the best of Landlord knowledge, there
are no pending applications which would adversely affect Tenant's ability to
amend the certificate of occupancy in accordance with the terms of this Lease),
to amend the certificate of occupancy from time to time in effect for the
Premises to accommodate Tenant's operation of a kitchen, cafeteria, Permitted
Function or conference center in the Premises or any other use permitted by this
Lease, subject to Landlord's prior consent, which shall not be unreasonably
withheld or delayed, provided that (i) the same is done subject to, and in
accordance with, all Requirements, (ii) any such amendment shall not permit any
use of the Premises not permitted under this Lease, (iii) no such change shall
adversely affect any portion of the Building other than the Premises, or the use
of such other portions of the Building, (iv) any filing in connection therewith
shall be performed by Landlord's designated code consultant or expediter and at
Tenant's sole cost and expense, provided that with respect to use of the
designated expediter or code consultant after performance of the Initial
Alterations, such expediter shall charge commercially reasonable rates and if
Tenant notifies Landlord prior to engaging said expediter that in Tenant's
reasonable determination said expeditor's rates are not commercially reasonable
and the extent of the surcharge, Landlord may still require Tenant to use said
expeditor so long as Landlord pays such surcharge or portion thereof as agreed
upon by Landlord and Tenant acting reasonably), (v) neither Landlord nor any
other tenant of the Building will be adversely affected by any such amendment,
and (vi) upon the expiration or earlier termination of the Term, upon request by
Landlord, Tenant shall amend the certificate of occupancy for the Premises so
that it conforms to the certificate of occupancy for the Premises in effect
prior to any change by Tenant. For purposes of the Initial Alterations, Landlord
and Tenant hereby agree that Tenant shall use Brookbridge Consultants or such
other consultant mutually satisfactory to both Landlord and Tenant (with both
agreeing to act reasonably) and Landlord acknowledges that Tenant may use Jerome
S. Gillman Consulting Architects as a consultant to work with Brookbridge
Consultants in connection therewith. Landlord shall reasonably cooperate with
Tenant's efforts under this Section 15.2 provided Landlord shall not be required
to expend any sum of money and shall be reimbursed by Tenant for its actual
reasonable out-of-pocket costs and
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expenses in connection therewith, and provided further that Landlord shall not
be obligated to perform any work in connection therewith.
ARTICLE 16
DEFAULT
Section 16.1 Each of the following events shall be an "Event of
Default" hereunder:
(A) if Tenant shall default in the payment when due of
any item of Rental and any other sum due hereunder and such default shall
continue for ten (10) days after notice of such default is given to
Tenant; or
(B) (1) if Tenant shall commence or institute any case,
proceeding or other action (i) seeking relief on its behalf as debtor, or
to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, or (ii)
seeking appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its property; or
(2) if Tenant shall make a general assignment
for the benefit of creditors; or
(3) if any case, proceeding or other action shall
be commenced or instituted against Tenant (i) seeking to have an
order for relief entered against it as debtor or to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, or (ii)
seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its
property, which in either of such cases (x) results in any such
entry of an order for relief, adjudication of bankruptcy or
insolvency or such an appointment or the issuance or entry of any
other order having a similar effect or (y) remains undismissed or
unstayed for a period of one hundred twenty (120) days; or
(4) if Tenant shall take any action in furtherance
of, or expressly indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clauses (1), (2), or
(3) above; or
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(5) if a trustee, receiver or other custodian is
appointed for any substantial part of the assets of Tenant which
appointment is not vacated or effectively stayed within forty-five
(45) Business Days; or
(C) if Tenant shall default in the observance or
performance of any other term, covenant or condition of this Lease on
Tenant's part to be observed or performed and Tenant shall fail to remedy
such default within thirty (30) days after notice by Landlord to Tenant of
such default; provided, however, if such default is of such a nature that
it can be remedied but cannot be completely remedied within said period of
thirty (30) days, Tenant shall not be in default hereunder if it commences
to remedy such default within said period of thirty (30) days and
thereafter diligently prosecutes to completion all steps necessary to
remedy such default.
Section 16.2 (A) Any notice which Landlord intends as a notice to
Tenant of a fact or condition which if unremedied within the applicable grace
period shall become an Event of Default shall expressly state that it is a
"default notice." If an Event of Default described in Section 16.1 shall occur
and Landlord, at any time thereafter, at its option, gives written notice to
Tenant stating that this Lease and the Term shall expire and terminate on the
tenth (10th) day following the date Landlord shall give Tenant such notice, then
this Lease and the Term and all rights of Tenant under this Lease shall expire
and terminate as if said tenth (10th) day were the Fixed Expiration Date, and
Tenant immediately shall quit and surrender the Premises.
(B) If an Event of Default described in Section A(1) hereof
shall occur or if this Lease shall be terminated as provided in Section 16.2(A)
hereof, Landlord, without additional notice, may dispossess Tenant by summary
proceedings.
(C) If at any time, Tenant shall comprise two (2) or more
persons, or Tenant's obligations under this Lease shall have been guaranteed by
any person other than Tenant, or Tenant's interest in this Lease shall have been
assigned, the word "Tenant" as used in Section 16.1(B) shall be deemed to mean
any of the persons primarily or secondarily liable for Tenant's obligations
hereunder.
Section 16.3 Landlord agrees that Tenant shall retain the right to
cure any such default within the applicable cure period set forth in Section
16.1 for such default after such dispute has been finally determined adversely
to Tenant pursuant to said Article 47.
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ARTICLE 17
REMEDIES AND DAMAGES
Section 17.1 (A) If there shall occur any Event of Default and the
Term shall expire and come to an end as provided in Article 16 hereof:
(1) Tenant shall quit and peacefully surrender the
Premises to Landlord, and Landlord and its agents may at any time after
the Term shall expire and come to an end, re-enter the Premises or any
part thereof without notice, either by summary proceedings, or by any
other applicable action or proceeding, and may repossess the Premises and
dispossess Tenant and any other persons from the Premises and remove any
and all of their property and effects from the Premises; and
(2) Landlord shall market the Premises in a manner
substantially in conformity with the marketing undertaken by Landlord with
respect to other comparable vacant office space in the Building and
Landlord shall list the Premises with a reputable Broker (which may be a
Related Entity of Landlord) to relet the whole or any part or parts of the
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; provided, however, that
Landlord shall have no obligation to relet the Premises or any part
thereof other than on terms which are acceptable to Landlord in its sole
judgment and shall in no event be liable for failure, provided Landlord
marketed and listed the Premises, as aforesaid in this Section 17.1(A)(2),
to relet the Premises or any part thereof, and no such failure shall
operate to relieve Tenant of any liability under this Lease or otherwise
affect any such liability, and Landlord, at Landlord's option, may make
such repairs, replacements, alterations, additions, improvements,
decorations and other physical changes in and to the 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 further hereby
waive any and all rights which Tenant and all such persons might otherwise have
under any present or future law to redeem the Premises, or to re-enter or
repossess the Premises, or to restore the operation of this Lease, after (a)
Tenant shall have been dispossessed by a judgment or by warrant of any court or
judge, or (b) any re-entry by Landlord after a termination of this Lease
pursuant to Article 16 hereof, or (c) any expiration or
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termination of this Lease and the Term, whether such dispossess, re-entry,
expiration or termination shall be by operation of law or pursuant to the
provisions of this Lease. The words "re-enter," "re-entry" and "re-entered" as
used in this Lease shall not be deemed to be restricted to their technical legal
meanings.
(C) In the event of a breach or threatened breach by Tenant or
Landlord hereunder, or any persons claiming through or under Tenant or Landlord,
as the case may be, of any term, covenant or condition of this Lease, Tenant or
Landlord, as the case may be, shall have the right to enjoin such breach and the
right to invoke any other remedy allowed by law or in equity. The right to
invoke the remedies hereinbefore set forth are cumulative and shall not preclude
either party from invoking any other remedy allowed at law or in equity.
Section 17.2 (A) If this Lease and the Term shall expire and come to
an end as provided in Section 16.2 hereof, or by or under any summary proceeding
or any other action or proceeding, or if Landlord shall re-enter the Premises as
provided in Section 16.2 or 17.1, then, in any of said events:
(1) Tenant shall pay to Landlord all Fixed Rent,
Escalation Rent and other items of Rental payable under this Lease by
Tenant to Landlord to the date upon which this Lease and the Term shall
have expired and come to an end or to the date of re-entry upon the
Premises by Landlord, as the case may be;
(2) Tenant also shall be liable for and shall pay to
Landlord, as damages, any deficiency (referred to as "Deficiency") between
the Rental for the period which otherwise would have constituted the
unexpired portion of the Term and the net amount, if any, of rents
collected under any reletting for any part of such period (first deducting
from the rents collected under any such reletting all of Landlord's actual
out-of-pocket expenses in connection with the termination of this Lease,
Landlord's reentry upon the Premises and with such reletting including,
but not limited to, all repossession costs, brokerage commissions, legal
expenses, attorneys' fees and disbursements, alteration costs,
contribution to work, takeover expenses and other expenses of preparing
the 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 Fixed Rent, Landlord shall be entitled to
recover from Tenant each monthly Deficiency as the same shall arise, and
no suit to collect the amount of the Deficiency for any month shall
prejudice Landlord's right to collect the Deficiency for any subsequent
month by a similar proceeding; and
(3) whether or not Landlord shall have collected any
monthly Deficiency as aforesaid, Landlord shall be entitled to recover
from
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Tenant, and Tenant shall pay to Landlord, on demand, in lieu of any
such Deficiency as and for liquidated and agreed final damages, a sum
equal to the amount by which the Fixed Rent and Escalation Rent for the
period which otherwise would have constituted the unexpired portion of the
Term (less any monthly Deficiency, if any, which was collected) exceeds
the then fair and reasonable rental value of the Premises for the same
period, both discounted to present worth at the Base Rate; if, before
presentation of proof of such liquidated damages to any court, commission
or tribunal, the Premises, or any part thereof, shall have been relet by
Landlord to unrelated third parties on arms-length terms for the period
which otherwise would have constituted the unexpired portion of the Term,
or any substantial 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 Premises so relet during the
term of the reletting.
(B) If the 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 Section 17.2. Tenant shall in no event be
entitled to any rents collected or payable under any reletting, whether or not
such rents shall exceed the Rental reserved in this Lease. Solely for the
purposes of this Article 17, the term "Escalation Rent" as used in Section
17.2(A) shall mean the Escalation Rent in effect immediately prior to the
Expiration Date, or the date of re-entry upon the Premises by Landlord, as the
case may be, adjusted to reflect any increase pursuant to the provisions of
Article 27 hereof for the Operating Year immediately preceding such event.
ARTICLE 18
FEES AND EXPENSES
Section 18.1 If an Event of Default shall have occurred and be
continuing, or in the event of an emergency (after delivery of such notice to
Tenant, if any, as is reasonable under the circumstances), and provided Tenant
shall be required hereunder to perform the obligation or make the expenditure in
question, Landlord may perform any act or obligation for and on the account of
Tenant, and make any reasonable expenditure or incur any reasonable obligation
in connection therewith, and such expenditures and payments, including, but not
limited to, reasonable attorneys' fees and disbursements in instituting,
prosecuting or defending any action or proceeding, and the cost thereof, with
interest thereon at the Applicable Rate, shall be deemed to be additional rent
hereunder and shall be paid by Tenant to Landlord within thirty (30) days of
rendition of any bill or statement to Tenant therefor, together with copies of
relevant bills, receipts, invoices and other backup documentation. Landlord
shall receive no profit in connection with its performance of such work.
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Section 18.2 If Tenant shall fail to pay any installment of Fixed
Rent, Escalation Rent or any other item of Rental within five (5) Business Days
after such amount is due, Tenant shall pay to Landlord, in addition to such
installment of Fixed Rent, Escalation Rent or other item of Rental, as the case
may be, as a late charge and as additional rent, a sum equal to interest at the
Applicable Rate on the amount unpaid, computed from the date such payment was
due to and including the date of payment.
Section 18.3. If Landlord shall fail to pay any amount due and
payable to Tenant pursuant to the terms of this Lease within five (5) Business
Days after it is due, Landlord shall pay to Tenant, in addition to such amount,
as a late charge, a sum equal to interest at the Applicable Rate on the amount
unpaid, computed from the date such payment was due to and including the date of
payment. If Landlord shall fail to pay any amount due and payable to Tenant
pursuant to the terms of this Lease within thirty (30) days after it is due and
payment is not being contested in good faith by Landlord, Tenant shall, in
addition to Tenant's other rights at law or in equity or under this Lease, have
the right to offset such amount (plus interest thereon in accordance with the
immediately preceding sentence) against the next succeeding installment(s) of
Fixed Rent and Escalation Rent due and payable hereunder until Tenant shall have
been fully reimbursed therefor, provided that Tenant shall have delivered to
Landlord ten (10) days prior written notice of Landlord's failure to pay such
amount (with such reasonable detail as necessary to permit Landlord to determine
the nature and amount of charges required to be paid by Landlord), and Landlord
shall not, within ten (10) days thereafter, send Tenant written notice that it
disputes in good faith Tenant's claims.
Section 18.4 (A) For the purposes of this Section 18.4, "Landlord
Default" shall mean a default by Landlord in the performance of its obligations
under this Lease (to the extent expressly required to be performed by Landlord
herein) to repair and maintain the Premises, all roofs and setbacks adjacent to
the Premises and which affect the Premises, and the Building Systems serving the
Premises within the time period therefor set forth in Section 18.4(B) hereof
which (a) impairs Tenant's ability to utilize a substantial or material portion
of the Premises for the normal conduct of its business (other than to a de
minimis extent), or (b) poses a safety threat or (c) poses a material and
imminent threat to Tenant's Property; provided that in any such instance,
Landlord's failure to repair or maintain the Premises is not due directly or
indirectly to the following: any act or omission by Tenant or its agents,
employees or contractors, or a default by Tenant, or the installation or
maintenance of Tenant's Initial Alterations or subsequent Alterations, or any
repairs or maintenance of the Premises by Tenant, or Tenant's particular manner
of use of the Premises, or, in the case of the condition described in the
preceding clause (a), for any reason outside the reasonable control of Landlord,
or in connection with Landlord's contest of the applicability or legality of a
Requirement in accordance with Section 6.2.
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(B) (1) In the event of a Landlord Default, Tenant may give
Landlord notice thereof which notice shall refer to this Section 18.4 and shall
expressly state that it is a "Landlord Default Notice" and Tenant's intention to
exercise its rights under this Section 18.4. If Landlord fails within thirty
(30) days (or, in case of emergency, a shorter period after delivery of a notice
(which may be telephonic if written notice is not practicable under the
circumstances, in which event Tenant shall follow such oral notice with
confirmation in writing), if any, as is reasonable under the circumstances)
after receipt of such notice to (i) cure the Landlord Default, or (ii) initiate
the cure thereof (if the Landlord Default is of such a nature that it cannot
with reasonable diligence be cured within such period), and diligently take all
steps necessary to cure such default, then provided and to the extent such
Landlord Default may be cured by actions taken solely within the Premises (or
with respect to a Building System serving the Premises which is immediately
adjacent to the Premises or other areas immediately adjacent to the Premises,
provided such areas are below the bottom of the ceiling slabs and above the top
of the floor slabs, or with respect to portions of the roof or set back areas
immediately contiguous to Tenant's Premises, provided that with respect to such
adjacent and contiguous areas, or Building Systems no other tenant or occupant
will be unreasonably disturbed by Tenant in connection with its efforts to cure
such default, and no other portion of the Building and/or Building System will
be adversely affected by such repair, in each case, to an extent greater than
would have been caused by Landlord if Landlord had performed the same) Tenant,
upon notice to Landlord, may (a) cure such Landlord Default for the account of
Landlord, or (b) pay any third party (in all other circumstances where such
Landlord Default may be cured by the payment of a fixed sum to a third party) as
may be required to effect the cure of the Landlord Default, or (c) make any
reasonable expenditure or incur any reasonable obligation for the payment of
money, including, without limitation, reasonable attorneys' fees and
disbursements in instituting, prosecuting or defending any action or proceeding,
in order to cure such Landlord Default. Tenant shall incur only those costs and
expenses as are reasonably necessary under the circumstances and shall receive
no profit in connection with its performance of such work. To the extent that
Tenant incurs any cost or expense in connection with curing a Landlord Default
as aforesaid, Tenant shall submit to Landlord copies of relevant bills,
receipts, invoices and other backup documentation, and Landlord shall reimburse
Tenant for such costs, with interest thereon at the Applicable Rate computed
from the date such costs were incurred to and including the date of payment,
within thirty (30) days after submission of such bills, receipts, invoices,
documentation and proof of payment. If Landlord fails to reimburse Tenant for
any costs or expenses incurred by Tenant under this Section 18.4 within the
thirty (30) day period provided herein, Tenant may offset the amount of such
expenditures and interest at the Applicable Rate against the next installments
of Fixed Rent and Escalation Rent becoming due hereunder until Tenant has been
fully reimbursed therefor.
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Section 18.5 Landlord and Tenant acknowledge and agree that the
occurrence of any of the events described in Section 18.4 hereinabove shall not
constitute a Landlord Default during the pendency of any legal proceeding or
arbitration if the matter in question has been submitted by Landlord or Tenant
to a court of competent jurisdiction (in the case of an Event of Default or
other matter which is not the subject matter of arbitration or to arbitration in
accordance with Article 47 hereof). Tenant agrees that Landlord shall retain the
right to cure any such default within the applicable cure period set forth
therefor in Section 18.4 hereof for any such default after such dispute has been
finally determined adversely to Landlord.
Section 18.6 Except as expressly provided in this Lease, all of
Landlord's and Tenant's rights and remedies under this Lease shall be cumulative
and non-exclusive, and no exercise by either party of any of its rights and
remedies under any provision of this Lease shall be deemed to limit the exercise
by such party of its rights and remedies under any other provision of this
Lease.
ARTICLE 19
NO REPRESENTATIONS BY LANDLORD
Landlord and Landlord's agents have made no representations or
promises with respect to the Building, the Real Property or the Premises except
as herein expressly set forth, and no rights, easements or licenses are acquired
by Tenant by implication or otherwise except as expressly set forth herein.
Tenant hereby acknowledges that it is currently in possession of the Premises,
and Tenant accepts the Premises in their existing "as-is" condition. Landlord
shall not be required to perform any work or spend any monies to prepare the
Premises for Tenant's occupancy thereof, provided that the foregoing shall not
be deemed to limit Landlord's obligations under this Lease.
ARTICLE 20
END OF TERM
Section 20.1 Upon the expiration or other termination of this Lease
(except as otherwise expressly provided herein), Tenant shall quit and surrender
to Landlord the Premises, vacant, broom clean, and its then "as-is" condition
provided Tenant has complied with its obligations under Article 4 hereof
(reasonable wear and tear and damage by fire or other casualty excepted), and
Tenant shall remove all of Tenant's Property and Specialty Removal Alterations
(in accordance with the provisions of Article 3 hereof) and perform such repairs
as may be required pursuant to Section 3.1(C)(2) hereof; this obligation shall
survive the expiration or sooner termination of the Term. Tenant expressly
waives, for itself and for any person claiming through or under Tenant, any
rights which Tenant or any such person may have under the provisions of Section
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2201 of the New York Civil practice Law and Rules and of any successor law of
like import then in force in connection with any holdover summary proceedings
which Landlord may institute to enforce the foregoing provisions of this Article
20.
Section 20.2 The parties recognize and agree that the damage to
Landlord resulting from any failure by Tenant to timely surrender possession of
the Premises as aforesaid may be extremely substantial, may exceed the amount of
the monthly installments of the Fixed Rent and Escalation Rent theretofore
payable hereunder, and will be impossible to measure accurately. Tenant
therefore agrees that if possession of the Premises is not surrendered to
Landlord on or before the Expiration Date, Tenant shall (which with respect to
the first one hundred twenty (120) days of such holdover shall constitute
liquidated damages) pay to Landlord on account of use and occupancy of the
Premises for each month and for each portion of any month during which Tenant
holds over in the Premises after the Expiration Date, a sum (the "Holdover
Amount") obtained by multiplying (a) (i) 100% for the first 30 days of such
holdover, (ii) 110% for the 31-60 day period of such holdover, (iii) 120% for
the 61-90 day period of such holdover, (iv) 130% for the 91-120 day period of
such holdover, (v) 140% for the 121-150 day period of such holdover, and (vi)
150% for the holdover period (the "Last Period") after the 150th day of such
holdover, times (b) the Fixed Rent and Escalation Rent which were payable (or
allocable, e.g., Tax escalation) under this Lease during the last month of the
Term. In addition, if the holdover extends for more than 120 days then, in
addition to the Holdover Amount, Landlord shall also be entitled to recover any
damages Landlord may sustain as a result of such holdover. Notwithstanding the
foregoing, the Holdover Amount for the Last Period shall be the then fair market
rental value of the Premises if greater than the Holdover Amount calculated for
such period, as set forth above. Nothing herein contained shall be deemed to
permit Tenant to retain possession of the Premises without consent after the
Expiration Date or to limit in any manner Landlord's right to regain possession
of the Premises through summary proceedings, or otherwise, and no acceptance by
Landlord of payments from Tenant after the Expiration Date shall be deemed to be
other than on account of the amount to be paid by Tenant in accordance with the
provisions of this Article 20. The provisions of this Article 20 shall survive
the Expiration Date.
ARTICLE 21
QUIET ENJOYMENT
Landlord covenants that Tenant shall peaceably and quietly enjoy the
Premises subject, nevertheless, to the terms and conditions of this Lease,
including, but not limited to, Article 7 hereof. This covenant shall be
construed as a covenant running with the Real Property.
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ARTICLE 22
DIRECTORY
The lobby contains a computerized directory wherein the Building's
tenants are listed, which is and shall remain prominently located in the lobby
of the Building. Tenant shall have the right to use a number of listings equal
to Tenant's Operating Share of the total number of listings available in such
directory for Tenant's and its subtenants', licensees' and other occupants' use.
From time to time, but not more frequently than once every month, Landlord shall
reprogram the computerized directory to reflect such changes in the listings
therein as Tenant shall request, and with the submission of such change request
Tenant shall pay to Landlord a reprogramming charge of Twenty-Five Dollars
($25.00) for each reprogramming. If such computerized directory shall at any
time be replaced by a non-computerized directory, Tenant shall be entitled to
Tenant's Operating Share of the total listings available on such
non-computerized directory.
ARTICLE 23
NO WAIVER
Section 23.1 No act or thing done by Landlord or Landlord's agents
during the Term shall be deemed an acceptance of a surrender of the Premises,
and no agreement to accept 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 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 Premises.
Section 23.2 The failure of Landlord to seek redress for violation
of, or to insist upon the strict performance of, any covenant or condition of
this Lease, or any of the Rules and Regulations set forth or hereafter adopted
by Landlord, shall not prevent a subsequent act, which would have originally
constituted a violation, from having all of the force and effect of an original
violation. The receipt by Landlord of Fixed Rent, Escalation Rent or any other
item of Rental with knowledge of the breach of any covenant of this Lease shall
not be deemed a waiver of such breach. The failure of Landlord to enforce any of
the Rules and Regulations set forth, or hereafter adopted, against Tenant or,
except to the extent otherwise set forth in this Lease, any other tenant in the
Building 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 Fixed Rent or other item of Rental
herein stipulated shall be deemed to be other than on account of the earliest
stipulated Fixed Rent or other item of Rental, nor shall any endorsement or
statement on any check or any letter
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accompanying any check or payment as Fixed Rent or other item of Rental 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 Fixed Rent
or other item of Rental or pursue any other remedy in this Lease provided. This
Lease contains the entire agreement between the parties and all prior
negotiations and agreements are merged herein. Any executory agreement hereafter
made shall be ineffective to change, modify, discharge or effect an abandonment
of this Lease in whole or in part unless such executory agreement is in writing
and signed by the party against whom enforcement of the change, modification,
discharge or abandonment is sought.
Section 23.3 The failure of Tenant to seek redress for violation of,
or to insist upon the strict performance of, any covenant or condition of this
Lease on Landlord's part to be performed, shall not be deemed a waiver of such
breach or prevent a subsequent act which would have originally constituted a
violation of the provisions of this Lease from having all of the force and
effect of an original violation of the provisions of this Lease. The payment by
Tenant of Fixed Rent, Escalation Rent or any other item of Rental or performance
of any obligation of Tenant hereunder with knowledge of any breach of any
covenant of this Lease shall not be deemed a waiver of such breach, and payment
of the same by Tenant shall be without prejudice to Tenant's right to pursue any
remedy against Landlord in this Lease provided. No provision of this Lease shall
be deemed to have been waived by Tenant, unless such waiver be in writing signed
by Tenant. No payment by Landlord or receipt by Tenant of a lesser amount than
any amounts required hereunder to be paid by Landlord to Tenant shall be deemed
to be other than on account of the earliest amounts owing from Landlord to
Tenant, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as any such amount be deemed an accord and
satisfaction, and Tenant may accept such check or payment without prejudice to
Tenant's right to recover the balance of such amount or to pursue any other
remedy provided in this Lease.
ARTICLE 24
WAIVER OF TRIAL BY JURY
The respective parties hereto shall and they hereby do waive trial
by jury in any action, proceeding or counterclaim brought by either of the
parties hereto against the other (except for personal injury) on any matters
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises,
or for the enforcement of any remedy under any statute, emergency or otherwise
in connection herewith. If Landlord commences any summary proceeding against
Tenant, Tenant will not interpose any counterclaim of whatever nature or
description in any such proceeding (unless failure to impose such counterclaim
would preclude Tenant from asserting in a separate action the claim which is the
subject of such
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counterclaim), and will not seek to consolidate such proceeding with any other
action which may have been or will be brought in any other court by Tenant.
ARTICLE 25
INABILITY TO PERFORM
This Lease and the obligation of Tenant to pay Rental hereunder and
perform all of the other covenants and agreements hereunder on the part of
Tenant to be performed shall not be affected, impaired or excused because
Landlord is unable to fulfill any of its obligations under this Lease expressly
or impliedly to be performed by Landlord or because Landlord is unable to make,
or is delayed in making any repairs, additions, alterations, improvements or
decorations, or is unable to supply or is delayed in supplying, any equipment or
fixtures, if Landlord is prevented or delayed from so doing by reason of strikes
or labor troubles or by any cause whatsoever beyond Landlord's reasonable
control (it being expressly understood that financial inability to perform is
not a cause beyond Landlord's reasonable control), including, but not limited
to, laws, governmental preemption in connection with a national emergency or by
reason of any Requirements of any Governmental Authority or by reason of the
conditions of supply and demand which have been or are affected by war or other
emergency. Except as expressly provided to the contrary in this Lease, this
Lease and the obligation of Landlord to make any required payments to Tenant
hereunder and Landlord's obligations to perform all of the other covenants and
agreements hereunder on the part of Landlord to be performed shall in no wise be
affected, impaired or excused because Tenant is unable to fulfill any of its
obligations under this Lease expressly or impliedly to be performed by Tenant or
because Tenant is unable to make, or is delayed in making any repairs,
additions, alterations, improvements or decorations, or is unable to supply or
is delayed in supplying, any equipment or fixtures, if Tenant is prevented or
delayed from so doing by reason of strikes or labor troubles, or by any cause
whatsoever beyond Tenant's reasonable control (it being expressly understood
that financial inability to perform is not a cause beyond Tenant's reasonable
control), including, but not limited to, laws, governmental preemption in
connection with a national emergency or by reason of any Requirements of any
Governmental Authority or by reason of the conditions of supply and demand which
have been affected by war or other emergency (the foregoing, with respect to
Landlord or Tenant, as applicable, are herein referred to "Unavoidable Delays").
For purposes of this Lease, an Unavoidable Delay shall be deemed to exist only
if Landlord or Tenant (as the case may be) promptly notifies the other party in
writing of such delay and, after such initial notification promptly after
request of the other party, Landlord or Tenant (as the case may be) notifies the
other party of the status of such delay and diligently pursues fulfillment of
such obligation after the cause of such delay ceases to exist. Unavoidable
Delays shall apply to all provisions of the Lease other than those provisions
which expressly exclude the application of Unavoidable Delays.
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Notwithstanding the foregoing, no Unavoidable Delay shall excuse Tenant's
obligation to pay any item of Rental under this Lease.
ARTICLE 26
BILLS AND NOTICES
Except as otherwise expressly provided in this Lease, any bills,
statements, consents, notices, demands, requests or other communications given
or required to be given under this Lease shall be in writing and shall be deemed
sufficiently given or rendered if delivered by hand (against a signed receipt)
or if sent by registered or certified mail (return receipt requested) or by a
nationally recognized overnight courier (e.g., FedEx or DHL) addressed as
follows:
(i) If to Tenant (a) at Tenant's address set forth in this
Lease, Attention: General Counsel, (b) at 1200 Harbor Boulevard, Weehawken, New
Jersey 07087, Attention: Legal Department, and (c) at 1200 Harbor Boulevard,
Weehawken, New Jersey 07087, Attention: Senior Vice President of Real Estate and
Facilities with a copy to Paine Webber Group Inc., 1285 Avenue of the Americas,
New York, New York 10019, Attention: General Counsel;
(ii) If to Landlord at Landlord's address set forth in this
Lease, Attention: Realty Operations, with copies to Equitable Life Assurance
Society of America, 787 Seventh Avenue, New York, New York 10019, Attention:
Legal Department, and to any Mortgagee or Lessor which shall have requested
same, by notice given in accordance with the provisions of this Article 26 at
the address designated by such Mortgagee or Lessor; or
to such other address(es) as either Landlord or Tenant may designate as its new
address(es) for such purpose by notice given to the other in accordance with the
provisions of this Article 26. If Tenant shall theretofore have assigned its
interest in this Lease, copies of all default notices to any assignee hereof
shall be given in like manner to the Tenant Named Herein. Any such bill,
statement, consent, notice, demand, request or other communication shall be
deemed to have been rendered or given on the date when it shall have been hand
delivered or one (1) Business Day after delivered by overnight courier or by
certified mail (as indicated on the return receipt). Tenant hereby agrees that
Landlord's managing agent or attorneys can give notices on behalf of Landlord
and Landlord hereby agrees that Tenant's attorneys can give notices on behalf of
Tenant.
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ARTICLE 27
ESCALATION
Section 27.1 For the purposes of this Article 27, the following
terms shall have the meanings set forth below.
(A) "Assessed Valuation" means, for any Tax Year with respect
to any real property, the value for such real property upon which Taxes are
actually computed and payable for such Tax Year (whether based on the actual or
transitional value, as the case may be) if such real property is taxable, or, if
such real property is exempt, the value upon which Taxes would have been
computed and payable but for such exemption.
(B) "Base Operating Expenses" shall mean (i) with respect to
the period of the Term commencing on the date hereof through and including June
30, 1997 (the "Gap Period"), Operating Expenses for the calendar year ending
December 31, 1995, and (ii) thereafter during the initial Term the Operating
Expenses for the calendar year ending December 31, 1997.
(C) "Base Operating Year" with respect to the Gap Period shall
mean the calendar year ending December 31, 1995 and thereafter during the
initial Term, the calendar year ending December 31, 1997.
(D) "Base Taxes" shall mean (i) with respect to the Gap
Period, the average of the Taxes payable for the Tax Year commencing July 1,
1994 and ending June 30, 1995 and the Taxes payable for the Tax Year commencing
July 1, 1995 and ending June 30, 1996, and (ii) thereafter during the initial
Term, the average of the Taxes payable for the Tax Year commencing July 1, 1996
and ending June 30, 1997 and the Taxes payable for the Tax Year commencing July
1, 1997 and ending June 30, 1998, provided that in no event however shall Base
Taxes pursuant to this clause (ii) be (1) less than the product obtained by
multiplying (x) $145,000,000 and (y) the average of the Tax Rate in effect for
the Tax Year commencing July 1, 1996 and ending June 30, 1997 and Tax Rate in
effect for the Tax Year commencing July 1, 1997 and ending June 30, 1998, or (2)
more than the product obtained by multiplying (x) $157,500,000, and (y) the
average of the Tax Rate in effect for the Tax Year commencing July 1, 1996 and
ending June 30, 1997 and the Tax Rate in effect for the Tax Year commencing July
1, 1997 and ending June 30, 1998.
(E) (1) "Operating Expenses" shall mean the aggregate of those
costs and expenses (and taxes, if any, thereon, including, without limitation,
sales and value-added taxes) paid or incurred by or on behalf of Landlord
(whether directly or through independent contractors) in respect of the
Operation of the Property which are
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properly chargeable to the Operation of the Property in accordance with
generally accepted accounting principles (consistently applied) and sound
management practices, together with and including, without limitation, the costs
of gas, oil, steam, water, sewer rental, electricity (for the portions of the
Real Property not leased to and occupied by tenants or available for occupancy),
HVAC and other utilities furnished to the Building and utility taxes, and the
expenses incurred in connection with the Operation of the Property such as
insurance premiums, reasonable attorneys' fees and disbursements (subject to
Section 27.1E(1) (xviii)), management (subject to Section 27.1E(5)), auditing
and other professional fees and expenses, and local taxes or fees imposed upon
the Real Property and/or the Building and not a part of Taxes, but specifically
excluding or if applicable, deducting therefrom:
(i) Taxes,
(ii) transfer, gains, franchise, inheritance, estate,
occupancy, succession, gift, corporation, unincorporated business, gross
receipts, profit and income taxes imposed upon Landlord,
(iii) mortgage interest and amortization,
(iv) all leasing costs, including, without limitation,
leasing and brokerage commissions and similar fees,
(v) the cost of electrical energy furnished to any space
leased or available for lease in the Building and the costs and fees of any
electric meter reading company retained by Landlord to read meters in space
leased by or leasable to third parties,
(vi) the cost of tenant installations and decorations incurred
in connection with preparing space for a tenant's occupancy, and any other
contribution by Landlord to the cost of tenant improvements,
(vii) salaries, fringe benefits and other compensation of
Landlord's personnel above the grade of building manager or other off-site
personnel,
(viii) ground rent or any other payments paid under Superior
Leases (other than in the nature of rent consisting of Taxes or Operating
Expenses and other payments which, independent of a Superior Lease, would
constitute an Operating Expense hereunder),
(ix) depreciation and amortization, except as provided herein,
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(x) advertising, entertainment and promotional costs for the
Building,
(xi) costs and expenditures payable to (a) any Affiliate
(provided that for purposes of defining Affiliate with respect to this clause
(xi) the Control Percentage shall be 33-1/3%) of Landlord, or Equitable Life
Assurance Society of the United States, or (b) to a Person in which Landlord (or
any partner of Landlord) directly or indirectly owns at least thirty-three and
one-third percent (33-1/3%) interest or (c) to any shareholder owning at least
thirty-three and one-third percent (33-1/3%) of the common stock of Landlord or,
any general partner, any officer or member of any Board of Directors of Landlord
or of any Person described in this clause (xi); in each case in excess of the
amount which would be paid in the absence of such relationship (it being agreed
that Landlord will provide Tenant with notice of any such affiliated
relationship with a Person performing services in the Building),
(xii) costs incurred with respect to a sale or transfer of all
or any portion of the Building or any interest therein or in any Person of
whatever tier owning an interest therein,
(xiii) financing and refinancing costs,
(xiv) except as otherwise provided herein, the cost of any
improvement, repair, alteration, addition, change, replacement or other item
which under generally accepted accounting principles (consistently applied) is
properly classified as a capital expenditure, including, without limitation,
rental payments for any equipment ordinarily considered to be of a capital
nature if rented in lieu of a purchase,
(xv) lease takeover or take back costs incurred by Landlord in
connection with leases in the Building,
(xvi) costs for which Landlord receives compensation through
the proceeds of insurance or for which Landlord would have been compensated by
insurance had it carried the coverage required under the Lease or for which
Landlord receives compensation from any other source except pursuant to
provisions similar to this Article 27,
(xvii) expenses incurred in connection with services or other
benefits of a type that are not provided to Tenant (or are provided at separate
or additional charge) but that are provided to another tenant or occupant of the
Building (including, without limitation, Landlord's performance of
non-structural alterations in another tenant's premises, which alteration is
required to be performed in accordance with Requirements of general
applicability to office tenants),
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(xviii) legal fees, expenses and disbursements (including,
without limitation, those incurred in connection with leasing, sales, financing
or refinancing or disputes with current or prospective tenants), except such
fees as are reasonably incurred in connection with the Operation of the Property
or are incurred to abate a nuisance which benefits substantially all the tenants
of the Building, provided that, in each case, (x) such action would reasonably
be taken by a prudent owner of a comparable first-class office building, (y) the
same do not result directly or indirectly from any negligent act or omission or
willful misconduct on the part of any of Landlord's Indemnitees or any act or
omission on the part of any tenant or occupant of the Building and (z) the same
were incurred on account of services that are not customarily performed by
first-class managing agents of comparable first-class office buildings in
midtown Manhattan, as part of the management fee.
(xix) amounts otherwise includable in Operating Expenses but
reimbursed to Landlord directly by Tenant or other tenants (other than through
provisions similar to this Article 27),
(xx) to the extent any costs includable in Operating Expenses
are incurred with respect to both the Building and other properties (including,
without limitation, salaries, fringe benefits and other compensation of
Landlord's personnel who provide services to both the Building and other
properties), there shall be excluded from Operating Expenses a fair and
reasonable percentage thereof which is properly allocable to such other
properties,
(xxi) the cost of any judgment, settlement, or arbitration
award resulting from any liability of Landlord which is the result of
negligence, willful misconduct or fraud (other than a liability for amounts
otherwise includable in Operating Expenses hereunder) and all expenses incurred
in connection therewith,
(xxii) the cost of providing any service provided by
first-class managing agents of comparable first-class office buildings in
midtown Manhattan which is customarily included in the management fees (other
than fees for bookkeeping and accounting services currently provided by Compass,
as described in Section 27.1(E)(5)).
(xxiii) the cost of acquiring or replacing any separate
electrical meter Landlord may provide to any of the tenants in the Building,
(xxiv) costs relating to withdrawal liability or unfunded
pension liability under the Multi-Employer Pension Plan Act or similar law,
(xxv) the cost of installing, operating and maintaining any
specialty facility such as an observatory, broadcasting facilities, luncheon
club, athletic or recreational club, child care facility, auditorium, cafeteria
or dining facility, conference
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center or similar facilities, unless Tenant elects (in its sole discretion) to
use such facilities,
(xxvi) any interest, fine, penalty or other late charges
payable by Landlord and incurred as a result of late payments, except to the
extent the same was incurred with respect to a payment, part or all of which,
was the responsibility of Tenant hereunder and with respect to which Tenant did
not make a payment in a timely fashion or did not make same at all,
(xxvii) any compensation paid to clerks, attendants or other
persons in commercial concessions operated by Landlord,
(xxviii) costs of acquiring, leasing, insuring, restoring,
removing or replacing (a) sculptures (other than planters and benches), (b)
paintings and (c) other objects of art located within or outside the Building,
except for the cost of routine maintenance of such objects in the public areas
in the Building,
(xxix) costs incurred to remedy violations of Requirements
that arise by reason of Landlord's negligent or willful failure to construct,
maintain or operate the Building or any part thereof in compliance with such
Requirements (excluding the costs of permits and approvals required to comply
with Requirements in the ordinary course of the Operation of the Property),
other than such costs incurred in order to achieve compliance with new
Requirements as more particularly described in Section 27.1(E)(3) below,
(xxx) expenses allocable directly and solely to the retail
space of the Building (including, without limitation, plate glass insurance for
retail space) and to any garage in the Building,
(xxxi) costs incurred in connection with making any additions
to, or building additional stories on, the Building or its plazas, or adding
buildings or other structures adjoining the Building, or connecting the Building
to other structures adjoining the Building,
(xxxii) costs incurred in connection with the acquisition or
sale of air rights, transferable development rights, easements or other real
property interests,
(xxxiii) any insurance costs that are not specifically
required to be carried by Landlord under the Lease and are not customary for
similar first-class office buildings in midtown Manhattan and any increased
insurance costs reimbursed directly to Landlord by a tenant, including, without
limitation, Tenant, pursuant to their respective leases,
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(xxxiv) costs incurred by Landlord which result from
Landlord's or other tenant's breach of a lease or Landlord's negligence or
willful misconduct,
(xxxv) the cost of repairs or replacements or restorations by
reason of fire or other casualty or condemnation (except to the extent of the
deductible permitted by Section 9.3),
(xxxvi) costs and expenses incurred by Landlord in connection
with any obligation of Landlord to indemnify any Building tenant (including
Tenant) pursuant to its lease or otherwise,
(xxxvii) the cost paid or incurred in connection with the
removal, replacement, enclosure, encapsulation or other treatment of any
Hazardous Materials in the Building, unless in accordance with Section (E)(3)(i)
below, other than the cost of customary office cleaning materials and supplies
and materials and supplies used in connection with operation of the Building
Systems which, in each case, used and stored in compliance with all applicable
Requirements and the removal of Hazardous Materials installed by Tenant,
(xviii) all costs incurred by Landlord in connection with the
performance of any sundry services to individual tenants,
(xxxix) the cost of electricity and overtime HVAC furnished to
the Premises or any other leasable space in the Building whether or not leased
to tenants,
(xl) costs (including, without limitation, any taxes or
assessments) of any revenue generating signs or other tenant's or occupant's
signs and any future signs designating the name of the Building (excluding any
signs replacing any present Building signs and any signs placed by or on behalf
of Tenant in, on or about the Building),
(xl) any costs incurred in connection with any concourse or
any plaza connecting the Building to any other building in excess of those costs
equitably allocable to the Building,
(xli) expenditures for repairing and/or replacing any defect
in any work performed by Landlord pursuant to the provisions of this Lease, and
(xlii) any payments or credits actually received by Landlord
for recyclable materials and waste paper for a particular Operating Year within
the Term shall be deducted from Operating Expenses for such Operating Year,
except, however, that if in any Operating Year (including the Base Operating
Year) Landlord is not furnishing any particular work or service (the cost of
which if performed
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by Landlord would constitute an Operating Expense) to a tenant who has
undertaken to perform such work or service in lieu of the performance thereof by
Landlord, Operating Expenses shall be deemed to be increased by an amount equal
to the additional Operating Expenses which reasonably would have been incurred
during such period by Landlord if it had at its own expense furnished such work
or services to such tenant. Any insurance proceeds received with respect to any
item previously included as an Operating Expense (and not subsequently excluded)
shall be deducted from Operating Expenses for the Operating Year in which such
proceeds are received. Landlord hereby agrees that service and maintenance
contracts entered into by Landlord in connection with the Operation of the
Property, shall be commercially reasonable with respect to their stepped pricing
provisions, if any. The electricity for the common and public areas of the
Building (including, without limitation, the Building Systems) may, to the
extent the same period is not metered, be determined by survey prepared by an
independent, reputable engineer retained by Landlord or by Landlord's utility
meter consultant, and the actual and net cost of such electricity shall be
included in Operating Expenses.
(2) In determining the amount of Operating Expenses for
any Operating Year, including the Base Operating Year, if less than all of the
Building rentable area shall have been occupied by tenant(s) at any time during
any such Operating Year, Operating Expenses shall be determined for such
Operating Year to be an amount equal to the like expenses which would normally
be expected to be incurred had all such areas been occupied throughout such
Operating Year.
(3) (i) If any capital improvement is made during any
Operating Year, including the Base Operating Year, in order to comply with a
Requirement (other than a Requirement with respect to the removal, replacement,
enclosure, encapsulation or other treatment of asbestos) enacted, or materially
modified after the date hereof, then the amortized cost of such improvement
(i.e., the cost of such improvement together with interest thereon at the Base
Rate amortized on a straight line basis) over the useful life thereof in
accordance with generally accepted accounting principles, consistently applied)
shall be included in Operating Expenses for each of the Operating Years during
which such cost of the improvement is amortized.
(ii) If any capital improvement is made during any
Operating Year, including the Base Operating Year, either for the purpose of
saving or reducing Operating Expenses (as, for example, a labor-saving
improvement), then the amortized cost of such improvement (i.e., the cost of
such improvement together with interest thereon at the Base Rate amortized on a
straight line basis over the useful life thereof in accordance with generally
accepted accounting principles, consistently applied) shall be included in
Operating Expenses for each of the Operating Years during which such cost of the
improvement is amortized; provided that the amount of any such costs
attributable to such capital improvement relating to any particular Operating
Year that
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may be included in Operating Expenses for such Operating Year shall
not exceed the savings Landlord expects to receive for such Operating Year as a
result of such expenditures by Landlord, which anticipated savings shall be
determined by a reputable, independent licensed engineer having at least ten
(10) years experience, reasonably acceptable to Tenant, and a copy of such
engineer's report and back-up documentation shall be provided to Tenant, upon
request.
(4) Notwithstanding the foregoing, if any items which
are alleged by Landlord to constitute Operating Expenses are disputed by Tenant
and such dispute is subsequently resolved in a manner favorable to Tenant, then
such expenses that were not properly chargeable as an Operating Expense shall be
deemed excluded from Base Operating Expenses.
(5) Landlord agrees that Operating Expenses will only
include commercially reasonable increases in the fees paid for management
services for the Building (taking into consideration the quality of the
management company and the services being performed, and increases in management
fees being incurred by prudent owners of comparable first-class office buildings
in midtown Manhattan), and the portion of any such increase which is not
commercially reasonable, as aforesaid, shall not be included in Operating
Expenses. Landlord hereby represents and warrants to Tenant that the total fees
payable to Compass an account of management services for the Building for
calendar year 1995 equals $490,629 (comprised of a management fee of $422,489
and bookkeeping and accounting charges of $68,140).
(F) "Operating Statement" shall mean a statement in reasonable
detail substantially in the form of Exhibit K attached hereto and made a part
hereof (which form may be changed from time to time, provided the general
content thereof remains substantially the same or is expanded) setting forth a
comparison of the Operating Expenses for an Operating Year with the Base
Operating Expenses and if applicable, the Escalation Rent on account of
Operating Expenses payable by Tenant for such Operating Year pursuant to the
provisions of either Section 27.4(C) or (D).
(G) "Operating Year" shall mean the 1996 calendar year and
each subsequent calendar year all or part of which occurs during the term of
this Lease.
(H) "Taxes" shall mean the aggregate amount of real estate
taxes and any general or special assessments (exclusive of penalties and
interest thereon) imposed upon the Real Property (other than by reason of
additions to the Building which increase the rentable square footage of the
Building) and which are then payable by Landlord for the Tax Year in question
(including, without limitation, (i) assessments
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made upon or with respect to any "air" and "development" rights now appurtenant
to or affecting the Real Property, (ii) any fee, tax or charge imposed by any
Governmental Authority for any vaults, vault space or other space within or
outside the boundaries of the Real Property (except with respect to space
demised or used by a third party for which such party reimburses Landlord for
the vault tax or charge incurred for such space), and (iii) any taxes or
assessments levied after the date hereof in whole or in part for public benefits
to the Real Property or the Building (including any Business Improvement
District taxes and assessments)), without taking into account any discount that
Landlord may receive by virtue of any early payment of Taxes; provided, that if
because of any change in the taxation of real estate, any other tax or
assessment, however denominated (including, without limitation, any franchise,
income, profit, sales, use, occupancy, gross receipts or rental tax) is imposed
upon Landlord or the owner of the Real Property or the Building, or the
occupancy, rents or income therefrom, in lieu of or in substitution for any of
the foregoing Taxes, such other tax or assessment shall be deemed part of Taxes
computed as if Landlord's sole asset were the Real Property. With respect to any
Tax Year, all commercially reasonable and prudent expenses (taking into
consideration similar fees incurred by prudent owners of comparable first-class
office buildings in midtown Manhattan), including reasonable attorneys' and
consultants' fees and disbursements, experts' and other witnesses' fees,
incurred in contesting the validity or amount of any Taxes or in obtaining a
refund of Taxes shall be considered as part of the Taxes for such Tax Year.
Anything contained herein to the contrary notwithstanding, Taxes shall not be
deemed to include (i) any taxes on Landlord's, Lessor's or Mortgagee's income,
(ii) any corporation, unincorporated business or franchise taxes, (iii) any
estate, gift, succession or inheritance taxes, (iv) any capital gains, mortgage
recording or transfer taxes, (v) any taxes or assessments to the extent
attributable to any sign attached to or located on the Real Property (except for
the present signage or Building Standard replacement thereof or any signage
installed by or on behalf of Tenant or any signage depicting the name of the
Building (which is not the name of another tenant or occupant, except a
Successor-in-interest or Related Entity of Tenant)) or signage required by any
applicable Requirements, (vi) any occupancy taxes which are or may be required
to be paid by Landlord by reason of Landlord's tenancy in the Building or (vii)
any similar taxes imposed on Landlord, Lessor or Mortgagee, unless such taxes
are levied, assessed or imposed in lieu of or as a substitute for the whole or
any part of the taxes, assessments, levies, impositions which now constitute
Taxes. In determining the amount of Taxes for any Tax Year (or for the partial
calendar years in which the Term shall commence or expire), Taxes payable in
such Tax Year shall be apportioned for the portions of the Tax Years occurring
within such partial years. If by law, any assessment that is included in Real
Estate Taxes pursuant to the terms hereof are paid in installments, then, for
the purposes of this Section 27.1, (1) such assessment shall be deemed to have
been so divided and to be payable in the maximum number of installments
permitted by applicable Requirements (together with any interest charged by the
applicable
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Governmental Authority) shall be deemed included in Real Estate Taxes
for each calendar year the installments of such assessment paid during such
calendar year.
(I) "Tax Statement" shall mean a statement setting forth a
comparison of Taxes for a Tax Year with the Base Taxes and the Tax Payment due
for such Tax Year pursuant to the provisions of this Article 27.
(J) "Tax Rate" shall mean, as to the Tax Year in question, the
real estate tax rate of The City of New York applicable to the Real Property
during such Tax Year.
(K) "Tax Year" shall mean the period July 1 through June 30
(or such other period as hereinafter may be duly adopted by The City of New York
as its fiscal year for real estate tax purposes), any portion of which occurs
during the Term.
Section 27.2 (A) If the Taxes payable for any Tax Year (any part or
all of which falls within the Gap Period) from and after May 1, 1996 shall
represent an increase above the Base Taxes referred to in Section 27.1(D)(i),
and if Taxes payable for any Tax Year (any part or all of which falls within the
initial Term after the Gap Period) shall represent an increase above Base Taxes
referred to in Section 27.1(D)(ii), then Tenant shall pay as additional rent for
such Tax Year and continuing thereafter until a new Tax Statement is rendered to
Tenant, Tenant's Tax Share of such increase (the "Tax Payment"). The Taxes shall
be computed initially on the basis of the Assessed Valuation in effect at the
time the Tax Statement is rendered (as the Taxes may have been settled or
finally adjudicated prior to such time), regardless of any then pending
application, proceeding or appeal respecting the reduction of any such Assessed
Valuation, but shall be subject to subsequent adjustment as provided in Section
27.3(B) hereof.
(B) At any time during or within eighteen (18) months after
the Term, Landlord may render to Tenant a Tax Statement or Statements showing
(i) a comparison of the Taxes for a Tax Year with the Base Taxes and (ii) the
amount of the Tax Payment resulting from such comparison, which notice shall be
accompanied by a copy of the relevant tax bill(s) to the extent the same shall
have theretofore been received by Landlord. Tenant shall pay Landlord, the Tax
Payment shown thereon, in two (2) equal installments, in advance, on June 15th
and December 15th of each year, or fifteen (15) Business Days after Landlord
sends such Tax Statement to Tenant for the particular Tax Year, in question,
whichever is later. If Taxes are required to be paid in full or on any other
date or dates or in different installments than as presently required by the
Governmental Authority imposing the same, then the due date of the installments
of the Tax Payment shall be correspondingly accelerated or revised so that the
Tax Payment (or the applicable installments thereof) is due on the later of (x)
thirty (30) days after the Tax Statement is rendered to Tenant, and (y) fifteen
(15) days prior to the date the
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corresponding payment is due to the Governmental Authority. If the Tax Year
established by The City of New York shall be changed, any Taxes for the Tax Year
prior to such change which are included within the new Tax Year and which were
the subject of a prior Tax Statement shall be equitably apportioned for the
purpose of calculating the Tax Payment payable with respect to such new Tax
Year. Landlord's failure to render a Tax Statement during or with respect to any
Tax Year shall not eliminate or reduce Tenant's obligation to make Tax Payments
pursuant to this Article 27 for such Tax Year, and shall not prejudice
Landlord's right to render a Tax Statement during or with respect to any
subsequent Tax Year, provided that, in each case, Landlord renders the Tax
Statement for the Tax Year in question within eighteen (18) months after the end
of such Tax Year. Upon written request, but not more often than once a year,
Landlord shall furnish Tenant with a reproduced copy of the tax bill (or
receipted bill) for the Taxes for the current or next succeeding Tax Year (if
theretofore issued by the Governmental Authority).
(C) The Tax Payment shall be prorated for any partial Tax Year
in which the Term of this Lease shall expire. If a Tax Statement is furnished to
Tenant after the commencement of the Tax Year in respect of which such Tax
Statement is rendered, Tenant shall, within fifteen (15) Business Days
thereafter, pay to Landlord an amount equal to the amount of any underpayment of
the Tax Payment with respect to such Tax Year. In the event of an overpayment of
the Tax Payment, Landlord shall in the event such refund exceeds one monthly
installment of Fixed Rent and Escalation Rent, pay to Tenant such excess,
otherwise such overpayment shall be credited, against the next monthly
installment of Fixed Rent and Escalation Rent payable under this Lease.
(D) Only Landlord shall be eligible to institute tax reduction
or other proceedings to reduce the actual Assessed Valuation. In the event that,
after a Tax Statement has been sent to Tenant, an Assessed Valuation which had
been utilized in computing the Taxes for a Tax Year is reduced (as a result of
settlement, final determination of legal proceedings or otherwise), and as a
result thereof a refund of Taxes is actually received by or credited to or on
behalf of Landlord, then, promptly after receipt or credit of such refund,
Landlord shall send Tenant a Tax Statement adjusting the Taxes for such Tax Year
(taking into account the expenses mentioned in Section 27.1(H)) and setting
forth Tenant's Tax Share of such refund and Tenant shall be entitled to receive
Tenant's Tax Share either by way of a credit against the Fixed Rent and
Escalation Rent next becoming due after the sending of such Tax Statement or by
a refund to the extent no further Fixed Rent and Escalation Rent is due,
provided, however, that Tenant's share of such refund shall be limited to the
portion of the Tax Payment, if any, which Tenant had theretofore paid to
Landlord attributable to increases in Taxes for the Tax Year to which the refund
is applicable on the basis of the Assessed Valuation before it had been reduced.
Landlord's obligations with respect to any refund payable to Tenant hereunder
will survive the expiration or earlier termination of the Lease. Tenant may
request that
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Landlord advise it of whether Landlord intends to commence tax certiorari
proceedings or file an application so as to preserve Landlord's rights to so
contest. Landlord will file an application to preserve its right to contest
Taxes for a Tax Year and pursue and prosecute in good faith a contest (or
settlement) of the Assessed Valuation for such Tax Year if such actions would be
taken by a prudent owner of the Building. Except as otherwise expressly provided
herein, nothing contained herein shall limit, in Landlord's reasonable judgment,
Landlord's right to settle any such protest, provided that if such protest with
respect to the Real Property is settled simultaneously by Landlord with respect
to protest(s) of other property(ies) owned by Landlord, Landlord shall not
settle such protest in a manner more detrimental to the real property than
Landlord would have done, if Landlord shall not have been settling protests
relating to the other property(ies).
(E) In the event that, after a Tax Statement has been sent to
Tenant, the amount of the Base Taxes is reduced (as a result of settlement or
final determination of legal proceedings) then, and in such event: (i) the Base
Taxes shall be retroactively adjusted to reflect such reduction, and (ii) all
retroactive Tax Payments resulting from such retroactive adjustments shall be
due and payable when billed by Landlord.
Section 27.3 Anything in this Article 27 to the contrary
notwithstanding, under no circumstances shall the Fixed Rent payable under this
lease be less than the Fixed Rent set forth in Article 1 hereof.
Section 27.4 (A) If the Operating Expenses for any Operating Year
(any part or all of which falls within the Term) from and after May 1, 1996
shall be greater than the Base Operating Expenses, then Tenant shall pay as
additional rent for such Operating Year and continuing thereafter until a new
Operating Statement is rendered to Tenant, Tenant's Operating Share of such
increase (the "Operating Payment") as hereinafter provided.
(B) At any time during or within eighteen (18) months after
the Term, Landlord may render to Tenant an Operating Statement or Statements
showing (i) a comparison of the Operating Expenses for the Operating Year in
question with the Base Operating Expenses, and (ii) the amount of the Operating
Payment resulting from such comparison. Except as hereinafter provided,
Landlord's failure to render an Operating Statement during or with respect to
any Operating Year in question shall not prejudice Landlord's right to render an
Operating Statement during or with respect to any subsequent Operating Year, and
shall not eliminate or reduce Tenant's obligation to make payments of the
Operating Payment pursuant to this Article 27 for such Operating Year.
Notwithstanding anything contained in this Lease to the contrary, (x) if
Landlord shall fail to render an Operating Statement to Tenant within six (6)
months after the end of the Operating Year in question, then upon notice from
Tenant of such failure and Landlord's
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failure to render such Operating Statement within thirty (30) days after such
notice from Tenant, Tenant shall have the right to withhold payments on account
of current Operating Expenses until Landlord shall have rendered to Tenant the
Operating Statement for the Operating Year in question and Tenant shall promptly
pay all monies so withheld by Tenant after Landlord furnishes such Operating
Statement, and (y) Tenant shall not be obligated to pay any net debit balance as
a result of a reconciliation with respect to an Operating Statement for an
Operating Year (as described in Section 27.4(E)(1) hereof) if Landlord shall not
have rendered such Operating Statement within eighteen (18) months after the end
of the Operating Year in question.
(C) On the first day of the month following the furnishing to
Tenant of an Operating Statement or thirty (30) days after Landlord furnishes
such Operating Statement to Tenant, whichever is later, Tenant shall pay to
Landlord a sum equal to 1/12th of the Operating Payment shown thereon to be due
for the preceding Operating Year multiplied by the number of months (and any
fraction thereof) of the Term then elapsed since the commencement of such
Operating Year in which such Operating Statement is delivered, less Operating
Payments and any Tentative Monthly Escalation Charge theretofore made by Tenant
for such Operating Year and thereafter, commencing with the then current monthly
installment of Fixed Rent and continuing monthly thereafter until rendition of
the next succeeding Operating Statement, Tenant shall pay on account of the
Operating Payment for such Operating Year an amount equal to 1/12th of the
Operating Payment shown thereon to be due for the preceding Operating Year. Any
Operating Payment shall be collectible by Landlord in the same manner as Fixed
Rent.
(D) (1) As used in this Section 27.4, (i) "Tentative Monthly
Escalation Charge" shall mean a sum equal to 1/12th of the product of (a)
Tenant's Operating Share, and (b) the excess of (y) Landlord's reasonable good
faith estimate of Operating Expenses for the Current Year over (z) the Base
Operating Expenses, provided that in no event shall the Tentative Monthly
Escalation Charge be greater than One Hundred Five Percent (105%) (the
"Tentative Cap") of the monthly installments on account of Operating Payment
payable for the immediately preceding Operating Year (or, in the case of the
first Operating Year for which payment shall be due hereunder, 1/12th of One
Hundred Five Percent (105%) of the Base Operating Expenses) unless Landlord
provides Tenant with reasonable substantiation of such excess greater than the
Tentative Cap with the submission of an Operating Statement. Landlord may also
readjust the Tentative Cap one additional time during the then Operating Year
(but only in connection with reasonably substantiated increases in labor or
utility costs), and (ii) "Current Year" shall mean the Operating Year in which a
demand is made upon Tenant for payment of a Tentative Monthly Escalation Charge.
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(2) At any time in any Operating Year after the Base
Operating Year, Landlord, at its option, in lieu of the payments required under
Section 27.4(C) hereof, may demand and collect from Tenant, as additional rent,
a sum equal to the Tentative Monthly Escalation Charge multiplied by the number
of months in said Operating Year preceding the demand and reduced by the sum of
all payments theretofore made under Section 27.4(C) with respect to said
Operating Year, and thereafter, commencing with the month in which the demand is
made and continuing thereafter for each month remaining in said Operating Year,
the monthly installments on account of the Operating Payment shall be deemed to
equal the Tentative Monthly Escalation Charge. Any amount due to Landlord under
this Section 27.4(D) may be included by Landlord in any Operating Statement
rendered to Tenant as provided in Section 27.4 (B) hereof.
(E) (1) Subject to the provisions of Section 27.4(B) hereof,
after the end of the Current Year and at any time that Landlord renders an
Operating Statement or Statements to Tenant as provided in Section 27.4(B)
hereof with respect to the comparison of the Operating Expenses for said
Operating Year or Current Year, with the Base Operating Expenses, as the case
may be, the amounts, if any, collected by Landlord from Tenant under Section
27.4(C) or (D) on account of the Operating Payment or the Tentative Monthly
Escalation Charge, as the case may be, shall be adjusted, and, if the amount so
collected is less than or exceeds the amount actually due under said Operating
Statement for the Operating Year, a reconciliation shall be made as follows:
Tenant shall be debited with any Operating Payment shown on such Operating
Statement and credited with the amounts, if any, paid by Tenant on account in
accordance with the provisions of subsection (C) and subsection (D) (2) of this
Section 27.4 for the Operating Year in question. Subject to the provisions of
Section 27.4(B) hereof, Tenant shall pay any net debit balance to Landlord
within thirty (30) days next following rendition by Landlord of an invoice for
such net debit balance following the rendition of the applicable Operating
Statement; any net credit balance shall either be (a) paid to Tenant on the date
on which Landlord shall have rendered to Tenant the Operating Statement in
question, or (b) if the amount of said net credit balance does not exceed one
(1) month's Fixed Rent and Escalation Rent hereunder, applied against the next
accruing monthly installment of Fixed Rent and Escalation Rent following the
date on which Landlord shall have rendered to Tenant the Operating Statement in
question. Landlord's obligations with respect to any refund payable to Tenant
hereunder will survive the expiration or earlier termination of this Lease.
(2) If the sum of the Tentative Monthly Escalation
Charges and payments made by Tenant in accordance with subsection (C) of this
Section 27.4 for any Operating Year shall have exceeded the Operating Payment
for such Operating Year by less than $50,000 (as such amount shall be increased
every five (5) years from the date hereof by the same percentage that the
Consumer Price Index in effect on January 1st of such year exceeds the Base
Index), interest on the overpayment shall
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accrue at the Base Rate or at the Applicable Rate if such excess was more than
$50,000 (as such amount is increased as aforesaid in this sentence), in each
case, on the overpayment, determined as of the respective dates of such payments
by Tenant and calculated from such respective dates to the dates on which such
amounts are either refunded to Tenant or credited against the monthly
installments of Fixed Rent and Escalation Rent pursuant to Section 27.4(E)(1)
hereinabove, and shall be either so refunded to Tenant or so credited.
Section 27.5 Any Operating Statement sent to Tenant shall be
conclusively binding upon Tenant unless, within three hundred sixty-five (365)
days after such statement is sent, Tenant shall (i) send a written notice to
Landlord objecting to such statement (the "Objection Notice"), (ii) conduct an
audit of such statement in question, and (iii) notify Landlord that it intends
to arbitrate such dispute. If an Objection Notice is sent, Tenant (together with
its independent reputable certified public accountants) may promptly examine
Landlord's books and records relating to the Operation of the Property to
determine the accuracy of the Operating Statement. Tenant recognizes the
confidential nature of such books and records and any information submitted by
Landlord in connection with an arbitration of an operating expense dispute and
Tenant shall deliver to Landlord a confidentiality statement (in form and
substance reasonably acceptable to both Landlord and Tenant) signed by a
partner, principal or officer of Tenant and a partner, principal or officer of
Tenant's certified public accountants to which such books and records have been
delivered wherein Tenant and its certified public accountants agree to maintain
the information obtained from such examination in strict confidence, except that
Tenant and its certified public accountants may reveal such documentation to
their employees who are actively involved in such investigation and Tenant's
legal counsel (provided such agents, representatives and legal counsel agree to
abide by the confidentiality standards, stated above) during the course of its
review, and to an arbitrator or court of competent jurisdiction in the event of
a dispute relating to the subject matter contained in whole or in part in such
records or as otherwise may be required by any Requirement. If after such
examination, Tenant still disputes such Operating Statement, Tenant may elect to
have the decision of the issues raised determined by arbitration (provided that
such dispute must be submitted to arbitration within one (1) year and three (3)
months after the statement, in question, was sent to Tenant and provided
further, that the arbitrator in such matter shall be a qualified, disinterested
and impartial person who shall be, and have been for the last ten (10) years, a
partner in a reputable accounting firm that is regularly engaged in and familiar
with the accounting concepts applicable to the computation of operating expenses
of first-class office buildings in Manhattan) in accordance with Article 47
hereof and any such decision shall be conclusively binding upon the parties. The
fees and expenses of the arbitrator shall be borne by the unsuccessful party
(and if both parties are partially successful, such fees and expenses shall be
apportioned between Landlord and Tenant in
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inverse proportion to the amount by which such decision is favorable to each
party). Notwithstanding the foregoing, if such decision shows that the Operating
Expenses for the Operating Year, in question were overestimated by more than 5%,
then Landlord shall also reimburse Tenant for the reasonable actual
out-of-pocket costs of Tenant's audit of Landlord's books and records (provided,
however, that, notwithstanding Tenant's payment/fee arrangements with its
auditor, Landlord shall only reimburse Tenant for the actual hours of service
provided by such auditor at the then reasonable and customary hourly rate for
such services) within thirty (30) days after demand therefor. Notwithstanding
the giving of such notice by Tenant, and pending the resolution of any such
dispute, Tenant shall pay to Landlord when due all amounts shown on any such
Operating Statement. In the event Tenant overpaid Tenant's Operating Share of
Operating Expenses for the Operating Year, in question, then such overpayment
shall accrue interest at the Base Rate if Tenant's overpayment was less than
$50,000.00 (as such amount shall be increased every five years from the date
hereof, by the same percentage that the Consumer Price index in effect on
January 1st of such year exceeds the Base Index) or at the Applicable Rate if
Tenant's overpayment was more than $50,000 as such amount is increased as
aforesaid in this sentence.
Section 27.6 Subject to the provisions of Sections 27.2 and 27.4
hereof, the expiration or termination of this Lease during any Operating Year or
Tax Year shall not affect the rights or obligations of the parties hereto
respecting payments of Escalation Rent for such Operating Year or Tax Year and
any Operating Statement or Tax Statement relating to such Escalation Rent may be
sent to Tenant subsequent to, and all such rights and obligations shall survive,
any such expiration or termination. In determining the amount of Escalation Rent
for the Operating Year and Tax Year in which the Term shall expire, the payment
of Escalation Rent for such Operating Year and Tax Year shall be pro rated based
on the number of days of the Term which fall within such Operating Year and Tax
Year.
Section 27.7 Notwithstanding anything herein contained to the
contrary, if the amount (the "Actual Amount") that would have been payable by
Tenant pursuant to Section 27B of the First Restated Lease (as modified by the
Lease Amendments) for the 1995 Operating Year is finally determined to be
greater or less than $3,413,101.82 (the "Deemed Amount"), then (i) if the Actual
Amount is greater than the Deemed Amount, Tenant shall pay an amount to Landlord
equal to the product of (x) such excess multiplied by (y) a fraction (the "Gap
Fraction"), the numerator of which equals the number of days in the Gap Period
and the denominator of which equals 365, which amount shall be paid within
thirty (30) days after the determination of the Actual Amount and request
therefor by Landlord or (ii) if the Actual Amount is less than the Deemed
Amount, an amount equal to the product of (x) such difference multiplied by (y)
the Gap Fraction shall be credited and applied against the next accruing monthly
installment(s) of Rental payable under this Lease promptly after the
determination of the Actual Amount.
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ARTICLE 28
SERVICES
Section 28.1 (A) Landlord shall provide (i) freight elevator service
only to the Storage and Service Space on Business Days from 8:00 a.m. to 6:00
p.m., (ii) passenger elevator service between the 38th Floor and the 14th Floor
through elevator numbers 32 and 33 at all times (except in the event of an
emergency or if necessary to comply with any applicable Requirement or if
necessary to make required repairs or if necessary for the safe operation of the
Building), (iii) the existing escalator service to the 2nd Floor Space on a 24
hour per day, 365 days per year basis, provided that at such times that Tenant
does not conduct its business in the 2nd Floor Space on a 24 hour per day, 7 day
a week basis, then Landlord shall have no obligation to furnish such escalator
service during any such non-Business Hours and hours on non-Business Days during
which Tenant is not so conducting its business in the 2nd Floor Space, and (iv)
not fewer than four (4) passenger elevators (per elevator bank) to the remainder
of the Premises (except in the event of an emergency or if necessary to comply
with any applicable Requirement, and subject to Landlord's right on infrequent
occasions to take one (1) or two (2) elevators out of service to service special
affairs or the repair same) on Business Days from 8:00 a.m. to 6:00 p.m. and
shall have at least two (2) elevators (per elevator bank) subject to call at all
other times. The passenger elevators shall perform substantially in accordance
with the specifications set forth in Schedule D attached hereto and made a part
hereof. Tenant shall have the exclusive use of the shuttle elevator number S3
which operates only between the 38th and 39th floors of the Building for so long
as Tenant is leasing the 38th Floor Space. For so long as Tenant is leasing the
38th Floor Space, Landlord shall maintain and repair such elevator, and Tenant
shall pay to Landlord as additional rent, Landlord's reasonable out-of-pocket
expenses incurred in the maintenance and repair of such elevator (without profit
or mark-up, and excluding equipment depreciation) within thirty (30) days after
rendition of a bill therefor, but only to the extent such expenses would be
includable in Operating Expenses pursuant to Article 27 hereof if such
maintenance or repair had not been performed exclusively for the benefit of
Tenant. In addition, for so long as Tenant is leasing the 38th Floor Space,
Tenant, at Tenant's sole cost and expense, shall comply with all requirements of
law, the New York Board of Fire Underwriters or any similar body applicable to
Tenant's use of such elevator to the extent such requirements would be
includable as Requirements if they were applicable to the Premises.
(B) Landlord shall provide (except in the event of an
emergency or if necessary to comply with any applicable Requirement, and subject
to Landlord's right on infrequent occasions to take one (1) such elevator out of
service to service special needs of occupants in the Building or the repair of
same) three (3) freight elevators serving the floors of the Building as follows:
S1 and S2 for SC - 15, S4 for SC - 39 and K1 for C-2, on call on a "first come,
first served" basis on Business Days from 8:00 a.m.
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to 6:00 p.m. ("Business Hours"), and one (1) freight elevator on a reservation,
"first come, first served" basis from 6:00 p.m. to 8:00 a.m. on Business Days
and at any time on days other than Business Days. Tenant, along with other
occupants of the Building, shall have "first come, first served" reserved access
to the loading docks of the Building during any time that use of the loading
dock shall be required when using the freight elevators for outside deliveries,
subject to Building deliveries. If Tenant shall use the Building's freight
elevators or loading docks between 6:00 p.m. and 8:00 a.m. on Business Days or
at any time on any other days, Tenant shall pay to Landlord, as additional rent,
the rate set forth on Schedule E attached hereto and made a part hereof (plus 1%
of such amount), which rate (i.e. the initial rate set forth on Schedule E)
shall be increased on January 1st of each calendar year during the Term by the
percentage increase in the Consumer Price Index on each such January 1st over
the Base Index.
(C) Landlord represents that, as of the date hereof, the
ordinary hours of operation of the Building are 8:00 a.m. to 6:00 p.m. on
Business Days. Subject to applicable Requirements restricting the same or
Unavoidable Delays, Tenant shall have reasonable access to the Premises,
consistent with the Building Standard, 24 hours per day, 365 days per year.
Section 28.2 (A) Landlord, at Landlord's expense, but subject to
recoupment to the extent permitted under Article 27 hereof, shall furnish to the
core wall or perimeter induction unit, as applicable, of each floor of the
Office Space, through the HVAC System, HVAC in accordance with the
specifications set forth in Schedule B-1 attached hereto and made a part hereof,
on a year-round basis from 8:00 a.m. to 6:00 p.m. on Business Days. Landlord
shall provide HVAC to the Storage and Service Space in accordance with the
specifications set forth in Schedule B-2 attached hereto and made a part hereof.
Landlord represents and covenants that the HVAC System is, and throughout the
term of the Lease shall be, in compliance with all applicable Requirements and
that the HVAC System does and shall, throughout the term of the Lease, achieve a
minimum volume of filtered outside air of 20 cfm per person based on an
occupancy of one person per 100 square feet of usable area. Tenant, at its own
cost and expense, may retain an independent qualified hygienist to perform air
quality testing of the Premises. If the results of such testing indicate
readings in excess of those permitted by the minimum standards of applicable
Requirements, Tenant shall deliver a copy of the report of such testing to
Landlord. In response thereto, Landlord may retain its own independent qualified
hygienist to perform air quality testing of the Premises or conduct such other
investigations (as Landlord shall determine are necessary) and shall provide to
Tenant a copy of the results of such testing or investigations. If the results
of such tests or investigations indicate readings in excess of those permitted
by applicable Requirements, and provided that such problem or deficiency has not
been caused by any act or omission of Tenant or its agents, employees,
contractors, subtenants or licensees, or the installation or maintenance of
Tenant's Initial Alterations or subsequent Alterations or Tenant's
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repairs to or maintenance of the Premises or Tenant's particular manner of use
of the Premises, Landlord shall, at Landlord's cost and expense, promptly take
all necessary actions to remedy such problem or deficiencies noted in such
report and shall reimburse Tenant for Tenant's actual out-of-pocket costs for
such testing. If such problem or deficiency has been caused by Tenant, as
aforesaid, Tenant shall, at Tenant's cost and expense, promptly take all
necessary actions in accordance with the applicable provisions of this Lease to
remedy the problem or deficiency noted in such report and shall reimburse
Landlord for Landlord's actual out-of-pocket costs in connection with such
testing and/or investigations.
(B) If Tenant shall elect to cease operating the Condenser
Water System other than on an emergency or temporary basis, Tenant shall have
the one-time right, upon at least thirty (30) days notice (unless a longer
notice period is reasonably required) to Landlord, to tap into the existing
condenser water pipes of the Building using existing taps located in the
Building to obtain condenser water for Tenant's system in accordance with the
applicable provisions of this Lease. Landlord shall not charge any tap-in,
hook-up, supervisory or other fees in excess of Landlord's then out-of-pocket
costs in connection therewith and the taps shall be made by Tenant under
Landlord's supervision. If any additional taps or three-way valves are required,
they shall be installed by Tenant, at Tenant's expense, under Landlord's
supervision. Landlord shall furnish to the floor(s) of the Premises serviced by
such system up to the aggregate capacity of four hundred (400) tons demand load
of condenser water as such amount may be increased pursuant to the terms of this
Lease) to service such system on a twenty-four (24) hour per day, three hundred
sixty-five (365) days per year basis. Such supplemental condenser water
temperature shall, at all times that the outdoor temperature does not exceed
95(Degree) Fahrenheit (dry) bulb and 78(Degree) Fahrenheit (wet) bulb, be at a
maximum of 85(Degree) Fahrenheit and such condenser water shall be supplied at 3
gallons per minute per ton at 10(Degree) delta temperature. Any installations
required to connect Tenant's supplemental HVAC units to the condenser water
system shall be made by Tenant (under Landlord's supervision) at Tenant's sole
cost and expense and in accordance with the applicable provisions of this Lease.
Tenant shall pay to Landlord for the supply of supplementary air conditioning
condenser water, within thirty (30) days after rendition a bill therefor, an
annual charge equal to the rate set forth on Schedule E (plus one percent (1%)
of such amount), which rate (i.e. the initial rate set forth on Schedule E)
shall be increased on January 1st of each calendar year during the Term by the
percentage increase in the Consumer Price Index on each such January 1st over
the Base Index. Landlord shall not be liable to Tenant for any failure or defect
in the supply or character of condenser water supplied to Tenant by reason of
any Requirement, act or omission of the public service company serving the
Building or for any other reason not attributable to the negligence or willful
misconduct of Landlord, its agents, contractors and employees or breach of its
obligations hereunder.
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(C) Landlord is currently providing approximately 211 tons of
the Building chilled water to the fan-coil units installed by Tenant in the
trading areas of the Premises located on the ninth (9th) through eleventh (11th)
floors and 14th floor executive area of the Building, through the HVAC System,
from 8:00 a.m. to 6:00 p.m. on Business Days and such chilled water shall, at
all times be at 45(Degree) degrees Fahrenheit. If Tenant requires additional
chilled water (as substantiated by reasonably detailed calculations for such
additional chilled water requirements), Landlord shall provide the same to
Tenant, provided Landlord shall not be required to furnish more than four
hundred (400) tons of chilled water to Tenant. Tenant shall pay Landlord, as
additional rent, for the supply of chilled water set forth in this Section
28.2(C), the rate set forth on Schedule E (plus 1% of such amount) as same
(i.e., the initial amount set forth on Schedule E) shall be increased on January
1st of each calendar year during the Term by the percentage increase in the
Consumer Price Index in effect on each such January 1st over the Base Index.
Tenant shall have the right during the Term to install its own chilled water
system ("Chilled Water System") in the location set forth on Exhibit Q attached
hereto ("Chilled Water System Space"), provided such system shall be considered
an Alteration pursuant to the terms hereof, such system shall be adequately
screened in, and such system shall not unreasonably interfere with other
occupants of the Building or the proper operation of the Building and/or
Building Systems. Landlord hereby agrees that there shall be no separate charge
to Tenant for use of the Chilled Water System Space. In the event Tenant
installs its own chilled water system, Landlord shall have no obligation to
furnish any chilled water to Tenant thereafter and Tenant shall have no
obligation to make any further payments under this Section 28.2(C) (except as
otherwise provided below), unless Tenant has not paid Landlord for chilled water
furnished to Tenant prior thereto. Notwithstanding the foregoing, in the event
that Tenant temporarily suspends the operation of such Chilled Water System, as
a result of an emergency situation, Landlord, upon prior notice (which may be
telephonic provided such notice is confirmed in writing) from Tenant, shall as
soon as reasonably practical thereafter exercising diligent efforts under the
circumstances, supply such quantities of chilled water as is reasonably required
by Tenant to cool portions of the Premises reasonably designated by Tenant
provided (and only to the extent) excess chilled water capacity in the then
existing Building chilled water system is available for Tenant's use (i.e. such
capacity has not been, or will not during such temporary suspension be,
committed to other occupants or for base Building use). Landlord shall use its
reasonable efforts to supply such chilled water as soon as practicably possible.
Tenant shall pay the cost of such chilled water in accordance with the
provisions of this Section 28.2(C) hereof. The parties shall in good faith
cooperate with each other and use diligent efforts to minimize the period of
time during which Landlord is unable to supply chilled water to Tenant after
such temporary suspension, and the period during which Landlord is required to
supply such chilled water.
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Section 28.3 (A) The Fixed Rent does not reflect or include any
charge to Tenant for the furnishing or distributing of any HVAC to the Premises
during periods other than the hours and days set forth in Section 28.2
hereinabove. For all overtime hours and days that Tenant requires overtime HVAC
("Overtime Periods"), Tenant shall pay Landlord, as additional rent, for such
overtime HVAC use the rate set forth on Schedule E, (plus one percent (1%) of
such amount), as same (i.e., the initial amount set forth on Schedule E) shall
be increased on January 1st of each calendar year during the Term by the
percentage increase in the Consumer Price Index in effect on each such January
1st over the Base Index. Landlord shall not be required to furnish any such
services during any Overtime Periods unless Landlord has received advance notice
from Tenant requesting such services prior to 4:00 p.m. of the day upon which
such services are requested or by 4:00 p.m. of the last preceding Business Day
if such Overtime Periods are to occur on a day other than a Business Day.
Landlord shall use good faith efforts to honor requests of Tenant for HVAC
service during Overtime Periods given after the aforesaid times. If Tenant fails
to give Landlord such advance notice, then, failure by Landlord to furnish or
distribute any such services during such periods shall not constitute an actual
or constructive eviction, in whole or in part, or entitle Tenant to any
abatement or diminution of Rental, 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. If more than one tenant utilizing the same
system as Tenant requests HVAC through such system, during any overtime periods
the charge to Tenant shall be adjusted pro rata based on the period of time each
tenant, including Tenant, utilizes such system, and Tenant shall be credited the
same against the next HVAC charges due and payable hereunder.
Section 28.4 (A) To the extent the acts of Tenant do not materially
adversely interfere with the Cleaning Contractor's ability to clean the
Premises, Landlord, at Landlord's expense, subject to recoupment to the extent
permitted under Article 27 hereof, commencing on the date hereof, shall cause
the Premises, excluding the Storage and Service Space, any areas which are
vacant or then the subject of Alterations and any portions of the Premises used
primarily for the storage, preparation, service or consumption of food or
beverages and any Secured Areas (unless Tenant provides such Cleaning Contractor
with reasonable access to perform cleaning services to such secured areas), to
be cleaned, substantially in accordance with the standards set forth in Schedule
C attached hereto and made a part hereof. If, however, any additional cleaning
of the Premises is to be done by Tenant, it shall be done at Tenant's sole cost
and expense, in a manner reasonably satisfactory to Landlord and no one other
than the Cleaning Contractor providing cleaning services to the Building on
behalf of Landlord or other persons reasonably approved by Landlord shall be
permitted to enter the Premises or the Building for such purpose.
Notwithstanding the foregoing, if Tenant shall perform any cleaning services in
addition to the services provided by Landlord as aforesaid, Tenant
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may use its own employees (provided that the same employment does not cause a
labor conflict with the unions operating in the Building). Tenant shall be
responsible for, at its sole cost and expense, removal from the Premises and the
Building of any of Tenant's (i) wet rubbish and (ii) refuse and rubbish to the
extent that the same exceeds the refuse and rubbish usually generated in
connection with normal office use and for which Landlord is charged extra by the
Building's carting contractor. Bills for the same shall be rendered by Landlord
or Landlord's designated agent (i.e., Landlord's Cleaning Contractor or
recycling service) to Tenant at such time as Landlord or Landlord's designated
agent may elect. If Tenant elects to use the Building's Cleaning Contractor for
additional cleaning services, Tenant shall contract directly with Landlord's
Cleaning Contractor, for the additional cleaning and refuse removal requested by
Tenant. Tenant shall comply with all applicable Requirements and the Rules and
Regulations with respect to the recycling of rubbish. Tenant, at Tenant's
expense, shall cause all private restroom facilities, the Storage and Service
Space and all portions of the Premises used primarily for the storage,
preparation, service or consumption of food or beverages to be cleaned daily in
a manner reasonably satisfactory to Landlord, and to be exterminated against
infestation by vermin, rodents or roaches regularly and, in addition, whenever
there shall be evidence of any infestation. Tenant shall not permit any person
to enter the Premises or the Building for the purpose of providing such
extermination services, other than persons first approved by Landlord, such
approval not to be withheld unreasonably.
Landlord shall provide Tenant with the cleaning credit or payment,
if any, to which Landlord is entitled to receive from the Cleaning Contractor
pursuant to the terms of its contract with such Cleaning Contractor for any
vacant space in the Premises during the Term, which credit or payment shall be
applied against Rental, within thirty (30) days after receipt of same by
Landlord.
(B) If the Cleaning Contractor fails to cause the Premises to
be cleaned in accordance with the standards set forth on Schedule C in any
material respect and on more than two (2) occasions in any ten (10) Business Day
period (provided such failure is not due to any act or omission of Tenant, its
agents, employees, contractors, subtenants or licensees including, without
limitation, failure to provide access to all parts of the Premises to be
cleaned, or in connection with an Unavoidable Delay) (a "Cleaning Contractor
Default"), Tenant shall give written notice thereof to Landlord within five (5)
Business Days of the alleged failure (time being of the essence of the giving of
such notice) specifying with particularity the respects in which the Cleaning
Contractor shall have failed to meet its obligations hereunder in any material
respect. Landlord shall have ten (10) days after the giving of Tenant's notice
to cause such Cleaning Contractor Default to be eliminated on a prospective
basis. If the Cleaning Contractor Default persists after such ten (10) day
period, then Tenant may request (in writing) that Landlord change the Building's
Cleaning Contractor. Landlord, within ten (10) Business days after Tenant's
request, must either (1) agree to change the Cleaning Contractor or (2) deliver
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notice to Tenant, disputing Tenant's claim that a Cleaning Contractor Default
exists. If Landlord disputes Tenant's claims, then Tenant may submit such
dispute to arbitration in accordance with Article 47 hereof, provided such
dispute is submitted within thirty (30) days after notice from Landlord that it
disputes Tenant's claims. If Landlord fails to dispute Tenant's claim that a
Cleaning Contractor Default persists, then Landlord shall change the Cleaning
Contractor within ninety (90) days after Tenant's request. If Tenant submits
such dispute to arbitration and the arbitrator determines that a Cleaning
Contractor Default occurred and remained uncured for such ten (10) day period,
then Landlord shall with reasonable diligence (and in any event within ninety
(90) days thereafter), change the Building's Cleaning Contractor. Any new
contractor shall charge commercially competitive rates and be consistent with
the first-class quality of cleaning contractors performing similar cleaning
services in comparable first-class office buildings in midtown Manhattan.
Section 28.5 Landlord shall provide to the Premises hot and cold
water for ordinary drinking, cleaning and core lavatory purposes and cold water
only for Tenant's pantries and private lavatories. If Tenant requires, uses or
consumes water for any purpose in addition to ordinary drinking, cleaning,
pantry or lavatory purposes, Landlord may install a water meter or meters (to
the extent one or more water meters is not already installed) and thereby
measure Tenant's water consumption for all such additional purposes. In such
event (1) Tenant shall pay Landlord for the reasonable cost of the meter and the
reasonable cost of the installation, maintenance, repair and reading thereof (to
the extent not included as an Operating Expense), (2) Tenant shall pay (at the
same rates paid by Landlord) for water consumed as shown on said meter (as and
when bills are rendered as additional rent), and (3) Tenant shall pay the sewer
rent charge or any other tax, rent, levy or charge which now or hereafter is
assessed, imposed or shall become a lien upon the Premises or the realty of
which they are a part pursuant to any Requirement made or issued in connection
with any such metered use, plus 1% of such costs identified in subsections (2)
of this Section 28.5. The bill rendered by Landlord for the above shall be based
upon Tenant's consumption and shall be payable by Tenant as additional rent
within thirty (30) days of rendition. Landlord represents and covenants to
Tenant that hot and cold water furnished to the Premises is, and throughout the
Term, shall be in compliance with all Requirements. Throughout the Term,
Landlord shall perform industry standard testing and evaluating cleaning of the
domestic water tanks to the extent required by any applicable Requirement or
otherwise appropriate for first-class office buildings in midtown Manhattan.
Section 28.6 Notwithstanding anything to the contrary contained
herein, Landlord reserves the right to stop service of the HVAC System or the
elevator, escalator, electrical, plumbing or other Building Systems or
facilities in the Building when necessary, by reason of accident or emergency,
or for repairs, additions, alterations, replacements or improvements in the
judgment of Landlord desirable or necessary to be
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made, until said repairs, alterations, replacements or improvements shall have
been completed (which repairs, alterations and improvements shall be performed
in accordance with Section 4.4 hereof, and which stoppages as a result of the
same shall only occur (except in an emergency or if necessary to comply with
applicable Requirements) during non-Business Hours on Business Days or on days
other than Business Days if the performance of the same would materially
interfere with Tenant's conduct of business. Landlord shall use good faith
efforts to give reasonable prior notice of such stoppage (which, in the case of
an emergency or if necessary to comply with any applicable Requirement(s) shall
be such notice, if any, as is reasonable under the circumstances) and such
notice shall also set forth, on a non-binding basis, Landlord's good faith
estimate of the duration of such stoppage. Except as specifically provided in
Section 14.3 hereof, Landlord shall have no responsibility or liability for
interruption, curtailment or failure to supply HVAC, elevator, electrical,
plumbing or other Building Systems or facilities when prevented by Unavoidable
Delays or by any Requirement of any Governmental Authority or due to the
exercise of its right to stop service as provided in this Section 28.6. Except
as otherwise expressly provided in this Lease (including, without limitation,
Section 14.3 hereof), the exercise of such right or such failure by Landlord
shall not constitute an actual or constructive eviction, in whole or in part, or
entitle Tenant to any compensation or to any abatement or diminution of Rental,
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.
Section 28.7 Landlord shall provide security for the Building
utilizing personnel, equipment, systems and procedures, either individually or
in combination, at least consistent with the Building Standard and comparable
first-class office buildings in midtown Manhattan with similar tenancies and
operations. Tenant shall, at Tenant's sole cost and expense, be entitled to
implement all reasonable security measures desired by Tenant in accordance with
the Building Standard, provided such measures do not adversely affect the proper
operation of the Building or unreasonably interfere with other tenants or
occupants in the Building, and to the extent such security measures involve
areas outside the Premises, same shall be performed in coordination and
cooperation with the Building security; and the implementation of any such
security measures shall be subject to Landlord's reasonable approval (and if
approved by Landlord, Landlord shall reasonably cooperate with Tenant in the
implementation of such security measures).
Section 28.8 Tenant, at its expense, may connect additional toilets
in the Premises to the Building's central toilet exhaust system (provided Tenant
shall install booster fan(s) of appropriate size to exhaust air (as determined
by and shown on Tenant's design drawings therefor) at the point(s) of connection
to the system under Landlord's supervision and in accordance with all the
applicable terms of this Lease), and Landlord shall permit an aggregate exhaust
air quantity with respect to such toilets, of up to 600
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cfm, provided that any such connection of more than 60 cfm with respect to any
full floor (or with respect to the 14th floor, more than 400 cfm) does not
adversely affect the performance of the Building exhaust system as reasonably
determined by Landlord's engineer. Landlord shall operate and maintain the
Building's toilet exhaust system so as to permit the same to accept such exhaust
in accordance with applicable Requirements.
Section 28.9 Subject to Landlord's reasonable approval, Landlord
shall permit Tenant, if Tenant relocates the kitchen within the Premises to
route a kitchen exhaust riser and make-up riser to the nearest point of intake
and exhaust for such kitchen, to the extent same is reasonably practicable and
does not unreasonably interfere with the operation of the Building Systems or
other tenants in the Building, and subject to compliance with the applicable
terms of this Lease, including without limitation Articles 3 and 6 hereof.
Section 28.10 Landlord represents that the existing base Building
sprinkler system complies with all applicable Requirements as of the date of
this Lease. Landlord hereby agrees to maintain and repair the Base building
sprinkler system and equipment serving and/or within the Premises in accordance
with the Building Standard and all applicable Requirements including, without
limitation, the distribution portions thereof (except Tenant shall maintain and
repair the distribution portions thereof during the period, if any, covered by
Tenant's warranty or if repair is necessitated by the acts or omissions of
Tenant, or its agents, employees, contractors, subtenants or licensees, or in
connection with any Alterations performed in the Premises).
Section 28.11 Landlord shall provide a fully capable Class "E" fire
alarm system to the Building ready for connection of wiring from devices
installed by Tenant. Tenant shall have the right, subject to the provisions of
Articles 3 and 6 hereof, to install smoke detectors, fire alarms, strobes,
strobe panels, speakers, pull-stations, fan shut-down relay and other equipment
in the Premises and to connect to the Building Class E fire alarm system. Tenant
shall have the right to utilize all of said existing life safety systems and
equipment and to add in the Premises additional life safety equipment (and
connect all additional equipment to said existing systems) where reasonably
required by Tenant. Landlord shall provide in the aggregate up to ten (10) with
respect to floors 2 and 12 and four (4) with respect to all other floors of the
Premises (i) supervised control/output points and (ii) digital input points per
floor, to the extent reasonably required for Tenant's connections to the base
Building Class E system (subject to any revisions necessitated as a result of a
system upgrade by Landlord, of which Landlord shall promptly notify Tenant).
Section 28.12 Landlord shall provide Tenant with access to and the
use of, subject to compliance by Tenant with the applicable provisions of this
Lease (i) (on a non-exclusive basis) one (1) main and three (3) satellite
telephone closets per floor of the
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Premises; and (ii) exclusive access to the portion of such telephone closets
depicted on Exhibit R attached hereto. If any such telephone closet is located
within another tenant's space or Tenant must access such closet through another
tenant's space, then Tenant shall only have access to such core telephone
closets at reasonable times and upon reasonable notice to Landlord and to any
such other tenant within whose premises such telephone closet is located.
Section 28.13 Tenant shall have the right, as an Alteration, to
connect, at Tenant's sole cost and expense, to the Building's steam riser to
obtain "low pressure" steam for Tenant's kitchen (not to exceed the amount of
steam currently being furnished to Tenant for Tenant's kitchen use) which
connection shall be done under Landlord's supervision and subject to the
applicable terms of this Lease, and Landlord shall install a submeter to measure
such steam consumption, at Tenant's sole cost. Tenant shall pay to Landlord,
Landlord's cost (at the same rates paid by Landlord) for all steam consumed by
Tenant as shown on the submeter measuring Tenant's consumption of steam in
Tenant's kitchen, (plus 1% of such cost), and Tenant shall also pay Landlord's
out-of-pocket meter reading expense (to the extent not included as an Operating
Expense), as additional rent, within thirty (30) days after bills are rendered
therefor.
Section 28.14 Subject to compliance with existing agreements, the
Rules and Regulations, applicable Requirements, and the terms of this Lease,
Landlord shall, at no cost to Landlord, permit the cable television company
serving the area in which the Building is located to provide cable television
service to all floors of the Premises to the extent reasonably practicable, and
safe, provided such cable company executes a license agreement reasonably
acceptable to Landlord with respect to its access to and use of the Building. At
no cost to Landlord, Landlord shall permit access to the Building, to the extent
reasonably practicable and safe, in accordance with Landlord's Rules and
Regulations and subject to compliance with Requirements and the applicable terms
of this Lease, by all telecommunications companies such as local exchange
carriers (LECS) and competitive access providers (CAPS), provided that these
telecommunications service providers are franchised, certified and are in full
compliance and in good standing with the state and federal agencies that
regulate, approve and oversee such telecommunications companies, and further
provided that the LECS and CAPS execute a telecommunications license agreement
reasonably acceptable to the Landlord with respect to access and use of the
Building. Landlord shall be entitled to charge a commercially reasonable fee
with respect to such access to the Building and/or use of space by such cable
and/or telecommunications providers, provided that the fee charged by Landlord
solely in connection with access to the Building (and not the use of space
within the Building) does not result in the rate being charged Tenant by such
companies to provide telecommunication services to be increased beyond a de
minimis extent. Tenant hereby agrees that it shall negotiate a rate with such
LECS and CAPS prior to Landlord's negotiation of a fee with same and Tenant
shall not disclose the contents of this Section
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28.14 with any such service provider. Landlord shall not charge any such CAPS or
LECS any access fee if Tenant contracts for any such services prior to the
completion of Tenant's Initial Alterations at the time Tenant so contracts with
such CAPS or LECS, subject to the aforesaid conditions. Landlord retains the
right to offer the telecommunications services on a fair and reasonable basis to
all tenants in the Building. Access by the LECS and CAPS may be limited at the
Landlord's reasonable discretion based on health, risk and space availability or
to the extent that proper operation of the Building, use or occupancy of the
Building by other tenants or other providers is materially adversely affected.
Section 28.15 Landlord shall provide emergency power in accordance
with all applicable Requirements for the emergency lighting in core corridors
and stairway exit signs only.
Section 28.16 All services expressly and specifically required to be
provided by Landlord in this Article 28 shall be provided by Landlord
substantially in conformance with the Building Standard, subject to the
provisions of this Lease.
Section 28.17 Notwithstanding anything to the contrary contained
herein, Landlord shall, at least once every three (3) years, and either party
may more frequently (but not more than once a year with respect to a particular
charge) conduct a study to determine whether any of the charges under this
Article 28, with respect to services furnished by Landlord to Tenant, the
initial charge for which is set forth on Exhibit E, must be increased or
decreased to reflect Landlord's then actual cost in providing such service
(without any profit or mark-up and excluding equipment depreciation), then the
applicable charge hereunder for such service shall be adjusted as hereinafter
provided to reflect Landlord's then actual cost to provide the applicable
service (without any profit or mark-up and excluding equipment depreciation), as
such cost may thereafter be increased based on the increase in the Consumer
Price Index on January 1st of the immediately succeeding calendar year in which
the study was concluded over the Consumer Price Index in effect for the month in
which the charge was so adjusted. The cost of the studies Landlord conducts
every three (3) years shall be shared equally by Landlord and Tenant and if
either of the parties desire to conduct studies more frequently, then same shall
be done at such party's sole cost and expense. The results of any study
conducted by either party hereunder shall be furnished to the other promptly
upon conclusion. When the amounts of such increases or decreases, as the case
may be, are so determined, the parties shall execute an agreement supplementary
hereto to reflect such adjustments, effective from the date of the increase or
decrease of such costs as determined by such consultant (but in no event shall
any such adjustment be effective prior to the date occurring one (1) year before
the conclusion of such study) and such increases or decreases shall be effective
from such date whether or not such a supplementary agreement is executed.
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Any disputes with respect to the accuracy of a study may be submitted to
arbitration in accordance with Article 47 hereof.
ARTICLE 29
INTENTIONALLY OMITTED
ARTICLE 30
VAULT SPACE
Notwithstanding anything contained in this Lease or indicated on any
sketch, blueprint or plan, any vaults, vault space or other space outside the
boundaries of the Real Property are not included in the Premises. Landlord makes
no representation as to the location of the boundaries of the Real Property,
provided, however, to the best of Landlord's knowledge no portion of the
Premises is located within any sidewalk vault or outside the boundaries of the
Real Property. All vaults and vault space and all other space outside the
boundaries of the Real Property which Tenant may be permitted to use or occupy
pursuant to the terms of this Lease are to be used or occupied under a revocable
license, and if any such license shall be revoked, or if the amount of such
space shall be diminished or required by any Governmental Authority or by any
public utility company, such revocation, diminution or requisition shall not
constitute an actual or constructive eviction, in whole or in part, or impose
any liability upon Landlord provided, from and after such revocation Tenant
shall not be required to pay Rental with respect to such space. Any fee, tax or
charge imposed by any Governmental Authority for any such vaults, vault space or
other space occupied by Tenant shall be paid by Landlord (subject to recoupment
pursuant to Article 27 hereof, notwithstanding anything to the contrary
contained therein).
ARTICLE 31
PARTIES BOUND
The covenants, conditions and agreements contained in this Lease
shall bind and inure to the benefit of Landlord and Tenant and their respective
legal representatives, successors, and, except as otherwise provided in this
Lease, their assigns.
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ARTICLE 32
CAPTIONS
The captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of this Lease nor
the intent of any provision thereof.
ARTICLE 33
BUILDING NAME
On the date hereof, Landlord and Tenant acknowledge that the
Building has been named "The PaineWebber Building" and Landlord shall continue
to keep the Building named "The PaineWebber Building" (or such other name
permitted in accordance with this Article 33); provided, however, that in order
to continue to have the Building named "The PaineWebber Building" (or such other
name permitted in accordance with this Article 33) during the balance of the
Term, Tenant Named Herein (or its Successor(s)-in-interest) and its Related
Entities (except second tier Non-Control Entity subtenants) must occupy for the
operation of their business at least 354,480 Rentable Square Feet of the Office
Space. Tenant has been and shall be permitted, subject to compliance with
applicable Requirements and subject to the approval, to the extent required, of
all Government Authorities, including, without limitation, the local community
board, to erect or maintain signs on the exterior of the Building substantially
conforming (in all material respects) to the existing signs and in keeping with
the Building Standard, at the locations at which such signs are presently
located, provided Tenant Named Herein (or its Successor(s)-in-interest) and its
Related Entities (except second tier Non-Control Entity subtenants) are then in
occupancy of at least 354,480 Rentable Square Feet of Office Space for the
conduct of their business. As long as Tenant Named Herein (or its
Successor(s)-in-interest) shall be entitled to have the Building named "The
PaineWebber Building" (or such other name permitted in accordance with this
Article 33) the name of no other entity shall appear on the Building, other than
Landlord (subject to the restrictions set forth in the second succeeding
sentence following this sentence), Equitable Life Assurance Society of the
United States (but only for so long as such entity has at least a 5% ownership
interest in Landlord), Nippon Life Insurance Company (but only for so long as
such entity has at least a 5% ownership interest in Landlord), any partners of
Landlord (subject to the restrictions set forth in the second succeeding
sentence following this sentence), the Building's managing agent, or the
Building's leasing agent, then same shall only appear in a size and in a manner
so as not to diminish or adversely impact the affect of the name of the Building
being "The PaineWebber Building" (or such other name permitted in accordance
with this Article 33) unless approved by Tenant in writing. The foregoing shall
not restrict, subject to the provisions of Section 2.5, retail tenants from
maintaining signage on the exterior of their
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stores in conformance with the Building Standard. Landlord shall not name the
Building after another stock brokerage or investment banking firm (or permit
such firm to have exterior or Building lobby signage) provided Tenant Named
Herein (or its Successor(s)-in-interest) and Related Entities (except second
tier Non-Control Entity subtenants) are then in occupancy of at least 100,000
rentable square feet of Office Space for the conduct of their business
(including their stock brokerage or investment banking business) and leasing at
least 250,000 Rentable Square Feet of Office Space. Notwithstanding the
foregoing, Tenant Named Herein (and any Successor(s)-in-interest) shall have the
right to change the name of the Building under the following circumstances:
(A) The name of the Building may be changed to that of any
Successor-in-interest to the Tenant Named Herein or any Successor-in-interest to
any such Successor-in-interest provided any such Successor-in-interest and its
Related Entities (except second tier Non-Control Entity subtenants) occupy at
least 354,480 Rentable Square Feet of the Office Space for the operation of
their business.
(B) The Building may be named after an entity which is
acquired by Tenant, provided that either (i) such acquired entity (and its
Related Entities, provided such entities would have constituted a Related Entity
of such acquired entity prior to such acquisition, and except second tier
Non-Control Entity subtenants) occupy at least 354,480 Rentable Square Feet of
the Office Space in the Building for the conduct of their business or (ii) such
acquired entity's then primary business is financial services (including,
without limitation, stock brokerage and/or investment banking).
(C) Notwithstanding paragraphs (A) and (B) above, the Building
may not be named by Tenant after (i) a life insurance company other than a stock
brokerage or securities or investment banking firm which is a Related Entity of
a life insurance company (e.g. Prudential Securities) as long as Landlord or any
partner of Landlord is a life insurance company, (ii) an advertising agency (for
so long as same is prohibited by the current terms of the BBDO lease), (iii) if
at the time of the name change, such party is a direct competitor of any Person
which is then in occupancy for the conduct of its business of at least 100,000
Rentable Square Feet of office space in the Building (other than a company the
primary business of which is investment banking and/or stock brokerage) or (iv)
any Person whose business is not in keeping with the Building Standard.
(D) Tenant uses the Building's expediter in connection with
all filings and local approvals and permits in connection therewith, provided
the fees of such expediter are commercially reasonable or competitive. If Tenant
and Landlord mutually determine acting reasonably and in good faith that such
fees are not commercially reasonable or competitive than Landlord may still
require Tenant to use such expediter, so
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long as Landlord pays the portion of the fees in excess of commercially
competitive rates. If Landlord does not elect to pay the portion of the fees in
excess of commercially competitive rates, then Tenant may select a reputable
expediter with at least ten (10) years experience performing similar work in
comparable first-class office buildings in midtown Manhattan, which expediter
shall be subject to Landlord's reasonable approval.
ARTICLE 34
PARTIES BOUND
The 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 assigns.
ARTICLE 35
BROKER
Section 35.1 Each party represents and warrants to the other that it
has not dealt with any broker or person in connection with this Lease other than
Goldman, Cushman, Compass and WSR (Goldman, Cushman, Compass and WSR are
collectively referred to herein as the "Brokers"). The commissions of Goldman,
Cushman and Compass shall be paid by Landlord pursuant to separate agreements
between Landlord and Goldman, Cushman and Compass. The execution and delivery of
this Lease by each party shall be conclusive evidence that such party has relied
upon the foregoing representation and warranty. Tenant shall indemnify and hold
Landlord harmless from and against any and all claims for commission, fee,
payment or other compensation by any Person (including WSR) other than Goldman,
Cushman and Compass (i) based upon a breach of Goldman's or Cushman's
representation in the applicable brokerage agreement (not to exceed, with
respect to a breach of Goldman's or Cushman's representations only, the total
amount of the supplemental rent credits provided to Tenant pursuant to this
Lease, as set forth on Exhibit Z) to the extent the liability is in excess of
Goldman's and Cushman's liability under the brokerage agreement and/or (ii) who
shall claimed to have dealt with Tenant in connection with this Lease and for
any and all costs incurred by Landlord in connection with such claims,
including, without limitation, reasonable attorneys' fees and disbursements.
Landlord shall indemnify and hold Tenant harmless from and against any and all
claims for commission, fee, payment or other compensation by the Brokers (other
than WSR) and any other Person who shall claim to have dealt with Landlord in
connection with this Lease and for any and all costs incurred by Tenant in
connection with such claims, including, without limitation, reasonable
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attorneys' fees and disbursements. This provision shall survive the expiration
or earlier termination of this Lease.
Section 35.2 In the event Landlord fails to pay all or any portion
of an installment of the brokerage commission due Goldman or Cushman within
thirty (30) days after notice that the same is overdue then Tenant shall be
entitled to pay all or any portion of such overdue portion of the commission on
Landlord's behalf, (provided if Landlord in good faith disputes the amount of
such commission (or portion thereof) or in good faith disputes whether any such
commission (or portion thereof) is owed, then Tenant shall only be entitled to
pay the non-disputed portion of such commission), and in the event Tenant pays
all or any portion of such overdue portion of the commission (reasonable
substantiation of which shall be provided to Landlord) Tenant may offset such
amount paid by Tenant (together with interest thereon at the Base Rate) against
the next due monthly installment or installments (if applicable) of Fixed Rent
and Escalation Rent payable hereunder.
ARTICLE 36
INDEMNITY
Section 36.1 (A) Except as otherwise expressly provided in this
Article 36 and subject to the limitations contained in Sections 4, 9 and 10
hereof, Tenant shall indemnify, defend and save Landlord's Indemnitees harmless
from and against all claims made or occasioned against Landlord's Indemnitees
and any and all obligations, liabilities, claims, costs, expenses (including,
without limitation, reasonable attorneys' fees), liens, judgments, actions,
causes of action, penalties, fines, taxes, fees and damages (collectively, the
"Indemnified Liabilities") suffered or incurred by Landlord's Indemnitees
arising from (i) any accident, injury or damage whatsoever caused to any person
or to the property of any person occurring in or about the Premises during the
Term or (ii) any accident, injury or damage caused by the act or omission of
Tenant or Tenant's Indemnitees, occurring inside or outside of the Premises but
anywhere within or about the Real Property or (iii) a breach of this Lease by
Tenant, or (iv) any negligent act or willful misconduct of Tenant or any of
Tenant's Indemnitees or Permitted Occupants in connection with Tenant's use or
occupancy of the Premises, or (v) Tenant's exercise of any self-help remedies
available to it hereunder, or (vi) in connection with Tenant's signage, kiosk or
artwork in the lobby or on the Building, or (vii) in connection with any
Permitted Function. Notwithstanding anything contained in this Lease to the
contrary (including, without limitation, Article 17 hereof), Tenant shall have
no liability for any consequential damages suffered either by Landlord or by any
party claiming through Landlord. The indemnity and hold harmless provision set
forth in this Section 36.1(A) with respect to claims for property damage, shall
be limited to the extent any insurance
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proceeds collectible by any Landlord's Indemnities under policies held by the
Landlord's Indemnitees with respect to the Indemnified Liabilities are
insufficient to satisfy same.
(B) Except as otherwise expressly provided in this Article 36
and subject to the limitations contained in Articles 4, 9, 10, 13, 28 and 37 and
Section 38.2 hereof, Landlord shall indemnify, defend and save Tenant's
Indemnitees harmless from and against all claims made or occasioned against
Tenant's Indemnitees and any and all Indemnified Liabilities suffered or
incurred by Tenant's Indemnitees arising from (i) any accident, injury or damage
whatsoever caused to any person or to the property of any person occurring in or
about the Real Property during the Term or (ii) any accident, injury or damage
occurring in or about the Premises or the Building and any bodily injury to
Tenant's Indemnitees, agents, servants or employees, where, in either case, such
accident, injury or damage results from a breach of this Lease by Landlord, or
any act or omission of Landlord or any of Landlord's Indemnitees, or (iii) any
negligent act or willful misconduct of Landlord or Landlord's Indemnitees in
connection with Landlord's Operation of the Property, or (iv) a Landlord
Default, or (v) Landlord's exercise of any self help remedies available to it
hereunder. The indemnity and hold harmless provision set forth in this Section
36.1(B) with respect to claims for property damage shall be limited to the
extent any insurance proceeds collectible by any Tenant's Indemnitees under
policies held by the Tenant's Indemnitees with respect to the Indemnified
Liabilities are insufficient to satisfy same. Landlord shall have no liability
for any consequential damages suffered either by Tenant or by any party claiming
through Tenant.
Section 36.2 If any claim, action or proceeding is made or brought
against either party (the "indemnified party"), and pursuant to which claim,
action or proceeding the other (the "indemnifying party") shall be obligated to
indemnify the indemnified party, pursuant to the terms of this Lease, then the
indemnifying party at its sole cost and expense, shall resist or defend such
claim, action or proceeding in the indemnified party's name, if necessary, by
such attorneys as the indemnified party shall approve, which approval shall not
be unreasonably withheld. Attorneys for the indemnifying party's insurer are
hereby deemed approved for purposes of this Section 36.2. If any claim is made
against the indemnified party, it shall give notice of the claim to the
indemnifying party in order that the indemnifying party can undertake its
obligations pursuant to the first sentence of this Section 36.2. The
indemnifying party may not settle any such action involving the indemnified
party unless the indemnified party receives a general release from the claimant
in the action. Failure by the indemnified party to notify the indemnifying party
of any claim, action nor proceeding shall not affect the indemnifying party's
obligations hereunder unless the failure to notify is prejudicial to the
indemnifying party. The provisions of this Article 36 shall survive the
expiration or earlier termination of this Lease.
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ARTICLE 37
ADJACENT EXCAVATION--SHORING
If an excavation shall be made upon land adjacent to the Premises,
or shall be authorized to be made, Tenant shall, upon reasonable advance notice,
afford to the person causing or authorized to cause such excavation, license to
enter upon the Premises for the purpose of doing such work as said person shall
deem reasonably necessary to preserve the wall or the Building from injury or
damage and to support the same by proper foundations without any claim for
damages or indemnity against Landlord, or diminution or abatement of Rental
provided that (i) Tenant shall continue to have reasonable access to the
Premises and the Building and (ii) Landlord shall use reasonable efforts to
cause said person to perform such work diligently and in a manner that does not
(x) unreasonably interfere with Tenant's use, enjoyment and occupancy of the
Premises or (y) reduce the rentable or usable square footage of the Premises
except to a de minimis amount.
ARTICLE 38
MISCELLANEOUS
Section 38.1 This Lease shall not be binding upon Landlord or Tenant
unless and until Landlord and Tenant shall have executed and delivered a fully
executed copy of this Lease to each other.
Section 38.2 Neither the partners (direct or indirect) comprising
Landlord, nor the shareholders (nor any of the partners comprising same),
partners, directors, members, managers or officers of any of the foregoing
(collectively, the "parties") shall be liable for the performance of Landlord's
obligations under this Lease. The obligations of Landlord under this Lease
arising and accruing after the date of any sale, conveyance, assignment or
transfer by Landlord of its interest in the Building or the Real Property shall
not be binding upon Landlord named herein after such sale, conveyance,
assignment or transfer by such Landlord (or upon any subsequent landlord after
the sale, conveyance, assignment or transfer by such subsequent landlord) of its
interest in the Building or the Real Property, as the case may be, to an
unrelated third party pursuant to an arms length transaction and in the event of
any such sale, conveyance, assignment or transfer, Landlord shall be and hereby
is entirely freed and relieved of all covenants and obligations of Landlord
hereunder and such transferee shall be deemed to have assumed the obligations of
Landlord under this Lease, subject to the terms hereof. The liability of
Landlord for Landlord's obligations under this Lease shall be limited to
Landlord's interest in the Real Property (including, without limitation, any
proceeds thereof resulting from any financing, refinancing, casualty or
condemnation) and Tenant shall not look to any other property or assets of
Landlord or the property or
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assets of any of the parties in seeking either to enforce Landlord's obligations
under this Lease or to satisfy a judgment for Landlord's failure to perform such
obligations. After any such sale, conveyance, assignment or transfer, the
liability of Landlord for such obligations shall be limited to the proceeds of
such transfer received by it. Notwithstanding any such sale, conveyance,
assignment or transfer, under this Lease, the transferee shall be liable to
Tenant, subject to the limitations set forth above in this Section 38.2, for and
Tenant shall be entitled to exercise all of its rights and remedies with respect
to, all claims that Tenant possesses against the transferor (and any previous
transferor(s)).
Section 38.3 Notwithstanding anything contained in this Lease to the
contrary, all amounts payable by Tenant to or on behalf of Landlord under this
Lease, whether or not expressly denominated Fixed Rent, Escalation Rent,
additional rent or Rental, shall constitute rent for the purposes of Section
502(b)(7) of the Bankruptcy Code.
Section 38.4 This Lease shall not be recorded; however, at the
request of either party, Landlord and Tenant shall promptly execute, acknowledge
and deliver a memorandum with respect to the Lease sufficient for recording,
together with all tax returns and forms executed and acknowledged where
appropriate that are necessary to record such memorandum. Upon termination of
this Lease for any reason, Tenant agrees that it will, at Landlord's request,
execute and deliver a termination of such memorandum sufficient for recording.
Section 38.5 Unless it shall be finally determined by a court of
competent jurisdiction (or by an arbitration conducted under the terms of
Section 47) that Landlord has withheld its consent willfully or in bad faith in
any instance where Landlord has agreed to not unreasonably withhold its consent,
Tenant hereby waives any claim against Landlord which Tenant may have based upon
any assertion that Landlord has unreasonably withheld or unreasonably delayed
any consent or approval requested by Tenant, and Tenant agrees that its sole
remedy shall be an action or proceeding to enforce any related provision or for
specific performance, injunction or declaratory judgment except in the case that
Landlord has willfully or in bad faith withheld any such consent or approval. In
the event of such determination, the requested consent or approval shall be
deemed to have been granted; however, Landlord shall have no liability to Tenant
for its refusal or failure to give such consent or approval in the absence of a
judicial determination (or a determination by an arbitration conducted under the
terms of this Lease) or willfulness or bad faith on the part of Landlord in
which event Tenant may seek to obtain monetary damages actually incurred by
Tenant as a result of such action by Landlord. Tenant's sole remedy for
Landlord's unreasonably withholding or delaying consent or approval shall be as
provided in this Section 38.5.
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Section 38.6 All references in this Lease to the consent or approval
of Landlord or Tenant shall be deemed to mean the written consent or approval of
Landlord or Tenant, as applicable, and no consent or approval of Landlord or
Tenant shall be effective for any purpose unless such consent or approval is set
forth in a written instrument executed by Landlord or Tenant, as applicable.
Section 38.7 Each of the schedules and exhibits appended to this
Lease is incorporated by reference herein as if set out in full herein. If, and
to the extent that, any of the provisions of this Lease conflict, or are
otherwise inconsistent, with any of the schedules and exhibits (including,
without limitation, the Rules and Regulations and the Building Rules and
Standards) appended to this Lease, then, whether or not such inconsistency is
expressly noted in this Lease, the provisions of this Lease shall prevail.
Section 38.8 (i) Whenever this Lease shall provide that Landlord or
Tenant shall pay the out-of-pocket costs of the other party, such out-of-pocket
costs shall be commercially reasonable, and (ii) whenever a party requests
reimbursement for its out-of-pocket costs, upon request of the other party, such
party shall deliver to the requesting party bills, receipts, invoices or other
documentation reasonably evidencing such costs.
Section 38.9 Landlord and Tenant each hereby (a) irrevocably
consents and submits to the jurisdiction of any Federal, state, county or
municipal court sitting in the State of New York with respect to any action or
proceeding brought therein by either party against the other concerning any
matters arising out of or in any way relating to this Lease; (b) irrevocably
waives all objections as to venue and any and all rights it may have to seek a
change of venue with respect to any such action or proceedings; (c) agrees that
the laws of the State of New York shall govern in any such action or proceeding
and waives any defense to any action or proceeding granted by the laws of any
other country or jurisdiction unless such defense is also allowed by the laws of
the State of New York; and (d) agrees that any final judgment rendered against
it in any such action or proceeding shall be conclusive and may be enforced in
any other jurisdiction by suit on the judgment or in any other manner provided
by law. Landlord and Tenant each further agrees that any action or proceeding by
either party against the other in respect to any matters arising out of or in
any way relating to this Lease shall be brought only in the State of New York,
County of New York. In furtherance of the foregoing, each of Landlord and Tenant
hereby agree that, if Tenant shall be in possession of all or any portion of the
Premises for the conduct of its business, Tenant's address for service of
process under this Lease shall be the Premises, and that Landlord's address for
service of process under this Lease shall be its address as set forth in Article
26 hereof. Notwithstanding the foregoing provisions of this Section 38.9, either
Landlord or Tenant may, by written notice to the other, change its address for
delivery of service of process to any other address.
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Section 38.10 If any term, covenant, condition or provision of this
Lease, or the application thereof to any person or circumstance, shall ever be
held to be invalid or unenforceable, then in each such event the remainder of
this Lease or the application of such term, covenant, condition or provision to
any other Person or any other circumstance (other than those as to which it
shall be invalid or unenforceable) shall not be thereby affected, and each term,
covenant, condition and provision hereof shall remain valid and enforceable to
the fullest extent permitted by law.
Section 38.11 This Lease may be executed in counterparts, each of
which shall be deemed to be an original and which, together, shall constitute
one document.
Section 38.12 Landlord and Tenant each represent and warrant to the
other that (a) this Lease (i) has been duly authorized, executed and delivered
by such party and (ii) constitutes the legal, valid and binding obligation of
such party and (b) the execution and delivery of this Lease is not prohibited
by, nor does it conflict with, or constitute a default under, any agreement or
instrument to which such party may be bound or any Requirement applicable to
such party.
Section 38.13 Except as otherwise provided herein, in each instance
in this Lease where a party has agreed that its consent shall not be
unreasonably withheld, such consent shall also not be unreasonably delayed or
conditioned, otherwise consent may be withheld in such party's sole discretion.
Section 38.14 Notwithstanding anything to the contrary contained in
this Lease, if more than one occupant of the Building, including Tenant, is
charged by Landlord for the same out-of-pocket costs and expenses relating to
the same services or work requested by or provided to Tenant and such other
occupant(s) of the Building for which Tenant is separately chargeable (whether
performed on an overtime basis or otherwise), then Tenant shall only be charged
for a proportionate share of such costs and expenses, which apportionment shall
be based on the amount of services or work requested by such parties.
Section 38.15 Intentionally omitted.
Section 38.16 Notwithstanding anything to the contrary contained in
this Lease, Landlord's delivery of, and Tenant's acceptance of, any portion of
the Premises, the Concourse B Space, the Expansion Space, the 2nd Floor Space or
the Offer Space shall not limit or affect any of Landlord's obligations under
Articles 4, 6, 9, 10, 11, 28 and 36.
Section 38.17 Notwithstanding anything herein contained to the
contrary, if the entity in question (including, without limitation, Tenant
and/or its Related Entities) has temporarily vacated any portion of the
Premises, but is complying in all material
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respects with all of the terms of this Lease, then such entity shall for
purposes of satisfying any occupancy test set forth in this Lease be deemed to
be occupying such portion(s) of the Premises for the conduct of its business
provided it has not allowed the use or occupancy of such portion of the Premises
by a third party.
ARTICLE 39
RENT CONTROL
If at the commencement of, or at any time or times during the Term
of this Lease, the Rental reserved in this Lease shall not be fully collectible
by reason of any commercial rent control or similar Requirement, Tenant shall
enter into such agreements and take such other steps (without additional expense
to Tenant) as Landlord may reasonably request and as may be legally permissible
to permit Landlord to collect the maximum rents which may from time to time
during the continuance of such legal rent restriction be legally permissible
(and not in excess of the amounts reserved therefor under this Lease). Upon the
termination of such legal rent restriction prior to the expiration of the Term,
(a) the Rental shall become and thereafter be payable hereunder in accordance
with the amounts reserved in this Lease for the periods following such
termination and (b) Tenant shall pay to Landlord, if legally permissible, an
amount equal to (i) the items of Rental which would have been paid pursuant to
this Lease but for such legal rent restriction less (ii) the rents paid by
Tenant to Landlord during the period or periods such legal rent restriction was
in effect.
ARTICLE 40
CONCOURSE B SPACE
Section 40.1 Effective as of the Concourse B Space Commencement
Date, the Concourse B Space shall become part of the Premises, without any
further act on the part of Landlord or Tenant and upon all of the terms and
conditions of this Lease, except that, from and after the Concourse B Space
Commencement Date:
(a) Fixed Rent shall be increased by (w) for the
period commencing on the Concourse B Space Commencement Date and
ending on the day preceding the sixth (6th) anniversary of the
Concourse B Space Commencement Date, Fifty-Five Thousand Five
Hundred Ninety Dollars ($55,590) per annum ($4,632.50 per month),
(x) for the period commencing on the sixth (6th) anniversary of the
Concourse B Space Commencement Date and ending on the day preceding
the eleventh (11th) anniversary of the Concourse B Space
Commencement Date, Sixty-Six Thousand Seven Hundred Eight Dollars
($66,708) per annum ($5,559 per
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month), (y) for the period commencing on the eleventh (11th)
anniversary of the Concourse B Space Commencement Date and ending on
the day preceding the sixteenth (16th) anniversary of the Concourse
B Space Commencement Date, Seventy-Seven Thousand Eight Hundred
Twenty-Six Dollars ($77,826) per annum ($6,485.50 per month), and
(z) for the period commencing on the sixteenth (16th) anniversary of
the Concourse B Space Commencement Date and ending on the Fixed
Expiration Date, Eighty-Eight Thousand Nine Hundred Forty-Four
Dollars ($88,944) per annum ($7,412 per month);
(b) for all purposes under this Lease with respect
to the Concourse B Space (but not as a representation as to the
actual square footage of the Concourse B Space), the Concourse B
Space shall be conclusively deemed to contain 3,706 Rentable Square
Feet;
(c) there shall be no increase in Tenant's Tax
Share or Tenant's Operating Share and no Tax Payment or Operating
Payment shall be required to be made with respect to the Concourse B
Space;
(d) the Concourse B Space shall be deemed to be
part of the Storage and Service Space;
(e) Landlord shall provide electricity to the
Concourse B Space in accordance with Section 13.1 hereof, such
electricity to be measured by the submeter measuring the consumption
of electricity in the Concourse A Space; and
(f) Except as set forth in Section 40.2, Landlord
shall not be required to perform any work, make any contribution or
allowance to Tenant or render any services to make the Concourse B
Space ready for Tenant's use or occupancy, and, as stated in Section
40.2 Tenant shall accept the Concourse B Space in its "as is"
condition on the Concourse B Space Commencement Date.
Section 40.2 (A) Landlord shall deliver possession of the Concourse
B Space to Tenant on the Concourse B Space Commencement Date, "as-is," in
compliance with all Requirements (for unoccupied storage space) and in
broom-clean condition. Landlord shall promptly, after the date hereof, deliver
to Tenant such number of original ACP-5 Certificates (provided that Tenant has
delivered to Landlord such documentation and information as Landlord may
reasonably require to deliver said ACP-5 Certificates) applicable to the
Concourse B
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Space as required to be filed by Tenant in order to permit Tenant to
perform its initial Alterations therein and thereafter to occupy the Concourse B
Space, together with all other documents and certificates required by any
Governmental Authority, to cause the performance of any Alterations therein to
be referred to as a so-called "non-asbestos" project (it being understood that
if Tenant shall fail to deliver such documentation and information to Landlord,
Landlord's obligation to deliver such ACP-5 Certificates shall not be affected
other than Landlord shall not be obligated to deliver such ACP-5 Certificates
until Tenant shall deliver such documentation and information)).
(B) The "Concourse B Space Commencement Date" shall be the
date upon which this Lease becomes effective.
ARTICLE 41
RENEWAL TERM
Section 41.1 (A) Tenant shall have the option (the "Renewal Option")
to extend the term of this Lease with respect to the entire Premises, or subject
to this Section 41.1, a portion thereof, for either (a) two (2) additional
periods of five (5) years each (the "5-Year Renewal Terms"), which 5-Year
Renewal Terms shall (i) commence on January 1, 2016 and end on December 31, 2020
(the "First 5-Year Renewal Term"), and (ii) commence on January 1, 2021 and end
on December 31, 2025 (the "Second 5-Year Renewal Term"), or, alternatively, (b)
one (1) additional period of ten (10) years to commence on January 1, 2016 and
end on December 31, 2025 (the "10-Year Renewal Term;" the 5-Year Renewal Terms
and the 10-Year Renewal Term are collectively referred to herein as the "Renewal
Terms"); provided that (a) a Special Event of Default is not continuing and (b)
Tenant and/or a Related Entity (except a second tier Non-Control Entity
subtenant) shall then be occupying at least 303,840 rentable square feet of the
Office Space for the conduct of its business (except to the extent such
occupancy may be temporarily affected by fire, casualty, failure of essential
services or similar cause beyond Tenant's reasonable control or by the
performance of Alterations or the change in use of the Premises by Tenant) on
the date Tenant gives Landlord written notice (the "Renewal Notice") of Tenant's
election to exercise the Renewal Option in question. Each Renewal Option may be
exercised with respect to (i) the entire Premises or (ii) a portion of the
Premises, provided that Tenant exercises the Renewal Option with respect to (A)
a total of not less than 303,840 Rentable Square Feet of the Office Space, and
(B) as to the Office Space, contiguous full floors only (except to the extent
that Tenant desires to exercise such Renewal Option with respect to isolated
full floors, specialty use floors (e.g. kitchen, computer/data center, trading,
cafeteria, and conference center floors) or all of Tenant's space on any partial
floor, provided any such partial floor is an isolated floor, a specialty use
floor or is contiguous to a renewed full floor). Each Renewal Option shall be
exercisable by Tenant delivering the Renewal Notice to Landlord (I) with respect
to the First 5-Year Renewal Term or the 10-Year Renewal Term, on or before March
1, 2014 (the "First Exercise Date"); and (II) with respect to the Second 5-Year
Renewal
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Term, if applicable, on or before March 1, 2019 (the "Second Exercise Date").
Time is of the essence with respect to the giving of the applicable Renewal
Notice. Tenant may not renew the term of this Lease for the Second 5-Year
Renewal Term unless it shall have exercised its option to renew the Term for the
First 5-Year Renewal Term. Upon the giving of the Renewal Notice with respect to
the 10-Year Renewal Term or the Second 5-Year Renewal Term, Tenant shall have no
further right or option to extend or renew the Term. If Tenant exercises the
Renewal Option for the First 5-Year Renewal Term for less than the entire
Premises, the Renewal Option for the Second 5-Year Renewal Term shall be
exercised with respect to at least 303,840 Rentable Square Feet of the Office
Space leased to Tenant pursuant to the Renewal Option for the First 5-Year
Renewal Term and the conditions of clause Section 41.1(A)(ii)(B) shall apply
thereto. Notwithstanding anything to the contrary contained in this Section
41.1, if Tenant shall have executed a Definitive Agreement, the First Exercise
Date or the Second Exercise Date, as applicable, shall be accelerated to be the
date that is ninety (90) days following the date that Tenant has unconditionally
executed and delivered a Definitive Agreement, provided such date shall not be
later than March 1, 2014 in the case of the First Exercise Date or March 1, 2019
in the case of the Second Exercise Date. As used herein, "Definitive Agreement"
means a binding agreement executed and unconditionally delivered by Tenant and
another landlord for the leasing of at least the lesser of: (i) 500,000 rentable
square feet and (ii) 90% of the amount of rentable square feet of Office Space
Tenant is then occupying in the Building, in connection with the relocation of
all or substantially all of Tenant's operations from the Building without the
substitution therefor of other operations of Tenant or its Related Entities,
which agreement is not subject to cancellation or termination, or the time
period for which both of such parties shall have the right to cancel or
terminate such agreement shall have expired without either party exercising such
termination right. If Landlord is notified by Tenant of a Definitive Agreement
prior to the public announcement of same, Landlord agrees to keep such
information confidential, until it is publicly announced.
(B) Notwithstanding anything herein contained to
the contrary, if Tenant shall have exercised a Renewal Option with respect to
only a portion of the Premises, then Tenant shall have the right, by notice
given at any time on or prior to the date that is twelve (12) months before the
end of the Term, to exercise such Renewal Option, subject to the restrictions
contained in the second (2nd) sentence of this Section 41.1(B), with respect to
the balance or any other portion(s) of the Premises complying with clause
41.1(A)(ii)(B) above, to the extent that Landlord is not then actively
negotiating to lease such space, in which case Tenant shall be deemed to have
exercised such Renewal Option with respect to such additional space with the
same force and affect as if the same had been originally included in the Renewal
Notice given by Tenant, except that "95%" set forth in Section 41.3(A) shall be
deemed to be "100%", with respect to such additional space.
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Section 41.2 If Tenant exercises the Renewal Option, each Renewal
Term shall be upon the same terms, covenants and conditions as those contained
in this Lease, except that (i) the Fixed Rent shall be deemed to mean the Fixed
Rent as determined pursuant to Section 41.3 hereof; (ii) the provisions of
Section 1.2 hereof shall not be applicable during any Renewal Term but Tenant
shall receive the Supplemental Rent Credit in the amount and during the period
set forth on Exhibit Z; (iii) Landlord shall not be obligated to perform any
work to the Premises and Tenant shall lease the Premises in their "as is"
condition at the time of such renewal; (iv) Tenant shall not be entitled to any
allowance or contribution with respect to the Premises for the Renewal Term and
(v) during each Renewal Term Escalation Rent shall continue to be paid pursuant
to Article 27 hereof, subject to adjusting the Base Operating Year and the Tax
Year as set forth in Section 41.3(A)(i) hereinbelow (i.e., there will be current
base years for Taxes and Operating Expenses) (it being agreed, however, that if
Tenant exercises a Renewal Option with respect to less than all of the then
Office Space demised hereunder, Tenant's Operating Share and Tenant's Tax Share
shall be decreased to exclude the Rentable Square Feet contained in the portion
of the Office Space not being leased during such Renewal Term). It is expressly
understood and agreed that during the First 5-Year Renewal Term, Tenant shall
have the right as set forth in Section 41.1 only with respect to the Second
5-Year Renewal Term, and that during the Second 5-Year Renewal Term or if Tenant
shall have exercised the 10-Year Renewal Term, Tenant shall have no further
right to renew this Lease.
Section 41.3 For each Renewal Term the Fixed Rent shall be
determined as follows:
(A) The Fixed Rent for the Premises for the applicable Renewal
Term shall be an amount equal to ninety-five percent (95%) of annual fair market
rental value of the Premises (or the portion thereof renewed pursuant to this
Article 41) (the "Fair Market Rent") for such Renewal Term. The Fair Market Rent
shall be determined as if the Premises were available in the then rental market
for comparable first-class office buildings in midtown Manhattan and assuming
that Landlord has had a reasonable time to locate a tenant not a tenant of the
Building who rents with the knowledge of the uses to which the Premises can be
adapted under the terms hereof, and that neither Landlord nor the prospective
tenant is under any compulsion to rent, taking into account:
(i) the fact that the Base Operating Years for the
applicable Renewal Term shall be the calendar year in which the
commencement date of each such Renewal Term occurs (i.e. calendar
years 2016 and/or 2021, as the case may be) and the Base Taxes for
the applicable Renewal Term shall mean the Taxes payable for the
calendar year in which the commencement date of each such Renewal
Term occurs (i.e. calendar years 2016 and/or 2021, as the case may
be), and for the
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purpose of calculating the Escalation Rent payable
pursuant to Article 27 hereof, the payment of which shall continue
to be made during each Renewal Term;
(ii) the fact that the Base Operating Years and Base
Taxes will be adjusted as set forth in subsection (i) above;
(iii) as to the First 5-Year Renewal Term only, the fact
that Tenant shall have the further right to renew this Lease for the
Second 5-Year Renewal Term;
(iv) the fact that Landlord shall not be obligated to
perform any work in the Premises to prepare the same for Tenant's
occupancy nor shall Tenant be entitled to any contribution or
allowance, taking into consideration work and/or contributions or
allowances then customarily being offered by landlords in comparable
transactions;
(v) the fact that Tenant shall not be entitled to any
rent abatement or rent credit against the Fixed Rent or any other
concessions (except the Supplemental Rent Credit) and taking into
account rent abatements or rent credits then customarily being
offered by landlords in comparable transactions;
(vi) the actual brokerage commission payable by Landlord
to Compass, if any, with respect to the Renewal Term in question;
(vii) the fact that Landlord and Tenant will be
incurring legal fees that are less than the legal fees which would
be incurred in connection with a new lease with a new tenant; and
the Building, if applicable, shall remain named for Tenant, subject
to the provisions of Article 33 hereof;
(viii) the length of the applicable Renewal Term;
(ix) the existing condition of the Premises and the fact
that Tenant will not incur moving expenses;
(x) rent then being charged by owners of comparable
first class office buildings in midtown Manhattan for comparable
space; and
(xi) all other factors deemed relevant by either party
not inconsistent with the foregoing.
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(B) For purposes of determining the Fair Market Rent pursuant
to this Article 41, the following procedures shall apply:
(1) The Fair Market Rent shall be determined as of the
First Exercise Date or the Second Exercise Date, as the case may be,
taking into account the applicable factors described in Section
41.3(A) hereof on the basis of the uses of the Premises permitted
hereunder and assuming that the Premises are free and clear of all
leases and tenancies (including this Lease) and taking into account
that the Premises are leased by a single tenant.
(2) Landlord shall give Tenant written notice (the "Rent
Notice") (i) with respect to the First 5-Year Renewal Term or the
10-Year Renewal Term, as the case may be, within sixty (60) days
after the First Exercise Date, and (ii) with respect to the Second
Renewal Term, within sixty (60) days after the Second Exercise Date,
which Rent Notice shall set forth Landlord's determination of the
Fair Market Rent ("Landlord's Determination"). If Landlord shall
fail or refuse to give such notice as aforesaid, Landlord's
Determination shall be deemed to be 110% of the Fixed Rent and
Escalation Rent then payable by Tenant on the First Exercise Date or
the Second Exercise Date, as the case may be.
(3) Tenant shall have the right to give Landlord written
notice ("Tenant's Notice"), within sixty (60) days after Tenant's
receipt of the Rent Notice, of whether Tenant accepts or disputes
Landlord's Determination. If Tenant in Tenant's Notice disputes
Landlord's Determination, Tenant shall deliver to Landlord, together
with Tenant's Notice, Tenant's determination of the Fair Market Rent
("Tenant's Determination") as determined by an independent real
estate appraiser ("Tenant's Appraiser"). If Tenant fails or refuses
to give Tenant's Notice as aforesaid, Tenant's determination shall
be deemed to be ninety percent (90%) of Landlord's Determination.
(4) Landlord shall have the right to give Tenant written
notice ("Landlord's Notice"), within sixty (60) days after
Landlord's receipt of Tenant's Determination, of whether Landlord
accepts or disputes Tenant's Determination. If Landlord fails or
refuses to give Landlord's Notice as aforesaid, Landlord shall be
deemed to have rejected Tenant's Determination. If Landlord does not
accept Tenant's Determination, then Landlord shall appoint an
independent real estate appraiser ("Landlord's Appraiser"). If
within thirty (30) days after Tenant's receipt of Landlord's Notice
in dispute, Landlord's Appraiser and Tenant's Appraiser shall
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mutually agree upon the determination (the "Mutual Determination")
of the Fair Market Rent, their determination shall be final and
binding upon the parties. If Landlord's Appraiser and Tenant's
Appraiser shall be unable to reach a Mutual Determination within
said thirty (30) day period, both of the Appraisers shall jointly
select a third independent real estate appraiser who has not been in
the employ of Landlord or Tenant or their respective Affiliates
during the preceding three (3) years ("Third Appraiser"), whose fee
shall be borne equally by Landlord and Tenant. In the event that
Landlord's Appraiser and Tenant's Appraiser shall be unable to
jointly agree on the designation of the Third Appraiser within ten
(10) Business Days after they are requested to do so by either
party, then the parties agree to allow the American Arbitration
Association (or any successor organization; "AAA") to designate the
Third Appraiser in accordance with the rules, regulations and/or
procedures then obtaining of the AAA.
(5) The Third Appraiser shall conduct such hearings and
investigations as he may deem appropriate and shall, within thirty
(30) days after the date of designation of the Third Appraiser,
choose either Landlord's or Tenant's Determination, and such choice
by the Third Appraiser shall be conclusive and binding upon Landlord
and Tenant. Each party shall pay its own counsel fees and expenses,
if any, in connection with any arbitration under this Section,
including the expenses and fees of any Appraiser selected by it in
accordance with provisions of this Article 41. Any Appraiser
appointed pursuant to this Article shall be an independent,
reputable real estate appraiser with at least ten (10) years
experience in leasing and valuation of properties which are similar
in character to the Building, and a member of the American Institute
of Appraisers of the National Association of Real Estate Boards and
a member of the Society of Real Estate Appraisers. Prior to his
appointment, the Third Appraiser shall agree to be bound by the
provisions hereof, including the obligation to render a
determination within thirty (30) days after the date of his
designation. The Appraisers shall not have the power to add to,
modify or change any of the provisions of this Lease.
(6) It is expressly understood that any determination of
the Fair Market Rent pursuant to this Article shall be based on the
criteria stated in Sections 41.2 and 41.3(A) hereof.
(C) After a determination has been made of the Fair
Market Rent for the applicable Renewal Term, the parties shall execute and
deliver to each other an instrument setting forth the Fixed Rent as hereinabove
determined, but no
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such instrument shall be necessary to make the exercise of
the Renewal Option and the terms and conditions applicable to such renewal for
any Renewal Term, effective.
(D) If the final determination of the Fair Market Rent
shall not be made on or before the first day of the applicable Renewal Term in
accordance with the provisions of this Article 41, pending such final
determination Tenant shall continue to pay, as the Fixed Rent for such Renewal
Term, an amount equal to the average of Landlord's Determination and Tenant's
Determination. If, based upon the final determination hereunder of the Fair
Market Rent, the payments made by Tenant on account of the Fixed Rent for such
portion of the applicable Renewal Term were (i) less than the Fixed Rent payable
for the applicable Renewal Term, Tenant shall pay to Landlord the amount of such
deficiency within ten (10) days after demand therefor together with interest
thereon at the Base Rate or (ii) greater than the Fixed Rent payable for the
applicable Renewal Term, Landlord promptly shall refund to Tenant the amount of
such excess together with interest thereon at the Base Rate.
Section 41.4 Notwithstanding the foregoing, with respect to each
Renewal Term, Tenant may notify Landlord, not earlier than 36 months prior to
the commencement date of the Renewal Term in question nor later than 24 months
prior to the commencement date of the Renewal Term in question, that Tenant
requests a simultaneous exchange of a binding Landlord's Determination and a
binding Tenant's Determination of Fair Market Rent for (a) the First 5-Year
Renewal Term and the 10-Year Renewal Term or (b) the Second 5-Year Renewal Term,
as the case may be, which exchange shall take place on December 1, 2013 (in the
case of the First 5-Year Renewal Term and the 10-Year Renewal Term) or December
1, 2018 (in the case of the Second 5-Year Renewal Term) (the "Mutual Exchange
Date") as the case may be, at 10:00 a.m. on said date at the place as Landlord
and Tenant shall mutually agree upon. If Tenant timely sends the aforesaid
notice then each party shall deliver to the other on the Mutual Exchange Date,
its determination of the applicable Fair Market Rent and Tenant may within
thirty (30) days after said mutual exchange (as to which date time shall be of
the essence), rescind any previous exercise of the Renewal Option in question by
giving notice to Landlord. If Tenant fails to rescind the Renewal Option as
aforesaid, Tenant shall be deemed to have waived its right to rescind the
Renewal Option and the Renewal Option shall be deemed to have been exercised in
accordance with the provisions of this Article 41.
Section 41.5 Landlord and Tenant shall enter into an appropriate
amendment of this Lease reflecting the exercise of the Renewal Option for each
Renewal Term, but no such amendment shall be necessary to make the exercise of
such Renewal Option and the terms and conditions applicable to the renewal term,
effective.
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ARTICLE 42
EXPANSION SPACE
Section 42.1 Provided a Special Event of Default has not occurred
and is not then continuing, and further provided Tenant and its Related Entities
are then leasing at least 250,000 Rentable Square Feet of Office Space for the
conduct of their business, Tenant shall have the option of leasing certain
additional space in the Building as set forth below ("Expansion Space") for a
term (the "Expansion Rental Period") commencing on the dates on which the same
are delivered to Tenant in accordance with this Article 42 (the "Expansion Space
Commencement Date(s)") and ending on the Expiration Date, or such earlier
date(s) as Tenant may elect in accordance with the provisions of this Article 42
(such earlier expiration date being hereinafter referred to as the "Expansion
Expiration Date(s)") on the terms and conditions as hereinafter set forth:
(A) Tenant shall have the option to lease the 19th Floor Space
commencing on September 1, 2001 and ending on either (provided such date may not
be earlier than the expiration date elected by Tenant for the 20th Floor Space,
if leased by Tenant) (i) the last day of the month in which occurs the fifth
(5th) anniversary of the Expansion Space Commencement Date for the 19th Floor
Space, or (ii) the last day of the month in which occurs the tenth (10th)
anniversary of the Expansion Space Commencement Date for the 19th Floor Space or
(iii) the Expiration Date, as Tenant may elect in the applicable Expansion
Notice.
(B) Tenant shall have the option to lease the 20th Floor Space
commencing on September 1, 2001 and ending on either (provided such date may not
be later than the expiration date elected by Tenant for the 19th Floor Space)
(i) the last day of the month in which occurs the fifth (5th) anniversary of the
Expansion Space Commencement Date for the 20th Floor Space, or (ii) the last day
of the month in which occurs the tenth (10th) anniversary of the Expansion Space
Commencement Date for the 20th Floor Space or (iii) the Expiration Date, as
Tenant may elect in the applicable Expansion Notice.
(C) Provided (i) BBDO shall not have by April 30, 2001
exercised its option contained on the date hereof in its existing lease to lease
the entire 8th Floor Space, or (ii) Ernst & Young shall not have extended the
term of its lease (pursuant to an amendment or a new lease) by September 30,
2001, (it being agreed that Landlord shall notify Tenant if BBDO or if Ernst &
Young exercised or failed to exercise their rights to such 8th Floor Space by
the aforesaid dates, within five (5) Business Days thereafter, provided however,
that failure so to notify shall not affect the rights of BBDO or Ernst & Young),
Tenant shall have the option to lease the 8th Floor Space (or the portion
thereof indicated by hatching on Exhibit B-6 annexed hereto and not leased to
BBDO if BBDO leases only a portion of the 8th Floor Space pursuant to the option
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contained on the date hereof in its existing lease (the "Partial 8th Floor
Space")) commencing on May 1, 2002 and ending on the Expiration Date. Landlord
shall not waive any requirements or consent to any modifications of the BBDO
lease or the Ernst & Young lease (except with respect to an extension of the
Ernst & Young lease exercised prior to September 30, 2001) which would adversely
affect or impair Tenant's right to lease the 8th Floor Space (or the Partial 8th
Floor Space) pursuant to this Article 42. Landlord represents to Tenant that the
material provisions of the BBDO and Ernst & Young options described in this
Section 42.1(C) and the time periods in which such options must be exercised are
set forth on Exhibit AA hereto.
(D) Provided Paul Weiss shall not have, by March 1, 2000
exercised its option contained on the date hereof in its existing lease to
extend its lease term or entered into a supplementary agreement or new lease
with Landlord extending its lease term (it being agreed that Landlord shall
notify Tenant if Paul Weiss exercises or fails to exercise its option by the
aforesaid date, within five (5) Business Days thereafter, provided however, that
failure so to notify shall not affect the rights of Paul Weiss), Tenant shall
have the option to lease the 21st Floor Space commencing on September 1, 2001
and ending on the Expiration Date. Tenant acknowledges that Paul Weiss is not
required to renew its lease for the 21st Floor Space, provided Landlord enters
into a direct lease with Paul Weiss's existing subtenant on the 21st floor in
the Building on or before March 1, 2000, upon fair market terms and for a term
of not less than five (5) years. Landlord shall not waive any requirements or
consent to any modifications of the Paul Weiss lease (except with respect to an
extension of the Paul Weiss lease exercised prior to March 1, 2000) which would
adversely affect or impair Tenant's right to lease the 21st Floor Space pursuant
to this Article 42. Landlord represents to Tenant (i) that the material
provisions of the Paul Weiss option described in this Section 42.1(D) and the
time period in which such option must be exercised are set forth on Exhibit AA
hereto and (ii) the "Rent Commencement Date" of the Paul Weiss lease was
September 1, 1986.
(E) Tenant shall have the option to lease the 18th Floor
Remainder Space commencing on September 1, 2001 and ending on the Expiration
Date.
Section 42.2 Tenant may elect to lease Expansion Space by giving
Landlord notice of such election (each, an "Expansion Notice") (a) with respect
to the 19th Floor Space and the 20th Floor Space, on or before September 1,
1999, (b) with respect to the 8th Floor Space (or the Partial 8th Floor Space,
if applicable), on or before November 1, 2001, unless prior thereto, Landlord
notifies Tenant that BBDO and Ernst and Young have either waived their right to
lease the 8th Floor Space, or no longer have a right to lease such space
pursuant to the terms of their lease, as applicable, then within thirty (30)
days after such notice from Landlord (but in no event earlier than November 1,
2000), and (c) with respect to 21st Floor Space on or before April 1, 2001,
unless prior thereto Landlord notifies Tenant that Paul Weiss has either waived
its right to lease the
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21st Floor Space, or no longer has a right to lease such space pursuant to the
terms of its lease, as applicable, then within thirty (30) days after such
notice from Landlord (but in no event earlier than March 1, 2000), and (d) with
respect to the 18th Floor Remainder Space, on or before March 1, 2000. If Tenant
shall deliver an Expansion Notice with respect to the 19th Floor Space or the
20th Floor Space, Tenant shall specify in the applicable Expansion Notice the
Expansion Expiration Date Tenant elects for such Expansion Space. Tenant may not
exercise its option with respect to the 20th Floor unless it has previously
exercised, or concurrently exercises, its option with respect to the 19th Floor.
Time is of the essence with respect to the giving of each Expansion Notice.
Section 42.3 (A) If Tenant timely delivers an Expansion Notice with
respect to any Expansion Space as provided in this Article 42, on the applicable
Expansion Space Commencement Date:
(i) such Expansion Space shall be added to and deemed a
part of the Office Space for all purposes of this Lease, except as
otherwise set forth in this Article 42;
(ii) the Fixed Rent shall be recalculated to include the
Expansion Space so leased as hereinafter provided: (x) with respect to the
19th Floor Space, the Fixed Rent shall be increased by (1) for the period
commencing on the Expansion Space Commencement Date and ending on the day
preceding the ten (10) month anniversary of the Expansion Space
Commencement Date, One Million Eighty-Eight Thousand Dollars ($1,088,000)
per annum ($90,666.67 per month), (2) for the period commencing on the ten
(10) month anniversary of the Expansion Space Commencement Date and ending
on the earlier of (I) the day preceding the date that is five (5) years
and ten (10) months following the Expansion Space Commencement Date and
(II) the Expansion Expiration Date, One Million One Hundred Seventy-Seven
Thousand Six Hundred Dollars ($1,177,600) per annum ($98,133.33 per
month), (3) for the period, if any, commencing on the date that is five
(5) years and ten (10) months following the Expansion Space Commencement
Date and ending on the earlier of (I) the day preceding the date that is
ten (10) years and ten (10) months following the Expansion Space
Commencement Date and (II) the Expansion Expiration Date, One Million Two
Hundred Eighty Thousand Dollars ($1,280,000) per annum ($106,666.67 per
month), and (4) for the period, if any, commencing on the date that is ten
(10) years and ten (10) months following the Expansion Space Commencement
Date and ending on the Fixed Expiration Date, One Million Three Hundred
Fifty-Six Thousand Eight Hundred Dollars ($1,356,800) per annum
($113,066.67 per month); (y) with respect to the 20th Floor Space, the
Fixed Rent shall be increased by (1) for the period commencing on the
Expansion Space Commencement Date and ending on the day preceding the ten
(10) month anniversary of the Expansion Space Commencement Date, One
Million Eighty-Eight Thousand Dollars ($1,088,000) per annum ($90,666.67
per month), (2) for the period commencing on the ten (10) month
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anniversary of the Expansion Space Commencement Date and ending on the
earlier of (I) the day preceding the date that is five (5) years and ten
(10) months following the Expansion Space Commencement Date and (II) the
Expansion Expiration Date, One Million One Hundred Seventy-Seven Thousand
Six Hundred Dollars ($1,177,600) per annum ($98,133.33 per month), (3) for
the period, if any, commencing on the date that is five (5) years and ten
(10) months following the Expansion Space Commencement Date and ending on
the earlier of (I) the day preceding the date that is ten (10) years and
ten (10) months following the Expansion Space Commencement Date and (II)
the Expansion Expiration Date, One Million Two Hundred Eighty Thousand
Dollars ($1,280,000) per annum ($106,666.67 per month), and (4) for the
period, if any, commencing on the date that is ten (10) years and ten (10)
months following the Expansion Space Commencement Date and ending on the
Fixed Expiration Date, One Million Three Hundred Fifty-Six Thousand Eight
Hundred Dollars ($1,356,800) per annum ($113,066.67 per month); and (z)
Fixed Rent for the 8th Floor Space (or the Partial 8th Floor Space, if
applicable), the 21st Floor Space and the 18th Floor Remainder Space, as
applicable, shall be at ninety-five percent (95%) of the "fair market
rental value" (as defined and described in Section 42.3(C) hereinbelow)
therefor for the applicable Expansion Rental Period;
(iii) Tenant's Operating Share shall be increased as of
the Expansion Space Commencement Date for the particular Expansion Space
in question, (v) with respect to the 19th Floor Space, by 1.7313% (w) with
respect to the 20th Floor Space, by 1.7313%, (x) with respect to the 8th
Floor Space, by 4.4702% (or with respect to the Partial 8th Floor Space,
if applicable by 1.86%), (y) with respect to the 21st Floor Space, by
1.7313%, and (z) with respect to the 18th Floor Remainder Space, by .54%;
(iv) as of the Expansion Space Commencement Date for the
particular Expansion Space in question, Tenant's Tax Share shall be
increased, (v) with respect to the 19th Floor Space, by 1.7160%, (w) with
respect to the 20th Floor Space, by 1.7160%, (x) with respect to the 8th
Floor Space, by 4.4309% (or with respect to the Partial 8th Floor Space,
if applicable by 1.8434%), (y) with respect to the 21st Floor Space, by
1.7160%, and (z) with respect to the 18th Floor Remainder Space, by
.5363%;
(v) the Base Operating Year with respect to the 19th
Floor Space, the 20th Floor Space, the 8th Floor Space (or with respect to
the Partial 8th Floor Space, if applicable), the 21st Floor Space and the
18th Floor Remainder Space, shall be the Base Operating Year set forth in
Section 27.1(B);
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(vi) the Base Taxes with respect to the 19th Floor
Space, the 20th Floor Space, 8th Floor Space (or with respect to the
Partial 8th Floor Space, if applicable), 21st Floor Space and the 18th
Floor Remainder Space, shall be the Base Taxes set forth in Section
27.1(D);
(vii) Tenant shall receive the Supplemental Rent Credit
in the amount and for the period of time set forth on Exhibit Z;
(viii) the Expansion Space shall be deemed to contain
for all purposes of this Lease (but same shall not be deemed a
representation as to the actual square footages of such Expansion Space),
(v) with respect to the 19th Floor Space, 25,600 Rentable Square Feet, (w)
with respect to the 20th Floor Space, 25,600 Rentable Square Feet, (x)
with respect to the 8th Floor Space (or with respect to the Partial 8th
Floor Space, if applicable, 27,500 Rentable Square Feet), 66,100 Rentable
Square Feet, (y) with respect to the 21st Floor Space, 25,600 Rentable
Square Feet, and (z) with respect to the 18th Floor Remainder Space, 8,000
Rentable Square Feet;
(ix) Landlord shall provide (a) electricity to the
Expansion Space in accordance with Section 13.1 hereof, such electricity
to be measured by submeters measuring only Tenant's consumption of
electricity in the applicable Expansion Space and (b) up to ten (10)
additional tons of condenser water per full floor of the Expansion Space
to the extent Tenant's condenser water system does not have the excess
capacity to supply such condenser water to the particular Expansion Space
taking into consideration the current and then anticipated future needs of
Tenant, as reasonably determined by Tenant and its consultants (reasonable
substantiation of which shall be provided to Landlord, upon request);
(x) the 19th Floor Space, the 20th Floor Space, the 8th
Floor Space (or with respect to the Partial 8th Floor Space, if
applicable), the 21st Floor Space and the 18th Floor Remainder Space, as
applicable, shall be delivered to Tenant by Landlord in compliance with
all Requirements (for unoccupied space) and broom-clean condition (it
being agreed that, on or prior to the Expansion Space Commencement Date,
Landlord shall deliver to Tenant such number of original ACP-5
Certificates (provided that Tenant has delivered to Landlord such
documentation and information as Landlord may reasonably require to
deliver said ACP-5 Certificates) applicable to the Expansion Space in
question as required to be filed by Tenant in order to permit Tenant to
perform its initial Alterations therein and thereafter to occupy each
floor of the Expansion Space in question, together with all other
documents and certificates required by any Governmental Authority to cause
the performance of any Alterations therein to be referred to as a
so-called "non-asbestos" project (it being understood that if Tenant
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shall fail to deliver such documentation and information to Landlord,
Landlord's obligation to deliver such ACP-5 Certificates shall not be
affected other than Landlord shall not be obligated to deliver such ACP-5
Certificates until Tenant shall deliver such documentation and
information)), but otherwise "as is", and Landlord shall not be obligated
to perform any other work or spend any monies (except as otherwise
expressly set forth herein) with respect thereto; and
(xi) Tenant shall not be entitled to any allowance or
contribution with respect thereto other than (x) with respect to the 19th
Floor Space, (I) if the Expansion Expiration Date shall be August 31,
2006, an amount equal to Six Hundred Forty Thousand Dollars ($640,000), or
(II) if the Expansion Expiration Date shall be either August 31, 2011 or
the Fixed Expiration Date, as applicable, an amount equal to Eight Hundred
Ninety-Six Thousand Dollars ($896,000) (either of such contributions being
hereinafter referred to as the "Landlord's 19th Floor Contribution"), (y)
with respect to the 20th Floor Space, (I) if the Expansion Expiration Date
shall be August 31, 2006, an amount equal to Six Hundred Forty Thousand
Dollars ($640,000), or (II) if the Expansion Expiration Date shall be
either August 31, 2011 or the Fixed Expiration Date, as applicable, an
amount equal to Eight Hundred Ninety-Six Thousand Dollars ($896,000)
(either of such contributions being hereinafter referred to as the
"Landlord's 20th Floor Contribution") (the Landlord's 19th Floor
Contribution, and the Landlord's 20th Floor Contribution are each referred
to as the "Landlord's Expansion Space Contribution"), which Landlord's
Expansion Space Contribution shall be contributed and paid by Landlord
with respect to the Expansion Space in question pursuant to Exhibit M
hereof.
(B) With respect to the 8th Floor Space (or the Partial 8th
Floor Space, if applicable), the 21st Floor Space and the 18th Floor Remainder
Space, Landlord shall provide Tenant with Landlord's Determination of Fair
Market Rent with respect to the Expansion Space in question in the Rent Notice
with respect thereto. If Tenant objects to Landlord's Determination, Tenant's
Notice shall include Tenant's Determination of Fair Market Rent. Fair Market
Rent for the Expansion Space in question shall be determined in accordance with
Section 42.3(C).
(C) The "fair market rental value" or "Fair Market Rent" for
the applicable Expansion Space for an Expansion Rental Period shall be
determined substantially in accordance with the provisions of Section 41.3(A)
hereof, mutatis mutandis, except those provisions which are inconsistent with
the Expansion Space (i.e. 41.3(A)(i), (ii), (iii), and (viii)) and except that:
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(i) as used therein, the term Fair Market Rent shall
mean the annual fair market rental value of the Expansion Space in
question as of the date on which Tenant gives the Expansion Notice in
question;
(ii) as used therein, the term "Premises" shall mean the
Expansion Space in question;
(iii) the Base Operating Year shall be the Base
Operating Year set forth in Section 27.1(B);
(iv) Base Taxes shall mean the Base Taxes set forth in
Section 27.1(D);
(v) clause (iv) of paragraph (A) of Section 41.3 hereof
shall be deemed amended to provide that Landlord shall be required to
deliver the Expansion Space in compliance with all Requirements (for
vacant space), broom-clean and with ACP-5 Certificates, but otherwise in
"as is" condition, and if applicable, the fact that Tenant shall not be
entitled to any allowance or contribution except with respect to the 19th
Floor Space and the 20th Floor Space, as the case may be;
(vi) the Rent Notice with respect to the Expansion Space
shall be delivered within ninety (90) days after Landlord's receipt of the
applicable Expansion Notice; and
(vii) since the Fixed Rent for the Expansion Space in
question is 95% of the Fair Market Rent (which is customarily calculated
on the basis of utilizing a current base operating year and base tax year
as provided in Section 41.3(A)(i) with respect to the Renewal Option
("Current Bases")), then the Fair Market Rent shall be equitably reduced
to reflect the fact that the Base Operating Year and the Base Taxes shall
be as set forth in subdivisions (iii) and (iv) above. (For example, if the
Fair Market Rent using current base years for Taxes and Operating Expenses
would be $50, and Fair Market Rent would be $40 using the existing base
years for Taxes and Operating Expenses because there is $10 of accrued
escalations, then the Fixed Rent will be $37.50 computed as follows:
95% of $50 = $47.50, less the $10 of accrued escalations = $37.50.)
(D) For purposes of determining the Fair Market Rent pursuant
to this Article 42, the following procedures shall apply:
(1) The Fair Market Rent shall be determined as of the
date on which Tenant gives the Expansion Notice, in question (but
not earlier than eighteen (18) months prior to the Expansion Space
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Commencement Date of the Expansion Space in question), taking into
account the applicable factors described in Section 42.3(C) hereof
on the basis of the uses of the applicable Expansion Space permitted
hereunder and assuming that the Expansion Space, in question, is
free and clear of all leases and tenancies (including this Lease)
and taking into account that the Expansion Space, in question, is
leased by a single tenant.
(2) Landlord shall give Tenant the Rent Notice within
ninety (90) days after Landlord's receipt of the applicable
Expansion Space Notice. If Landlord shall fail or refuse to give
such Rent Notice, as aforesaid, then Landlord's determination of
Fair Market Rent for the applicable Expansion Space shall be deemed
to be 110% of the Fixed Rent and Escalation Rent then payable by
Tenant under this Lease on a Rentable Square Foot basis for the
Office Space.
(3) The provisions of Paragraphs (3) (4) and (5) of
Section 41.3(B), mutatis mutandis, shall apply to the determination
of Fair Market Rent for the Expansion Space, in question, as if
expressly stated in this Section 42.3(C).
(4) It is expressly understood that any determination of
the Fair Market Rent pursuant to this Article 42 shall be based on
the criteria stated in Sections 42.3(C) hereof.
(E) After a determination has been made of the Fair
Market Rent for the applicable Expansion Space, the parties shall execute and
deliver to each other an instrument setting forth the Fixed Rent as hereinabove
determined, but no such instrument shall be necessary to make the exercise of
the Expansion Option and the terms and conditions applicable thereto, effective.
(F) If the final determination of the Fair Market Rent
shall not be made on or before the first day of the applicable Expansion Space
Commencement Date in accordance with the provisions of this Article 42, pending
such final determination Tenant shall pay, as the Fixed Rent for such Expansion
Space, an amount equal to the average of Landlord's Determination and Tenant's
Determination. If, based upon the final determination hereunder of the Fair
Market Rent, the payments made by Tenant on account of the Fixed Rent for such
Expansion Space were (i) less than the Fixed Rent payable for the applicable
Expansion Space, Tenant shall pay to Landlord the amount of such deficiency
within ten (10) days after demand therefor together with interest thereon at the
Base Rate or (ii) greater than the Fixed Rent payable for the applicable Renewal
Term, Landlord promptly shall refund to Tenant the amount of such excess
together with interest thereon at the Base Rate.
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Section 42.4 (A) If Landlord is unable to deliver possession of
Expansion Space on the applicable Expansion Space Commencement Date therefor set
forth in Section 42.1, then Landlord shall give Tenant at least fifteen (15)
days prior notice of the date on which the Expansion Space Commencement Date is
anticipated to occur. If Landlord is unable to deliver possession of Expansion
Space on the applicable Expansion Space Commencement Date because of the holding
over or retention of possession by any tenant, undertenant or occupant in such
Expansion Space (other than Tenant), or for any other cause outside Landlord's
reasonable control, (i) Landlord, subject to compliance with the provisions of
this Section 42.4, shall not be subject to any liability or failure to give
possession on said date, (ii) Tenant waives the right to recover any damages
from Landlord which may result from the failure of Landlord to deliver
possession of such Expansion Space, and Tenant agrees that the provisions of
this Section shall constitute an "express provision to the contrary" within the
meaning of Section 223(a) of the New York Real Property Law, (iii) the Fixed
Rent and other items of Rental payable for such Expansion Space shall be abated
and the Expansion Space Commencement Date shall be postponed until the Expansion
Space is in fact available for Tenant's occupancy in the conditioned required
hereby, upon not less than fifteen (15) days prior notice, and (iv) Landlord, at
Landlord's expense, shall use all reasonable efforts to timely deliver
possession of the Expansion Space to Tenant, and, in connection therewith, if
necessary, shall institute and diligently and in good faith prosecute holdover
and any other appropriate proceedings against the occupant of such space. If
Landlord shall fail to deliver the applicable Expansion Space within ninety (90)
days after the applicable Expansion Space Commencement Date (the "Expansion
Cancellation Date"), Tenant shall have the right, in addition to its other
rights at law or in equity, to elect to cancel its leasing of the Expansion
Space in question by providing Landlord with written notice thereof within
fifteen (15) days after the expiration of such ninety (90) day period (time
being of the essence with respect to the giving of such notice). If Tenant shall
not deliver a notice of its election to cancel its leasing of the Expansion
Space in question following the expiration of such ninety (90) day period,
Tenant shall have waived its rights to cancel the leasing of the applicable
Expansion Space pursuant to this Article 42 for the next sixty (60) day period
(and each sixty (60) day period thereafter, if applicable), in which event the
Expansion Cancellation Date shall be deemed to be the last day of such
applicable sixty (60) day period and Tenant shall again have the right to so
elect to cancel its leasing of the Expansion Space, in question, provided
however, Landlord shall, with respect to the first sixty (60) days of any such
holdover affecting the Expansion Space in question, pay to Tenant, within thirty
(30) days after receiving same, all amounts payable by the tenants or occupants
of such Expansion Space holding over, for such holdover period (the "Total
Holdover Amount"), in excess of the Fixed Rent and Escalation Rent that would be
payable by Tenant for such Expansion Space ("Expansion Space Rent") pursuant to
the terms of this Article 42 (without taking into account any free rent period
or rent abatement that Tenant would be entitled to upon the leasing of the
Expansion Space) (the
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"Tenant's Holdover Payment") less the Holdover Costs with respect thereto; with
respect to the 61st through 180th day of any such holdover, Tenant's Holdover
Payment shall be increased, if applicable, by fifty percent (50%) of the amount
(the "Excess"), if any, by which the Expansion Space Rent exceeds the rents
which were payable by the tenants or occupants of such Expansion Space
immediately prior to the holdover period; and with respect to each day after the
180th day of such holdover, Tenant's Holdover Payment shall be increased, if
applicable, by 100% of the Excess, if any.
(B) Except as set forth in Section 42.1(C) and (D) and Section
42.7, Landlord agrees that it will not enter into a lease, an amendment to a
lease or any other occupancy agreement after the date hereof for all or any
portion of Expansion Space which does not expire by its terms (taking into
account all renewal and extension options) on or prior to the date that is
thirty (30) days prior to the applicable Expansion Space Commencement Date
therefor set forth in Section 42.1 hereof.
Section 42.5 The rights of Tenant set forth in this Article 42 to
exercise its option with respect to any particular Expansion Space are
independent of its rights to exercise its option with respect to any other
Expansion Space and may be exercised whether or not any other option has been
exercised.
Section 42.6 Landlord and Tenant shall enter into an appropriate
amendment of this Lease reflecting the leasing of any Expansion Space by Tenant,
but no such amendment shall be necessary to make the leasing of any Expansion
Space or the terms thereof, effective.
Section 42.7 In the event that the existing lease for the 21st Floor
Space terminates prior to September 1, 1999, by reason of the default,
bankruptcy or insolvency of the tenant of such space and Landlord has obtained
vacant possession of such space. Landlord may elect to accelerate the Expansion
Space Commencement Date with respect to the 21st Floor Space by giving notice of
such acceleration to Tenant, provided the accelerated commencement date shall be
not earlier than March 1, 2000. In the event of such acceleration, Tenant shall
exercise its option to lease the 21st Floor Space, within thirty (30) days after
delivery by Landlord of the acceleration notice (time being of the essence with
respect to the giving of the notice by Tenant). In the event Tenant fails to
exercise the option to lease the 21st Floor Space after such an acceleration,
Landlord may lease (collectively the "Waiver Lease") the space to a third party
or parties, for a term not to exceed 5 years and 6 months after the delivery of
the acceleration notice. Tenant shall continue to have an Expansion Option with
respect to such 21st Floor Space, provided the Expansion Notice shall be
delivered on or before the date which is eighteen (18) months prior to the
latest expiration date of the applicable Waiver Lease (notice of the expiration
date of each such Waiver Lease shall be given to Tenant promptly after Landlord
executes each such Waiver Lease) and the Expansion Space Commencement Date
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applicable thereto shall be the date following the expiration date of the Waiver
Lease expiring last (which shall in no event be later than 5 years and 6 months
after delivery of the acceleration notice). Time is of the essence with respect
to Tenant's delivery of the Expansion Notice referred to in this Section 42.7.
ARTICLE 43
2ND FLOOR SPACE/38TH FLOOR SPACE
Section 43.1 Tenant shall lease the 2nd Floor Space for a term
commencing on the date Landlord delivers to Tenant possession of the 2nd Floor
Space (or the portion thereof known as the "Cafeteria Space" or "Building Office
Space") in accordance with Section 43.3 below upon not less than ten (10) days'
prior notice to Tenant, but in no event prior to July 1, 1996 (the "2nd Floor
Commencement Date") and ending on the Expiration Date, on the terms and
conditions as hereinafter set forth. Notwithstanding anything to the contrary
contained in this Article 43, Landlord shall have the right, upon notice to
Tenant to reduce the 2nd Floor Space by 3,000 Rentable Square Feet more
particularly described on Exhibit B-13 annexed hereto (the "BBDO Space") if
Landlord is obligated to lease such space to BBDO under the terms contained in
its existing lease (it being agreed that Landlord shall notify Tenant if BBDO
exercised or failed to exercise its rights within five (5) Business Days after
the last possible date BBDO was required to notify Landlord of its exercise of
such option; provided, however, failure to so notify Tenant shall not affect the
rights of BBDO). Landlord shall not waive any requirements or consent to any
modifications of the BBDO lease which would adversely affect or impair Tenant's
right to lease the BBDO Space pursuant to this Article 43. Landlord represents
to Tenant that the material provisions of the BBDO right described in this
Section 43.1 and the time period in which such right must be exercised are set
forth on Exhibit AA, annexed hereto.
Section 43.2 On the 2nd Floor Commencement Date: (i) the 2nd Floor
Space (or applicable portion thereof) shall be added to and deemed a part of the
Premises for all purposes of this Lease, except as otherwise set forth in this
Article 43; (ii) the Fixed Rent for the 2nd Floor Space shall be as set forth on
Schedule H, annexed hereto; (iii) Tenant's Operating Share shall be increased by
the percentage obtained from dividing the Rentable Square Feet of the 2nd Floor
Space (or applicable portion thereof) by 1,478,672 and Tenant's Tax Share shall
be increased by the percentage obtained from dividing the Rentable Square Feet
of the 2nd Floor Space (or applicable portion thereof) by 1,491,800; (iv) the
2nd Floor Space shall be deemed to contain for all purposes of this Lease (but
same shall not be a representation as to the actual square footage of such
space), (x) if the 2nd Floor Space includes the BBDO Space, 33,569 Rentable
Square Feet, and (y) if the 2nd Floor Space does not include the BBDO Space,
30,569 Rentable Square Feet; (v) Landlord shall provide electricity to the 2nd
Floor Space in accordance
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with Section 13.1 hereof, such electricity to be measured by submeters,
installed by Tenant, at Tenant's expense to the extent not already installed,
measuring only Tenant's consumption of electricity in the 2nd Floor Space; (vi)
the 2nd Floor Space (or applicable portion thereof) shall be delivered to Tenant
by Landlord in compliance with all Requirements (for unoccupied space) and
broom-clean condition with all cafeteria equipment and fixtures removed and all
damage resulting from such removal repaired in a commercially reasonable manner
(it being agreed that on or prior to the 2nd Floor Commencement Date, Landlord
shall deliver to Tenant such number of original ACP-5 Certificates (provided
that Tenant has delivered to Landlord such documentation and information as
Landlord may reasonably require to deliver said ACP-5 Certificates) applicable
to the 2nd Floor Space as required to be filed by Tenant in order to permit
Tenant to perform its initial Alterations therein and thereafter to occupy the
2nd Floor Space, together with all other documents and certificates required by
any Governmental Authority to cause the performance of any Alterations therein
to be referred to as a so-called "non-asbestos" project (it being understood
that if Tenant shall fail to deliver such documentation and information to
Landlord, Landlord's obligation to deliver such ACP-5 Certificates shall not be
affected other than Landlord shall not be obligated to deliver such ACP-5
Certificates until Tenant shall deliver such documentation and information)),
but otherwise "as is", and Landlord shall not be obligated to perform any other
work with respect thereto; and (vii) Tenant shall not be entitled to any work
allowance or contribution with respect to the 2nd Floor Space.
Section 43.3 (A) Notwithstanding the foregoing, Tenant acknowledges
that Landlord may deliver possession of the portion of the 2nd Floor Space
depicted on the floor plan attached hereto as Exhibit B-13 as the "Cafeteria
Space" (which shall be deemed to contain for all purposes of this lease (but
same shall not be deemed a representation as to the actual square footage of
such space) 27,841 Rentable Square Feet) or the portion of the 2nd Floor Space
depicted on said floor plan as the "Building Office Space" (which shall be
deemed to contain for all purposes of this lease (but same shall not be deemed a
representation as to the actual square footage of such space) 5,728 Rentable
Square Feet) at different times, provided Landlord shall use all reasonable
efforts to deliver the Cafeteria Space within ninety (90) days after the date
hereof, and the Building Office Space within one hundred eighty (180) days after
the date hereof, subject to this Lease becoming effective by June 1, 1996 (and
if this Lease is not effective and unconditionally delivered by June 1, 1996
such dates shall be extended by one day for each day after June 1, 1996 that
this Lease is not effective and unconditionally delivered (e.g., if the escrow
conditions contained in that certain escrow agreement dated the date hereof
between Davis & Gilbert, Landlord and Tenant are satisfied on June 15, 1996 then
the above periods shall be extended by 14 days). In such event, the 2nd Floor
Space Commencement Date shall be deemed to occur upon delivery of either the
Cafeteria Space or Building Office Space to Tenant, as the case may be, in
accordance with the
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terms hereof. The Cafeteria Space and the Building Office Space shall be deemed
a part of the Premises as of the delivery of possession of such space in its
required condition to Tenant. If the Cafeteria Space and Building Office Space
are not delivered to Tenant at the same time, then as of the 2nd Floor
Commencement Date the Fixed Rent for the 2nd Floor Space shall be equitably
adjusted (i.e., reducing such Fixed Rent for the 2nd Floor Space by the product
obtained by multiplying (i) the Rentable Square Feet of the portion of the 2nd
Floor Space not yet delivered to Tenant (but which will be delivered) by (ii)
$32.00), and Tenant's Tax Share and Tenant's Operating Share with respect to the
2nd Floor Space shall only be increased with respect to the number of Rentable
Square Feet comprising the portion thereof initially delivered until both
portions of the 2nd Floor Space are delivered to Tenant in accordance with this
Article 43.
(B) In the event that the 2nd Floor Space does not include the BBDO
space, the Rent Abatement referred to in Section 1.2 hereof shall be reduced by
$90,000.
Section 43.4 On or before December 31, 1997 (the "38th Floor
Termination Date"), Tenant shall surrender the 38th Floor Space to Landlord in
accordance with the terms of this Lease, as if the 38th Floor Termination Date
were the Expiration Date (provided Tenant shall not be required to remove any
Specialty Removal Alterations therefrom). Upon the later of the 38th Floor
Termination Date and the date Tenant vacates the 38th Floor Space and delivers
possession thereof to Landlord in accordance with all of the terms, covenants
and conditions of this Lease (the "38th Floor Surrender Date"), (x) Tenant's Tax
Share shall be reduced by 1.8099%; and (y) Tenant's Operating Share shall be
reduced by 1.826%. In the event Tenant fails to vacate and surrender possession
of the 38th Floor Space in accordance with the terms of this Lease on or before
the 38th Floor Termination Date, then Tenant shall be deemed to be holding over
in such space and all of the terms and conditions contained in this Lease with
respect to such holding over, including, without limitation Article 20 hereof,
shall be applicable thereto.
Section 43.5 If Landlord is unable to deliver possession of the
entire 2nd Floor Space within 210 days after the date hereof, which date shall
be extended by one day for each day after June 1, 1996 that the lease is not
effective and unconditionally delivered (the "2nd Floor Outside Date") because
of the holding over or retention of possession by any tenant, undertenant or
occupant (other than Tenant), or for any other cause outside Landlord's
reasonable control, (i) Landlord, subject to compliance with the provisions of
this Section 43.5, shall not be subject to any liability or failure to give
possession on said date, (ii) Tenant waives the right to recover any damages
from Landlord which may result from the failure of Landlord to deliver
possession of the entire 2nd Floor Space, and Tenant agrees that the provisions
of this Section shall constitute an "express provision to the contrary" within
the meaning of Section 223(a) of the New York Real Property Law, and (ii)
Landlord, at Landlord's expense, shall use all reasonable
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efforts to timely deliver possession of the Entire 2nd Floor Space to Tenant,
and, in connection therewith, if necessary, shall institute and diligently and
in good faith prosecute holdover and any other appropriate proceedings against
the occupant of such space. If Landlord shall fail to deliver the entire 2nd
Floor Space within sixty (60) days after the 2nd Floor Outside Date (the "2nd
Floor Cancellation Date"), Tenant shall have the right, in addition to its other
rights at law or in equity, to elect to cancel its leasing of the 2nd Floor
Space by providing Landlord with written notice thereof within fifteen (15) days
after the expiration of the 2nd Floor Cancellation Date (time being of the
essence with respect to the giving of such notice). If Tenant shall not deliver
a notice of its election to cancel its leasing of the 2nd Floor Space, Tenant
shall have waived its rights to cancel the leasing of the 2nd Floor Space
pursuant to this Article 43 for the next sixty (60) day period (and each sixty
(60) day period thereafter, if applicable), in which event the 2nd Floor
Cancellation Date shall be deemed to be the last day of such applicable sixty
(60) day period and Tenant shall again have the right to so elect to cancel its
leasing of the 2nd Floor Space, provided however, Landlord shall, with respect
to the first sixty (60) days of any such holdover affecting any portion of the
2nd Floor Space, pay to Tenant, within thirty (30) days after receiving same,
all amounts payable by the tenants or occupants of such portion of the 2nd Floor
Space so holding over for such holdover period (the "Total 2nd Floor Holdover
Amount"), in excess of the Fixed Rent and Escalation Rent that would be payable
by Tenant for such portion of the 2nd Floor Space ("2nd Floor Rent") pursuant to
the terms of this Article 43 (without taking into account any free rent period
or rent abatement that Tenant would be entitled to upon the leasing of such
portion of the 2nd Floor Space) (the "Tenant's 2nd Floor Holdover Payment") less
the Holdover Costs with respect thereto; with respect to the 61st through 180th
day of any such holdover, Tenant's 2nd Floor Holdover Payment shall be
increased, if applicable, by fifty percent (50%) of the amount (the "2nd Floor
Excess"), if any, by which the 2nd Floor Rent exceeds the rents which were
payable by the tenants or occupants of such portion of the 2nd Floor Space
immediately prior to the holdover period; and with respect to each day after the
180th day of such holdover, Tenant's 2nd Floor Holdover Payment shall be
increased, if applicable, by 100% of the 2nd Floor Excess, if any.
43.6 Landlord and Tenant shall enter into an appropriate amendment
of this Lease reflecting the leasing of the 2nd Floor Space by Tenant, but no
such amendment shall be necessary to make the leasing of the 2nd Floor Space and
the terms and conditions thereof, effective.
ARTICLE 44
CONTRACTION SPACE
Section 44.1 Provided no Special Event of Default has occurred and
is continuing, and subject to the provisions of section 44.2(D) below, on or
before January
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1, 2004 (the "Contraction Exercise Date"), Tenant shall have the right (the
"Contraction Space Option") to surrender to Landlord certain space (the
"Contraction Space") within the Office Space, upon compliance with, and subject
to, the terms and conditions hereinafter set forth. The Contraction Space shall
consist of one or two full tower floors which are contiguous to each other not
exceeding 51,200 Rentable Square Feet in the aggregate of the Office Space
located on or above the 16th Floor of the Building, as selected by Tenant.
Tenant shall give Landlord notice in the Contraction Space Notice of the space
constituting the Contraction Space. The Contraction Space Option shall be
exercisable by Tenant delivering notice (the "Contraction Space Notice") to
Landlord on or before the Contraction Exercise Date. Time is of the essence with
respect to the giving of the Contraction Space Notice.
Section 44.2 (A) If Tenant delivers the Contraction Space Notice as
aforesaid, then, subject to the provisions of this Article 44, as of December
31, 2005 (the "Contraction Space Termination Date") (i) Tenant shall surrender
the Contraction Space to Landlord subject to and in accordance with all of the
applicable provisions of this Lease, including the provisions of Article 20
hereof (and references to the "Premises" contained in Article 20 shall be deemed
to mean the "Contraction Space" for purposes of this Section 44.2), (ii) all
Fixed Rent, Escalation Rent and other items of Rental attributable to the
Contraction Space shall be apportioned as of the date of such termination, (iii)
this Lease shall be deemed to have terminated as to the Contraction Space and
neither party to this Lease shall have any further obligation to the other with
respect to the Contraction Space accruing from and after the Contraction Space
Termination Date, except as herein expressly stated to survive the termination
of this Lease, (iv) the Contraction Space shall no longer be a part of the
Office Space for any purposes of this Lease, (v) the Fixed Rent shall be
decreased by an amount equal to the Fixed Rent allocable to the Contraction
Space as set forth on Exhibit G, or as determined in accordance with the
provisions of Article 42, with respect to Expansion Space, or Article 45, with
respect to Offer Space, (vi) Tenant's Operating Share shall be decreased by an
amount equal to the Rentable Square Footage of the Contraction Space divided by
1,478,672; and (vii) Tenant's Tax Share shall be decreased by an amount equal to
(y) the Rentable Square Footage of the Contraction Space divided by 1,491,800.
(B) Tenant shall pay to Landlord on or before December 31,
2004, as additional rent, and as a reasonable fee for Tenant's contraction right
and not as a penalty, an amount equal to (i) with respect to the portion of the
Contraction Space consisting of existing Office Space, an amount equal to the
Rentable Square Feet of the Contraction Space multiplied by $66.75, and (ii)
with respect to the portion of the Contraction Space consisting of Expansion
Space, Offer Space or any other space leased by Landlord to Tenant, an amount
equal to the unamortized portion (which amounts shall be amortized with interest
at the rate of ten percent (10%) per annum, over the term of the leasing of such
space commencing on the applicable commencement date for such space
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and ending on the fixed expiration date for such space without giving effect to
the exercise of the Contraction Space Option) of (y) the work allowance or
contribution (or free rent to the extent a work allowance or contribution was
converted to free rent or a rent credit), if any, provided by Landlord to Tenant
for such space either pursuant to the terms of this Lease or pursuant to the
exercise of an option contained in this Lease with respect to the Offer Space or
the Expansion Space, as applicable, plus (z) the brokerage commissions payable
by Landlord in connection with Tenant's leasing of such space pursuant to the
terms of this Lease or pursuant to the exercise of an option contained in this
Lease with respect to the Offer Space or the Expansion Space, as applicable.
(C) Landlord and Tenant shall enter into an appropriate
amendment of this Lease reflecting the exercise of the Contraction Space Option
by Tenant, but no such amendment shall be necessary to make the exercise of the
Contraction Space Option and the terms applicable thereto, effective.
(D) Notwithstanding anything to the contrary contained in this
Article 44, Tenant shall not have the right to exercise the Contraction Space
Option within the twelve (12) month period following Tenant's delivery of a
Tenant Offer Notice for more than 10,000 Rentable Square Feet of Offer Space
located on the 7th through 24th Floors of the Building unless there have
occurred a Major Business Event within such twelve (12) month period, and then
only provided such Major Business Event had a direct relationship to Tenant's
decision to contract.
ARTICLE 45
OFFER SPACE
Section 45.1 Provided no Special Event of Default has occurred and
is continuing, and subject to the provisions of Sections 45.5 and 45.7 below, if
at any time after the date hereof any space located on the Subconcourse Level,
the Concourse Level or the 7th through 24th Floors of the Building (each such
space being hereinafter referred to as the "Offer Space") becomes or will become
available for leasing during the succeeding twelve month period during the Term
to entities which are not existing tenants or occupants of the Building leasing
space directly from Landlord in the elevator bank in which such Offer Space is
located, Landlord shall promptly notify Tenant in writing (the "Offer Space
Notice") of each such availability (such notice to include the anticipated date
that such Offer Space will be vacant and available for occupancy (the
"Anticipated Offer Space Commencement Date"), and Tenant shall have the right to
lease the Offer Space for a term commencing on the date such Offer Space becomes
available for occupancy (the "Offer Space Commencement Date") and ending on the
date that is the later to occur of (a) the date that is five (5) years following
the Offer Space Commencement Date and (b) the last day of the Term, subject to
the Renewal Option (the
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"Offer Space Rental Period"), on the terms and conditions set forth in Section
45.2 hereinbelow. Tenant shall have fifteen (15) days after receipt of the Offer
Space Notice in which to notify Landlord in writing ("Tenant's Offer Notice") of
its election to lease the Offer Space. Time is of the essence with respect to
the giving of Tenant's Offer Notice. If Tenant shall fail to notify Landlord of
such election within said period, Tenant shall be deemed to have waived its
rights under this Article 45 with respect to such Offer Space, subject to the
provisions of Section 45.4. Notwithstanding the foregoing, the "Offer Space
Commencement Date" shall be deemed to be the date such Offer Space becomes
vacant and available for Tenant's occupancy and is delivered to Tenant in the
required condition upon not less than fifteen (15) days prior notice (which
shall not be more than thirty (30) days before the Anticipated Offer Space
Commencement Date).
Section 45.2 (A) Provided that Tenant timely delivers Tenant's Offer
Notice, as aforesaid, then on the applicable Offer Space Commencement Date: (i)
the Offer Space so leased shall be added to and be deemed part of, with respect
to Offer Space located on the Subconcourse Level and Concourse Level, the
Storage and Service Space, and with respect to all other Offer Space, the Office
Space, for all purposes of this Lease, except as set forth in this Article 45;
(ii) the Fixed Rent shall be recalculated and increased so as to include the
Offer Space so leased, provided that the Fixed Rent with respect to such Offer
Space so leased shall be at 95% of the "fair market rental value" (as defined
and described in Section 45.2(B) hereinbelow) for the applicable Offer Space
Rental Period; (iii) if the Offer Space is not located on the Subconcourse Level
or Concourse Level, Tenant's Operating Share and Tenant's Tax Share shall be
increased to include the Offer Space so leased; (iv) Tenant shall receive the
Supplemental Rent Credit in the amount and during the period of time set forth
on Exhibit Z; (v) Landlord shall provide (a) electricity to the Offer Space so
leased in accordance with Section 13.1, such electricity to be measured by
submeters measuring only Tenant's consumption of electricity in the Offer Space
so leased, and (b) up to ten (10) additional tons of condenser water per full
floor of the Offer Space (appropriately pro-rated in the case of any partial
floor Offer Space) to the extent Tenant's condenser water system does not have
the excess capacity to supply such condenser water to the particular Offer Space
taking into consideration Tenant's present and then anticipated future needs as
reasonably determined by Tenant and its consultants (reasonable substantiation
of which shall be provided to Landlord upon request); (vi) the Offer Space so
leased shall be delivered to Tenant by Landlord in compliance with all
Requirements (for unoccupied space) and in broom-clean condition (it being
agreed that, on or prior to the Offer Space Commencement Date, Landlord shall
deliver to Tenant such number of original ACP-5 Certificates (provided that
Tenant has delivered to Landlord such documentation and information as Landlord
may reasonably require to deliver said ACP-5 Certificates) applicable to the
Offer Space in question as required to be filed by Tenant in order to permit
Tenant to perform its initial Alterations therein and thereafter to occupy each
floor
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of the Offer Space in question, together with all other documents and
certificates required by any Governmental Authority to cause the performance of
any Alterations therein to be referred to as a so-called "non-asbestos" project
(it being understood that if Tenant shall fail to deliver such documentation and
information to Landlord, Landlord's obligation to deliver such ACP-5
Certificates shall not be affected other than Landlord shall not be obligated to
deliver such ACP-5 Certificates until Tenant shall deliver such documentation
and information)), but otherwise in its "as is" condition and Landlord shall not
be obligated to perform any other work with respect thereto; and (vii) Tenant
shall not be entitled to any allowance or contribution with respect thereto.
Landlord shall set forth in the Rent Notice delivered by Landlord to Tenant with
respect to the Offer Space in question Landlord's Determination of the Fair
Market Rent of such Offer Space. If Tenant objects to Landlord's Determination,
Tenant's Notice shall include Tenant's Determination. Fair Market Rent for such
Offer Space shall be determined pursuant to Section 45.2(B).
(B) The "fair market rental value" for any Offer Space for an
Offer Space Rental Period shall be determined substantially in accordance with
the provisions of Sections 41.3(A) hereof, mutatis mutandis, except those
provisions which are inconsistent with such Offer Space (i.e. 41.3(A)(i), (ii),
(iii) and (viii)), and, except that:
(i) as used therein, the term "Fair Market Rent" shall
mean the annual fair market rental value of the Offer Space in question as
of the date on which Tenant gives Tenant's Offer Notice in question;
(ii) as used therein, the term "Premises" shall mean the
Offer Space in question;
(iii) the Base Operating Year shall mean the Base
Operating Year set forth in Section 27.1(B);
(iv) there shall be taken into account the actual
brokerage commission payable by Landlord to Compass, if any, with respect
to the applicable Offer Space;
(v) Base Taxes shall mean the Base Taxes set forth in
Section 27.1(D);
(vii) clause (iv) of paragraph (A) of Section 41.3
hereof shall be deemed amended to provide that Landlord shall be required
to deliver the Offer Space in compliance with all Requirements (for vacant
space), broom-clean and with ACP-5 Certificates, but otherwise in "as is",
condition, and if applicable,
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and the fact that Tenant shall not be entitled to any allowance or
contribution with respect thereto; and
(viii) the Rent Notice with respect to the Offer Space
shall be delivered with the Offer Space Notice.
(ix) Since the Fixed Rent for the Offer Space in
question is 95% of the Fair Market Rent (which is customarily calculated
on the basis of utilizing a current base operating year for base operating
expenses and a current base tax year for base taxes), then the Fair Market
Rent shall be equitably reduced to reflect the fact that the Base
Operating Year and Base Taxes are as set forth in subdivisions (iii) and
(v) above. (For example, if the Fair Market Rent using current base years
for Taxes and Operating Expenses would be $50, and Fair Market Rent would
be $40 using the existing base years for Taxes and Operating Expenses
because there is $10 of accrued escalations, then the Fixed Rent will be
$37.50 computed as follows: 95% of $50 = $47.50, less the $10 of accrued
escalations = $37.50.)
(C) For purposes of determining the Fair Market Rent pursuant
to this Article 45, the following procedures shall apply:
(1) The Fair Market Rent shall be determined as of the
date on which Tenant provides the Offer Space Notice, taking into
account the applicable factors described in Section 45.2(B) hereof
on the basis of the uses of the Offer Space permitted hereunder and
assuming that the Offer Space is free and clear of all leases and
tenancies (including this Lease) and taking into account that the
Offer Space is leased by a single tenant.
(2) Landlord shall give Tenant the Rent Notice with
respect to the Offer Space with delivery of the Offer Space Notice.
If Landlord shall fail or refuse to give such notice as aforesaid,
Landlord's Determination shall be deemed to be 110% of the Fixed
Rent and Escalation Rent then payable by Tenant under this Lease on
a Rentable Square Foot basis for the Office Space.
(3) The provisions of Paragraphs (3) (4) and (5) of
Section 41.3(B), mutatis mutandis, shall apply to the determination
of Fair Market Rent for the Offer Space, as if expressly stated in
this Section 45.2(B).
(4) It is expressly understood that any determination of
the Fair Market Rent pursuant to this Article 45 shall be based on
the criteria stated in Section 45.2(B) hereof.
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(D) After a determination has been made of the Fair
Market Rent for the Offer Space, the parties shall execute and deliver to each
other an instrument setting forth the Fixed Rent as hereinabove determined, but
no such instrument shall be necessary to make the exercise of the Offer Space
Option and the terms and conditions applicable thereto, effective.
(E) If the final determination of the Fair Market Rent
shall not be made on or before the Offer Space Commencement Date in accordance
with the provisions of this Article 45, pending such final determination Tenant
shall pay, as the Fixed Rent for such Offer Space, an amount equal to the
average of Landlord's Determination and Tenant's Determination. If, based upon
the final determination hereunder of the Fair Market Rent, the payments made by
Tenant on account of the Fixed Rent for such Offer Space were (i) less than the
Fixed Rent payable for the Offer Space, Tenant shall pay to Landlord the amount
of such deficiency within ten (10) days after demand therefor together with
interest thereon at the Base Rate or (ii) greater than the Fixed Rent payable
for the Offer Space, Landlord promptly shall refund to Tenant the amount of such
excess together with interest thereon at the Base Rate.
Section 45.3 If Landlord is unable to deliver possession of the
Offer Space so leased on the Anticipated Offer Space Commencement Date because
of the holding over or retention of possession of any tenant, undertenant or
occupant in the Offer Space so leased or otherwise or for any other cause
outside Landlord's reasonable control, subject to compliance with the provisions
of this Section 45.3, (i) Landlord shall not be subject to any liability for
failure to give possession on said date, (ii) Tenant waives the right to recover
any damages which may result from the failure of Landlord to deliver possession
of the Offer Space so leased and agrees that the provisions of this Section 45.3
shall constitute an "express provision to the contrary" within the meaning of
Section 223(a) of the New York Real Property Law, (iii) the Fixed Rent and other
items of Rental payable with respect to the Offer Space so leased shall be
abated and the Offer Space Commencement Date shall be postponed until the Offer
Space so leased is, in fact, available for Tenant's occupancy and (iv) Landlord,
at Landlord's expense, shall use all reasonable efforts to timely deliver
possession of the Offer Space to Tenant, and, in connection therewith, if
necessary, shall institute and diligently and in good faith prosecute holdover
and any other appropriate proceedings against the occupant of such space.
Notwithstanding the foregoing, if Landlord shall be unable to deliver possession
of any Offer Space so leased on the applicable Anticipated Offer Space
Commencement Date, Landlord shall deliver to Tenant at least fifteen (15) days
prior notice of the Offer Space Commencement Date. If Landlord shall fail to
deliver possession of such Offer Space within ninety (90) days after the Offer
Space Commencement Date (the "Offer Cancellation Date"), Tenant shall have the
right, in addition to its other rights at law or in equity, to elect to cancel
its leasing of the Offer Space in question by delivering a notice of termination
to Landlord within fifteen (15) days thereafter (time being of the essence
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with respect to the giving of such notice). If Tenant shall not timely deliver a
notice of its election to cancel its leasing of the Offer Space in question to
Landlord following the expiration of such ninety (90) day period, Tenant shall
have waived its right to cancel the leasing of the Offer Space in question
pursuant to this Article 45 for the next sixty (60) day period (and each sixty
(60) day period thereafter, if applicable), in which event the Offer
Cancellation Date shall be deemed to be the last day of such applicable sixty
(60) day period and Tenant shall again have the right to so elect to cancel its
leasing of the Offer Space in question; provided, however, Landlord shall pay to
Tenant, within ten (10) days after receiving same, all amounts payable by the
tenant(s) or occupant(s) of such Offer Space so holding over for such holdover
period (the "Total Offer Holdover Amount"), in excess of the Fixed Rent and
Escalation Rent that would be payable by Tenant for such Offer Space ("Offer
Space Rent") pursuant to the terms of this Article 45 (without taking into
account any free rent period or rent abatement that Tenant would be entitled to
upon the leasing of such Offer Space) ("Offer Space Holdover Amount") less
Holdover Costs with respect thereto; with respect to the 61st through 180th day
of any such holdover, the Offer Space Holdover Amount shall be increased, if
applicable, by fifty percent (50%) of the amount (the "Offer Excess"), if any,
by which the Offer Space Rent exceeds the rents which were paid by the tenants
or occupants of such Offer space immediately prior to the holdover period; and
with respect to each day after the 180th day of such holdover, the Offer Space
Holdover Amount shall be increased, if applicable, by 100% of the Offer Excess,
if any.
Section 45.4 Anything contained in this Article 45 to the contrary
notwithstanding, if Landlord shall offer the Offer Space to Tenant as provided
herein, and Tenant shall elect not to lease such Offer Space, Landlord shall be
obligated to comply with the provisions of this Article 45 and offer such Offer
Space to Tenant again if Landlord shall not lease such Offer Space within
eighteen (18) months following the delivery of the prior Offer Space Notice for
such Offer Space and Landlord is not then in active negotiations with another
Person for such Offer Space (as evidenced by, among other things, a non-binding
term sheet which shall have been executed and delivered by Landlord and such
Person and shall not be subject to any outstanding, cancellation or termination
rights by either party).
Section 45.5 Notwithstanding anything to the contrary contained in
this Article 45, Tenant shall not have the right to lease any Offer Space within
the twelve (12) month period following Tenant's delivery of the Contraction
Space Notice unless there shall occur a Major Business Event within such twelve
(12) month period which is directly related to Tenant's exercise of the right to
lease such Offer Space. As used herein, "Major Business Event" means the merger
or consolidation of Tenant into or with any other Person, the purchase or other
acquisition by Tenant of any Person, all or substantially all the assets of any
Person or a division or business group from any Person or the sale, transfer or
divestiture of any Related Entity, all or substantially all of the
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assets of any Related Entity or any division or business group of Tenant or any
Related Entity which necessitates the requirement for additional space or
reduction of space as the case may be, in the Building.
Section 45.6 Landlord and Tenant shall enter into an appropriate
amendment of this Lease reflecting the leasing of any Offer Space by Tenant, but
no such amendment shall be necessary to make the leasing of any Offer Space and
the applicable terms thereof, effective.
Section 45.7 Notwithstanding anything to the contrary contained in
this Article 45, Tenant's offer right is subject to Tenant and its Related
Entities (except second tier Non-Control Entity subtenants) then being in
occupancy of at least 100,000 rentable square feet of Office Space for the
conduct of their business. If Tenant and its Related Entities (except second
tier Non-Control Entity subtenants) are in occupancy of at least 100,000
rentable square feet of Office Space for the conduct of their business and
Tenant is then leasing at least 250,000 rentable square feet of Office Space,
then Tenant's offer right shall be subject to (i) the rights of tenants to renew
or extend their lease for the Offer Space in question, (ii) existing (as of the
date hereof) offer and option rights of tenants in the Building, and (iii)
option rights of tenants leasing Offer Space (or space immediately contiguous
thereto) after Tenant fails to exercise its offer right with respect to
available Offer Space (provided such option rights do not apply to an amount of
space which exceeds the rentable square footage of the space then being leased
by such tenants); and in addition to the foregoing, if Tenant and its Related
Entities (except second tier Non-Control Entity subtenants) are in occupancy of
at least 100,000 rentable square feet of Office Space, but are leasing less than
250,000 rentable square feet of Office Space either at the time Landlord is
granting option or offer rights to tenants occupying more rentable square feet
of office space than Tenant or at the time such applicable offer or option space
becomes available for occupancy, Tenant's offer right is also subject to any
option or offer rights (whenever granted) of a tenant in the Building occupying
more rentable square feet of office space than Tenant at either of such times.
ARTICLE 46
LOBBY RIGHTS
Section 46.1 Subject to Landlord's reasonable approval as to design,
Tenant shall have the right upon reasonable prior notice to Landlord and under
Landlord's supervision, to erect and maintain in good condition and repair and
use a kiosk (which design, appearance and manner of display conforms to the
Building Standard) (the "Lobby Kiosk"), in the lobby of the Building which shall
occupy not more than 200 square feet in an area to be mutually acceptable to
both Landlord and Tenant, and both parties shall act in good faith and use
reasonable efforts to agree on such
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location. Landlord shall not charge Tenant for the use of such lobby space. The
Lobby Kiosk shall be used to display in a first-class, professional manner
business, promotional, charitable and community matters of general interest to
the public. The Lobby Kiosk and all displays therein or thereon shall be
installed and maintained at Tenant's sole cost and expense. Tenant shall include
the Lobby Kiosk in the insurance coverages provided by Tenant under Section 9.2.
Section 46.2 (A) Tenant shall have the right to install and maintain
artworks and related exhibits of a quality in keeping with the Building Standard
in the lobby of the Building only in the areas shown on Exhibit V (the "Art
Areas") (it being agreed that there shall be no charge to Tenant for the use of
such lobby space). At no time shall any artworks or exhibits be built-into,
affixed or attached to the Building in such a manner as would result in material
damage to the Building upon the removal of such artwork or exhibit and no such
artwork or exhibit shall be built-into, affixed or attached to the Building if
removal of same shall be deemed to constitute a prohibited destruction of the
artwork or exhibit, in question. Any artworks or exhibits installed in the Art
Areas shall be displayed in a first class, professional manner and substantially
harmonious and compatible with the decor of the lobby and in keeping with the
Building Standard and in a manner so as not to cause any injury or damage to the
Building, or unreasonable interference with the proper operation of the
Building. Tenant shall be solely responsible for the repair and maintenance of,
and security for, any such artworks or exhibits installed in the Art Areas.
Landlord shall have no liability to Tenant for any loss or damage to any of the
artworks or exhibits displayed in the Art Areas except to the extent arising out
of the negligence or willful misconduct of Landlord's Indemnitees.
(B) The operation of the exhibitions and the access of the
public to the Art Areas shall not unreasonably interfere with or impede access
or the pedestrian traffic flow in the lobby or to the remaining portions of the
Building or unreasonably interfere with the normal security arrangements for the
Building or the Operation of the Property. Tenant's exhibitions in the Art Areas
shall be operated during Business Hours on Business Days or at such other
reasonable hours as Tenant may elect upon notice to Landlord. If Tenant shall
operate the Art Areas other than during Business Hours on Business Days, Tenant
shall provide at least five (5) Business Days notice to Landlord, and if
Landlord shall reasonably require any additional security or lobby personnel for
such operation, Landlord shall notify Tenant within two (2) Business Days
thereafter. Tenant shall have the right to either provide such additional
security or lobby personnel or to have Landlord provide same, and the
out-of-pocket costs incurred by Landlord in connection therewith shall be paid
by Tenant within thirty (30) days after submission of a bill therefor. If Tenant
shall fail to notify Landlord that Tenant shall be providing such additional
security or lobby personnel within two (2) Business Days after Landlord notifies
Tenant of the requirement for such personnel, Landlord shall provide such
personnel at Tenant's cost, as described above.
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(C) Tenant shall, in conformity with the Building Standard,
promptly repair, at its sole cost and expense, any damage to the Building caused
by the installation, maintenance or repair of the lobby kiosk, or any artworks
or exhibits in the Art Areas. Tenant shall include the Art Areas and the
artworks and exhibits therein in the insurance coverages provided by Tenant
under Section 9.2.
Section 46.3 Tenant shall have the right to install (i) a concierge
or security desk ("Tenant's Lobby Desk") in the lobby of the Building in the
area more particularly shown on Exhibit V (it being agreed that there shall be
no charge to Tenant for the use of such lobby space), (ii) such telephone,
computer, communication and security installations as may be reasonably required
by Tenant in connection with the operation of Tenant's Lobby Desk provided the
installation of same is performed in accordance with the terms of this Lease and
under Landlord's supervision, and shall be done in a manner so as not to
unreasonably interfere with the normal use of the lobby by Building tenants, and
(iii) a dignified sign for Tenant's Lobby Desk, provided that the design, size
and location of Tenant's Lobby Desk and of such sign and such installations
shall be subject to Landlord's approval (which shall not be unreasonably
withheld or delayed) and the same shall be consistent with the existing design
and signage of the lobby and at all times consistent with the Building Standard.
Tenant shall, prior to installing Tenant's Lobby Desk and such sign, consult
with Landlord or Landlord's architect. Notwithstanding anything herein contained
to the contrary, Landlord hereby approves Tenant's use of the existing Lobby
Desk and Tenant's existing sign for the Lobby Desk, and Tenant's use of the same
in substantially the same manner as Tenant is using such lobby desk as of the
date hereof.
Section 46.4 Subject to compliance with all applicable Requirements,
and the applicable terms of this Lease, and/or the terms and conditions
contained in existing agreements with other occupants of the Building (to the
best of Landlord's knowledge no existing occupancy agreement expressly prohibits
a Permitted Function, but such agreement(s) may require Landlord to maintain or
operate the Building and provide use, occupancy and/or access thereof in
conformity with certain standards), Tenant shall have the right, upon at least
fifteen (15) days prior notice to Landlord, to request that Landlord close off
portions of the lobby of the Building in the area more particularly shown on
Exhibit V (the "Closed-Off Lobby Areas") other than during Business Hours on
Business Days for Permitted Functions (it being agreed that there shall be no
charge to Tenant for the use of such lobby space), provided such use does not
unreasonably interfere with the use and proper operation of the Building. If
Landlord shall reasonably require any additional security or lobby personnel for
any Permitted Function in the Closed-Off Lobby Areas, Landlord shall notify
Tenant within two (2) Business Days following Tenant's notice to Landlord.
Tenant shall have the right to either provide such additional security or lobby
personnel or to have Landlord provide same, the out-of-pocket costs of Landlord
to be paid by Tenant within thirty (30) days after submission of a bill
therefor.
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If Tenant shall fail to notify Landlord that Tenant shall be providing such
additional security or lobby personnel within two (2) Business Days after
Landlord notifies Tenant of the requirement for such personnel, Landlord shall
provide such personnel.
Section 46.5 The rights granted to Tenant in this Article 46 are
limited to the Tenant Named Herein (and its Successors-in-interest), and are
subject to Tenant and its Related Entities (except second tier Non-Control
Entity subtenants) then occupying at least 250,000 rentable square feet of
Office Space in the Building for the conduct of their business.
ARTICLE 47
ARBITRATION
Section 47.1 Either party shall have the right to submit any dispute
under this Lease (other than any disputes under Article 16 hereof) to
arbitration in The City of New York under the Expedited Procedures provisions of
the Commercial Arbitration Rules of the AAA (presently Rules 53 through 57 and,
to the extent applicable, Section 19); provided, however, that with respect to
any such arbitration, (i) the list of arbitrators referred to in Rule 54 shall
be returned within five (5) days from the date of mailing; (ii) the parties
shall notify the AAA by telephone, within four (4) days of any objections to the
arbitrator appointed and will have no right to object if the arbitrator so
appointed was on the list submitted by the AAA and was not objected to in
accordance with the second paragraph of Rule 54; (iii) the Notice of Hearing
referred to in Rule 55 shall be four (4) days in advance of the hearing; (iv)
the hearing shall be held within five (5) days after the appointment of the
arbitrator; (v) the arbitrator shall have no right to award damages except with
respect to a successful claim by Tenant that Landlord has withheld its consent
in bad faith as described in Section 38.5; and (vi) the decision and award of
the arbitrator shall be final and conclusive on the parties. The time periods
set forth in this Section 47.1 are of the essence. If any party fails to appear
at a duly scheduled and noticed hearing, the arbitrator is hereby expressly
authorized to enter judgment for the appearing party.
Section 47.2 The arbitrators conducting any arbitration shall be
bound by the provisions of this Lease and shall not have the power to add to,
subtract from, or otherwise modify such provisions. Landlord and Tenant agree to
sign all documents and to do all other things reasonably necessary to submit any
such matter to arbitration and further agree to, and hereby do, waive any and
all rights they or either of them may at any time have to revoke their agreement
hereunder to submit to arbitration and to abide by the decision rendered
thereunder which shall be binding and conclusive on the parties and shall
constitute an "award" by the arbitrator within the meaning of the AAA rules and
applicable law. Judgment may be had on the decision and award of the arbitrators
so rendered in any court of competent jurisdiction. Each arbitrator shall be a
qualified,
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disinterested and impartial person who shall have had at least ten (10) years
experience in New York City in a calling connected with the matter of the
dispute. Landlord and Tenant shall each have the right to appear and be
represented by counsel before said arbitrators and to submit such data and
memoranda in support of their respective positions in the matter in dispute as
may be reasonably necessary or appropriate in the circumstances. Each party
hereunder shall pay its own costs, fees and expenses in connection with any
arbitration or other action or proceeding brought under this Article 47, and the
expenses and fees of the arbitrators selected shall be shared equally by
Landlord and Tenant. Notwithstanding any contrary provisions hereof, Landlord
and Tenant agree that, except with respect to a successful claim by Tenant that
Landlord has withheld its consent willfully or in bad faith as described in
Section 38.5, (i) the arbitrators may not award or recommend any damages to be
paid by either party and (ii) in no event shall either party be liable for, nor
be entitled to recover, any damages.
Section 47.3 Either party may withhold up to fifty percent (50%) of
the dollar amount of any monetary obligation in dispute (but not any amounts
which are not in dispute) (except that Tenant may not withhold any portion of
Fixed Rent or Escalation Rent which is subject to such arbitration) until the
resolution of such dispute. Upon resolution of such dispute an appropriate
payment (or refund) shall be made with interest on such amount at the Applicable
Rate. Such withholding party shall pay all amounts which are not in dispute.
Section 47.4 This Article 47 shall survive the expiration or sooner
termination of this Lease.
ARTICLE 48
ROOF RIGHTS
Section 48.1 (A) Landlord shall make available to Tenant (on an
exclusive basis, subject to the following provisions), without charge (except as
otherwise expressly set forth in Section 1.1(A)(8) hereof), space on the roof of
the Building as shown (cross-hatched) on Exhibit N attached hereto and made part
hereof (the "Roof Space") for Tenant's communications tower, microwave and/or
satellite dishes, antennas and related equipment, mountings and supports
(collectively, the "Communications Equipment"). Tenant shall pay all costs and
expenses of such Communications Equipment and its installation, maintenance and
repair (including, without limitation, the cost of all electrical and
telecommunications conduits that Tenant may install in connection therewith). In
connection therewith, Landlord will make available to Tenant reasonable access
to the roof for the construction, installation, maintenance, repair, operation
and use of the Communications Equipment, as well as space in the existing
telephone closets opposite the high-rise freight elevator in the Building to run
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telecommunications conduits from the Communications Equipment to the Premises,
reasonable available space (to the extent reasonably required) in the existing
electrical closets in the Building to run electrical conduits from the
Communications Equipment to the Premises and such other reasonable space in the
Building as may be necessary, to run electrical and telecommunications conduits
from the Communications Equipment to the Premises. The installation of the
Communications Equipment shall constitute an Alteration and shall be performed
in accordance with and subject to the provisions of Articles 3 and 6 hereof and
the Communications Equipment shall be treated for all purposes of this Lease as
if the same were Tenant's Property. All of the provisions of this Lease with
respect to Tenant's obligations hereunder shall apply to the installation, use
and maintenance of the Communications Equipment, including, without limitation,
provisions relating to compliance with Requirements, insurance, indemnity,
repairs and maintenance. If the installation of the Communications Equipment
requires other Alterations to the Building so that the Building will be
substantially in the same condition as immediately prior to such installation,
in order to comply with any applicable Requirements, then such work shall be
performed by Tenant, at its sole expense.
(B) It is expressly understood that Landlord retains the right
to use the portion of the roof on which the Communications Equipment is located
for any purpose whatsoever provided that Tenant shall have reasonable access to,
and Landlord shall not unreasonably interfere with, the use of the
Communications Equipment (except in cases of emergency, or in compliance with
Requirements).
(C) Tenant shall use the Communications Equipment so as not to
cause (i) any unreasonable interference to other tenants in the Building or (ii)
any interference with telecommunications equipment existing prior to the
installation of the Communications Equipment or (iii) damage to or interference
with the operation of the Building or Building Systems. Landlord shall not
permit any other communication, Communications Equipment, microwave or satellite
dish or other equipment to be installed on the roof of the Building after the
installation of the Communications Equipment which would unreasonably interfere
with the operation of the Communications Equipment, unless in connection with
the compliance with Requirements. If Tenant's use of the Communications
Equipment shall cause any (i) unreasonable interference to any antenna or
microwave dish or other telecommunications equipment of another tenant of the
Building or Person installed prior to Tenant's installation of the
Communications Equipment, or (ii) irreparable or material damage to or
unreasonable interference with the Building Systems, Tenant shall, at its
expense, eliminate such interference by either modifying the Communications
Equipment or relocating the Communications Equipment to another roof location
(which location shall be reasonably determined by Landlord and Tenant). To the
best of Landlord's knowledge (without having made any special or independent
investigation) Tenant's existing Communications Equipment do not fall within the
parameters of Sections (i) or (ii) in the immediately
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preceding sentence, as of the date hereof. Except with respect to the foregoing
obligation of Tenant, Landlord reserves the right to relocate the Communications
Equipment at Landlord's sole cost and expense (but subject to recoupment
pursuant to Article 27 hereof) provided such relocation will not cause
unreasonable interference with Tenant's use of the Communications Equipment, the
relocated space shall be reasonably satisfactory to Tenant, and shall have
transmission and reception substantially the same as the original location, and
Landlord may relocate the Communications Equipment only if required for the
proper operation of the Building (e.g. a repair or alteration) or to comply with
a Requirement and not merely to convenience Landlord or another tenant or any
other Person.
(D) Landlord shall not have any obligations with respect to
the Communications Equipment or compliance with any Requirements relating
thereto nor shall Landlord be responsible for any damage that may be caused to
Tenant or the Communications Equipment by any other tenant in the Building.
Except as otherwise expressly set forth in this Article 48, Landlord makes no
representation that the Communications Equipment will be able to receive or
transmit communication signals without interference or disturbance (whether or
not by reasons of the installation or use of similar equipment by others on the
roof) and Tenant agrees that Landlord shall not be liable to Tenant therefor,
provided, however, that if any other tenant of the Building shall be permitted
to install an antenna or similar equipment on the roof of the Building, such
tenant shall covenant not to use its antenna or similar equipment in a manner so
as to cause any unreasonable interference with Tenant's use of the
Communications Equipment.
(E) Tenant, at Tenant's sole cost and expense, shall paint and
maintain the Communications Equipment in white or such other color as Landlord
shall reasonably determine and shall install such lightning rods or air
terminals on or about the Communications Equipment as Landlord may reasonably
determine.
(F) Tenant shall (i) be solely responsible for any damage (and
the prompt repair of same) caused as a result of the installation or use of the
Communications Equipment (except to the extent such damage is caused by the
negligence or willful misconduct of Landlord or its respective agents, servants,
employees or licensees), (ii) promptly pay any tax, license or permit fees
charged pursuant to any Requirements in connection with the installation,
maintenance or use of the Communications Equipment and comply with all
applicable Requirements, and (iii) make necessary repairs, replacements to, or
maintenance of, the Communications Equipment with reasonable diligence.
Section 48.2 (A) Subject to compliance with Requirements, and the
applicable terms of this Lease, Landlord shall make available to Tenant, without
charge, on an exclusive basis (subject to the following provisions), the 16th
Floor Setback Space
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and the 15th Floor Mechanical Space for Tenant's Condenser Water System. Tenant
shall pay all costs and expenses of such Condenser Water System and its
installation. In connection therewith, Landlord will make available to Tenant
reasonable access to the 16th Floor Setback Space, the 15th Floor Mechanical
Space and to portions of the Building other than the Premises (including,
without limitation, to the existing mechanical riser shaftways and other
portions of the Building's core and shaft areas currently being used by Tenant
in connection with Tenant's Condensor Water System) for the construction,
installation, maintenance, repair, operation and use of the Condenser Water
System, as well as any reasonably required additional portions of the Building's
core and shaft areas to the extent same is required to be made available by
Landlord pursuant to Article 49, to run pipes and conduits from the Condenser
Water System to the Premises provided that in connection with such access Tenant
shall not unreasonably interfere with Building Systems or the use and occupancy
of the Building by other tenants. Any proposed replacement or expansion of the
Condenser Water System by Tenant shall constitute an Alteration and shall be
performed in accordance with and subject to the provisions of this Lease,
including, without limitation, Articles 3 and 6 hereof and the Condenser Water
System shall be treated for all purposes of this Lease as if the same were
Tenant's Property, and such system shall only be expanded onto the location
designated on Exhibit B-8 attached hereto.
(B) Tenant hereby acknowledges that, in connection with the
installation of the Condenser Water System, Tenant has installed a water meter
(which Tenant shall maintain at its own expense) to (i) measure the consumption
of water which is required to compensate for a loss of water due to evaporation
(otherwise known as a "make-up" meter) and (ii) measure Tenant's water
consumption in connection with the operation of the Condenser Water System.
Tenant shall maintain a chemical treatment program in connection with the use,
operation and maintenance of the Condenser Water System which is environmentally
safe and compatible with the Building's chemical treatment program for the
Building's condenser water system. Tenant shall pay Landlord for such water
consumption in accordance with the provisions of Section 28.5 hereof.
(C) Tenant hereby acknowledges that Landlord is not obligated
to provide condenser water for all or any portion of Tenant's supplementary HVAC
units. Notwithstanding the foregoing, in the event that Tenant temporarily
suspends the operation of the Condenser Water System (for only such period of
time as reasonably required by Tenant), Landlord, upon prior notice (which may
be telephonic provided such notice is confirmed in writing) from Tenant, shall
as soon as reasonably practical thereafter exercising diligent efforts under the
circumstances, supply condenser water of up to 400 tons to Tenant's
supplementary HVAC units by means of the condenser water pipes and conduits
existing as of the date hereof, in accordance with the provisions of Section
28.2(B) hereof. In the event of an emergency which temporarily suspends the
operation of the Condenser Water System, Landlord shall use its reasonable
efforts to
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supply such condenser water as soon as practicably possible. Tenant shall pay
the cost of such condenser water in accordance with the provisions of Section
28.2(B) hereof; provided, however, Tenant shall not be charged for the cost of
such condenser water for the first forty-eight (48) hours that such water is so
supplied by Landlord. Tenant shall have the right, at its sole cost and expense,
to install a water meter to measure the consumption of condenser water provided
by Landlord. The parties shall in good faith cooperate with each other and use
diligent efforts to minimize the period of time during which Landlord is unable
to supply condenser water to Tenant's supplementary HVAC units after such
temporary suspension, and the period during which Landlord is required to supply
such condenser water.
(D) Tenant's consumption of electricity in connection with its
use of the Condenser Water System shall be measured by a submeter measuring only
Tenant's consumption of electricity in a portion of the Premises (which
submeter, as of the date hereof, is located on the 15th Floor).
(E) Tenant may install emergency generator(s) for its use
solely in the location depicted on Exhibit B-8 (the "Generator Space") attached
hereto, provided such installation shall constitute an Alteration and shall be
performed in accordance with all of the terms of this Lease, including, without
limitation Articles 3 and 6 hereof. Tenant hereby agrees to pay all costs and
expenses in connection with the use and maintenance of the generator, including
without limitation, electricity furnished in connection therewith.
(F) Tenant covenants that it will use the 16th Floor Set Back
Space, the 15th Floor Mechanical Space, the Generator Space and Chilled Water
System Space, if applicable, in a manner so as not to unreasonably interfere
with any equipment of Landlord or any other tenant whose equipment is located
near such spaces, or the proper operation of the Building. Landlord retains the
right to use such spaces for any purpose whatsoever provided that Tenant retains
reasonable access to its equipment thereon and further provided that Landlord
does not unreasonably interfere with such equipment. The provisions of
subsection (F) of Section 48.1 above are incorporated herein by reference except
that all references to Communications Equipment shall be read as Condenser Water
System, Chilled Water System and/or emerging generator(s), as the case may be.
Section 48.3 Landlord hereby agrees that Tenant shall have the
right, subject to compliance with all the applicable terms of the Lease and
Requirements, to use the portions of the Building's fire tower located on the
floors in the Building on which Tenant is leasing the entire floor provided and
on condition that (i) such use shall be solely in connection with mechanical
installations, (ii) such use shall not be done in a manner which creates
additional rentable space in the Building, (iii) any work in
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<PAGE> 187
connection therewith shall be treated as an Alteration subject to the terms of
Article 3 of the Lease, and (iv) such use shall be done in a manner which does
not adversely affect the Operation of the Property or unreasonably interfere
with the use of the Building by other tenants.
Section 48.4 If Tenant provides Landlord with notice at any
time during the Term that Tenant requests the use of the existing 600 kw diesel
generator on the roof of the Building in the location shown on Exhibit N
attached hereto, then, if the generator has not been committed for Building use
or the use by another tenant or future tenant of the Building, Tenant shall be
entitled to use such generator in accordance with the terms of this lease and in
a manner which does not unreasonably interfere with the Operation of the
Property or occupancy of the Building by other tenants. In the event Landlord
intends to use the generator or allow another tenant to use the generator, then
prior thereto it shall so notify Tenant and if Tenant desires to use same, it
shall provide Landlord with notice thereof within thirty (30) days after
Landlord's notice. In the event Tenant shall elect to use the generator, as
aforesaid, Landlord and Tenant shall in good faith negotiate a fair market price
for the use of such generator. If the parties are unable to agree on the fair
market price within ninety (90) days after notice from Tenant of its intention
to use same, then either party may submit such dispute to arbitration. Tenant
hereby agrees to pay all costs and expenses in connection with the use and
maintenance of the generator, including without limitation, electricity
furnished in connection therewith.
ARTICLE 49
SHAFT SPACE
Landlord shall make available to Tenant (a) on an exclusive basis
the portion of the Building core and shaft areas shown on Exhibit R attached
hereto, and (b) such other space (not to exceed Tenant's Operating Share
thereof, when combined with existing shaft space being used by Tenant and the
space that Tenant is entitled to use pursuant to clause (a) of this sentence) in
the Building core and Building shafts as may reasonably be required by Tenant,
and in such locations as may reasonably be requested by Tenant, including
without limitation areas designated on Exhibit R attached hereto (subject,
however, to availability, the existing rights of other tenants in the Building,
future needs of other tenants, and Landlord's reasonable approval), for Tenant's
wiring and cabling needs, provided that to the extent Tenant can create space in
the core and shaft areas which Tenant is entitled to use, by removing unused
wiring and cabling installed by or for the benefit of Tenant and the location of
such core and shaft areas containing such unused wiring and cabling is suitable
and proper, in Tenant's reasonable judgment for Tenant's needs, then Tenant
shall remove such unused wiring and cabling and use such core and shaft areas
prior to requesting additional space in the Building's
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<PAGE> 188
core and shafts. Landlord shall permit under Landlord's supervision in
accordance with the terms of this Lease reasonably sized conduits for Tenant's
telephone, telecommunications and data transmission cables to be run from the
street through the Building's core telephone closets to Tenant's telephone,
telecommunications and data systems within the Premises, and to any Antenna
installed by Tenant. Tenant's rights hereunder are subject to compliance with
applicable terms of this Lease, including Articles 3 and 6 hereof, and
Requirements, and any work to be performed hereunder shall be considered an
Alteration. Tenant shall be responsible for maintaining and repairing all such
wiring cables, conduit and equipment in connection therewith and Tenant shall
exercise its rights hereunder in a manner so as to minimize interference with
other tenants in the Building and in a manner which does not unreasonably
interfere with the proper operation of the Building. If at anytime during the
Term, Landlord requests the right to use for itself or another occupant of the
Building, certain exclusive shaft space set forth in clause (a) above, then to
the extent Tenant does not need such space (as reasonably determined by Tenant
in good faith taking into consideration its present and future needs, reasonable
substantiation of which shall be provided to Landlord), Landlord shall have the
right or Landlord may allow other tenants, to use such shaft space for wiring
and cabling needs. At the request of Landlord, Tenant shall make available
Tenant's cable management program, if any, to Landlord and Tenant shall
cooperate with Landlord in identifying any unused wiring or cabling installed by
or on behalf of Tenant in the core and shaft areas of the Building.
ARTICLE 50
HAZARDOUS MATERIALS
Section 50.1 (A) Landlord represents and warrants to Tenant that, as
of the date hereof (i) there are no pending actions or proceedings in which any
person, entity or Governmental Authority has alleged in writing the violation of
Environmental Laws with respect to the Real Property or the presence, release,
threat of release or placement of any Hazardous Materials at, on or under the
Real Property, and (ii) Landlord has not received any notice (and Landlord has
no actual knowledge) that any Governmental Authority or any employee or agent
thereof, has determined that there has been a violation of Environmental Laws at
or in connection with the Real Property. If Tenant, at any time prior to or
during the Term, shall uncover or disturb any Hazardous Materials in the
Premises or the floors of the Building on which the Premises are located, or
affecting access to the Premises or the Building Systems serving the Premises
(other than Hazardous Materials brought onto or introduced into the Premises (i)
during the Term or while Tenant was in occupancy thereof (unless brought onto or
introduced into the Premises by Landlord's Indemnitees or other tenants or
occupants of the Building, except Tenant's Indemnitees) or (ii) by or on behalf
of Tenant, Tenant's contractors, agents, employees, invitee, licensees,
sublessees or assigns), which in any such case are required
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<PAGE> 189
to be abated by removal, the enclosure or encapsulation or otherwise in
accordance with applicable Requirements, Landlord shall promptly commence and
diligently proceed to remove the same, at its sole cost and expense, in
accordance with all applicable Requirements and Environmental Laws.
(B) If Tenant shall discover the presence of any asbestos in
the Premises in excess of those permitted by applicable Environmental Laws at
any time during the Term, and, if as a result of such presence of asbestos, any
portion of the Premises shall be untenantable and not suitable for Tenant's use
of the Premises as set forth herein and Tenant actually vacates such portion of
the Premises, then Tenant shall be entitled to an abatement of Fixed Rent and
Escalation Rent for each day the Premises (or such portion thereof) is
untenantable and Tenant actually vacated such portion of the Premises until the
asbestos has been removed from the affected areas in compliance with applicable
Requirements or Tenant occupies such affected areas, whichever occurs earlier;
provided and on condition that Tenant shall not be entitled to such a Rent
abatement unless the asbestos affects not less than 5,000 rentable square feet
of the Premises and (ii) such asbestos is not removed by Landlord in accordance
with all applicable Requirements within five (5) Business Days following receipt
of notice from Tenant as to the existence thereof (provided Landlord is given
prompt access to the affected area upon request).
Section 50.2 Landlord shall indemnify, defend and save and hold
Tenant's Indemnitees harmless from and against any and all loss, cost, demand,
liability, expense, fines, suits, demands and damages of any kind or nature
(including, without limitation, reasonable attorneys' and consultants' fees and
disbursements) which Tenant may incur as a result of (i) any Hazardous Materials
located in, at, on or around the Building or on the Real Property (other than
those placed in, at, on or around the Building or on the Real Property by or on
behalf of Tenant), and (ii) the violation of any Environmental Laws with respect
to the Real Property by Landlord, Affiliates of Landlord, Landlord's agents,
representatives, contractors and employees, except to the extent caused by
Tenant, its Indemnitees or Permitted Occupants.
Section 50.3 Tenant shall indemnify, defend and save and hold
Landlord's Indemnitees harmless from and against any and all loss, cost, demand,
liability, expense, fines, suits, demand and damages of any kind of nature
(including, without limitation, reasonable attorneys' and consultants' fees and
disbursements) which Landlord may incur as a result of (i) any Hazardous
Materials located in, at, on or around the Building and placed in, at, on or
around the Building or on the Real Property by or on behalf of Tenant, Tenant's
contractors, agents, employees, invitee, licensees or subtenants, or which were
placed or brought into the Premises during Tenant's occupancy thereof and/or the
Term, unless placed or brought into the Premises by Landlord's Indemnities or
other tenants or occupants of the Building (except Tenant's Indemnitees), or
(ii) the violation of any
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<PAGE> 190
Environmental Laws with respect to the Real Property by Tenant, Tenant's agents,
representatives, contractors, employees and subtenants.
ARTICLE 51
GOVERNMENTAL INCENTIVES
Landlord agrees to cooperate with Tenant, at no cost to Landlord, in
Tenant's efforts to negotiate an incentive package (the "Government Package")
with various governmental entities and to execute and deliver any estoppel and
other certificates or documentation reasonably required by such entities and
making any required modifications to this Lease, provided that no such
certificate, documentation or Lease modification shall (a) increase any
obligation of Landlord under this Lease (except to a de minimis extent), (b)
adversely affect any right of or benefit to Landlord under the Lease (except to
a de minimis extent), or (c) relieve Tenant of any of its obligations under the
Lease. Any and all fees, costs and expenses imposed by the governmental entities
shall be borne solely by Tenant. Tenant hereby acknowledges that such
cooperation of Landlord is at the request of Tenant, and in order to induce
Landlord to so cooperate Tenant agrees that (i) to the extent that Landlord
shall incur any reasonable out-of-pocket expense in so cooperating or in
rendering such assistance (including, without limitation, reasonable legal and
other professional fees and all other reasonable costs incurred at Tenant's
request in obtaining State and City tax rulings regarding the incentive benefits
transaction), Tenant shall reimburse Landlord for such expense as additional
rent hereunder, (ii) Tenant agrees to indemnify and hold harmless Landlord with
respect to any liability incurred by Landlord by reason of such cooperation
unless caused by the wrongful acts or omissions of Landlord or its agents,
employees, representatives or contractors, and (iii) Tenant agrees to indemnify
and hold harmless Landlord, and any direct or indirect owner or partner of
Landlord for any costs suffered or incurred by any such person directly
resulting from Tenant seeking and/or obtaining the Government Package, but only
to the extent that the same are in excess of the costs which would have been
suffered or incurred by such person in the absence of Tenant seeking and/or
obtaining the Government Package. Notwithstanding anything herein contained to
the contrary, any benefits obtained by Tenant (or on behalf of Tenant) at
Tenant's sole expense from any governmental entities shall be solely for the
benefit of Tenant and to the extent that any of the same are granted to
Landlord, Landlord shall assign (or pay) the same promptly to Tenant.
185
<PAGE> 191
IN WITNESS WHEREOF, Landlord and Tenant have respectively executed
this Lease as of the day and year first above written.
1285 ASSOCIATES, LIMITED PARTNERSHIP
By: Equitable Life Assurance Society of the
United States, General Partner
By:____________________________________
Name:
Title:
PAINEWEBBER INCORPORATED
By:____________________________________
Name:
Title:
186
<PAGE> 1
THIS GUARANTY, made as of this 1st day of May, 1996, by PAINE WEBBER GROUP
INC., a Delaware corporation having an office at 1285 Avenue of the Americas,
New York, New York 10019 (the "Guarantor"), in favor of 1285 ASSOCIATES LIMITED
PARTNERSHIP, having an office c/o Equitable Real Estate Investment Management,
Inc., 101 Park Avenue, New York, New York 10178 ("Landlord").
W I T N E S S E T H :
WHEREAS, Landlord has entered into a lease (the "Lease") dated as of the
date hereof with PAINEWEBBER INCORPORATED ("Tenant"), whereby Landlord leases
and Tenant hires certain premises (the "Premises") located at 1285 Avenue of the
Americas, New York, New York (the "Building"), as more particularly described in
the Lease, for a term as provided therein; and
WHEREAS, as an inducement to Landlord to enter into the Lease, Tenant
covenanted to procure and deliver to Landlord a Guaranty by Guarantor of all of
Tenant's payment obligations under the Lease as hereinafter provided;
NOW, THEREFORE, in satisfaction of the aforesaid covenant of Tenant and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby conclusively acknowledged, the Guarantor covenants and agrees as follows
(all capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Lease):
1. Guaranty of Lease.
The Guarantor hereby guarantees to Landlord the performance by Tenant of
all of its obligations under the Lease, including, without limitation, the
payment by Tenant, when due, of all installments of Fixed Rent and Escalation
Rent and any other charges or items of Rental under the Lease ("Tenant's
Obligations").
<PAGE> 2
2. Absolute, Unconditional Guaranty.
This Guaranty is an absolute, present, primary, continuing and
unconditional Guaranty of Tenant's Obligations and, without limitation, is in no
way conditioned or contingent upon any effort or attempt to seek payment from or
performance by Tenant or upon any other condition or contingency except as
herein expressly provided. If Tenant at any time fails to pay any amount arising
under or in connection with the Lease, the Guarantor shall, without release of
Tenant, be primarily and directly liable to Landlord for, complete payment of
such amounts. Landlord is not and shall not be required to first pursue any
right or remedy against or seek any redress from Tenant or any other person,
firm or corporation or to first take any action whatsoever with respect to the
Premises.
3. Justifiable Reliance.
The Guarantor makes this Guaranty knowing that Landlord will rely hereon in
leasing the Premises to Tenant. The Guarantor conclusively acknowledges that
Landlord's reliance hereon is in every respect justifiable.
4. Warranty and Covenant of Guarantor.
The Guarantor hereby represents and warrants to Landlord that the
provisions of this Guaranty are binding and enforceable upon the Guarantor in
accordance with its terms except as limited by bankruptcy, insolvency,
receivership and similar laws affecting creditors rights from time to time in
effect.
5. Obligations Not Affected.
The obligations and liability of the Guarantor hereunder with respect to
Tenant's Obligations shall not be impaired, abated, deferred, diminished,
modified or otherwise affected by any event, condition, occurrence,
circumstance, proceeding, action or failure to act whatsoever (whether or not
any such event, condition, occurrence, circumstance, proceeding, action or
failure to act is detrimental or adverse with respect to the Guarantor),
including (but
2
<PAGE> 3
not limited to): (a) any renewal, amendment, extension or modification of, or
addition or supplement, to the Lease ("Lease Revision") (all of which shall be
binding upon and enforceable against the Guarantor); (b) any modification,
compromise, settlement, adjustment or extension of Tenant's Obligations or
Tenant's liability under the Lease; (c) any waiver, consent, indulgence,
forbearance, lack of diligence, action or inaction on the part of Landlord in
enforcing the obligations of Tenant or of the Guarantor or otherwise in
connection with the Lease or the Premises; (d) any default by Tenant under the
Lease or of the Guarantor hereunder; (e) any bankruptcy, insolvency,
reorganization, arrangement, composition, liquidation, rehabilitation, or
similar or dissimilar proceeding or circumstance involving or affecting Tenant
(any limitation on or discharge of the liability of Tenant in such proceeding
shall not diminish, limit, impair, abate, deter, modify or otherwise affect the
liability of the Guarantor); (f) any assignment, conveyance, extinguishment,
merger or other transfer, voluntary or involuntary (whether by operation of law
or otherwise), of all or any part of the interest of Tenant in the Lease or the
Premises; and (g) any action taken or omitted to be taken by or on behalf of
Landlord with respect to the Lease or the Premises in accordance with the terms
of the Lease, including any dispossess, eviction or other proceeding or remedy
and any release, compromise or settlement in connection therewith.
Notwithstanding anything contained in this paragraph 5 to the contrary, a Lease
Revision which increases Tenant's Obligations shall not be binding upon the
Guarantor if such Lease Revision was entered into by the then Landlord under the
Lease with any company, person or entity to which the Tenant named herein
assigns the Lease or with any subsequent assignee, provided such assignee or
subsequent assignee, as the case may be, is not a Related Entity having a 100%
control relationship to the Tenant named herein (i.e., a wholly owned subsidiary
or parent entity), as determined in accordance with Section 12.4(A) of the
Lease, provided however, this Guaranty shall continue to be applicable to all
Tenant's Obligations other than those created by the Lease Revision.
3
<PAGE> 4
6. Recovery Against the Guarantor.
The Guarantor may be joined in any action, suit or proceeding commenced by
Landlord against Tenant based upon or in connection with Tenant's Obligations.
Recovery may be had against the Guarantor in such an action, suit or proceeding
or in an independent action, suit or proceeding without any requirement that
Landlord first or simultaneously assert, prosecute or exhaust any right, power
or remedy against Tenant or with respect to the Premises.
7. Costs of Enforcement.
The Guarantor shall reimburse Landlord for all out-of-pocket costs and
expenses (including reasonable counsel fees and disbursements) incurred by or on
behalf of Landlord in enforcing the obligations or liabilities of the Guarantor
hereunder, provided Landlord is successful in the action against either Tenant
or the Guarantor hereunder; but if Landlord is not successful, then Landlord
shall reimburse the Guarantor for all out-of-pocket costs and expenses
(including reasonable counsel fees and disbursements) incurred by or on behalf
of the Guarantor in the defense against Landlord's action.
8. Waiver.
The Guarantor absolutely and unconditionally waives all requirements of
diligence and all notices, subject to Landlord's obligation to give all notices
required to be given under the Lease, and consents which may be necessary,
whether by statute, rule of law or otherwise, to charge the Guarantor or to
preserve Landlord's rights and remedies against the Guarantor hereunder,
including but not limited to notice of any of the matters referred to in
Paragraph 5 hereof.
9. Assignment by Landlord.
Landlord shall have the unconditional and unrestricted right to assign,
transfer or otherwise dispose of its interest in the Lease in connection with a
transfer of Landlord's interest in the Building or the portion of such interest
which includes the entire Premises. Any such
4
<PAGE> 5
assignment, transfer or other disposition shall not in any respect impair,
diminish, modify or otherwise affect the obligations and liabilities of the
Guarantor hereunder.
10. Duration.
This Guaranty shall remain in full force and effect in favor of Landlord
and its heirs, legal representatives, successors and assigns until all Tenant's
Obligations have been fully complied with in accordance with the terms of the
Lease at which time this Guaranty shall be deemed to be null, void and at no
further force or effect.
11. Amendment.
No right or benefit in favor of Landlord shall be deemed waived, no
obligation or liability of the Guarantor hereunder shall be deemed modified,
diminished, released, compromised, extended, discharged or otherwise affected,
and no provision or term hereof may be amended, modified or otherwise changed
except by an instrument in writing, specifying the same, duly executed by
Landlord.
12. Assigns.
This Guaranty and all rights and obligations hereunder shall inure to the
benefit of Landlord and its legal representatives, successors and assigns as set
forth in Paragraph 9 above and shall be binding on the Guarantor and its
successors and assigns.
13. Applicable Law.
This Guaranty shall be construed and enforced in accordance with the laws
of the State of New York.
14. No Immunity from Prosecution.
Guarantor represents and warrants that it is not entitled to immunity from
judicial proceedings and agrees that, in the event Landlord brings any suit,
action or proceeding in New York or any other proper jurisdiction to enforce any
obligation or liability of Guarantor
5
<PAGE> 6
arising, directly or indirectly, out of or relating to this Guaranty, no
immunity from such suit, action or proceeding will be claimed by or on behalf of
Guarantor.
15. Consent to Service.
Guarantor hereby (a) irrevocably consents and submits to the jurisdiction
of any federal, state, county or municipal court sitting in the State of New
York in respect to any action or proceeding brought therein by Landlord against
Guarantor concerning any matters arising, directly or indirectly, out of, or
relating to, this Guaranty; (b) irrevocably waives all objections as to venue
and any and all rights it may have to seek a change of venue with respect to any
such act or proceeding; and (c) agrees that any final judgment rendered against
it in any such action or proceeding shall be conclusive and may be enforced in
the State of New York or any other jurisdictions by suit on the judgments or in
any manner provided by law and expressly consents to the affirmation of the
validity of any such judgment by the courts of the State of New York or any
other jurisdiction so as to permit execution thereon. To the extent permitted
under applicable law, this consent to personal jurisdiction shall be self
operative and no further instrument or action, other than service or process, or
as otherwise permitted by law, shall be necessary to confer jurisdiction upon
the person of Guarantor in any such court.
16. Disaffirmance or Rejection.
If, at any time, the Lease shall be disaffirmed or rejected in any
proceeding of the types described in Article 12 of the Lease, or in any similar
proceeding, or in the event of termination of the Lease by reason of any such
proceeding as provided in the Lease, Guarantor shall remain liable for the
payment of all Tenant's Obligations from and after the date of such
disaffirmance, rejection or termination, to the same extent as if the Lease had
not been disaffirmed, rejected or terminated as aforesaid.
6
<PAGE> 7
IN WITNESS WHEREOF, the Guarantor has duly executed this Guaranty as of the
date first above mentioned.
PAINE WEBBER GROUP INC.
By:__________________________
7
<PAGE> 1
Exhibit 11
Paine Webber Group Inc.
Computation of Earnings Per Common Share
(In thousands of dollars except share and per share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
------------ ------------
<S> <C> <C>
Primary:
Weighted average common shares outstanding 89,810,621 93,150,593
Incremental stock options and awards 8,197,137 6,045,570
------------ ------------
Weighted average common and common equivalent shares 98,007,758 99,196,163
Net income $ 100,501 $ 34,310
Interest savings on convertible debentures and short-term borrowings 1,326 276
Preferred dividend requirements (7,323) (7,313)
------------ ------------
Net income applicable to common shares $ 94,504 $ 27,273
============ ============
Primary earnings per common share $ 0.96 $ 0.27
============ ============
Fully Diluted:
Weighted average common shares outstanding 89,810,621 93,150,593
Incremental stock options and awards 8,197,137 6,188,516
Weighted average common shares issuable assuming conversion
of 8% Convertible Debentures and 6% Cumulative Convertible
Redeemable Preferred Stock 6,457,448 8,366,943
------------ ------------
Weighted average common and common equivalent shares 104,465,206 107,706,052
============ ============
Net income $ 100,501 $ 34,310
Interest savings on convertible debentures and short-term borrowings 1,144 506
Preferred dividend requirements (5,823) (5,813)
------------ ------------
Net income applicable to common shares $ 95,822 $ 29,003
============ ============
Fully diluted earnings per common share $ 0.92 $ 0.27
============ ============
</TABLE>
<PAGE> 1
Exhibit 12.1
Paine Webber Group Inc.
Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends
(In thousands of dollars)
<TABLE>
<CAPTION>
Three Months Years Ended December 31,
Ended March 31, ------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income before taxes $ 154,616 $ 102,677 $ 44,385 $ 407,576 $ 339,115 $ 226,247
---------- ---------- ---------- ---------- ---------- ----------
Preferred stock dividends 10,962 36,260 1,710 5,828 27,789 34,732
---------- ---------- ---------- ---------- ---------- ----------
Fixed charges:
Interest 467,391 1,969,811 1,428,653 1,130,712 879,242 1,056,124
Interest factor in rents 15,119 59,491 51,102 50,133 45,962 43,804
---------- ---------- ---------- ---------- ---------- ----------
Total fixed charges 482,510 2,029,302 1,479,755 1,180,845 925,204 1,099,928
---------- ---------- ---------- ---------- ---------- ----------
Total fixed charges and preferred
stock dividends 493,472 2,065,562 1,481,465 1,186,673 952,993 1,134,660
---------- ---------- ---------- ---------- ---------- ----------
Income before taxes and fixed charges $ 637,126 $2,131,979 $1,524,140 $1,588,421 $1,264,319 $1,326,175
========== ========== ========== ========== ========== ==========
Ratio of earnings to fixed charges
and preferred stock dividends 1.3 1.0 1.0 1.3 1.3 1.2
========== ========== ========== ========== ========== ==========
</TABLE>
For purposes of computing the ratio of earnings to combined fixed charges and
preferred stock dividends (tax effected), "earnings" consist of income before
taxes and fixed charges. "Fixed charges" consist of interest expense incurred on
securities sold under agreements to repurchase, short-term borrowings, long-term
borrowings and that portion of rental expense estimated to be representative of
the interest factor.
<PAGE> 1
Exhibit 12.2
Paine Webber Group Inc.
Computation of Ratio of Earnings to Fixed Charges
(In thousands of dollars)
<TABLE>
<CAPTION>
Three Months Years Ended December 31,
Ended March 31, ------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Income before taxes $ 154,616 $ 102,677 $ 44,385 $ 407,576 $ 339,115 $ 226,247
---------- ---------- ---------- ---------- ---------- ----------
Fixed charges:
Interest 467,391 1,969,811 1,428,653 1,130,712 879,242 1,056,124
Interest factor in rents 15,119 59,491 51,102 50,133 45,962 43,804
---------- ---------- ---------- ---------- ---------- ----------
Total fixed charges 482,510 2,029,302 1,479,755 1,180,845 925,204 1,099,928
---------- ---------- ---------- ---------- ---------- ----------
Income before taxes and
fixed charges $ 637,126 $2,131,979 $1,524,140 $1,588,421 $1,264,319 $1,326,175
========== ========== ========== ========== ========== ==========
Ratio of earnings to fixed charges 1.3 1.1 1.0 1.3 1.4 1.2
========== ========== ========== ========== ========== ==========
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, "earnings"
consist of income before taxes and fixed charges. "Fixed charges" consist of
interest expense incurred on securities sold under agreements to repurchase,
short-term borrowings, long-term borrowings and that portion of rental expense
estimated to be representative of the interest factor.
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Paine Webber Group Inc. for the three months ended March
31, 1996 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 613,826
<RECEIVABLES> 7,322,346
<SECURITIES-RESALE> 20,397,008
<SECURITIES-BORROWED> 7,488,382
<INSTRUMENTS-OWNED> 14,282,418
<PP&E> 319,625
<TOTAL-ASSETS> 50,423,605
<SHORT-TERM> 1,340,081
<PAYABLES> 6,566,707
<REPOS-SOLD> 28,103,046
<SECURITIES-LOANED> 3,133,358
<INSTRUMENTS-SOLD> 7,005,301
<LONG-TERM> 2,518,726
186,984
100,000
<COMMON> 105,265
<OTHER-SE> 1,364,137
<TOTAL-LIABILITY-AND-EQUITY> 50,423,605
<TRADING-REVENUE> 296,376
<INTEREST-DIVIDENDS> 545,459
<COMMISSIONS> 368,185
<INVESTMENT-BANKING-REVENUES> 81,855
<FEE-REVENUE> 107,655
<INTEREST-EXPENSE> 467,391
<COMPENSATION> 566,991
<INCOME-PRETAX> 154,616
<INCOME-PRE-EXTRAORDINARY> 100,501
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 100,501
<EPS-PRIMARY> 0.96
<EPS-DILUTED> 0.92
</TABLE>
