<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934. FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
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 No.)
1285 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10019
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 713-2000
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<S> <C>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
Common Stock, $1 Par Value New York Stock Exchange, Inc.
Pacific Stock Exchange, Inc.
U.S. Dollar Increase Warrants on the Japanese Yen,
expiring March 6, 1996 American Stock Exchange, Inc.
U.S. Dollar Increase Warrants on the Japanese Yen,
expiring April 30, 1996 New York Stock Exchange, Inc.
U.S. Dollar Increase Warrants on the Japanese Yen,
expiring July 31, 1996 American Stock Exchange, Inc.
Stock Index Return Securities on the S&P
MidCap 400 Index due June 2, 2000 American Stock Exchange, Inc.
</TABLE>
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K./ /
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The aggregate market value of voting stock held by non-affiliates of the
Registrant was $1,375,952,624 as of March 19, 1996. (See Item 12.)
On March 15, 1996, the Registrant had outstanding 94,642,015 shares of common
stock of $1 par value, which is Registrant's only class of common stock.
DOCUMENTS INCORPORATED BY REFERENCE:
Parts I, II and IV incorporate information by reference from the Registrant's
1995 Annual Report to Stockholders. Part I and Part III incorporate
information by reference from the Registrant's definitive proxy statement for
the annual meeting to be held on April 30, 1996.
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<PAGE> 2
PART I
ITEM 1. BUSINESS
Paine Webber Group Inc. ("PWG") is a holding Company which, together with its
operating subsidiaries (collectively, the "Company"), forms one of the largest
full-service securities and commodities firms in the industry. Founded in
1879, the Company employs approximately 15,900 people in 310 offices wordwide.
In addition to the detailed information set forth below, incorporated herein by
reference is the general business description information on the Company, under
the caption "Management's Discussion and Analysis" on page 28 in the 1995
Annual Report to Stockholders.
The Company's business activities are highly integrated and constitute a single
industry segment. Financial information for the years ended December 31, 1995,
1994 and 1993, including the amount of total revenue contributed by class of
similar products or services contributing 10% or more of consolidated revenue
and information on geographic data, is set forth in the Consolidated Financial
Statements and the Notes thereto, and the "Five Year Financial Summary," in the
1995 Annual Report to Stockholders incorporated herein by reference.
BROKERAGE TRANSACTIONS
A portion of the Company's revenues are generated from commissions or fees
earned as a broker for individual and institutional clients in the purchase and
sale of securities (listed and over-the-counter securities), mutual funds,
insurance products, options, commodities and financial futures. The Company
also earns commissions or fees for services provided in the areas of employee
benefits, managed accounts and personal trusts.
Securities transactions - The Company holds memberships in all major securities
exchanges in the United States in order to provide services to its brokerage
clients in the purchase and sale of listed securities. A major portion of the
Company's revenues is derived from commissions from individual and
institutional clients on brokerage transactions in listed securities and in
over-the- counter ("OTC") markets. The largest portion of the Company's
commission revenue (58%) is derived from brokerage transactions in listed
securities. The Company also acts as broker for investors in the purchase and
sale of U.S. government and municipal securities. The Company has established
commission rates for brokerage transactions which vary with the size and
complexity of the transaction and with the activity level of the client's
account.
Mutual funds - The Company distributes shares of mutual funds for which it
serves as investment advisor and sponsor as well as shares of funds sponsored
by others. Income from the sale of mutual funds is derived from standard
dealers' discounts, which are determined by the terms of the selling agreement
and the size of the transaction. In addition, the Company distributes shares
of proprietary mutual funds for which it serves as investment advisor and
administrator. Income from these proprietary mutual funds is also derived from
management and distribution fees. Mutual funds include both taxable and
tax-exempt funds and front-load, reverse-load, and level-load funds.
Insurance - Through subsidiaries, PaineWebber Incorporated ("PWI") acts as agent
for several life insurance companies and sells deferred annuities and life
insurance. Additionally, variable annuities are issued by PaineWebber Life
Insurance Company which are sold by PWI as agent.
Managed accounts - The Company acts in a consulting capacity to both individuals
and institutions in the selection of professional money managers. Services
provided in this consulting capacity may include client profiling, asset
allocation, manager selection and performance measurement. Money managers
recommended may be either affiliated with the Company or non affiliated
managers. Compensation for services is in the form of commissions or
established fees.
Options - The Company's options related services include the purchase and sale
of options on behalf of clients, and the delivery and receipt of the underlying
securities upon exercise of the options. In addition, the Company utilizes its
securities research capabilities in the formulation of options strategies and
recommendations for its clients.
<PAGE> 3
Commodities and financial futures - The Company provides transaction services
for clients in the purchase and sale of futures contracts, including metals,
currencies, interest rates, stock indexes, agricultural products, managed
futures and commodity funds. Transactions in futures contracts are on margin
and are subject to individual exchange regulations. The risk to the Company's
clients in futures transactions, and the resulting credit risk to the Company,
is greater than the risk in cash securities transactions, principally due to
the low initial margin requirements relative to the nominal value of the actual
futures contract. Additionally, commodities exchange regulations governing
daily price movements can have the effect of precluding clients from taking
actions to mitigate adverse market conditions. These factors may increase the
Company's risk of loss on collections of amounts due from clients. However,
net worth requirements and other credit standards for customer accounts are
utilized to limit this exposure.
Employee benefit plans - PW Trust Company, a wholly owned subsidiary of PWG,
offers and administers 401(K) plans for corporations and acts as trustee,
custodian or investment manager of retirement assets for approximately 1,350
corporate retirement plans.
Personal trust services - The Company offers its clients a full range of
domestic and international personal trust services, including self trustee and
corporate trustee options. Investment choices are broad and flexible. The
Company serves its international clients through a trust company located in
Guernsey, Channel Islands, and may serve its domestic clients through third
party trustees.
DEALER TRANSACTIONS
The Company regularly makes a market in OTC securities and as a block
positioner, acts as market-maker in certain listed securities, U.S. government
and agency securities, investment-grade and high-yield corporate debt, and a
full range of mortgage-backed securities.
Equity - The Company effects transactions in large blocks of securities, usually
with institutional investors, generally involving 5,000 or more shares of
listed stocks. Such transactions are handled on an agency basis to the extent
possible, but the Company may take a long or short position as principal to the
extent that no buyer or seller is immediately available. By engaging in block
positioning, the Company places a portion of its capital at risk to facilitate
transactions for clients. Where possible, the Company seeks to reduce such
risks by hedging with option positions. Despite the risks involved in block
positioning, the aggregate brokerage commissions generated by the Company's
willingness to commit a portion of its capital in repositioning, including
commissions on other orders from the same clients, justifies such activities.
The Company makes markets, buying and selling as principal, in common stocks,
convertible preferred stocks, warrants and other securities traded on the
Automated Quotation System of the National Association of Securities Dealers or
in other OTC markets. The unlisted equity securities in which the Company
makes markets are principally those in which there is substantial continuing
client interest and include securities which the Company has underwritten.
Fixed Income - The Company provides clients access to a multitude of fixed
income products including: U.S. government and agency securities; mortgage
related securities including those issued through Government National Mortgage
Association ("GNMA"), Federal National Mortgage Association ("FNMA") and
Federal Home Loan Mortgage Corp. ("FHLMC"); corporate investment-grade and
high-yield bonds; and options and futures contracts on these products. The
Company's capital can be at risk to the extent significant price fluctuations
occur. This risk is lessened by hedging inventory positions.
As a "primary dealer" in U.S. government securities, the Company actively
participates in the distribution of United States treasury securities and
reports its inventory positions and market transactions to the Federal Reserve
Bank on a weekly basis. The Company takes positions in government and
government agency securities to facilitate transactions for its clients on a
principal basis. Profits or losses are recognized from fluctuations in the
value of securities in which it maintains positions. Additionally, trading
activities include the purchase of securities under agreements to resell at
future dates (reverse repurchase agreements) and the sale of the same or
similar securities under agreements to repurchase at future dates (repurchase
agreements). Profits and losses on the repurchase transactions result from the
interest rate differentials.
<PAGE> 4
The Company actively participates in the mortgage-backed securities markets
through the purchase or sale of GNMA, FNMA, FHLMC, mortgage pass-through
securities, Collateralized Mortgage Obligations ("CMOs") and other mortgage
related securities, in order to meet client needs on a principal basis. As a
means of financing its trading, the Company enters into repurchase agreements.
The Company also structures and underwrites CMOs. Additionally, the Company
serves as principal and financier in the purchase, sale, securitization and
resale of first mortgage notes and the related servicing rights.
The Company is an active participant in the corporate bond markets. Through
the fixed income debt syndicate desk and institutional sales force, the Company
distributes and markets new issuances of corporate debt securities. The
corporate bond trading desk supports this effort as a dealer in the secondary
markets by effecting transactions on behalf of clients or for the Company's own
account. Revenues generated from these activities include underwriting fees on
syndicate transactions and trading gains or losses.
The Company also underwrites, makes markets, and facilitates trades for clients
in the high-yield securities markets. High-yield securities refer to companies
whose debt is rated as non-investment grade. The Company continually monitors
its risk positions associated with high-yield debt securities and establishes
limits with respect to overall market exposure, industry group and individual
issuer.
Municipal securities - Through its municipal bond department, the Company is a
dealer in both the primary and secondary markets, buying and selling securities
for its own account and for clients. Revenues derived from these activities
include underwriting and management fees, selling concessions and trading
profits.
Derivatives - The Company is engaged in activities, primarily on behalf of
clients, in equity derivative products, including listed and OTC options,
warrants, futures and underlying equity securities. The Company has also
engaged in creating structured products, which are sold to retail and
institutional clients, that are based on baskets of securities and currencies,
primary foreign and domestic market indexes and other equity and debt-based
products. The Company generally hedges positions taken in these structured
products based on option and other valuation models. Through the institutional
options and futures group, the Company engages in interest rate, stock index,
commodity options and futures contract transactions in connection with the
Company's principal trading activities. In addition, the Company's mortgage
and foreign currency businesses enter into forward and option purchase and sale
agreements.
Derivative financial instruments are subject to varying degrees of market and
credit risk. The Company has developed a control environment, encompassing
both its derivative-based and other businesses, that involves the interaction
of a number of risk management and control groups. See "Management's
Discussion and Analysis - Risk Management" on page 36 in the 1995 Annual Report
to Stockholders for a discussion of these groups and their functions.
The extent to which derivative financial instruments pose credit risk is
determined by the market in which they are exchanged, provisions of the
agreements regarding termination, collateral and counterparty creditworthiness.
Credit risks are minimized for instruments traded on exchanges. The various
futures markets are highly regulated and impose strict margin and other
financial requirements on the Company and its clients. Transactions in futures
and certain option contracts are conducted through regulated exchanges which
clear and guarantee performance of counterparties. However, in the event that
members of clearinghouses default on material obligations to such
clearinghouses, the Company may have financial exposure. The Company is also
subject to credit risk on derivatives not traded on formal exchanges,
principally forward agreements and OTC options. These risks are controlled by
the use of standard documentation whenever possible providing for early
termination and collateral calls, and by entering into master netting
agreements when feasible. The Company's risk of credit loss is mitigated
further by adherence to formal credit control procedures which include approved
customer and counterparty credit limits, periodic monitoring of customer and
counterparty creditworthiness, and continuous assessment of credit exposure by
comparing market value to contract value. Potential credit exposure on equity
derivatives is also measured by simulating increases or decreases in each
contract's underlying index. The Credit Department independently evaluates
call and termination situations and makes recommendations to management. See
also "Notes to Consolidated Financial Statements - Note 11: Financial
Instruments with Off-Balance-Sheet Risk and Note 12: Risk Management",
beginning on page 49 and page 52, respectively, in the 1995 Annual Report to
Stockholders.
<PAGE> 5
As a principal trader, the Company is exposed to market risk in the event of
unfavorable changes in interest rates, volatility, foreign currency exchange
rates or the market values of the securities underlying the instruments. The
Company monitors its exposure to market risk through a variety of control
procedures including a review of trading positions and hedging strategies, and
establishing limits by the Risk Management Committee. Market risk monitoring
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.
INVESTMENT BANKING
The Company manages and underwrites public offerings of debt and equity
securities, arranges private placements and provides financial advice in
connection with mergers and acquisitions, restructurings and reorganizations
for domestic and international companies.
The Company manages public offerings of corporate debt and equity securities or
participates as an underwriter in syndicates of public offerings managed by
others. Management of an underwriting account is generally more profitable
than participation as a syndicate member since the managing underwriters
receive a management fee and have more control over the allocation of
securities available for distribution. The Company is invited to participate
in many syndicates of negotiated public offerings managed by others.
The Company is an industry leader in the management of tax-exempt bond
offerings. Through its Municipal Securities Group, the Company provides
financial advice to, and raises capital for, issuers of municipal securities to
finance the construction and maintenance of a broad range of public-related
facilities, including healthcare, housing, education, public power, water and
sewer, airports, highways and other public finance infrastructure needs. The
group also provides a secondary market for these securities and develops and
markets a few derivative products.
Significant risks are involved in the underwriting of securities. Underwriting
syndicates agree to purchase securities at a discount from the public offering
price. If the securities are ultimately sold below the cost to the syndicate,
an underwriter will experience losses on the securities which it has purchased.
In addition, losses may be incurred on stabilization activities taken during
such underwriting.
The Company, through certain subsidiaries, may participate from time to time as
an equity investor or provide financing committments or other extensions of
credit associated with merchant banking and other principal investments.
ASSET MANAGEMENT
Asset management activities are conducted principally by Mitchell Hutchins
Asset Management Inc. ("MHAM") and Mitchell Hutchins Institutional Investors
Inc. ("MHII"). MHAM and MHII provide investment advisory and portfolio
management services to individuals and pension, endowment and mutual funds.
Mutual funds, for which MHAM serves as an investment advisor, include both
taxable and tax-exempt funds and front-load, reverse-load, and level-load
funds. At December 31, 1995, total assets under management were $43.7 billion.
MARGIN LENDING
Client securities transactions are executed 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. The Company receives
income from interest charged on such extensions of credit. Amounts loaned are
limited by margin requirements which are subject to the Company's credit review
and daily monitoring procedures and are generally more restrictive than the
margin regulations of the Federal Reserve Board and other regulatory
authorities. The Company may lend to other brokers or use as collateral a
portion of the margin securities to the extent permitted by applicable margin
regulations.
<PAGE> 6
The financing of margin purchases can be an important source of revenue to the
Company since the interest rate paid by the client on funds loaned by the
Company exceeds the Company's cost of short-term funds. The amount of the
Company's gross interest revenues is affected not only by prevailing interest
rates, but also by the volume of business conducted on a margin basis. To
finance margin loans to clients, the Company utilizes both interest-bearing and
non-interest-bearing funds generated from a variety of sources in the course of
its operations, including bank loans, free credit balances in client accounts,
sale of securities under agreements to repurchase, the lending of securities
and sales of securities not yet purchased. No interest is paid on a
substantial portion of clients' free credit balances.
By permitting a client to purchase on margin, the Company takes the risk that
market declines could reduce the value of the collateral below the principal
amount loaned, plus accrued interest, before the collateral could be sold.
SECURITIES LENDING
In connection with both its trading and brokerage transactions, the Company
borrows and lends securities to and from brokers and dealers and banks,
principally to cover short sales and to complete transactions where the
customer has not delivered securities by the settlement date. The borrower of
securities is generally required to deposit cash or another form of qualifying
collateral with the lender. The borrower receives only a portion of the
interest earned on the cash deposit or pays a fee to the lender, pursuant to an
agreement between the parties specifying the terms of the transaction.
INTERNATIONAL
Portions of the Company's core business activities are conducted through
PaineWebber International Inc. and its subsidiaries, and PaineWebber Asia Ltd.,
(collectively, the "foreign subsidiaries") which also function as introducing
broker-dealers to PWI for U.S. market products and are members of various
international exchanges. The foreign subsidiaries are also active in the
sales, trading and underwriting of U.S. dollar denominated and non-U.S. dollar
denominated Eurobonds.
RESEARCH
Research provides investment advice to institutional and individual clients and
guidance for investment strategies. More than 780 companies in 73 industry
sectors are covered by the division's analysts. In addition to fundamental
company and industry research, the Company offers research products and
services in the following areas: asset allocation, economics, fixed income and
high-yield issues, convertible and closed-end bond funds, country funds and
derivatives.
OTHER ACTIVITIES
The Commercial Real Estate group provides a full range of capital markets
services to its real estate clients, including underwriting of debt and equity
securities, principal lending activity, debt restructuring, property sales and
bulk sales services, and other advisory services.
PaineWebber Specialists Inc. ("PWSI") maintains trading posts on the Pacific,
Boston and Cincinnati stock exchanges and an affiliation on the Chicago stock
exchange. Specialists are responsible for executing transactions and
maintaining an orderly market in certain securities. In this function, the
specialist firm acts as an agent in executing orders entrusted to it and/or
acts as a dealer. PWSI acts as a specialist for approximately 550 equity
issues.
Correspondent Services Corporation ("CSC"), a registered broker-dealer,
provides execution and clearing services of securities for more than 100
broker-dealers on a fully disclosed and omnibus basis. CSC also provides
margin loans to the clients of its correspondent brokers.
PaineWebber Life Insurance Company ("PW Life") issues variable annuities which
are sold by PWI as agent. PW Life also assumes reinsurance of variable
annuities issued by other insurance companies.
<PAGE> 7
KIDDER, PEABODY ACQUISITION
In October 1994, the Company entered into an agreement, as thereafter
supplemented, with General Electric Company ("GE") and Kidder, Peabody Group
Inc. ("Kidder"), whereby the Company agreed to purchase certain assets and
liabilities (the "net assets"), and specific businesses of Kidder, in a series
of transactions which were consummated in December 1994 and early 1995. The
net assets acquired approximated $1.9 billion. The consideration given in
exchange for the net assets and businesses acquired included cash of
approximately $1.4 billion and the issuance of the Company's common and
preferred stock valued at $603.5 million at the date of issuance. For further
discussion on the Kidder acquisition, see "Management's Discussion and Analysis"
and "Notes to Consolidated Financial Statements - Note 2: Business Acquisition"
on page 29 and page 44, respectively, in the 1995 Annual Report to
Stockholders.
REGULATION
The securities and commodities industry is one of the nation's most extensively
regulated industries. The Securities and Exchange Commission ("SEC") is
responsible for carrying out the federal securities laws and serves as a
supervisory body over all national securities exchanges and associations. The
regulation of broker-dealers has to a large extent been delegated, by the
federal securities laws, to self-regulatory organizations ("SROs"). These SROs
include all the national securities and commodities exchanges, the National
Association of Securities Dealers and the Municipal Securities Rulemaking
Board. Subject to approval by the SEC and the Commodity Futures Trading
Commission ("CFTC"), these SROs adopt rules that govern the industry and
conduct periodic examinations of the operations of certain subsidiaries of the
Company. The New York Stock Exchange ("NYSE") has been designated by the SEC
as the primary regulator of certain of the Company's subsidiaries including
PWI. In addition, certain of these subsidiaries are subject to regulation of
the laws of the 50 states, the District of Columbia, Puerto Rico and certain
foreign countries in which they are registered to conduct securities, banking,
insurance or commodities business.
Broker-dealers are subject to regulations which cover all aspects of the
securities business, including sales methods, trade practices among
broker-dealers, use and safekeeping of customers' funds and securities, capital
structure of securities firms, record-keeping, and the conduct of directors,
officers and employees. Violation of applicable regulations can result in the
revocation of broker-dealer licenses, the imposition of censures or fines, and
the suspension or expulsion of a firm.
As a registered broker-dealer and member firm of the NYSE, PWI is subject to
the Net Capital Rule (Rule 15c3-1 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), which also has been adopted through
incorporation by reference in NYSE Rule 325. The Net Capital Rule, which
specifies minimum net capital requirements for registered broker-dealers, is
designed to measure the financial soundness and liquidity of broker-dealers.
The Net Capital Rule, as defined, prohibits registered broker-dealers from
making substantial distributions of capital by means of dividends or similar
payments, or unsecured advances and loans to certain related persons, including
stockholders, without giving at least two business days prior or post
notification to the SEC. Pre- notification requirement applies to any proposed
withdrawal of capital if the aggregate of such withdrawals, on a net basis,
within any 30 calendar day period would exceed 30% of the broker-dealer's
excess net capital, as defined. Post notification requirement applies if the
aggregate of such withdrawals, on a net basis, would exceed 20% of the
broker-dealer's excess net capital, as defined. The rule permits the SEC, by
order to restrict, for up to 20 business days, withdrawing of equity capital or
making unsecured advances or loans to related persons under certain limited
circumstances. Finally, broker-dealers are prohibited from making any
withdrawal of capital that would cause the broker-dealer's net capital to be
less than 25% of the deductions from net worth required by the Net Capital Rule
as to readily marketable securities.
Under the Market Reform Act of 1990, the SEC adopted regulations requiring
registered broker-dealers to maintain, preserve and report certain information
concerning the organizational structure, risk management policies and financial
condition of any affiliate of the Company whose activities are reasonably
likely to have a material impact on the financial and operational condition of
the broker-dealer. Securities broker-dealers are also required to file with
the SEC, specified information on a quarterly and annual basis.
<PAGE> 8
Under the Futures Trading Practices Act of 1992, the CFTC adopted regulations
requiring futures commission merchants ("FCMs") to maintain, preserve and
report certain information concerning the organizational structure, risk
management policies and financial condition of any affiliate of the Company
whose activities are reasonably likely to have a material impact on the
financial and operational condition of the FCM. FCMs are also required to
file with the CFTC, specified information on a quarterly and annual basis.
COMPETITION
All aspects of the business of the Company are highly competitive. The Company
competes directly with numerous other brokers and dealers, investment banking
firms, insurance companies, investment companies, banks, commercial banks and
other financial institutions.
In recent years, competitive pressures from discount brokerage firms and
commercial banks, increased investor sophistication and an increase in the
variety of investment products have resulted, primarily through mergers and
acquisitions, in the emergence of a few well capitalized national firms. The
Company believes that the principal factors affecting competition in the
securities industry are available capital, and the quality and prices of
services and products offered.
ITEM 2. PROPERTIES
The principal executive offices of the Company are located at 1285 Avenue of
the Americas, New York, New York under leases expiring through August 31, 2001.
The Company is currently leasing approximately 585,000 square feet at 1285
Avenue of the Americas comprising the offices of its investment banking, asset
management, institutional sales and trading, and corporate headquarters staff,
as well as two branch offices for retail investment executives.
The Company leases approximately 950,000 square feet of space at Lincoln Harbor
in Weehawken, New Jersey under leases expiring December 31, 2013. The Lincoln
Harbor facility houses the Private Client Group headquarters, systems,
operations, administrative services, and finance and training divisions.
At December 31, 1995, the Company maintained 310 offices worldwide under leases
expiring between 1996 and 2014. In addition, the Company leases various
furniture and equipment.
ITEM 3. 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
below. 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, including those described below, and intends to defend
actively each such case.
IN RE NASDAQ MARKET-MAKER ANTITRUST LITIGATION
In July 1994, PaineWebber Incorporated ("PaineWebber"), together with numerous
unrelated firms, were named as defendants in a series of purported class action
complaints that have since been consolidated for pre-trial purposes in the
United States District Court for the Southern District of New York under the
caption In Re NASDAQ Market-Maker Antitrust and Securities Litigation, MDL
Docket No. 1023. The refiled consolidated complaint in these actions alleges
that the defendant firms engaged in activities as market makers on the NASDAQ
over-the-counter market that violated the federal antitrust laws. The
plaintiffs seek declaratory and injunctive relief, damages in an amount to be
determined and subject to trebling and additional relief. On December 18,
1995, PaineWebber filed its answer to plaintiffs' refiled consolidated
complaint. The parties are presently engaged in pre-trial discovery.
<PAGE> 9
PaineWebber and two other broker-dealers were named as defendants in litigation
brought in November 1994 and subsequently styled In Re Merrill Lynch et al.
Securities Litigation, Civ. No. 94-5343 (DRD). The amended complaint, filed in
March 1995, alleged that defendants violated federal securities laws in
connection with the execution of orders to buy and sell NASDAQ securities. On
December 13, 1995, the District Court granted defendants' motion for summary
judgment. On January 19, 1996, the plaintiffs filed a notice of appeal to the
United States Court of Appeals for the Third Circuit. The matter on appeal is
Newton, et al., v. Merrill Lynch, et al., No. 96-5045.
LIMITED PARTNERSHIP CLASS ACTIONS
A series of purported class actions concerning PaineWebber Incorporated's sale
and sponsorship of various limited partnership investments have been filed
against PaineWebber and Paine Webber Group Inc. (together "PaineWebber") among
others, by partnership investors since November 1994. Several such actions
(the "Federal Court Limited Partnership Actions") were filed in the United
States District Court for the Southern District of New York, one was filed in
the United States District Court for the Southern District of Florida and one
complaint (the "New York Limited Partnership Action") was filed in the Supreme
Court of the State of New York. The time to answer or otherwise move with
respect to these complaints has not yet expired.
The complaints in all of these cases make substantially similar allegations
that, in connection with the sale of interests in approximately 50 limited
partnerships between 1980 and 1992, PaineWebber (1) failed to provide adequate
disclosure of the risks involved with each partnership; (2) made false and
misleading representations about the safety of the investments and the
anticipated performance of the partnerships; and (3) marketed the partnerships
to investors for whom such investments were not suitable. The plaintiffs, who
are suing on behalf of all persons who invested in limited partnerships sold by
PaineWebber between 1980 and 1992, also allege that, following the sale of the
partnership units, PaineWebber misrepresented financial information about the
partnerships' value and performance.
The Federal Court Limited Partnership Actions also allege that PaineWebber
violated the Racketeer Influenced and Corrupt Organization Act ("RICO"), and
certain of them also claim that PaineWebber violated the federal securities
laws. The plaintiffs seek unspecified damages, including reimbursement for all
sums invested by them in the partnerships, as well as disgorgement of all fees
and other income derived by PaineWebber from the limited partnerships. In the
Federal Court Limited Partnership Actions, the plaintiffs also seek treble
damages under RICO.
In addition, PaineWebber and several of its present or former officers were
sued in two other purported class actions (the "Geodyne Limited Partnership
Actions") filed in the state court in Harris County, Texas. Those cases,
Nedick v. Geodyne Resources, Inc. et al. and Wolff v. Geodyne Resources, Inc.
et al., are similar to the other Limited Partnership Actions except that the
plaintiffs purport to sue only on behalf of those investors who bought
interests in the Geodyne Energy Partnerships, which were a series of oil and
gas partnerships that PaineWebber sold over several years. The plaintiffs in
Geodyne Limited Partnership Actions allege that PaineWebber committed fraud and
misrepresentation, breached its fiduciary obligations to its investors and
brokerage customers, and breached certain contractual obligations. The
complaints seek unspecified damages, including reimbursement of all sums
invested by them in the partnerships, as well as disgorgement of all fees and
other income derived by PaineWebber from the Geodyne partnerships. PaineWebber
has filed an answer denying the allegations in plaintiffs' complaint.
On January 18, 1996, PaineWebber signed and filed with the federal court a
memorandum of understanding with the plaintiffs in both the New York Limited
Partnership Actions and the Geodyne Limited Partnership Actions outlining the
terms under which the parties have agreed to settle both actions. Pursuant to
that memorandum of understanding, PaineWebber irrevocably deposited $125
million into an escrow fund under the supervision of the United States District
Court for the Southern District of New York to be used to resolve the New York
and Geodyne Limited Partnership Actions in accordance with a definitive
settlement agreement and plan of allocation which the parties expect to submit
to the court for its consideration and approval within the next several months.
<PAGE> 10
In addition, three actions were filed against the Company in the District Court
for Brazoria County, Texas, two captioned Mallia v. PaineWebber, Inc. ("Mallia
I" and "Mallia II") and one captioned Billy Hamilton v. PaineWebber
("Hamilton"), relating to the Company's sale and sponsorship of various limited
partnership investments. Mallia I was originally filed as a class action, but
was later amended to assert claims only on behalf of the named plaintiffs. The
complaints in Mallia I, Mallia II, and Hamilton, collectively, make allegations
on behalf of approximately 65 named plaintiffs that are substantially similar
to those in the New York Partnership Actions except that the plaintiffs purport
to bring only state law claims, principally for common law fraud, negligent
misrepresentation, breach of fiduciary duty, violations of the Texas Securities
Act, and violations of the Texas Deceptive Trade Practices Act, on behalf of
those investors who bought interests in Pegasus aircraft leasing partnerships
and in unspecified other limited partnerships and investments. The plaintiffs
seek unspecified damages. All three actions have been removed to federal
court and the two Mallia actions have been transferred to the United States
District Court for the Southern District of New York. The Hamilton action has
been dismissed with the consent of the parties on the grounds that it is
duplicative of the two Mallia actions now before the federal court in new York.
In April 1995, two investors in the Pegasus limited partnership filed a
purported class action in the Circuit Court of the State of Illinois for Cook
County entitled Jacobson v. PaineWebber, Inc., making allegations substantially
similar to those alleged in the New York Limited Partnership Actions, but
limited in subject matter to the sale of the Pegasus partnerships, and without
a RICO claim. The complaint seeks unspecified damages. The plaintiffs in the
Jacobson case simultaneously remained as participants in the New York Limited
Partnership Actions, and subsequently sought to intervene in that action and to
be named class representatives for a separate subclass that they asked the
court to establish consisting of investors in the Pegasus partnerships. The
court in the New York Limited Partnership Actions has not yet ruled on their
request.
GENERAL DEVELOPMENT CORPORATION SECURITIES LITIGATION
On or about June 10, 1991, PaineWebber Incorporated ("PaineWebber") was served
with a "First Amended Complaint" in an action captioned Rolo v. City Investing
Liquidating Trust, et al., Civ. Action 90-4420 D.N.J., filed on or about May 13,
1991 naming it and other entities and individuals as defendants. The First
Amended Complaint alleges conspiracy and aiding and abetting violations of: (1)
one or more provisions of the Racketeer Influenced and Corrupt Organiztion Act
("RICO"); (2) one or more provisions of the Interstate Land Sales Full
Disclosure Act; and (3) the common law, on behalf of all persons (excluding
defendants) who purchases lots and/or houses from General Development
Corporation ("GDC") or one of its affiliates and who are members of an
association known as the North Port Out-of-State Lot Owners Association.
The secondary liability claims in the First Amended Complaint relating to
PaineWebber are premised on allegations that PaineWebber served as (1) the
co-lead underwriter in connection with the April 8, 1988 offering by GDC of
12-7/8% senior subordinated notes pursuant to a Registration Statement and
Prospectus and (2) the underwriter for a 1989 offering of Adjustable Rate
General Development Residential Mortgage Pass-Through Certificates, Series
1989-A, which plaintiffs contend enabled GDC to acquire additional financial
resources for the perpetuation of (and/or aided and abetted) an alleged scheme
to defraud purchasers of GDC lots and/or houses. The First Amended Complaint
requests certain declaratory relief, equitable relief, compensatory damages of
not less than $500 million, punitive damages of not less than three times
compensatory damages, treble damages with respect to the RICO count,
pre-judgment and post-judgment interest on all sums awarded, and attorney's
fees, costs, disbursement and expert witness fees.
On December 27, 1993, the District Court entered an order dismissing
plaintiffs' First Amended Complaint against PaineWebber and the majority of the
other defendants for failure to state a claim upon which relief can be granted.
On November 8, 1994, the United States Court of Appeals for the Third Circuit
affirmed the District Court's order dismissing this action against PaineWebber.
On November 18, 1994, plaintiffs filed a Petition for Rehearing and Suggestion
for Rehearing En Banc with the Third Circuit.
<PAGE> 11
On April 4, 1995, the United States Court of Appeals for the Third Circuit
entered an order vacating its order of November 8, 1994, and granted
plaintiffs' application for rehearing and remanded the case to the District
Court for reconsideration. Following the remand by the Third Circuit Court of
Appeals, on August 24, 1995, the District Court entered an order dismissing the
action as to all defendants. On February 20, 1996, plaintiffs filed a notice
of appeal from the District Court's order dismissing the action.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Executive Officers of the Registrant
Incorporated herein by reference is the Company's definitive proxy statement
for the annual meeting of stockholders to be held on April 30, 1996 ("Proxy
Statement") to be filed with the SEC not later than 120 days after the
end of the fiscal year.
Set forth below, in addition to information contained in the Proxy Statement,
is certain information concerning the executive officers of PWG who do not also
serve as directors of PWG:
Theodore A. Levine, 51, is General Counsel, Vice President and Secretary of
PWG, and is an Executive Vice President of PWI, positions he has held since
June 15, 1993. Prior to joining the Company, Mr. Levine was a partner at the
Washington D.C.- based law firm of Wilmer, Cutler and Pickering from February
1984 to June 1993. He was with the Securities and Exchange Commission from
1969 to 1984 where he rose to the position of Associate Director in the
Division of Enforcement.
Regina Dolan, 41, is Vice President and Chief Financial Officer of PWG, a
position she has held since February 3, 1994. Prior thereto, she was the
principal financial and accounting officer of PWG from October 1992 to February
3, 1994. Ms. Dolan is also Executive Vice President and has been Chief
Financial Officer of PWI since February 3, 1994. From October 1992 to February
3, 1994, she was Director of Finance and Controls of PWI. Prior to joining the
Company, Ms. Dolan was with Ernst & Young LLP from September 1975 to September
1992, where she rose to the position of Partner and served as Director of the
firm's Securities Industry Practice.
Pierce R. Smith, 52, has been Treasurer of PWG since February 16, 1988,
Executive Vice President and Treasurer of PWI since February 2, 1988 and was
Controller of PWI from February 15, 1993 to September 11, 1995. He was Senior
Vice President and Treasurer of Norwest Corporation from August 1982 to
December 1987.
Anthony M. DiIorio, 52, is Vice President and Controller of PWG, and is
Executive Vice President and Controller of PWI, positions he has held since
September 11, 1995. Prior to joining the Company, Mr. DiIorio was Senior Vice
President and Chief Financial Officer for the Capital Markets and Investment
Banking Group of NationsBank Corporation from August 1994 to September 1995.
He was with Goldman, Sachs & Company from March 1989 to August 1994 where he
served as Vice President and Controller.
Executive Officers are elected annually to serve until their successors are
elected and qualify or until they sooner die, retire, resign or are removed.
<PAGE> 12
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The information set forth under the captions "Market for Common Stock" and
"Common Stock Dividend History" in the 1995 Annual Report to Stockholders is
incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
The information set forth under the caption "Financial Highlights" in the 1995
Annual Report to Stockholders is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The information set forth under the caption "Management's Discussion and
Analysis" beginning on page 28 in the 1995 Annual Report to Stockholders is
incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements, schedules and supplementary financial information
required by this item and included in this report or incorporated herein by
reference are listed in the index appearing on page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE> 13
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the age and principal occupation of each director is set
forth under the caption "Information Concerning the Nominees and Directors" in
the Proxy Statement and is incorporated herein by reference. Information
concerning executive officers of the Registrant, who do not serve as directors,
is given at the end of Part I of this report.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning compensation of directors and executive officers of the
Registrant is set forth under the captions "Compensation of Directors,"
"Executive Compensation," "Other Benefit Plans and Agreements" and "Certain
Transactions and Arrangements" in the Proxy Statement and is incorporated
herein by reference.
ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security ownership of executive officers, directors and certain beneficial
owners is set forth under the caption "Security Ownership" in the Proxy
Statement and is incorporated herein by reference.
Solely for the purpose of calculating the aggregate market value of the voting
stock held by non-affiliates of the Registrant as set forth on the cover of
this report, it has been assumed that directors and executive officers of the
Registrant are affiliates.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information related to certain transactions with directors of the
Registrant is set forth under the captions "Certain Agreements with Directors"
and "Certain Transactions and Arrangements" in the Proxy Statement and is
incorporated herein by reference.
PART IV
ITEM 14. FINANCIAL STATEMENTS, FINANCIAL SCHEDULES, EXHIBITS AND REPORTS ON
FORM 8-K
(a) Documents filed as a part of this Report:
(1) Financial Statements
The financial statements required to be filed hereunder are listed
on page F-1 hereof.
(2) Financial Statement Schedules
The financial statement schedules required to be filed hereunder
are listed on page F-1 hereof.
(3) Exhibits
Certain of the following exhibits, as indicated parenthetically,
were previously filed as exhibits to other reports or registration
statements filed by the Registrant under the Securities Act of 1933
or to reports or registration statements by the Registrant under
the Securities Exchange Act of 1934, respectively, and are
incorporated herein by reference to such reports.
1 - Distribution Agreement dated November 30, 1993 between
Registrant, PWI and The First Boston Corporation
(incorporated by reference to Exhibit 1.2 of Registrant's
Registration Statement No. 33-52695 filed with the SEC on
October 16, 1995).
<PAGE> 14
3.1 - Restated Certificate of Incorporation of Registrant, as filed with
the Office of the Secretary of State of the State of Delaware on May
4, 1987 (incorporated by reference to Exhibit 3.1 of Registrant's
Registration Statement No. 33-52695 on Form S-3 filed with the SEC
on October 16, 1995).
3.2 - Certificate of Designations for the 6% Cumulative Convertible
Redeemable Preferred Stock, Series A, of the Registrant as filed
with the Secretary of State of the State of Delaware on December 15,
1994 (incorporated by reference to Exhibit 3.1 to Registrant's
Current Report on Form 8-K dated December 27, 1994).
3.3 - Certificate of Designations for the 9% Cumulative Convertible
Redeemable Preferred Stock, Series C, of the Registrant as filed
with the Secretary of State of the State of Delaware on December 15,
1994 (incorporated by reference to Exhibit 3.2 to Registrant's
Current Report on Form 8-K dated December 27, 1994).
3.4 - Certificate of Amendment to the Restated Certificate of
Incorporation of Registrant as filed with the office of the
Secretary of State of the State of Delaware on June 6, 1994
(incorporated by reference to Registrant's Current Report on Form
8-K dated June 15, 1994).
3.5 - Certificate of Amendment to the Restated Certificate of
Incorporation of Registrant as filed with the Office of the
Secretary of State of the State of Delaware on June 3, 1988
(incorporated by reference to Exhibit 3.1 of Registrant's
Registration Statement No. 33-52695 on Form S-3 filed with the SEC
on October 16, 1995).
3.6 - Certificate of Powers, Designations, Preferences and Rights
relating to Registrant's 7.5% Convertible Preferred Stock as filed
with the Office of the Secretary of State of Delaware on January 16,
1992 (incorporated by reference to Exhibit 3.1 of Registrant's Form
10-K for the year ended December 31, 1991).
3.7 - Certificate of Powers, Designations, Preferences and Rights relating
to Registrant's 7.5% Convertible Preferred Stock, Series B, as filed
with the Office of the Secretary of State of Delaware on January 16,
1992 (incorporated by reference to Exhibit 3.2 to Registrant's Form
10-K for the year ended December 31, 1991).
3.8 - Certificate of Designation, Preference and Rights relating to
Registrant's Cumulative Participating Convertible Voting Preferred
Stock, Series A as filed with the Office of the Secretary of State
of the State of Delaware on November 5, 1992 (incorporated by
reference to Exhibit 3 of Registrant's Form 10-Q for the quarter
ended September 30, 1992).
3.9 - By-laws of the Registrant as amended March 1, 1988 (incorporated by
reference to Exhibit 3.2 of Registrant's Registration Statement No.
33-52695 on Form S-3 filed with the SEC on October 16, 1995).
3.10 - Certificate of Stock Designation (elimination) relating to
Registrant's 7% Cumulative Convertible Exchangeable Voting Preferred
Stock, Series A as filed with the office of the Secretary of State
of the State of Delaware on November 5, 1992 (incorporated by
reference to Exhibit 3.1 of Registrant's Form 10-K for the year
ended December 31, 1992).
3.11 - Certificate of Powers, Designations, Preferences and Rights relating
to the Company's 6% Convertible Preferred Stock as filed with the
Office of the Secretary of State of the State of Delaware on
February 10, 1994 (incorporated by reference to Registrant's Form
8-K dated February 10, 1994).
<PAGE> 15
4.1* - Form of Debt Securities (8-7/8% Notes due 2005).
4.2* - Form of Debt Securities (8-1/4% Notes due 2002).
4.3* - Form of Debt Securities (6-3/4% Notes due 2006).
4.4* - Form of Debt Securities (6-1/4% Notes due 1998).
4.5 - Form of Debt Securities (6-1/2% Notes due 2005) (incorporated by
reference to Exhibit 4.1 of Registrant's Form 10-K for the year
ended December 31, 1994).
4.6 - Form of Debt Securities (7-5/8% Notes due 2014) (incorporated by
reference to Exhibit 4.2 of Registrant's Form 10-K for the year
ended December 31, 1994).
4.7 - Form of Debt Securities (7-3/4% Notes due 2002) (incorporated by
reference to Exhibit 4.3 of Registrant's Form 10-K for the year
ended December 31, 1994).
4.8 - Stockholders Agreement dated December 16, 1994 among the Registrant,
General Electric Company and Kidder, Peabody Group Inc.
(incorporated by reference to Exhibit 4.1 to Registrant's Current
Report on Form 8-K dated December 27, 1994).
4.9 - Copy of form of certificate of common stock to reflect a new
signatory (incorporated by reference to Exhibit 4.1 of Registrant's
Form 10-K for the year ended December 31, 1993).
4.10 - Supplemental Indenture dated as of November 30, 1993 between
Registrant and Chemical Bank (Delaware), as Trustee, relating to the
Subordinated Debt Securities (incorporated by reference to Exhibit
4.2 of Registrant's Form 10-K for the year ended December 31, 1993).
4.11 - Indenture dated as of March 15, 1988 between Registrant and Chemical
Bank (Delaware), as Trustee, relating to Registrant's Medium-Term
Subordinated Notes, Series B and Series D (incorporated by reference
to Exhibit 4.2d of Registrant's Registration Statement No. 33-52695
on Form S-3 filed with the SEC on October 16, 1995).
4.12 - Supplemental Indenture dated as of September 22, 1989, to the
Indenture dated as of March 15, 1988, between Registrant and
Chemical Bank (Delaware), as Trustee, relating to Subordinated Debt
Securities (incorporated by reference to Exhibit 4.2e of
Registrant's Registration Statement No. 33-52695 on Form S-3 filed
with the SEC on October 16, 1995).
4.13 - Supplemental Indenture dated as of March 22, 1991 between Registrant
and Chemical Bank (Delaware), as Trustee, relating to Subordinated
Debt Securities (incorporated by reference to Exhibit 4.2f of
Registrant's Registration Statement No. 33-52695 on Form S-3 filed
with the SEC on October l6, 1995).
4.14 - Indenture dated as of March 15, 1988 between Registrant and Chemical
Bank, as Trustee, relating to Registrant's Medium-Term Senior Notes,
Series A and Series C (incorporated by reference to Exhibit 4.2a of
Registrant's Registration Statement No. 33-52695 on Form S-3 filed
with the SEC on October 16, 1995).
4.15 - Supplemental Indenture dated as of September 22, 1989, to the
Indenture dated as of March 15, 1988 between Registrant and Chemical
Bank, as Trustee, relating to Senior Debt Securities (incorporated
by reference to Exhibit 4.2b of Registrant's Registration Statement
No. 33-52695 on Form S-3 filed with the SEC on October 16, 1995).
_______________________
* Filed herewith.
<PAGE> 16
4.16 - Supplemental Indenture dated as of March 22, 1991 between Registrant
and Chemical Bank, as Trustee, relating to Senior Debt Securities
(incorporated by reference to Exhibit 4.2c of Registrant's
Registration Statement No. 33-52695 on Form S-3 filed with the SEC
on October 16, 1995).
4.17 - Form of Debt Securities (9-1/4% Notes Due 2001) (incorporated by
reference to Exhibit 4.1 of Registrant's Form 8-K dated December 17,
1991 filed with the SEC).
4.18 - Form of 8% Convertible Debentures Due 2000 issued in connection with
Registrant's Key Executive Equity Program (incorporated by reference
to Exhibit 4.1 of Registrant's Form 10-K for the year ended December
31, 1991).
4.19 - Form of 6.5% Convertible Debentures Due 2002 issued in connection
with Registrant's Key Executive Equity Program (incorporated by
reference to Exhibit 4.1 of Registrant's Form 10-K for the year
ended December 31, 1992).
4.20 - Form of Debt Securities (7% Notes Due 2000) (incorporated by
reference to Exhibit 4.2 of Registrant's Form 10- K for the year
ended December 31, 1992).
4.21 - Form of Debt Securities (7-7/8% Notes Due 2003) (incorporated by
reference to Exhibit 4.1f of Registrant's Form 8-K dated February
11, 1993).
4.22 - Form of Book-Entry Global Security relating to Stock Index Return
Securities on the S&P MidCap 400 Index due June 2, 2000
(incorporated by reference to Exhibit 4.1g of Registrant's Form 8-K
dated May 25, 1993).
4.23 - Warrant Agreement dated as of March 16, 1994 among Registrant,
Citibank, N.A., as Warrant Agent and PaineWebber Incorporated as
Determination Agent relating to the Registrant's U.S. Dollar
Increase Warrants on the Japanese Yen Expiring March 6, 1996
(incorporated by reference to Registrant's Current Report on Form
8-K dated March 17, 1994).
4.24 - Warrant Agreement dated as of May 1, 1995 among Registrant,
Citibank, N. A. as Warrent Agent and PaineWebber Incorporated as
Spot Rate Reference Agent relating to Registrant's 1,050,000 U.S.
Dollar Increase Warrants on the Japanese Yen expiring April 30, 1996
(incorporated by reference to Exhibit 4.1 of Registrants Form 8-K
dated May 1, 1995).
4.25 - Warrant Agreement, dated as of August 5, 1994, among the Registrant,
Citibank, N.A., as Warrant Agent, and PaineWebber Incorporated, as
Spot Rate Reference Agent relating to the Registrant's U.S. Dollar
Increase Warrants on the Japanese Yen Expiring July 31, 1996
(incorporated by reference to Exhibit 4.1 of Registrant's Current
Report on Form 8-K dated August 5, 1994).
4.26 - Proposed Form of Debt Securities (Medium-Term Senior Note, Series C,
Fixed Rate) (incorporated by reference to Exhibit 4.1a to
Registrant's Registration Statement No. 33-52695 on Form S-3 filed
with the SEC on October 16, 1995).
4.27 - Proposed Form of Debt Securities (Medium-Term Subordinated Note,
Series D, Fixed Rate) (incorporated by reference to Exhibit 4.1b to
Registrant's Registration Statement No. 33-52695 on Form S-3 filed
with the SEC on October 16, 1995).
4.28 - Proposed Form of Debt Securities (Medium-Term Subordinated Note,
Series C, Floating Rate) (incorporated by reference to Exhibit 4.1c
to Registrant's Registration Statement No. 33-52695 on Form S-3
filed with the SEC on October 16, 1995).
4.29 - Proposed Form of Debt Securities (Medium-Term Subordinated Note,
Series D, Floating Rate) (incorporated by reference to Exhibit 4.1d
to Registrant's Registration Statement No. 33-52695 on Form S-3
filed with the SEC on October 16, 1995).
<PAGE> 17
4.30 - Proposed Form of Debt Securities (Senior Note, Fixed Rate)
(incorporated by reference to Exhibit 4.1c to Registrant's
Registration Statement No. 33-58124 on Form S-3 filed with the
SEC on February 10, 1993).
The credit agreements listed below have not been registered under the Securities
Act of 1933 or the Securities Exchange Act of 1934, nor does the long-term
indebtedness that they represent exceed, in the aggregate, 10% of the total
assets of Registrant and its subsidiaries on a consolidated basis. Consequently,
these instruments have not been filed as an exhibit with this report, but copies
will be furnished to the Securities and Exchange Commission upon request.
Credit Agreement dated as of December 20, 1994 among Registrant, the Initial
Lenders named therein, and The Bank of New York and Citibank, N.A., as
Co-Administrative Agents, relating to the $1.2 billion credit facility.
Credit Agreement dated as of December 20, 1994 among Registrant, the Initial
Lenders named therein, and The Bank of New York and Citibank, N.A., as
Co-Administrative Agents, relating to the $800 million credit facility.
10.1 - Limited Partnership Agreement of PW Partners 1993 Dedicated L.P.
dated as of January 6, 1994 (incorporated by reference to Exhibit
10.1 of Registrant's Form 10-K for the year ended December 31,
1994).
10.2 - Limited Partnership Agreement of PW Partners 1993 L.P. dated as of
February 2, 1994 (incorporated by reference to Exhibit 10.2 of
Registrant's Form 10-K for the year ended December 31, 1994).
10.3 - Registrant's 1994 Executive Incentive Compensation Plan
(incorporated by reference to Exhibit 10.3 of Registrant's Form
10-K for the year ended December 31, 1994).
10.4 - Registrant's 1994 Senior Officer Deferred Compensation Plan
(incorporated by reference to Exhibit 10.4 of Registrant's Form
10-K for the year ended December 31, 1994).
10.5 - Registrant's 1994 Senior Officer Deferred Compensation Plan
Grantor Trust Agreement on behalf of Donald B. Marron (incorporated
by reference to Exhibit 10.5 of Registrant's Form 10-K for the year
ended December 31, 1994).
10.6 - Registrant's 1994 Senior Officer Deferred Compensation Plan Grantor
Trust Agreement on behalf of Joseph J. Grano (incorporated by
reference to Exhibit 10.7 of Registrant's Form 10-K for the year
ended December 31, 1994).
10.7 - Registrant's 1994 Senior Officer Deferred Compensation Plan Grantor
Trust Agreement on behalf of Regina A. Dolan (incorporated by
reference to Exhibit 10.8 of Registrant's Form 10-K for the year
ended December 31, 1994).
10.8 - Lease dated December 7, 1994 between IBM Credit Corporation and PWI
(IBM 9032-003, 9076-303 and 9672-E02) (incorporated by reference to
Exhibit 10.9 of Registrant's Form 10-K for the year ended December
31, 1994).
10.9 - Lease dated November 23, 1994 between AT&T Capital Corporation and
PWI (IBM 9021-962)(incorporated by reference to Exhibit 10.10 of
Registrant's Form 10-K for the year ended December 31, 1994).
10.10 - Asset Purchase Agreement dated as of October 17, 1994 between Paine
Webber Group Inc., General Electric Company and Kidder, Peabody
Group Inc. relating to the purchase of certain assets and
businesses of Kidder, Peabody Group Inc. and its subsidiaries
(incorporated by reference to Registrant's Form 10-Q for the
quarter ended September 30, 1994).
<PAGE> 18
10.11 - Supplemental Agreement dated as of December 9, 1994 among the
Registrant, General Electric Company and Kidder, Peabody Group Inc.
(incorporated by reference to Exhibit 4.2 to Registrant's Current
Report on Form 8-K dated December 27, 1994).
10.12 - Second Supplemental Agreement dated as of December 16, 1994 among
the Registrant, General Electric Company and Kidder, Peabody Group
Inc. (incorporated by reference to Exhibit 4.3 to Registrant's
Current Report on Form 8- K dated December 27, 1994).
10.13 - Third Supplemental Agreement dated as of January 27, 1995 among the
Registrant, General Electric Company and Kidder, Peabody Group Inc.
(incorporated by reference to Exhibit 10.3 to Registrant's Form
8-K/A dated February 24, 1995 which amended Registrant's Form 8-K
dated December 27, 1994).
10.14 - Fourth Supplemental Agreement dated as of February 10, 1995 among
the Registrant, General Electric Company and Kidder, Peabody Group
Inc. (incorporated by reference to Exhibit 10.3 to Registrant's
Form 8-K/A dated February 24, 1995 which amended Registrant's Form
8-K dated December 27, 1994).
10.15 - Registrant's 1994 Stock Award Plan (incorporated by reference to
Exhibit 4.1 of Registrant's Registration Statement No. 33-55457 on
Form S-8 filed with the SEC on September 13, 1994).
10.16 - Registrant's 1994 Executive Stock Award Plan (incorporated by
reference to Exhibit 4.1 of Registrant's Registration Statement No.
33-55451 on Form S-8 filed with the SEC on September 13, 1994).
10.17 - Registrant's 1994 Non-Employee Director Stock Plan (incorporated by
reference to Exhibit 4.1 of Registrant's Registration Statement No.
33-53489 on Form S-8 filed with the SEC on May 5, 1994).
10.18 - Limited Partnership Agreement of PW Partners 1992 Dedicated L.P.
dated as of September 2, 1992 (incorporated by reference to Exhibit
10.1 of Registrant's Form 10-K for the year ended December 31,
1993).
10.19 - Employment agreement dated as of May 4, 1993 between Registrant,
PWI and Theodore A. Levine (incorporated by reference to Exhibit
10.2 of Registrant's Form 10-K for the year ended December 31,
1993).
10.20* - Letter dated as of October 27, 1995 amending certain provisions of
the Employment Agreement between Registrant, PWI and Theodore A.
Levine.
10.21 - Restated and Amended Agreement of Lease, dated as of January 1,
1989, between The Equitable Life Assurance Society of the United
States and Registrant relating to property located at 1285 Avenue
of the Americas, New York, New York (incorporated by reference to
Exhibit 10.3 of Registrant's Form 10-K for the year ended December
31, 1993).
10.22 - Amended and Restated Investment Agreement dated as of November 5,
1992 by and between Registrant and The Yasuda Mutual Life Insurance
Company ("Yasuda") relating to the repurchase by Registrant of
1,685,394 shares of Registrant's 7% Cumulative Convertible
Exchangeable Voting Preferred Stock, Series A ("7% Preferred
Shares") and the replacement of the remaining 3,370,786 7%
Preferred Shares for 7,758,632 shares of Registrant's Cumulative
Participating Convertible Voting Preferred Stock, Series A
(incorporated by reference to Exhibit 10 of Registrant's Form 10-Q
for the quarter ended September 30, 1992).
10.23* - Employment Agreement dated as of January 2, 1987 between
Registrant, PaineWebber Incorporated and Donald B. Marron.
_______________________
* Filed herewith.
<PAGE> 19
10.24* - Employment Agreement dated as of January 2, 1987 between
Registrant, PWI and John A. Bult.
10.25* - Registrant's Supplemental Employee's Retirement Plan For Certain
Senior Officers, as amended, dated January 1, 1990.
10.26* - Deferred Compensation Agreement dated as of August 29, 1988 between
Registrant and Donald B. Marron relating to the Supplemental
Employees Retirement Plan.
10.27* - Deferred Compensation Agreement dated as of August 29, 1988 between
Registrant and John A. Bult relating to the Supplemental Employees
Retirement Plan.
10.28 - Agreement and Declaration of Trust for Supplemental Employees
Retirement Plan dated as of January 1, 1990 between Registrant and
Chase Manhattan Bank, N.A. as Trustee (incorporated by reference to
Exhibit 10.3 of Registrant's Form 10-K for the year ended December
31, 1990).
10.29 - Registrant's 1983 Stock Option Plan (incorporated by reference to
Exhibit 4 of Registrant's Registration Statement No. 2-81554 on
Form S-8 filed with the SEC on January 28, 1983).
10.30 - Registrant's 1984 Stock Award Plan (incorporated by reference to
Exhibit 4(a) of Registrant's Registration Statement No. 2-92770 on
Form S-8 filed with the SEC on August 15, 1984).
10.31 - Registrant's Stock Award Plan (incorporated by reference to Exhibit
4 of Registrant's Registration Statement No. 33-22265 on Form S-8
filed with the SEC on June 1, 1988).
10.32 - Registrant's 1986 Stock Award Plan (incorporated by reference to
Registrant's Registration Statement No. 33- 2959 on Form S-8 filed
with the SEC on February 4, 1986).
10.33 - Registrant's 1990 Stock Award and Option Plan (incorporated by
reference to Exhibit 4.1 of Registrant's Registration Statement No.
33-40489 on Form S-8 filed with the SEC on May 13, 1991).
10.34 - Registrant's Savings Investment Plan (incorporated by reference to
Exhibit 4.1 to Registrant's Post-Effective Amendment No. 1 on Form
S-8, No. 33-20240, filed with the SEC on October 31, 1990).
10.35 - Master Agreement between PWI and Quotron Systems Inc. dated
February 11, 1991 (incorporated by reference to Exhibit 10.4 of
Registrant's Form 10-K for the year ended December 31, 1990).
10.36 - Third-Party Master Lease Agreement between PWI and AT&T Systems
Leasing Corporation dated as of October 21, 1991 (incorporated by
reference to Exhibit 10.3 of Registrant's Form 10-K for the year
ended December 31, 1991).
10.37* - Lease Agreement dated as of April 14, 1986, between PWI (as Tenant)
and Hartz-PW Limited Partnership (as Landlord) relating to the
Lincoln Harbor Project (Operations Center) located in Weehawken,
New Jersey.
10.38* - Lease Agreement dated as of April 14, 1986, between PWI (as Tenant)
and Hartz-PW Limited Partnership (as Landlord) relating to the
Lincoln Harbor Project (Data Processing Center) located in
Weehawken, New Jersey.
10.39* - Lease Agreement dated as of April 14, 1986, between PWI (as Tenant)
and Hartz-PW Tower B Limited Partnership, as successor in interest
to Hartz-PW Hotel Limited Partnership relating to the Lincoln
Harbor Project (Tower B/Office Building) located in Weehawken, New
Jersey.
_______________________
* Filed herewith.
<PAGE> 20
10.40* - Agreement of Limited Partnership of Hartz-PW Limited Partnership
dated April 14, 1986 relating to the Lincoln Harbor Project
(Operation Center and Data Processing Center) located in Weehawken,
New Jersey.
10.41* - Agreement of Limited Partnership of Hartz-Tower B Limited
Partnership dated April 14, 1986, as amended relating to the
Lincoln Harbor Project (Tower B/Office Building) located in
Weehawken, New Jersey.
10.42* - Ground lease between Hartz Mountain Industries and Hartz-PW
Limited Partnership dated April 14, 1986 relating to the
Operations Center at the Lincoln Harbor Project in Weehawken.
10.43 - Directors and Officers Liability and Corporation Reimbursement
insurance policy with Fiduciary Liability Rider with National Union
Fire Insurance Company (incorporated by reference to Exhibit 10.2
of Registrant's Form 10-K for the year ended December 31, 1990).
10.44 - Limited Partnership Agreement of PW Partners 1991 Dedicated L.P.
dated as of October 7, 1991 (incorporated by reference to Exhibit
10.2 of Registrant's Form 10-K for the year ended December 31,
1992).
10.45 - Letter Agreement dated as of March 9, 1993 between Registrant and
The Yasuda Mutual Life Insurance Company (incorporated by reference
to Exhibit 10.3 of Registrant's Form 10-K for the year ended
December 31, 1992).
10.46 - Form of License Agreement between Standard and Poor's Corporation
and Registrant (incorporated by reference to Exhibit 10.1 of
Registrant's Form 8-K dated June 1, 1993).
10.47* - Limited Partnership Agreement of PW Partners 1995 L.P. dated as of
October 31, 1995.
Executive Compensation Plans and Arrangements
o* Employment Agreement dated as of January 2, 1987 between Registrant,
PaineWebber Incorporated and Donald B. Marron.
o* Employment Agreement dated as of January 2, 1987 between Registrant, PWI
and John A. Bult.
o Employment Agreement dated as of May 4, 1993 between Registrant, PWI and
Theodore A. Levine (filed as Exhibit 10.2 to this Form 10-K for the year
ended December 31, 1993).
_______________________
* Filed herewith.
<PAGE> 21
o * Letter dated as of October 27, 1995 amending the Employment Agreement
between Registrant, PWI and Theodore A. Levine.
o* Registrant's Supplemental Employee's Retirement Plan for Certain
Senior Officers dated August 4, 1988.
o* Deferred Compensation Agreement dated as of August 29, 1988 between
Registrant and Donald B. Marron relating to the Supplemental
Employees Retirement Plan.
o* Deferred Compensation Agreement dated as of August 29, 1988 between
Registrant and John A. Bult relating to the Supplemental Employees
Retirement Plan.
o Agreement and Declaration of Trust for Supplemental Employees
Retirement Plan dated as of January 1, 1990 between Registrant and
Chase Manhattan Bank, N.A. as Trustee (incorporated by reference to
Exhibit 10.3 of Registrant's Form 10-K for the year ended December
31, 1990).
o Registrant's 1983 Stock Option Plan (incorporated by reference to
Exhibit 4 of Registrant's Registration Statement No. 2-81554 on Form
S-8 filed with the SEC on January 28, 1983).
o Registrant's 1984 Stock Award Plan (incorporated by reference to
Exhibit 4(a) of Registrant's Registration Statement No. 2-92770 on
Form S-8 filed with the SEC on August 15, 1984).
o Registrant's Stock Award Plan (incorporated by reference to Exhibit 4
of Registrant's Registration Statement No. 33-22265 on Form S-8
filed with the SEC on June 1, 1988).
o Registrant's 1986 Stock Award Plan (incorporated by reference to
Registrant's Registration Statement No. 33-2959 on Form S-8 filed
with the SEC on February 4, 1986).
o Registrant's 1990 Stock Award and Option Plan (incorporated by
reference to Exhibit 4.1 of Registrant's Registration Statement No.
33-40489 on Form S-8 filed with the SEC on May 13, 1991).
o Form of 8% Convertible Debentures Due 2000 issued in connection with
Registrant's Key Executive Equity Program (incorporated by reference
to Exhibit 4.1 of Registrant's Form 10-K for the year ended December
31, 1991).
o Form of 6.5% Convertible Debenture Due 2002 issued in connection with
Registrant's Key Executive Equity Program (incorporated by reference
to Exhibit 4.1 of Registrant's Form 10-K for the year ended December
31, 1992).
o Limited Partnership Agreement of PW Partners 1991 Dedicated L.P.
dated as of October 7, 1991 (incorporated by reference to Exhibit
10.2 of Registrant's Form 10-K for the year ended December 31, 1992).
o Limited Partnership Agreement of PW Partners 1992 Dedicated L.P.
dated as of September 2, 1992 (filed as Exhibit 10.1 to Registrant's
Form 10-K for the year ended December 31, 1993).
o Limited Partnership Agreement of PW Partners 1993 Dedicated L.P.
dated as of January 6, 1994 (incorporated by reference to Exhibit
10.1 of Registrant's Form 10-K for the year ended December 31,
1994).
o Limited Partnership Agreement of PW Partners 1993 L.P. dated as of
February 2, 1994 (incorporated by reference to Exhibit 10.2 of
Registrant's Form 10-K for the year ended December 31, 1994).
o* Limited Partnership Agreement of PW Partners 1995 L.P. dated as of
October 31, 1995.
_______________________
* Filed herewith.
<PAGE> 22
o Registrant's 1994 Executive Incentive Compensation Plan
(incorporated by reference to Exhibit 10.3 of Registrant's
Form 10-K for the year ended December 31, 1994).
o Registrant's 1994 Senior Officer Deferred Compensation Plan
(incorporated by reference to Exhibit 10.4 of Registrant's
Form 10-K for the year ended December 31, 1994).
o Registrant's 1994 Senior Officer Deferred Compensation Plan
Grantor Trust Agreement on behalf of Donald B. Marron
(incorporated by reference to Exhibit 10.5 of Registrant's
Form 10-K for the year ended December 31, 1994).
o Registrant's 1994 Senior Officer Deferred Compensation Plan
Grantor Trust Agreement on behalf of Joseph J. Grano
(incorporated by reference to Exhibit 10.7 of Registrant's
Form 10-K for the year ended December 31, 1994).
o Registrant's 1994 Senior Officer Deferred Compensation Plan
Grantor Trust Agreement on behalf of Regina A. Dolan
(incorporated by reference to Exhibit 10.8 of Registrant's
Form 10-K for the year ended December 31, 1994).
11* - Computation of Earnings per Common Share.
12.1* - Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.
12.2* - Computation of Ratio of Earnings to Fixed Charges.
13* - 1995 Annual Report to Stockholders of Registrant.
21* - Subsidiaries of the Registrant.
23* - Consent of Independent Auditors.
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K dated January 24, 1996
with the SEC reporting under item 5 ("Other Events") providing a press
release related to the resolution of the Limited Partnership issues.
____________________
* Filed herewith.
<PAGE> 23
PAINE WEBBER GROUP INC.
ITEMS 8, 14(a)(1) AND (2) AND 14(d)
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Financial Statements
Incorporated herein by reference are the following financial statements included
in the 1995 Annual Report to Stockholders. With the exception of the following
financial statements and the information incorporated by reference on items 1,
5, 6 and 7, the 1995 Annual Report to Stockholders is not to be deemed filed as
part of this report.
<TABLE>
<CAPTION>
1995 Annual
Report
Description (Page)
----------- ---------------
<S> <C>
Report of independent auditors 59
Consolidated statements of financial
condition at December 31, 1995 and 1994 39
For the years ended December 31, 1995,
1994 and 1993:
Consolidated statements of income 38
Consolidated statements of changes in
stockholders' equity 40-41
Consolidated statements of cash flows 42
Notes to consolidated financial statements 43-58
Quarterly financial information (unaudited) 62
</TABLE>
<TABLE>
<CAPTION>
Schedules
- ---------
Form 10-K
Description (Page)
----------- ----------------
<S> <C>
Report of independent auditors F-2
I - Condensed financial information F-3 - F-6
</TABLE>
All other schedules have been omitted since the required information is not
present in amounts sufficient to require submission of the schedules, or because
the information required is included in the respective consolidated financial
statements or notes thereto.
F-1
<PAGE> 24
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND STOCKHOLDERS
PAINE WEBBER GROUP INC.
We have audited the consolidated financial statements of Paine Webber Group Inc.
as of December 31, 1995 and 1994, and for each of the three years in the period
ended December 31, 1995, and have issued our report thereon dated January 31,
1996. Our audits also included the financial statement schedule listed in the
Index to Financial Statements and Financial Statement Schedules on page F-1.
This schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
/s/ ERNST & YOUNG LLP
New York, New York
January 31, 1996
F-2
<PAGE> 25
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PAINE WEBBER GROUP INC.
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF INCOME
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
REVENUES
Interest $ 224,487 $ 192,008 $ 104,600
Other 628 1,677 1,231
--------- --------- ---------
Total revenues 225,115 193,685 105,831
Interest expense 238,172 237,871 138,627
--------- --------- ---------
Net revenues (13,057) (44,186) (32,796)
--------- --------- ---------
NON-INTEREST EXPENSES 6,644 10,350 17,004
--------- --------- ---------
Loss before income taxes and
equity in income of affiliates (19,701) (54,536) (49,800)
Benefit for income taxes 16,511 22,852 20,143
--------- --------- ---------
Loss before equity in income
of affiliates (3,190) (31,684) (29,657)
Equity in income of affiliates 83,940 63,315 275,840
--------- --------- ---------
NET INCOME $ 80,750 $ 31,631 $ 246,183
========= ========= =========
</TABLE>
See Notes to Condensed Financial Information of Registrant.
F-3
<PAGE> 26
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PAINE WEBBER GROUP INC.
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS OF DOLLARS EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 12 $ 196
Trading assets, at fair value 32,575 66,162
Loans to and receivables from affiliates 3,272,502 4,222,553
Investments in affiliates 1,550,289 1,460,296
Other assets 248,445 228,751
----------- -----------
$ 5,103,823 $ 5,977,958
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term borrowings $ 719,608 $ 1,606,649
Trading liabilities, at fair value 32,575 66,162
Payables to affiliates 27,812 24,401
Other liabilities and accrued expenses 140,710 127,955
----------- -----------
920,705 1,825,167
Long-term borrowings 2,444,070 2,336,323
----------- -----------
3,364,775 4,161,490
----------- -----------
Commitments and contingencies
Redeemable Preferred Stock 186,760 185,969
Stockholders' Equity:
Convertible Preferred Stock 100,000 100,000
Common stock, $1 par value, 200,000,000
shares authorized; issued 104,492,091 shares
and 100,613,737 shares in 1995 and 1994, respectively 104,492 100,614
Additional paid-in capital 831,763 784,974
Retained earnings 719,325 715,052
----------- -----------
1,755,580 1,700,640
Treasury stock, at cost; 7,417,845 shares and 1,297,081
shares in 1995 and 1994, respectively (151,616) (21,981)
Unamortized cost of restricted stock (55,302) (51,803)
Foreign currency translation adjustment 3,626 3,643
----------- -----------
1,552,288 1,630,499
----------- -----------
$ 5,103,823 $ 5,977,958
=========== ===========
</TABLE>
See Notes to Condensed Financial Information of Registrant.
F-4
<PAGE> 27
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PAINE WEBBER GROUP INC.
(PARENT COMPANY ONLY)
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 80,750 $ 31,631 $ 246,183
Adjustments to reconcile net income to cash
provided by (used for) operating activities:
Noncash items included in net income:
Equity in income of affiliates (83,940) (63,315) (275,840)
Depreciation and amortization 2,925 388 362
Deferred income taxes 16,371 (25,940) (20,255)
Other 6,299 15,855 2,812
(Increase) decrease in assets:
Trading assets 33,587 (6,138) 74,098
Loans to and receivables from affiliates 1,626,049 483,700 (1,740,163)
Investment in affiliates (3,106) (58,300) (12,875)
Other assets (36,729) (70,617) 50,595
Increase (decrease) in liabilities:
Payables to affiliates 3,411 23,887 200
Trading liabilities (33,587) 6,238 (74,098)
Other liabilities and accrued expenses 21,744 70,662 14,638
Proceeds from:
Dividends received from subsidiaries -- 19,102 169,339
----------- ----------- -----------
Cash provided by (used for) operating activities 1,633,774 427,153 (1,565,004)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for:
Net assets acquired in business acquisition (624,090) (726,217) --
Acquisition-related expenditures (15,649) -- --
Office equipment and leasehold improvements (55) (144) (327)
----------- ----------- -----------
Cash used for investing activities (639,794) (726,361) (327)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (payments on) proceeds from short-term borrowings (887,041) (100,996) 994,802
Proceeds from:
Long-term borrowings 472,452 637,379 1,035,507
Employee stock transactions 36,203 11,078 21,121
Payments for:
Long-term borrowings (366,550) (168,505) (243,012)
Repurchases of common stock (173,525) (43,133) (116,627)
Preferred stock transactions -- -- (104,425)
Dividends (75,703) (36,474) (30,973)
----------- ----------- -----------
Cash (used for) provided by financing activities (994,164) 299,349 1,556,393
----------- ----------- -----------
Increase (decrease) in cash and cash equivalents (184) 141 (8,938)
Cash and cash equivalents, beginning of year 196 55 8,993
----------- ----------- -----------
Cash and cash equivalents, end of year $ 12 $ 196 $ 55
=========== =========== ===========
</TABLE>
See Notes to Condensed Financial Information of Registrant.
F-5
<PAGE> 28
SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PAINE WEBBER GROUP INC.
(PARENT COMPANY ONLY)
NOTES TO CONDENSED FINANCIAL INFORMATION OF REGISTRANT
(IN THOUSANDS OF DOLLARS EXCEPT SHARE AMOUNTS)
GENERAL
The condensed financial information of Paine Webber Group Inc. (Parent Company
Only) should be read in conjunction with the consolidated financial statements
of Paine Webber Group Inc. and the notes thereto incorporated by reference in
this report.
STATEMENT OF CASH FLOWS
Interest payments for the years ended December 31, 1995, 1994 and 1993
approximated $229,390, $232,526 and $122,073, respectively. Income tax payments
(consolidated) totaled $28,248, $68,455 and $128,089 for the years ended
December 31, 1995, 1994 and 1993, respectively.
The Condensed Statement of Cash Flows does not reflect noncash investing and
financing activities relating to the purchase of certain assets and liabilities
and specific businesses of Kidder, Peabody Group Inc., as discussed in Part I of
this report.
COMMITMENTS AND CONTINGENCIES
The Company has guaranteed certain of its subsidiaries' unsecured lines of
credit and contractual obligations.
F-6
<PAGE> 29
SIGNATURES
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 on March 26, 1996.
PAINE WEBBER GROUP INC.
(Registrant)
BY: /s/ Donald B. Marron
------------------------------------
Donald B. Marron
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 26, 1996.
/s/ Donald B. Marron
------------------------------------
Donald B. Marron
Chairman of the Board,
Chief Executive Officer
and Director (principal executive
officer)
/s/ Regina Dolan
------------------------------------
Regina Dolan
Vice President and
Chief Financial Officer
/s/ T. Stanton Armour
------------------------------------
T. Stanton Armour
Director
/s/ E. Garrett Bewkes, Jr.
------------------------------------
E. Garrett Bewkes, Jr.
Director
/s/ Reto Brown
------------------------------------
Reto Braun
Director
------------------------------------
John A. Bult
Director
<PAGE> 30
SIGNATURES
/s/ Frank P. Doyle
------------------------------------
Frank P. Doyle
Director
/s/ Joseph J. Grano, Jr.
------------------------------------
Joseph J. Grano, Jr.
Director
------------------------------------
John E. Kilgore, Jr.
Director
/s/ James W. Kinnear
------------------------------------
James W. Kinnear
Director
/s/ Naoshi Kiyono
------------------------------------
Naoshi Kiyono
Director
/s/ Robert M. Loeffler
------------------------------------
Robert M. Loeffler
Director
/s/ Edward Randall, III
------------------------------------
Edward Randall, III
Director
/s/ Henry Rosovsky
------------------------------------
Henry Rosovsky
Director
/s/ Yoshinao Seki
------------------------------------
Yoshinao Seki
Director
<PAGE> 31
EXHIBIT INDEX
-------------
4.1* - Form of Debt Securities (8-7/8% Notes due 2005).
4.2* - Form of Debt Securities (8-1/4% Notes due 2002).
4.3* - Form of Debt Securities (6-3/4% Notes due 2006).
4.4* - Form of Debt Securities (6-1/4% Notes due 1998).
10.20* - Letter dated as of October 27, 1995 amending certain provisions of
the Employment Agreement between Registrant, PWI and Theodore A.
Levine.
10.23* - Employment Agreement dated as of January 2, 1987 between
Registrant, PaineWebber Incorporated and Donald B. Marron.
10.24* - Employment Agreement dated as of January 2, 1987 between
Registrant, PWI and John A. Bult.
10.25* - Registrant's Supplemental Employee's Retirement Plan For Certain
Senior Officers, as amended, dated January 1, 1990.
10.26* - Deferred Compensation Agreement dated as of August 29, 1988 between
Registrant and Donald B. Marron relating to the Supplemental
Employees Retirement Plan.
10.27* - Deferred Compensation Agreement dated as of August 29, 1988 between
Registrant and John A. Bult relating to the Supplemental Employees
Retirement Plan.
10.37* - Lease Agreement dated as of April 14, 1986, between PWI (as Tenant)
and Hartz-PW Limited Partnership (as Landlord) relating to the
Lincoln Harbor Project (Operations Center) located in Weehawken,
New Jersey.
10.38* - Lease Agreement dated as of April 14, 1986, between PWI (as Tenant)
and Hartz-PW Limited Partnership (as Landlord) relating to the
Lincoln Harbor Project (Data Processing Center) located in
Weehawken, New Jersey.
10.39* - Lease Agreement dated as of April 14, 1986, between PWI (as Tenant)
and Hartz-PW Tower B Limited Partnership, as successor in interest
to Hartz-PW Hotel Limited Partnership relating to the Lincoln
Harbor Project (Tower B/Office Building) located in Weehawken, New
Jersey.
10.40* - Agreement of Limited Partnership of Hartz-PW Limited Partnership
dated April 14, 1986 relating to the Lincoln Harbor Project
(Operation Center and Data Processing Center) located in Weehawken,
New Jersey.
10.41* Agreement of Limited Partnership of Hartz-Tower B Limited
Partnership dated April 14, 1986, as amended relating to the
Lincoln Harbor Project (Tower B/Office Building) located in
Weehawken, New Jersey.
10.42* - Ground lease between Hartz Mountain Industries and Hartz-PW
Limited Partnership dated April 14, 1986 relating to the
Operations Center at the Lincoln Harbor Project in Weehawken.
10.47* - Limited Partnership Agreement of PW Partners 1995 L.P. dated as of
October 31, 1995.
11* - Computation of Earnings per Common Share.
12.1* - Computation of Ratio of Earnings to Combined Fixed
Charges and Preferred Stock Dividends.
12.2* - Computation of Ratio of Earnings to Fixed Charges.
13* - 1995 Annual Report to Stockholders of Registrant.
21* - Subsidiaries of the Registrant.
23* - Consent of Independent Auditors.
27* - Financial Data Schedule.
- ----------------
*Filed herewith.
<PAGE> 1
Exhibit 4.1
REGISTERED REGISTERED
NUMBER
R 0252 Paine Webber Group Inc.
8-7/8% NOTE DUE 2005
CUSIP 695629 AR 6
SEE REVERSE FOR CERTAIN DEFINITIONS
Paine Webber Group Inc., a Delaware corporation (the "Company"),
promises to pay to
8-7/8% 8-7/8%
DUE DUE
2005 2005
, or registered assigns,
the principal sum of Dollars on March 15, 2005.
[REGISTERED]
INTEREST PAYMENT DATES: March 15 and September 15
RECORD DATES: March 1 and September 1
Additional provisions of this Note and certain definitions are set
forth on the reverse hereof.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by the Trustee
under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This in one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
CHEMICAL BANK,
as Trustee
By
Authorized Officer
[PAINE WEBBER GROUP INC.
CORPORATE
S E A L
1 9 7 3
DELAWARE]
Paine Webber Group Inc.,
Attest By
/s/ Theodore A. Levine /s/ David Buchanan
Secretary Chairman of the Board
<PAGE> 2
PAINE WEBBER GROUP INC.
8 7/8% NOTE DUE 2005
1. INDENTURE
This Note is one of a series of unsecured debentures, notes or other evidences
of indebtedness (collectively, the "Securities") of Paine Webber Group Inc., a
Delaware corporation (the "Company"), issued and to be issued under an
Indenture dated as of March 15, 1988 between the Company and the Trustee, as
amended by a supplemental Indenture dated as of September 22, 1989 and by a
supplemental Indenture dated as of March 22, 1991 (as so amended, the
"Indenture"). The Indenture permits the issuance of an unlimited number of
series of Securities in an unlimited aggregate principal amount. This Note is
one of a series designated the 8 7/8% Notes Due 2005 (the "Notes"), which
series is limited in aggregate principal amount to $125,000,000. The Notes are
subject to the terms stated in the Indenture, and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"Act"), and holders of Notes are referred to the Indenture and the Act for a
statement of those terms.
2. INTEREST
The Company promises to pay interest on the principal amount of this
Note at the rate per annum shown above. The Company will pay interest
semiannually on March 15 and September 15 of each year. Interest on the Notes
will accrue from the most recent date to which interest has been paid or if no
interest has been paid from March 15, 1993. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
3. METHOD OF PAYMENT
The Company will pay interest on the Notes (except defaulted interest)
to the persons who are registered Holders of Notes at the close of business on
March 1 or September 1 next preceding the interest payment date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company
will pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. However,
the Company may pay interest by its check payable in such money. It may mail an
interest check to a holder's registered address.
4. PAYING AGENT AND REGISTRAR
Initially, Chemical Bank (the "Trustee") will act as Paying Agent and
Registrar. The Company may change the Paying Agent or Registrar without notice.
5. DENOMINATIONS; TRANSFER; EXCHANGE
The Notes are in registered form without coupons in denominations of
$1,000 and any multiple of $1,000. A holder may transfer or exchange Notes in
accordance with the Indenture. The Registrar may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture.
6. PERSONS DEEMED OWNERS
The registered holder of this Note may be treated as the owner of it for
all purposes.
7. UNCLAIMED MONEY
If money for the payment of principal of or interest on the Notes
remains unclaimed for two years after such principal or interest has become due
and payable, it shall be repaid by the Trustee or Paying Agent to the Company
at its request. Thereafter, holders entitled to the money must look only to the
Company and not to the Trustee or Paying Agent for payment.
8. AMENDMENT; SUPPLEMENT; WAIVER
The Company and the Trustee may, without the consent of any holders of
Securities, agree to amend or supplement the Indenture or the Securities to,
among other things, add to the covenants of the Company for the benefit of
holders of all or any series of Securities, add to the Events of Default with
respect to all or any series of the Securities and, provided that such action
shall not adversely affect the interests of the holders of any series of
Securities in any material respect, cure ambiguities, defects or
inconsistencies in the Indenture or make other provisions. Subject to certain
exceptions, the holders of not less than a majority in principal amount of the
outstanding Securities of any series may waive any past default by the Company,
with respect to such series, on behalf of all holders of Securities of such
series. Subject to certain exceptions, the Company and the Trustee may agree to
amend or supplement the Indenture or the Securities of any series in any manner
with the consent of holders of not less than 66-2/3% in principal amount of the
outstanding Securities of each series to be affected.
9. OBLIGATIONS OF THE COMPANY
The Notes are direct, unsecured obligations of the Company. The
Indenture does not limit the amount of the Company's other unsecured debt.
10. SUCCESSOR CORPORATION
Any successor corporation resulting from a consolidation or merger
involving the Company, or from a conveyance, transfer or lease of the assets of
the Company substantially as an entirety, shall succeed to all rights and
obligations of the Company under the Notes and the Indenture, and thereafter,
except in the case of a lease, the predecessor corporation will be relieved of
all such obligations.
11. DEFAULTS AND REMEDIES
An Event of Default is default for 30 days in payment of any interest on the
Notes; default in payment of any principal on the Notes, default in the
performance or breach by the Company of any covenant or warranty under the
Indenture for the benefit of the Notes and the continuance of the default or
breach for a period of 60 days following receipt of notice of such default or
breach; and certain events of bankruptcy or insolvency affecting the Company.
If an Event of Default occurs and is continuing, the Trustee or the holders of
at least 25% in principal amount of the Notes may declare the principal amount
of the Notes to be due and payable immediately. Holders of Notes may not
enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may refuse to enforce the Indenture or the Notes unless it receives
indemnity satisfactory to it. Subject to the above and other limitations,
holders of a majority in principal amount of the Notes may direct the Trustee
in its exercise of any trust or power with respect to the Notes. The Trustee
may withhold from holders of Notes notice of a default by the Company (except a
default in payment of principal or interest) if it is determined that
withholding notice is in the interest of such holders.
12. TRUSTEE DEALINGS WITH THE COMPANY
Chemical Bank, the Trustee under the Indenture, in its individual or
other capacity may make loans to, accept deposits from and perform services for
the Company or its affiliates, and may otherwise deal with the Company or its
affiliates, as if it were not Trustee.
13. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder of the Company, as such,
shall not have any liability for any obligations of the Company under the Notes
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each holder of a Note by accepting such Note
waives all such claims and releases such directors, officers, employees and
stockholders from all such liability. Such waiver and release are part of the
consideration for the issue of the Notes.
14. COPIES OF INDENTURE
The Company will furnish to any holder of Notes upon written request
and without charge a copy of the Indenture. Requests may be made to: Secretary,
Paine Webber Group Inc., 1285 Avenue of the Americas, New York, New York 10019.
15. GOVERNING LAW
The Notes shall be governed by and construed in accordance with the
laws of the State of New York.
_____________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- ___________ Custodian ___________
(Cust) (Minor)
under Uniform Gifts to Minors Act ________________
(State)
Additional abbreviations may also be used though not in the above list.
_____________________________
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Please print or typewrite name and address
including postal zip code of assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
_______________________________________________________________________attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: ________________________
_______________________________________________
<PAGE> 1
Exhibit 4.2
REGISTERED REGISTERED
NUMBER
R 0254 Paine Webber Group Inc.
8-1/4% NOTE DUE 2002
CUSIP 695629 AS 4
SEE REVERSE FOR CERTAIN DEFINITIONS
Paine Webber Group Inc., a Delaware corporation (the "Company"),
promises to pay to
8-1/4% 8-1/4%
DUE DUE
2002 2002
, or registered assigns,
the principal sum of Dollars on May 1, 2002.
INTEREST PAYMENT DATES: May 1 and November 1
RECORD DATES: April 15 and October 15
Additional provisions of this Note and certain definitions are set
forth on the reverse hereof.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by the Trustee
under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This in one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
CHEMICAL BANK,
as Trustee
By
Authorized Officer
[PAINE WEBBER GROUP INC.
CORPORATE
S E A L
1 9 7 3
DELAWARE]
Paine Webber Group Inc.,
Attest By
/s/ Theodore A. Levine /s/ David Buchanan
Secretary Chairman of the Board
<PAGE> 2
PAINE WEBBER GROUP INC.
8 1/4% NOTE DUE 2002
1. INDENTURE
This Note is one of a series of unsecured debentures, notes or other evidences
of indebtedness (collectively, the "Securities") of Paine Webber Group Inc., a
Delaware corporation (the "Company"), issued and to be issued under an
Indenture dated as of March 15, 1988 between the Company and the Trustee, as
amended by a supplemental Indenture dated as of September 22, 1989 and by a
supplemental Indenture dated as of March 22, 1991 (as so amended, the
"Indenture"). The Indenture permits the issuance of an unlimited number of
series of Securities in an unlimited aggregate principal amount. This Note is
one of a series designated the 8 1/4% Notes Due 2002 (the "Notes"), which
series is limited in aggregate principal amount to $125,000,000. The Notes are
subject to the terms stated in the Indenture, and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"Act"), and holders of Notes are referred to the Indenture and the Act for a
statement of those terms.
2. INTEREST
The Company promises to pay interest on the principal amount of this
Note at the rate per annum shown above. The Company will pay interest
semiannually on May 1 and November 1 of each year. Interest on the Notes
will accrue from the most recent date to which interest has been paid or if no
interest has been paid from May 1, 1995. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
3. METHOD OF PAYMENT
The Company will pay interest on the Notes (except defaulted interest)
to the persons who are registered Holders of Notes at the close of business on
April 15 or October 15 next preceding the interest payment date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company
will pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. However,
the Company may pay interest by its check payable in such money. It may mail an
interest check to a holder's registered address.
4. PAYING AGENT AND REGISTRAR
Initially, Chemical Bank (the "Trustee") will act as Paying Agent and
Registrar. The Company may change the Paying Agent or Registrar without notice.
5. DENOMINATIONS; TRANSFER; EXCHANGE
The Notes are in registered form without coupons in denominations of
$1,000 and any multiple of $1,000. A holder may transfer or exchange Notes in
accordance with the Indenture. The Registrar may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture.
6. PERSONS DEEMED OWNERS
The registered holder of this Note may be treated as the owner of it for
all purposes.
7. UNCLAIMED MONEY
If money for the payment of principal of or interest on the Notes
remains unclaimed for two years after such principal or interest has become due
and payable, it shall be repaid by the Trustee or Paying Agent to the Company
at its request. Thereafter, holders entitled to the money must look only to the
Company and not to the Trustee or Paying Agent for payment.
8. AMENDMENT; SUPPLEMENT; WAIVER
The Company and the Trustee may, without the consent of any holders of
Securities, agree to amend or supplement the Indenture or the Securities to,
among other things, add to the covenants of the Company for the benefit of
holders of all or any series of Securities, add to the Events of Default with
respect to all or any series of the Securities and, provided that such action
shall not adversely affect the interests of the holders of any series of
Securities in any material respect, cure ambiguities, defects or
inconsistencies in the Indenture or make other provisions. Subject to certain
exceptions, the holders of not less than a majority in principal amount of the
outstanding Securities of any series may waive any past default by the Company,
with respect to such series, on behalf of all holders of Securities of such
series. Subject to certain exceptions, the Company and the Trustee may agree to
amend or supplement the Indenture or the Securities of any series in any manner
with the consent of holders of not less than 66-2/3% in principal amount of the
outstanding Securities of each series to be affected.
9. OBLIGATIONS OF THE COMPANY
The Notes are direct, unsecured obligations of the Company. The
Indenture does not limit the amount of the Company's other unsecured debt.
10. SUCCESSOR CORPORATION
Any successor corporation resulting from a consolidation or merger
involving the Company, or from a conveyance, transfer or lease of the assets of
the Company substantially as an entirety, shall succeed to all rights and
obligations of the Company under the Notes and the Indenture, and thereafter,
except in the case of a lease, the predecessor corporation will be relieved of
all such obligations.
11. DEFAULTS AND REMEDIES
An Event of Default is default for 30 days in payment of any interest on the
Notes; default in payment of any principal on the Notes, default in the
performance or breach by the Company of any covenant or warranty under the
Indenture for the benefit of the Notes and the continuance of the default or
breach for a period of 60 days following receipt of notice of such default or
breach; and certain events of bankruptcy or insolvency affecting the Company.
If an Event of Default occurs and is continuing, the Trustee or the holders of
at least 25% in principal amount of the Notes may declare the principal amount
of the Notes to be due and payable immediately. Holders of Notes may not
enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may refuse to enforce the Indenture or the Notes unless it receives
indemnity satisfactory to it. Subject to the above and other limitations,
holders of a majority in principal amount of the Notes may direct the Trustee
in its exercise of any trust or power with respect to the Notes. The Trustee
may withhold from holders of Notes notice of a default by the Company (except a
default in payment of principal or interest) if it is determined that
withholding notice is in the interest of such holders.
12. TRUSTEE DEALINGS WITH THE COMPANY
Chemical Bank, the Trustee under the Indenture, in its individual or
other capacity may make loans to, accept deposits from and perform services for
the Company or its affiliates, and may otherwise deal with the Company or its
affiliates, as if it were not Trustee.
13. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder of the Company, as such,
shall not have any liability for any obligations of the Company under the Notes
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each holder of a Note by accepting such Note
waives all such claims and releases such directors, officers, employees and
stockholders from all such liability. Such waiver and release are part of the
consideration for the issue of the Notes.
14. COPIES OF INDENTURE
The Company will furnish to any holder of Notes upon written request
and without charge a copy of the Indenture. Requests may be made to: Secretary,
Paine Webber Group Inc., 1285 Avenue of the Americas, New York, New York 10019.
15. GOVERNING LAW
The Notes shall be governed by and construed in accordance with the
laws of the State of New York.
_____________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- ___________ Custodian ___________
(Cust) (Minor)
under Uniform Gifts to Minors Act ________________
(State)
Additional abbreviations may also be used though not in the above list.
_____________________________
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Please print or typewrite name and address
including postal zip code of assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
_______________________________________________________________________attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: ________________________
_______________________________________________
<PAGE> 1
Exhibit 4.3
REGISTERED REGISTERED
NUMBER
R Paine Webber Group Inc.
6-3/4% NOTE DUE 2006
CUSIP 695629 AT 2
SEE REVERSE FOR CERTAIN DEFINITIONS
Paine Webber Group Inc., a Delaware corporation (the "Company"),
promises to pay to
6-3/4% 6-3/4%
DUE DUE
2006 2006
, or registered assigns,
the principal sum of Dollars on February 1, 2006.
INTEREST PAYMENT DATES: February 1 and August 1
RECORD DATES: January 15 and July 15
Additional provisions of this Note and certain definitions are set
forth on the reverse hereof.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by the Trustee
under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This in one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
CHEMICAL BANK,
as Trustee
By
Authorized Officer
[PAINE WEBBER GROUP INC.
CORPORATE
S E A L
1 9 7 3
DELAWARE]
Paine Webber Group Inc.,
Attest By
/s/ Theodore A. Levine /s/ David Buchanan
Secretary Chairman of the Board
<PAGE> 2
PAINE WEBBER GROUP INC.
6 3/4% NOTE DUE 2006
1. INDENTURE
This Note is one of a series of unsecured debentures, notes or other evidences
of indebtedness (collectively, the "Securities") of Paine Webber Group Inc., a
Delaware corporation (the "Company"), issued and to be issued under an
Indenture dated as of March 15, 1988 between the Company and the Trustee, as
amended by a supplemental Indenture dated as of September 22, 1989 and by a
supplemental Indenture dated as of March 22, 1991 (as so amended, the
"Indenture"). The Indenture permits the issuance of an unlimited number of
series of Securities in an unlimited aggregate principal amount. This Note is
one of a series designate the 6 3/4% Notes Due 2006 (the "Notes"), which
series is limited in aggregate principal amount to $100,000,000. The Notes are
subject to the terms stated in the Indenture, and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"Act"), and holders of Notes are referred to the Indenture and the Act for a
statement of those terms.
2. INTEREST
The Company promises to pay interest on the principal amount of this
Note at the rate per annum shown above. The Company will pay interest
semiannually on February 1 and August 1 of each year. Interest on the Notes
will accrue from the most recent date to which interest has been paid or if no
interest has been paid from February 1, 1996. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
3. METHOD OF PAYMENT
The Company will pay interest on the Notes (except defaulted interest)
to the persons who are registered Holders of Notes at the close of business on
January 15 or July 15 next preceding the interest payment date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company
will pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. However,
the Company may pay interest by its check payable in such money. It may mail an
interest check to a holder's registered address.
4. PAYING AGENT AND REGISTRAR
Initially, Chemical Bank (the "Trustee") will act as Paying Agent and
Registrar. The Company may change the Paying Agent or Registrar without notice.
5. DENOMINATIONS; TRANSFER; EXCHANGE
The Notes are in registered form without coupons in denominations of
$1,000 and any multiple of $1,000. A holder may transfer or exchange Notes in
accordance with the Indenture. The Registrar may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture.
6. PERSONS DEEMED OWNERS
The registered holder of this Note may be treated as the owner of it for
all purposes.
7. UNCLAIMED MONEY
If money for the payment of principal of or interest on the Notes
remains unclaimed for two years after such principal or interest has become due
and payable, it shall be repaid by the Trustee or Paying Agent to the Company
at its request. Thereafter, holders entitled to the money must look only to the
Company and not to the Trustee or Paying Agent for payment.
8. AMENDMENT; SUPPLEMENT; WAIVER
The Company and the Trustee may, without the consent of any holders of
Securities, agree to amend or supplement the Indenture or the Securities to,
among other things, add to the covenants of the Company for the benefit of
holders of all or any series of Securities, add to the Events of Default with
respect to all or any series of the Securities and, provided that such action
shall not adversely affect the interests of the holders of any series of
Securities in any material respect, cure ambiguities, defects or
inconsistencies in the Indenture or make other provisions. Subject to certain
exceptions, the holders of not less than a majority in principal amount of the
outstanding Securities of any series may waive any past default by the Company,
with respect to such series, on behalf of all holders of Securities of such
series. Subject to certain exceptions, the Company and the Trustee may agree to
amend or supplement the Indenture or the Securities of any series in any manner
with the consent of holders of not less than 66-2/3% in principal amount of the
outstanding Securities of each series to be affected.
9. OBLIGATIONS OF THE COMPANY
The Notes are direct, unsecured obligations of the Company. The
Indenture does not limit the amount of the Company's other unsecured debt.
10. SUCCESSOR CORPORATION
Any successor corporation resulting from a consolidation or merger
involving the Company, or from a conveyance, transfer or lease of the assets of
the Company substantially as an entirety, shall succeed to all rights and
obligations of the Company under the Notes and the Indenture, and thereafter,
except in the case of a lease, the predecessor corporation will be relieved of
all such obligations.
11. DEFAULTS AND REMEDIES
An Event of Default is default for 30 days in payment of any interest on the
Notes; default in payment of any principal on the Notes, default in the
performance or breach by the Company of any covenant or warranty under the
Indenture for the benefit of the Notes and the continuance of the default or
breach for a period of 60 days following receipt of notice of such default or
breach; and certain events of bankruptcy or insolvency affecting the Company.
If an Event of Default occurs and is continuing, the Trustee or the holders of
at least 25% in principal amount of the Notes may declare the principal amount
of the Notes to be due and payable immediately. Holders of Notes may not
enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may refuse to enforce the Indenture or the Notes unless it receives
indemnity satisfactory to it. Subject to the above and other limitations,
holders of a majority in principal amount of the Notes may direct the Trustee
in its exercise of any trust or power with respect to the Notes. The Trustee
may withhold from holders of Notes notice of a default by the Company (except a
default in payment of principal or interest) if it is determined that
withholding notice is in the interest of such holders.
12. TRUSTEE DEALINGS WITH THE COMPANY
Chemical Bank, the Trustee under the Indenture, in its individual or
other capacity may make loans to, accept deposits from and perform services for
the Company or its affiliates, and may otherwise deal with the Company or its
affiliates, as if it were not Trustee.
13. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder of the Company, as such,
shall not have any liability for any obligations of the Company under the Notes
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each holder of a Note by accepting such Note
waives all such claims and releases such directors, officers, employees and
stockholders from all such liability. Such waiver and release are part of the
consideration for the issue of the Notes.
14. COPIES OF INDENTURE
The Company will furnish to any holder of Notes upon written request
and without charge a copy of the Indenture. Requests may be made to: Secretary,
Paine Webber Group Inc., 1285 Avenue of the Americas, New York, New York 10019.
15. GOVERNING LAW
The Notes shall be governed by and construed in accordance with the
laws of the State of New York.
_____________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- ___________ Custodian ___________
(Cust) (Minor)
under Uniform Gifts to Minors Act ________________
(State)
Additional abbreviations may also be used though not in the above list.
_____________________________
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Please print or typewrite name and address
including postal zip code of assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
_______________________________________________________________________attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: ________________________
_______________________________________________
<PAGE> 1
EXHIBIT 4.4
REGISTERED REGISTERED
NUMBER
R Paine Webber Group Inc.
6 1/4% NOTE DUE 1998
CUSIP 695629 AN 5
SEE REVERSE FOR CERTAIN DEFINITIONS
Paine Webber Group Inc., a Delaware corporation (the "Company"),
promises to pay to
6 1/4% 6 1/4%
DUE DUE
1998 1998
, or registered assigns,
the principal sum of Dollars on June 15, 1998.
INTEREST PAYMENT DATES: June 15 and December 15
RECORD DATES: June 1 and December 1
Additional provisions of this Note and certain definitions are set
forth on the reverse hereof.
This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by the Trustee
under the Indenture referred to on the reverse hereof.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This in one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
CHEMICAL BANK,
as Trustee
By
Authorized Officer
[PAINE WEBBER GROUP INC.
CORPORATE
S E A L
1 9 7 3
DELAWARE]
Paine Webber Group Inc.,
Attest By
/s/ Theodore A. Levine /s/ Donald B. Marron
Secretary Chairman of the Board
<PAGE> 2
PAINE WEBBER GROUP INC.
6 1/4% NOTE DUE 1998
1. INDENTURE
This Note is one of a series of unsecured debentures, notes or other evidences
of indebtedness (collectively, the "Securities") of Paine Webber Group Inc., a
Delaware corporation (the "Company"), issued and to be issued under an
Indenture dated as of March 15, 1988 between the Company and the Trustee, as
amended by a supplemental Indenture dated as of September 22, 1989 and by a
supplemental Indenture dated as of March 22, 1991 (as so amended, the
"Indenture"). The Indenture permits the issuance of an unlimited number of
series of Securities in an unlimited aggregate principal amount. This Note is
one of a series designated the 6 1/4% Notes Due 1998 (the "Notes"), which
series is limited in aggregate principal amount to $200,000,000. The Notes are
subject to the terms stated in the Indenture, and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"Act"), and holders of Notes are referred to the Indenture and the Act for a
statement of those terms.
2. INTEREST
The Company promises to pay interest on the principal amount of this
Note at the rate per annum shown above. The Company will pay interest
semiannually on June 15 and December 15 of each year. Interest on the Notes
will accrue from the most recent date to which interest has been paid or if no
interest has been paid from June 15, 1993. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
3. METHOD OF PAYMENT
The Company will pay interest on the Notes (except defaulted interest)
to the persons who are registered Holders of Notes at the close of business on
June 1 or December 1 next preceding the interest payment date. Holders must
surrender Notes to a Paying Agent to collect principal payments. The Company
will pay principal and interest in money of the United States that at the time
of payment is legal tender for payment of public and private debts. However,
the Company may pay interest by its check payable in such money. It may mail an
interest check to a holder's registered address.
4. PAYING AGENT AND REGISTRAR
Initially, Chemical Bank (the "Trustee") will act as Paying Agent and
Registrar. The Company may change the Paying Agent or Registrar without notice.
5. DENOMINATIONS; TRANSFER; EXCHANGE
The Notes are in registered form without coupons in denominations of
$1,000 and any multiple of $1,000. A holder may transfer or exchange Notes in
accordance with the Indenture. The Registrar may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture.
6. PERSONS DEEMED OWNERS
The registered holder of this Note may be treated as the owner of it for
all purposes.
7. UNCLAIMED MONEY
If money for the payment of principal of or interest on the Notes
remains unclaimed for two years after such principal or interest has become due
and payable, it shall be repaid by the Trustee or Paying Agent to the Company
at its request. Thereafter, holders entitled to the money must look only to the
Company and not to the Trustee or Paying Agent for payment.
8. AMENDMENT; SUPPLEMENT; WAIVER
The Company and the Trustee may, without the consent of any holders of
Securities, agree to amend or supplement the Indenture or the Securities to,
among other things, add to the covenants of the Company for the benefit of
holders of all or any series of Securities, add to the Events of Default with
respect to all or any series of the Securities and, provided that such action
shall not adversely affect the interests of the holders of any series of
Securities in any material respect, cure ambiguities, defects or
inconsistencies in the Indenture or make other provisions. Subject to certain
exceptions, the holders of not less than a majority in principal amount of the
outstanding Securities of any series may waive any past default by the Company,
with respect to such series, on behalf of all holders of Securities of such
series. Subject to certain exceptions, the Company and the Trustee may agree to
amend or supplement the Indenture or the Securities of any series in any manner
with the consent of holders of not less than 66-2/3% in principal amount of the
outstanding Securities of each series to be affected.
9. OBLIGATIONS OF THE COMPANY
The Notes are direct, unsecured obligations of the Company. The
Indenture does not limit the amount of the Company's other unsecured debt.
10. SUCCESSOR CORPORATION
Any successor corporation resulting from a consolidation or merger
involving the Company, or from a conveyance, transfer or lease of the assets of
the Company substantially as an entirety, shall succeed to all rights and
obligations of the Company under the Notes and the Indenture, and thereafter,
except in the case of a lease, the predecessor corporation will be relieved of
all such obligations.
11. DEFAULTS AND REMEDIES
An Event of Default is default for 30 days in payment of any interest on the
Notes; default in payment of any principal on the Notes, default in the
performance or breach by the Company of any covenant or warranty under the
Indenture for the benefit of the Notes and the continuance of the default or
breach for a period of 60 days following receipt of notice of such default or
breach; and certain events of bankruptcy or insolvency affecting the Company.
If an Event of Default occurs and is continuing, the Trustee or the holders of
at least 25% in principal amount of the Notes may declare the principal amount
of the Notes to be due and payable immediately. Holders of Notes may not
enforce the Indenture or the Notes except as provided in the Indenture. The
Trustee may refuse to enforce the Indenture or the Notes unless it receives
indemnity satisfactory to it. Subject to the above and other limitations,
holders of a majority in principal amount of the Notes may direct the Trustee
in its exercise of any trust or power with respect to the Notes. The Trustee
may withhold from holders of Notes notice of a default by the Company (except a
default in payment of principal or interest) if it is determined that
withholding notice is in the interest of such holders.
12. TRUSTEE DEALINGS WITH THE COMPANY
Chemical Bank, the Trustee under the Indenture, in its individual or
other capacity may make loans to, accept deposits from and perform services for
the Company or its affiliates, and may otherwise deal with the Company or its
affiliates, as if it were not Trustee.
13. NO RECOURSE AGAINST OTHERS
A director, officer, employee or stockholder of the Company, as such,
shall not have any liability for any obligations of the Company under the Notes
or the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. Each holder of a Note by accepting such Note
waives all such claims and releases such directors, officers, employees and
stockholders from all such liability. Such waiver and release are part of the
consideration for the issue of the Notes.
14. COPIES OF INDENTURE
The Company will furnish to any holder of Notes upon written request
and without charge a copy of the Indenture. Requests may be made to: Secretary,
Paine Webber Group Inc., 1285 Avenue of the Americas, New York, New York 10019.
15. GOVERNING LAW
The Notes shall be governed by and construed in accordance with the
laws of the State of New York.
_____________________________
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- ___________ Custodian ___________
(Cust) (Minor)
under Uniform Gifts to Minors Act ________________
(State)
Additional abbreviations may also be used though not in the above list.
_____________________________
FOR VALUE RECEIVED the undersigned hereby sell(s),
assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
______________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Please print or typewrite name and address
including postal zip code of assignee
_______________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
_______________________________________________________________________attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: ________________________
_______________________________________________
<PAGE> 1
Exhibit 10.20
[PAINEWEBBER LETTERHEAD]
as of
October 27, 1995
Mr. Donald B. Marron
Chairman and Chief Executive Officer
PaineWebber Group Inc.
1285 Avenue of the Americas
New York, New York 10019
Mr. Joseph Jr. Grano, Jr.
President
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Don and Joe:
This is in reference to the Employment Contract dated May 4, 1993 between
PaineWebber Group Inc. and PaineWebber Incorporated and the undersigned, a copy
of which is attached. It is mutually understood and agreed that, by accepting
the terms and conditions of the Executive Compensation Program which is set
forth in the October 16, 1995 memo from you to me, the annual bonus provision of
paragraph 5 of the May 4, 1993 Employment Contract with respect to 1995 and 1996
and the provisions of paragraphs 9(a) and (b) of the May 4, 1993 Employment
Contract concerning non-competition are null and void. It is further understood
and agreed that, in all other respects, the May 4, 1993 Employment Contract
remains in effect as a valid and binding agreement.
Very truly yours,
/s/ Theodore A. Levine
Theodore A. Levine
<PAGE> 1
Exhibit 10.23
EMPLOYMENT AGREEMENT
AGREEMENT dated as of January 2, 1987, by and
between PAINE WEBBER GROUP INC., a Delaware
corporation with its principal office at 1285 Avenue
of the Americas, New York, New York 10019 ("PWG"),
PAINEWEBBER INCORPORATED, a Delaware corporation with
its principal office at 1285 Avenue of the Americas,
New York, New York 10019 ("PWI"), as the employers,
and DONALD B. MARRON, who resides at 555 Park Avenue,
New York, New York 10021, as the employee (the
"Executive").
WHEREAS, the Executive has been serving as President and Chief
Executive Officer of PWG and as Chairman of the Board of Directors of PWG (the
"PWG Board") and as Chief Executive Officer of PWI and Chairman of the Board of
Directors of PWI; and
WHEREAS, PWG and PWI each desire to assure the Executive of his rights
to compensation and benefits that are granted to him because of his service in
the foregoing capacities, and Executive desires to continue to serve in such
capacities in consideration of the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants set forth herein and for other good and valuable consideration, PWG,
PWI and the Executive hereby agree as follows:
1. Definitions.
(a) "Cause shall mean (i) the Executive is convicted of a crime
involving moral turpitude, or (ii) the Executive, in carrying out his duties, is
guilty of (A) willful gross neglect or (B) willful gross misconduct resulting,
in either case, in material harm to PWG or PWI unless such act, or failure to
act, was believed by the Executive in good faith to be in the best interests of
PWG or PWI.
(b) a "Change in Control" shall be deemed to have occurred if:
<PAGE> 2
2
(i) any "person", as such term is used in Sections 13(d) and 14(d)
(2) of the Securities Exchange Act of 1934 (the "Act"), becomes a
beneficial owner, as such term is used in Rule 13d-3 promulgated under the
Act, of securities of PWG or PWI representing 20% or more of the combined
voting power of the outstanding securities of PWG or PWI, as the case may
be, having the right to vote in the election of directors (any such owner
being herein referred to as an "Acquiring Person");
(ii) a majority of the PWG Board at any time consists of
individuals elected to membership at a PWG Board meeting or a PWG
shareholders' meeting other than individuals nominated or approved by a
majority of the Disinterested Directors;
(iii) all or substantially all the business of PWI is disposed of
pursuant to a merger, consolidation or other transaction (other than a
merger, consolidation or other transaction with a company of which 50% or
more of the combined voting power of the outstanding securities having a
right to vote at the election of directors is owned, directly or
indirectly, by PWG both before and immediately after the merger,
consolidation or other transaction) in which PWI is not the surviving
corporation or PWG is materially or completely liquidated; or
(iv) PWG or PWI combines with another company and is the surviving
corporation (other than a merger, consolidation or other transaction with a
company of which 50% or more of the combined voting power of the
outstanding securities having a right to vote at the election of directors
is owned, directly or indirectly, by PWG both before and immediately after
the merger, consolidation or other transaction) but, immediately after the
combination, the shareholders of PWG hold, directly or indirectly, less
than 50% of the total outstanding securities of the combined company having
the right to vote in the election of directors.
(c) "Disinterested Director" shall mean any member of the PWG Board (i)
who is not an officer or employee of PWG, PWI or any of their subsidiaries, (ii)
who is not an Acquiring Person or an affiliate or associate of an Acquiring
Person or a nominee or representative of an Acquiring Person or of any such
affiliate or associate and (iii) who was a member of the PWG Board prior to the
date of this
<PAGE> 3
3
Agreement or was recommended for election or elected by a majority of the
Disinterested Directors then on the PWG Board.
(d) "Constructive Termination" shall mean that, without the Executive's
prior written consent, one or more of the following events occurs and, within
six months thereafter, the Executive, on his own initiative, terminates his
employment:
(i) The Executive is not reelected to or is otherwise removed from
the position of Chairman of the Board of PWG or Chairman of the Board of
PWI as described in Section 2(a) for any reason other than his termination
of employment under Section 10(a), 10(b) or 10(d).
(ii) The Executive is assigned any duties or responsibilities that
are inconsistent, in any significant respect, with the scope of duties and
responsibilities associated with his positions and offices as described in
Section 2(a).
(iii) The Executive suffers a reduction in the authorities, duties
and responsibilities associated with his positions and offices as described
in Section 2(a) on the basis of which he makes a determination in good
faith that he can no longer carry out such positions or offices in the
manner contemplated at the time this Agreement was entered into.
(iv) The Executive's base salary or annual bonus decreases below
the minimum level provided in Section 3 or 4, as the case may be, or his
benefits under any employee benefit plan or program of PWG or PWI, or his
incentive opportunity under any incentive program of PWG or PWI is
materially reduced below the level, or opportunity, as the case may be, in
effect on the Operative Date, unless PWG or PWI provides the Executive with
a comparable plan or program having the economic equivalent thereof.
(v) The principal office of PWG or PWI or the Executive's own
office location as assigned to him by PWG or PWI is relocated outside of
Manhattan.
(e) "Disability" shall mean the Executive's inability to render for a
period of six consecutive months, full and effective services hereunder by
reason of permanent
<PAGE> 4
4
disability, whether resulting from illness, accident or otherwise; provided,
however, that in no event will the Executive be considered disabled for the
purposes of this Agreement unless he is deemed disabled pursuant to the PWG Long
Term Disability Plan.
(f) "Operative Date" shall mean the date, if any, following a Change in
Control that has been designated in a resolution adopted by a majority of the
Disinterested Directors, in their sole discretion, as the Operative Date.
(g) "Pro Rata Bonus" shall mean an amount equal to the annual bonus
otherwise payable with respect to the fiscal year in question multiplied by a
fraction, the numerator of which is the number of days in such fiscal year
during which the Executive is employed, and the denominator of which is 365.
(h) "Term of this Agreement" shall mean the period between the
Operative Date and the third anniversary thereof, but only if the Executive is
employed by PWG or PWI on the Operative Date.
2. Positions and Duties.
(a) During the Term of this Agreement, the Executive shall be employed
as President and Chief Executive Officer of PWG and as Chairman of the Board and
Chief Executive Officer of PWI, and it is the intention of the parties during
the Term of this Agreement that the Executive shall serve as Chairman of the PWG
Board. The Executive shall during the Term of this Agreement be responsible for
the overall policy of and the accomplishment of plans and objectives of PWG and
PWI. The Executive, in carrying out his duties, during the Term of this
Agreement, shall report to the PWG Board. During the Term of this Agreement and
subject to the provisions of Section 2(b), the Executive shall devote reasonable
business time and attention to the business and affairs of PWG and PWI and shall
use his best efforts, skills and abilities to promote their interests.
(b) Anything herein to the contrary notwithstanding, nothing shall
preclude the Executive from serving on the boards of directors of other
companies, engaging in charitable and community affairs (including his serving
as President of the Museum of Modern Art) and managing his personal investments,
provided that such activities do not materially interfere with the performance
of his duties or responsibilities hereunder.
<PAGE> 5
5
3. Salary.
During the Term of this Agreement, the Executive shall be paid by PWI a
base salary payable no less frequently than in equal semi-monthly installments
at an annualized rate of no less than the annual salary being paid to the
Executive on the Operative Date. Such base salary shall be reviewed annually for
increase in the discretion of the Compensation Committee of the PWG Board (the
"Committee"), taking into account such factors as corporate and individual
performance, salary increases for other senior officers and increases, if any,
in the Consumer Price Index for New York (the "Consumer Price Index").
4. Annual Bonus.
For each fiscal year during the Term of this Agreement, PWI shall pay
the Executive an annual bonus of not less than the average of the three annual
bonuses awarded to him for the three fiscal years of PWI next preceding the
Operative Date or such larger amount as the Committee in its discretion shall
determine, taking into account such factors as corporate and individual
performance, bonuses for other senior officers and increases, if any, in the
Consumer Price Index. For the period of employment during the last fiscal year
in which falls the Term of this Agreement, PWI shall pay the Executive a Pro
Rata Bonus. All bonuses shall be paid to the Executive at the same time bonuses
are paid to other senior officers of PWI, unless the Executive has elected to
defer receipt of all or part of the bonus to which he is entitled in respect of
such fiscal year in accordance with the terms of the PWI Deferred Compensation
Program.
5. Restricted Stock.
During the Term of this Agreement, the Executive shall be entitled to
participate in the Restricted Stock Award Program under the Paine Webber Group
Inc. 1986 Stock Award Plan (the "Stock Award Plan"), or any successor program or
programs. Size and frequency of awards shall be determined in accordance with
administrative policies consistent with those followed in the past.
6. Stock Option and Stock Appreciation Rights Awards.
During the Term of this Agreement, the Executive shall be entitled to
participate in the Stock Option program
<PAGE> 6
6
under the Stock Award Plan, or any successor program or programs. Size and
frequency of awards shall be determined in accordance with administrative
policies consistent with those followed in the past.
7. PW Partners L.P.
During the Term of this Agreement, the Executive shall be eligible to
participate in PW Partners L.P.
8. Employee Benefit Programs.
During the Term of this Agreement, the Executive shall be entitled to
participate in all employee benefit programs of PWG or PWI now or hereafter made
available to PWG or PWI executives or salaried employees generally, as such
programs may be in effect from time to time, including, without limitation,
pension and other retirement plans, profit sharing plans, group life insurance,
accidental death and dismemberment insurance, hospitalization, surgical, major
medical coverage, sick leave (including salary continuation arrangements),
long-term disability, vacations, holidays and other employee benefit programs
sponsored by PWG or PWI.
9. Business Expense Reimbursement and Perquisites.
(a) During the Term of this Agreement, the Executive shall be entitled
to receive Proper reimbursement by PWG or PWI for all reasonable, out-of-pocket
expenses incurred by him (in accordance with the policies and procedures
established by PWG or PWI for their senior executives) in performing services
under this Agreement, provided that the Executive submits reasonable
documentation with respect to such expenses.
(b) During the Term of this Agreement, the Executive shall also be
entitled to any of the PWG or PWI executive perquisites in accordance with the
terms and provisions of such arrangements as are in effect and applicable on the
Operative Date.
10. Termination of Employment.
(a) Termination Due to Death or Disability. In the event the
Executive's employment terminates during the Term of this Agreement as a result
of death or termination
<PAGE> 7
7
by PWG or PWI due to Disability, the Executive or his legal representative, as
the case may be, shall be entitled to:
(i) base salary as provided in Section 3, at the rate in effect at
the time of his termination through the date of termination of employment;
(ii) any bonus awarded but not yet paid under Section 4;
(iii) a Pro Rata Bonus for the fiscal year in which death or
disability occurs;
(iv) any deferred bonus as provided in Section 4, including
interest or other credits on the deferred amounts;
(v) reimbursement for expenses incurred pursuant to Section 9(a)
prior to termination; and
(vi) such rights to other compensation and benefits as may be
provided in applicable plans and programs of PWG or PWI, including without
limitation restricted stock as provided in Section 5, stock options as
provided in Section 6 and interests in PW Partners L.P. as provided in
Section 7, as well as applicable employee benefit plans and programs as
provided in Section 8.
(b) Termination by PWG or PWI for Cause. In the event PWG or PWI
terminates the Executive's employment during the Term of this Agreement for
Cause, he shall be entitled to:
(i) base salary as provided in Section 3 at the rate in effect at the
time of his termination through the date of termination of employment;
(ii) any bonus awarded but not yet paid under Section 4;
(iii) any deferred bonus as provided in Section 4, including interest
or other credits on the deferred amounts;
(iv) reimbursement for expenses incurred pursuant to Section 9(a) prior
to termination; and
<PAGE> 8
8
(v) such rights to other compensation and benefits as may be provided
in applicable plans and programs of PWG or PWI, including without
limitation restricted stock as provided in Section 5, stock options as
provided in Section 6, and interests in PW Partners L.P. as provided in
Section 7, as well as applicable employee benefit plans and programs as
provided in Section 8.
In any case described in this Section 10(b), the Executive shall be
given written notice, authorized by a vote of at least a majority of the members
of the PWG Board (excluding the Executive), that PWG or PWI intends to terminate
his employment for Cause under this Section 10(b). Such written notice shall
specify the particular acts, or failures to act, on the basis of which the
decision to so terminate employment has been made. The Executive shall be given
the opportunity within 20 days of the receipt of such notice to meet with the
PWG Board to defend such acts, or failures to act, and the Executive shall be
given seven days after such meeting to correct such acts or failures to act.
Upon failure of the Executive, within seven days, to correct such acts or
failures to act, the Executive's employment by PWG and PWI shall automatically
be terminated for Cause under this Section 10(b).
(c) Termination Without Cause or Constructive Termination.
(i) In the event that during the Term of this Agreement (A) either PWG
or PWI terminates the Executive's employment without Cause, other than due to
Disability, or (B) there is a Constructive Termination, the Executive shall
thereupon be entitled to (x) a lump sum payment equal to the present value of:
(aa) base salary until the end of the Term of this Agreement at the
rate in effect immediately prior to the termination of employment;
(bb) a bonus for the year of termination and bonuses for each year
until the end of the Term of this Agreement, at an annualized rate equal to
the average of the bonuses awarded to him with respect to the three years
preceding the year in which termination occurs; and
(cc) any bonus awarded but not yet paid (including deferred bonus);
and (y) such rights to
<PAGE> 9
9
compensation, benefits and reimbursements as may be provided in applicable
plans, programs and policies of PWG or PWI, including without limitation
restricted stock as provided in Section 5, stock options as provided in
Section 6 and interests in PW Partners L.P. as provided in Section 7, as
well as applicable employee benefit plans and programs as provided in
Section 8. To the extent that, because of his termination under this
Section 10(c), the Executive is ineligible for continued employee benefit
coverage under the employee benefit programs as provided in Section 8, PWI
shall provide him with the economic equivalent thereof.
(ii) Notwithstanding anything herein to the contrary, if
(A) any amounts due under Section 10(c)(i) constitute "Parachute
Payments" within the meaning of Section 280G(b)(2) of the Internal Revenue
Code (the "Code"), or successor provision, and
(B) the amount of the Parachute Payments, reduced by all Federal,
state and local taxes applicable with respect thereto, including the excise
tax imposed pursuant to Section 4999 of the Code, is less than the amount
he would receive, after taxes, if he were paid only 2.99 times his "Base
Amount" within the meaning of Section 280G(b)(3), then, in lieu of the
Parachute Payments the Executive shall be paid an amount in cash equal to
2.99 times the Base Amount. The determinations made with respect to this
Section 10(c) (ii) shall be made by an independent auditor (the "Auditor")
jointly selected by PWG and the Executive, or his legal representatives.
The Auditor shall be a nationally recognized United States public
accounting firm which has not, during the two years preceding the date of
its selection, acted in any way on behalf of PWG or its affiliates.
(iii) Any payments to which the Executive shall be entitled under this
Section 10(c) shall be made as promptly as possible following the termination of
the Executive's employment hereunder.
(iv) In the event that during the term of this Agreement (A) either PWG
or PWI terminates the Executive's employment without Cause, other than due to
Disability, or (B) there is a Constructive Termination, either PWG or PWI shall
provide, at its expense, the following to the
<PAGE> 10
10
Executive for a period of ten years from the date of such Termination or
Constructive Termination:
(aa) the use of a full-time car and driver;
(bb) a suitable office in midtown Manhattan having furnishings and
a quality of building comparable to the office being provided to him
immediately before the Operative Date with respect to such Termination or
Constructive Termination;
(cc) an executive assistant having a comparable skill level to that
of the individual serving in such capacity on such Operative Date, such
executive assistant to have salary and benefits no less than those in
effect from time to time for the comparable level position at PWG or PWI;
and
(dd) continued coverage for him and those members of his immediate
family who are eligible to participate under the terms of the then existing
PWG or PWI medical or disability plans and programs.
(d) Voluntary Termination. A "Voluntary Termination" under this Section
10(d) shall mean a termination of employment, during the Term of this Agreement,
by the Executive on his own initiative other than (i) a termination due to
disability under Section 10(a) or (ii) a Constructive Termination under Section
10(c). Such a termination shall not be deemed a breach of the Agreement and
shall entitle the Executive to all of the rights and benefits to which he would
be entitled in the event of a termination for Cause as described in Section
10(b).
(e) No Mitigation; No Offset. In the event of any termination under
this Section 10, the Executive shall be under no obligation to seek other
employment and there shall be no offset against amounts due the Executive under
this Section 10 on account of any remuneration attributable to any subsequent
employment that the Executive may obtain. Any amounts due under this Section 10
are in the nature of severance payments, or liquidated damages, or both, and are
not in the nature of a penalty.
11. Indemnification.
PWG and PWI represent that, while the Executive is employed under this
Agreement, he shall be serving as an officer of PWI at the request of PWG for
purposes of the
<PAGE> 11
11
provisions of Article IX of the Restated Certificate of Incorporation of PWG as
proposed to the PWG stockholders to be amended at the 1987 Annual Meeting of
Stockholders of PWG and as an officer of PWI for purposes of the provisions of
Article X of the Restated Certificate of Incorporation of PWI as in effect on
the date hereof. If either Certificate is amended so as to remove or diminish
the Protection therein accorded to covered officers, PWG and/or PWI will notify
the Executive within five days of such removal or diminution. PWG and PWI
further agree to maintain the same liability insurance coverage for the
Executive with respect to all periods during which the Executive serves or
served as an officer of PWG or PWI as is maintained with respect to such periods
for other senior executives of PWG and PWI.
12. Disputes
Any controversy or claim arising out of or relating to this Agreement,
or any breach thereof, shall be settled by arbitration in accordance with the
rules of the American Arbitration Association then in effect in the State of New
York, and judgment upon such award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. The arbitration shall be held in
Manhattan. The cost of the arbitration including, but not limited to, any
reasonable legal fees or other expenses incident thereto, shall be determined by
the arbitrator(s) and shall be borne by the parties to the arbitration. To the
extent the Executive's position is upheld, any reasonable expenses (including
costs of witnesses, evidence, and attorneys) incurred by the Executive in
connection with the arbitration shall be reimbursed to the Executive by PWG or
PWI.
13. Assignability
No rights or obligations under this Agreement may be assigned or
transferred by the Executive except (a) the Executive's rights to compensation
and benefits hereunder shall, in the event of death, pass to his estate, or to
this designated beneficiary, and may be transferred by will or operation of law,
and (b) the Executive's rights under PWI and PWG plans, programs and policies as
described in Sections 5, 6, 7 and 8 may be assigned or transferred in accordance
with such plans, policies or practices. No rights or obligations of PWI or PWG
under this Agreement may be assigned or transferred except that such rights or
obligations may be assigned or transferred by operation of law in situations
described in Section 368 of the Code, as amended, or successor provision, in
liquidation, in
<PAGE> 12
12
dissolution or otherwise where PWI or PWG is not the continuing entity, provided
the assignee or transferee is the successor to all or substantially all the
assets of PWI or PWG and such assignee or transferee assumes the rights, duties
and liabilities of PWI or PWG, as contained in this Agreement, either
contractually or as a matter of law.
14. Governing Law.
This agreement shall be governed by the laws of the State of New York
without reference to the principles of conflict of laws.
15. Entire Agreement.
Except as otherwise specifically provided herein, this Agreement
contains all the legally binding understandings and representations between PWG,
PWI and the Executive pertaining to the subject matter hereof and supersedes all
undertakings and agreements, if any, whether oral or in writing, previously
entered into by PWG, PWI and the Executive with respect to such subject matter.
16. Amendment or Modification; Waiver.
No provision of this Agreement may be amended or waived unless such
amendment or waiver is agreed to in writing, signed by the Executive and by a
duly authorized officer of PWI or PWG. Except as otherwise specifically provided
in this Agreement, no waiver by PWG, PWI or the Executive of any breach by the
other of any condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar provision or
condition at the same or any prior or subsequent time.
17. Notices.
Any notice required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
or sent by certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the party concerned at the address indicated below
or to such changed address as such party may subsequently give notice of:
<PAGE> 13
13
If to PWG or PWI:
Painewebber Group Inc.
1285 Avenue of the Americas
New York, New York 10019
Attn: Corporate Secretary
If to the Executive:
Donald B. Marron
555 Park Avenue
New York, New York 10021
18. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions or portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
19. Survivorship. To the extent contemplated by this Agreement, the
respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
20. Representations.
(a) By the Executive. The Executive represents and warrants that the
performance of his duties under this Agreement will not violate any agreement
between him and any other person, firm or organization.
(b) By PWG and PWI. PWG and PWI represent and warrant that they are
fully authorized and empowered to enter into this Agreement.
21. Impact of Agreement on Other Benefits.
Nothing in this Agreement shall curtail the Executive's entitlement to
full participation in the executive compensation, employee benefit and other
programs of PWG and PWI in which senior executives of PWG and PWI are eligible
to participate.
22. References.
In the event of the Executive's death or a judicial determination of
his incompetence, reference in this
<PAGE> 14
14
Agreement to the Executive will be deemed, where appropriate, to refer to his
legal representative, or, where appropriate, to his beneficiary or
beneficiaries.
23. Headings.
Headings to the sections in this Agreement are intended solely for
convenience and no provision of this Agreement shall be construed by reference
to any heading.
24. Counterparts
This agreement may be executed in one or more counterparts.
IN WITNESS WHEREOF, the Executive, PWG and PWI have caused this
Agreement to be executed as of the day and year first above written.
PAINE WEBBER GROUP INC.
by /s/ Paul B. Guenther
------------------------------------
PAINEWEBBER INCORPORATED
by
------------------------------------
/s/ Donald B. Marron
------------------------------------
Donald B. Marron
<PAGE> 1
Exhibit 10.24
EMPLOYMENT AGREEMENT
AGREEMENT dated as of January 2, 1987 by and
between PAINE WEBBER GROUP INC., a Delaware
corporation with its principal office at 1285 Avenue
of the Americas, New York, New York 10019 ("PWG"),
PAINEWEBBER INCORPORATED, a Delaware corporation with
its principal office at 1285 Avenue of the Americas,
New York, New York 10019 ("PWI"), as the employers,
and JOHN A. BULT, who resides at 930 Fifth Avenue,
New York, New York 10021, as the employee (the
"Executive").
WHEREAS, the Executive has been serving as President of PW
International; and
WHEREAS, PWG and PWI each desire to assure the Executive of his rights
to compensation and benefits that are granted to him because of his service in
the foregoing capacities, and Executive desires to continue to serve in such
capacities in consideration of the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants set forth herein and for other good and valuable consideration, PWG,
PWI and the Executive hereby agree as follows:
1. Definitions.
(a) "Cause shall mean (i) the Executive is convicted of a crime
involving moral turpitude, or (ii) the Executive, in carrying out his duties, is
guilty of (A) willful gross neglect or (B) willful gross misconduct resulting,
in either case, in material harm to PWG or PWI unless such act, or failure to
act, was believed by the Executive in good faith to be in the best interests of
PWG or PWI.
(b) a "Change in Control" shall be deemed to have occurred if:
(i) any "person", as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange
<PAGE> 2
2
Act of 1934 (the "Act"), becomes a beneficial owner, as such term is used
in Rule 13d-3 promulgated under the Act, of securities of PWG or PWI
representing 20% or more of the combined voting power of the outstanding
securities of PWG or PWI, as the case may be, having the right to vote in
the election of directors (any such owner being herein referred to as an
"Acquiring Person");
(ii) a majority of the Board of Directors of PWG ("PWG Board") at
any time consists of individuals elected to membership at a PWG Board
meeting or a PWG shareholders' meeting other than individuals nominated or
approved by a majority of the Disinterested Directors;
(iii) all or substantially all the business of PWI is disposed of
pursuant to a merger, consolidation or other transaction (other than a
merger, consolidation or other transaction with a company of which 50% or
more of the combined voting power of the outstanding securities having a
right to vote at the election of directors is owned, directly or
indirectly, by PWG both before and immediately after the merger,
consolidation or other transaction) in which PWI is not the surviving
corporation or PWG is materially or completely liquidated; or
(iv) PWG or PWI combines with another company and is the surviving
corporation (other than a merger, consolidation or other transaction with a
company of which 50% or more of the combined voting power of the
outstanding securities having a right to vote at the election of directors
is owned, directly or indirectly, by PWG both before and immediately after
the merger, consolidation or other transaction) but, immediately after the
combination, the shareholders of PWG hold, directly or indirectly, less
than 50% of the total outstanding securities of the combined company
having the right to vote in the election of directors.
(c) "Disinterested Director" shall mean any member of the PWG Board (i)
who is not an officer or employee of PWG, PWI or any of their subsidiaries, (ii)
who is not an Acquiring Person or an affiliate or associate of an Acquiring
Person or a nominee or representative of an Acquiring Person or of any such
affiliate or associate and (iii) who was a member of the PWG Board prior to the
date of this Agreement or was recommended for election or elected by a
<PAGE> 3
3
majority of the Disinterested Directors then on the PWG Board.
(d) "Constructive Termination" shall mean that, without the Executive's
prior written consent, one or more of the following events occurs and, within
six months thereafter, the Executive, on his own initiative, terminates his
employment:
(i) The Executive is not reelected to or is otherwise removed from
the position of President of PW International as described in Section 2(a)
for any reason other than his termination of employment under Section
10(a), 10(b) or 10(d).
(ii) The Executive is assigned any duties or responsibilities that
are inconsistent, in any significant respect, with the scope of duties and
responsibilities associated with his position as described in Section 2(a).
(iii) The Executive suffers a reduction in the authorities, duties
and responsibilities associated with his position as described in Section
2(a) on the basis of which he makes a determination in good faith that he
can no longer carry out such position in the manner contemplated at the
time this Agreement was entered into.
(iv) The Executive's base salary or annual bonus decreases below
the minimum level provided in Section 3 or 4, as the case may be, or his
benefits under any employee benefit plan or program of PWG or PWI, or his
incentive opportunity under any incentive program of PWG or PWI is
materially reduced below the level, or opportunity, as the case may be, in
effect on the Operative Date, unless PWG or PWI provides the Executive with
a comparable plan or program having the economic equivalent thereof.
(v) The principal office of PWG or PWI or the Executive's own
office location as assigned to him by PWG or PWI is relocated outside an
area within ten miles of the headquarters of PWI in Manhattan on the date
hereof.
(e) "Disability" shall mean the Executive's inability to render for a
period of six consecutive months, full and effective services hereunder by
reason of permanent
<PAGE> 4
4
disability, whether resulting from illness, accident or otherwise; provided,
however, that in no event will the Executive be considered disabled for the
purposes of this Agreement unless he is deemed disabled pursuant to the PWG Long
Term Disability Plan.
(f) "Operative Date" shall mean the date, if any, following a Change in
Control that has been designated in a resolution adopted by a majority of the
Disinterested Directors, in their sole discretion, as the Operative Date.
(g) "Pro Rata Bonus" shall mean an amount equal to the annual bonus
otherwise payable with respect to the fiscal year in question multiplied by a
fraction, the numerator of which is the number of days in such fiscal year
during which the Executive is employed, and the denominator of which is 365.
(h) "Term of this Agreement" shall mean the period between the
Operative Date and the third anniversary thereof, but only if the Executive is
employed by PWG or PWI on the Operative Date.
2. Positions and Duties.
(a) During the Term of this Agreement, the Executive shall be employed
as President of PW International. The Executive shall report during the Term of
this Agreement to the Chief Executive Officer of PWI and shall direct and
control PWI's International Businesses in Securities Sales and Trading. He shall
during the Term of this Agreement recommend objectives, policies and plans for
these areas. During the Term of this Agreement and subject to the provisions of
Section 2(b), the Executive shall devote his full business time and attention to
the business and affairs of PWG and PWI and shall use his best efforts, skills
and abilities to promote their interests.
(b) Anything herein to the contrary notwithstanding, nothing shall
preclude the Executive from serving on the boards of directors of other
companies, engaging in charitable and community affairs and managing his
personal investments, provided that such activities do not materially interfere
with the performance of his duties or responsibilities hereunder.
<PAGE> 5
5
3. Salary.
During the Term of this Agreement, the Executive shall be paid by PWI a
base salary payable no less frequently than in equal semi-monthly installments
at an annualized rate of no less than the annual salary being paid to the
Executive on the Operative Date. Such base salary shall be reviewed annually for
increase in the discretion of the Compensation Committee of the PWG Board (the
"Committee"), taking into account such factors as corporate and individual
performance, salary increases for other senior officers and increases, if any,
in the Consumer Price Index for New York (the "Consumer Price Index").
4. Annual Bonus.
For each fiscal year during the Term of this Agreement, PWI shall pay
the Executive an annual bonus of not less than the average of the three annual
bonuses awarded to him for the three fiscal years of PWI next preceding the
Operative Date or such larger amount as the Committee in its discretion shall
determine, taking into account such factors as corporate and individual
performance, bonuses for other senior officers and increases, if any, in the
Consumer Price Index. For the period of employment during the last fiscal year
in which falls the Term of this Agreement, PWI shall pay the Executive a Pro
Rata Bonus. All bonuses shall be paid to the Executive at the same time bonuses
are paid to other senior officers of PWI, unless the Executive has elected to
defer receipt of all or part of the bonus to which he is entitled in respect of
such fiscal year in accordance with the terms of the PWI Deferred Compensation
Program.
5. Restricted Stock.
During the Term of this Agreement, the Executive shall be entitled to
participate in the Restricted Stock Award program under the Paine Webber Group
Inc. 1986 Stock Award Plan (the "Stock Award Plan"), or any successor program or
programs. Size and frequency of awards shall be determined in accordance with
administrative policies consistent with those followed in the past.
6. Stock Option and Stock Appreciation Rights Awards.
During the Term of this Agreement, the Executive shall be entitled to
participate in the Stock Option program
<PAGE> 6
6
under the Stock Award Plan, or any successor program or programs. Size and
frequency of awards shall be determined in accordance with administrative
policies consistent with those followed in the past.
7. PW Partners L.P.
During the Term of this Agreement, the Executive shall be eligible to
participate in PW Partners L.P.
8. Employee Benefit Programs.
During the Term of this Agreement, the Executive shall be entitled to
participate in all employee benefit programs of PWG or PWI now or hereafter made
available to PWG or PWI executives or salaried employees generally, as such
programs may be in effect from time to time, including, without limitation,
pension and other retirement plans, profit sharing plans, group life insurance,
accidental death and dismemberment insurance, hospitalization, surgical, major
medical coverage, sick leave (including salary continuation arrangements),
long-term disability, vacations, holidays and other employee benefit programs
sponsored by PWG or PWI.
9. Business Expense Reimbursement and Perquisites.
(a) During the Term of this Agreement, the Executive shall be entitled
to receive proper reimbursement by PWG or PWI for all reasonable, out-of-pocket
expenses incurred by him (in accordance with the policies and procedures
established by PWG or PWI for their senior executives) in performing services
under this Agreement, provided that the Executive submits reasonable
documentation with respect to such expenses.
(b) During the Term of this Agreement, the Executive shall also be
entitled to any of the PWG or PWI executive perquisites in accordance with the
terms and provisions of such arrangements as are in effect and applicable on the
Operative Date.
10. Termination of Employment.
(a) Termination Due to Death or Disability. In the event the
Executive's employment terminates during the
<PAGE> 7
7
Term of this Agreement as a result of death or termination by PWG or PWI due to
Disability, the Executive or his legal representative, as the case may be, shall
be entitled to:
(i) base salary as provided in Section 3, at the rate in effect at
the time of his termination through the date of termination of employment;
(ii) any bonus awarded but not yet paid under Section 4;
(iii) a Pro Rata Bonus for the fiscal year in which death or
disability occurs;
(iv) any deferred bonus as provided in Section 4, including
interest or other credits on the deferred amounts;
(v) reimbursement for expenses incurred pursuant to Section 9(a)
prior to termination; and
(vi) such rights to other compensation and benefits as may be
provided in applicable plans and programs of PWG or PWI, including without
limitation restricted stock as provided in Section 5, stock options as
provided in Section 6 and interests in PW Partners L.P. as provided in
Section 7, as well as applicable employee benefit plans and programs as
provided in Section 8.
(b) Termination by PWG or PWI for Cause. In the event PWG or PWI
terminates the Executive's employment during the Term of this Agreement for
Cause, he shall be entitled to:
(i) base salary as provided in Section 3 at the rate in effect at
the time of his termination through the date of termination of employment;
(ii) any bonus awarded but not yet paid under Section 4;
(iii) any deferred bonus as provided in Section 4, including
interest or other credits on the deferred amounts;
(iv) reimbursement for expenses incurred pursuant to Section 9(a)
prior to termination; and
<PAGE> 8
8
(v) such rights to other compensation and benefits as may be
provided in applicable plans and programs of PWG or PWI, including without
limitation restricted stock as provided in Section 5, stock options as
provided in Section 6, and interests in PW Partners L.P. as provided in
Section 7, as well as applicable employee benefit plans and programs as
provided in Section 8.
In any case described in this Section 10(b), the Executive shall be
given written notice, authorized by a vote of at least a majority of the members
of the PWG Board (excluding the Executive), that PWG or PWI intends to terminate
his employment for Cause under this Section 10(b). Such written notice shall
specify the particular acts, or failures to act, on the basis of which the
decision to so terminate employment has been made. The Executive shall be given
the opportunity within 20 days of the receipt of such notice to meet with the
PWG Board to defend such acts, or failures to act, and the Executive shall be
given seven days after such meeting to correct such acts or failures to act.
Upon failure of the Executive, within seven days, to correct such acts or
failures to act, the Executive's employment by PWG and PWI shall automatically
be terminated for Cause under this Section 10(b).
(c) Termination Without Cause or Constructive Termination.
(i) In the event that during the Term of this Agreement (A) either PWG
or PWI terminates the Executive's employment without Cause, other than due to
Disability, or (B) there is a Constructive Termination, the Executive shall
thereupon be entitled to (x) a lump sum payment equal to the present value of:
(aa) base salary until the end of the Term of this Agreement at the
rate in effect immediately prior to the termination of employment;
(bb) a bonus for the year of termination and bonuses for each year
until the end of the Term of this Agreement, at an annualized rate equal to
the average of the bonuses awarded to him with respect to the three years
preceding the year in which termination occurs: and
(cc) any bonus awarded but not yet paid (including deferred bonus);
and (y) such rights to
<PAGE> 9
9
compensation, benefits and reimbursements as may be provided in applicable
plans, programs and policies of PWG or PWI, including without limitation
restricted stock as provided in Section 5, stock options as provided in
Section 6 and interests in PW Partners L.P. as provided in Section 7, as
well as applicable employee benefit plans and programs as provided in
Section 8. To the extent that, because of his termination under this
Section 10(c), the Executive is ineligible for continued employee benefit
coverage under the employee benefit programs as provided in Section 8, PWI
shall provide him with the economic equivalent thereof.
(ii) Notwithstanding anything herein to the contrary, if
(A) any amounts due under Section 10(c)(i) constitute "Parachute
Payments" within the meaning of Section 280G(b)(2) of the Internal Revenue
Code (the "Code"), or successor provision, and
(B) the amount of the Parachute Payments, reduced by all Federal,
state and local taxes applicable with respect thereto, including the excise
tax imposed pursuant to Section 4999 of the Code, is less than the amount
he would receive, after taxes, if he were paid only 2.99 times his "Base
Amount" within the meaning of Section 280G(b)(3), then, in lieu of the
Parachute Payments the Executive shall be paid an amount in cash equal to
2.99 times the Base Amount. The determinations made with respect to this
Section 10(c)(ii) shall be made by an independent auditor (the "Auditor")
jointly selected by PWG and the Executive, or his legal representatives.
The Auditor shall be a nationally recognized United States public
accounting firm which has not, during the two years preceding the date of
its selection, acted in any way on behalf of PWG or its affiliates.
(iii) Any payments to which the Executive shall be entitled under this
Section 10(c) shall be made as promptly as possible following the termination of
the Executive's employment hereunder.
(d) Voluntary Termination. A "Voluntary Termination" under this Section
10(d) shall mean a termination of employment, during the Term of this Agreement,
by the Executive on his own initiative other than (i) a termination due to
disability under Section 10(a) or (ii) a Constructive
<PAGE> 10
10
Termination under Section 10(c). Such a termination shall not be deemed a breach
of the Agreement and shall entitle the Executive to all of the rights and
benefits to which he would be entitled in the event of a termination for Cause
as described in Section 10(b).
(e) No Mitigation; No Offset. In the event of any termination under
this Section 10, the Executive shall be under no obligation to seek other
employment and there shall be no offset against amounts due the Executive under
this Section 10 on account of any remuneration attributable to any subsequent
employment that the Executive may obtain. Any amounts due under this Section 10
are in the nature of severance payments, or liquidated damages, or both, and are
not in the nature of a penalty.
11. Indemnification.
PWG and PWI represent that, while the Executive is employed under this
Agreement, he shall be serving as an officer of PWI at the request of PWG for
purposes of the provisions of Article IX of the Restated Certificate of
Incorporation of PWG as proposed to the PWG stockholders to be amended at the
1987 Annual Meeting of Stockholders of PWG and as an officer of PWI for purposes
of the provisions of Article X of the Restated Certificate of Incorporation of
PWI as in effect on the date hereof. If either Certificate is amended so as to
remove or diminish the protection therein accorded to covered officers, PWG
and/or PWI will notify the Executive within five days of such removal or
diminution. PWG and PWI further agree to maintain the same liability insurance
coverage for the Executive with respect to all periods during which the
Executive serves or served as an officer of PWG or PWI as is maintained with
respect to such periods for other senior executives of PWG and PWI.
12. Disputes
Any controversy or claim arising out of or relating to this Agreement,
or any breach thereof, shall be settled by arbitration in accordance with the
rules of the American Arbitration Association then in effect in the State of New
York, and judgment upon such award rendered by the arbitrator(s) may be entered
in any court having jurisdiction thereof. The arbitration shall be held in
Manhattan. The cost of the arbitration including, but not limited to, any
reasonable legal fees or other expenses incident thereto, shall be determined by
the arbitrator(s) and shall be borne by the parties to the arbitration. To the
extent the
<PAGE> 11
11
Executive's position is upheld, any reasonable expenses (including costs of
witnesses, evidence, and attorneys) incurred by the Executive in connection with
the arbitration shall be reimbursed to the Executive by PWG or PWI.
13. Assignability
No rights or obligations under this Agreement may be assigned or
transferred by the Executive except (a) the Executive's rights to compensation
and benefits hereunder shall, in the event of death, pass to his estate, or to
this designated beneficiary, and may be transferred by will or operation of law,
and (b) the Executive's rights under PWI and PWG plans, programs and policies as
described in Sections 5, 6, 7 and 8 may be assigned or transferred in accordance
with such plans, policies or practices. No rights or obligations of PWI or PWG
under this Agreement may be assigned or transferred except that such rights or
obligations may be assigned or transferred by operation of law in situations
described in Section 368 of the Code, as amended, or successor provision, in
liquidation, in dissolution or otherwise where PWI or PWG is not the continuing
entity, provided the assignee or transferee is the successor to all or
substantially all the assets of PWI or PWG and such assignee or transferee
assumes the rights, duties and liabilities of PWI or PWG, as contained in this
Agreement, either contractually or as a matter of law.
14. Governing Law.
This agreement shall be governed by the laws of the State of New York
without reference to the principles of conflict of laws.
15. Entire Agreement
Except as otherwise specifically provided herein, this Agreement
contains all the legally binding understandings and representations between PWG,
PWI and the Executive pertaining to the subject matter hereof and supersedes all
undertakings and agreements, if any, whether oral or in writing, previously
entered into by PWG, PWI and the Executive with respect to such subject matter.
16. Amendment or Modification; Waiver.
No provision of this Agreement may be amended or waived unless such
amendment or waiver is agreed to in
<PAGE> 12
12
writing, signed by the Executive and by a duly authorized officer of PWI or PWG.
Except as otherwise specifically provided in this Agreement, no waiver by PWG,
PWI or the Executive of any breach by the other of any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of a
similar or dissimilar provision or condition at the same or any prior or
subsequent time.
17. Notices.
Any notice required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
or sent by certified or registered mail, postage prepaid, return receipt
requested, duly addressed to the party concerned at the address indicated below
or to such changed address as such party may subsequently give notice of:
If to PWG or PWI:
PaineWebber Group Inc.
1285 Avenue of the Americas
New York, New York 10019
Attn: Corporate Secretary
If to the Executive:
John A. Bult
930 Fifth Avenue
New York, New York 10021
18. Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions or portions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
law.
19. Survivorship. To the extent contemplated by this Agreement, the
respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
20. Representations.
(a) By the Executive. The Executive represents and warrants that the
performance of his duties under this
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13
Agreement will not violate any agreement between him and any other person, firm
or organization
(b) By PWG and PWI. PWG and PWI represent and warrant that they are
fully authorized and empowered to enter into this Agreement.
21. Impact of Agreement on Other Benefits.
Nothing in this Agreement shall curtail the Executive's entitlement to
full participation in the executive compensation, employee benefit and other
programs of PWG and PWI in which senior executives of PWG and PWI are eligible
to participate.
22. References.
In the event of the Executive's death or a judicial determination of
his incompetence, reference in this Agreement to the Executive will be deemed,
where appropriate, to refer to his legal representative, or, where appropriate,
to his beneficiary or beneficiaries.
23. Headings.
Headings to the sections in this Agreement are intended solely for
convenience and no provision of this Agreement shall be construed by reference
to any heading.
24. Counterparts.
This agreement may be executed in one or more counterparts.
IN WITNESS WHEREOF, the Executive, PWG and PWI have caused this
Agreement to be executed as of the day and year first above written.
PAINE WEBBER GROUP INC.
by /s/ Donald B. Marron
--------------------------
<PAGE> 14
14
PAINEWEBBER INCORPORATED
by /s/ Ronald M. Schwartz
--------------------------
/s/ John A. Bult
------------------------------
John A. Bult
<PAGE> 1
Exhibit 10.25
9/10/90
PAINE WEBBER GROUP, INC.
SUPPLEMENTAL EMPLOYEE'S RETIREMENT PLAN
FOR
CERTAIN SENIOR OFFICERS
(Effective August 4, 1988)
(As amended effective January 1, 1990)*
- ----------------------------------------------------
* For text of amendments, see Riders A and B.
<PAGE> 2
9/10/90
PAINE WEBBER GROUP, INC.
SUPPLEMENTAL EMPLOYEE'S RETIREMENT PLAN
FOR
CERTAIN SENIOR OFFICERS
(Effective August 4, 1988)
(As amended effective January 1, 1990)*
- ---------------------------------------------------
* For text of amendments, see Riders A and B.
<PAGE> 3
ARTICLE I
1.1 Creation of Plan
Paine Webber Group, Inc. hereby establishes a Supplemental Employees'
Retirement Plan for Certain Officers to be effective as and from the
fourth day of August, 1988, and as more specifically set forth herein.
Paine Webber Group, Inc. recognizes the unique services of the executive
officers included as Participants herein and the importance to Paine
Webber Group, Inc. and its stockholders of retaining such persons and,
therefore, of providing compensation (including deferred compensation)
that is competitive amongst similar firms. The Plan hereby created is
intended to be a plan which is unfunded and is maintained by the employer
primarily for the purpose of providing deferred compensation for a select
group of management or highly compensated employees within the meaning of
Section 201(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA", 29 USC 1051, and similar sections of ERISA, passim.)
1.2 Concomitant Trust
A concomitant trust is intended to be created hereby for the purpose of
accumulating a corpus and income thereon which, subject to certain
conditions precedent and subsequent shall be held in trust for the purpose
of providing the benefits hereunder, and as specifically set forth in the
Agreement and Declaration of Trust, it further being understood that under
certain conditions the trusteeship created thereby shall be discharged and
the corpus and income held thereby be paid to the settlor of the trust or
its creditors rather than the
<PAGE> 4
Page 2
individual Participants, as set forth in the Agreement and Declaration of
Trust. The trust created hereby shall be revocable by the settlor until
and unless the Internal Revenue Service shall rule (1) that contributions
made to the trust shall not subject the Participants to income tax, until
the proceeds of the trust shall be distributed to them and (2) that
contributions made by the settlor to the trust shall not be deductible to
the settlor in computing its net taxable income, but the amounts actually
paid out to the Participants from the trust shall be so deductible, and
shall be irrevocable thereafter.
It is further intended that the trust created hereby shall be a grantor
trust within the meaning of Section 673 of the Internal Revenue Code of
1986, as amended.
<PAGE> 5
Page 3
ARTICLE II
DEFINITIONS
2.1 "Act" shall mean the Securities Exchange Act of 1934 (15USC Ch 2B).
2.2 "Acquiring Person" shall mean any person (within the meaning of Sections
13(d) and 14(d) (2) of the Act) who becomes a beneficial owner (within the
meaning of Section 13(d) of the Act and Rule 13d-3 of the rules of the
SEC) of securities of Paine Webber Group, Inc. or PaineWebber Incorporated
representing twenty percent (20%) or more of the combined voting power of
the outstanding securities of Paine Webber Group, Inc. or PaineWebber
Incorporated (as the case may be) having a right to vote at the election
of directors.
2.3* "Basic Annual Compensation" shall mean the highest basic annual rate of
compensation or remuneration paid to a Participant while employed by the
Employer, exclusive of commissions, draw, bonuses or other irregular or
special compensation.
2.4 "Board" means the Board of Directors of Paine Webber Group, Inc.
2.5 "Change in Control" shall mean the time when (i) an Acquiring Person shall
acquire such shares as makes him an Acquiring Person, (ii) the majority of
the members of the Board consists of persons elected to membership at the
Board or shareholders' meeting other than individuals nominated or
approved by a majority of the Disinterested Directors, (iii) all or
substantially all of the business of Paine Webber Group, Inc. or
PaineWebber Incorporated is disposed of pursuant
- ----------------------------------------------------------------
* This Section has been amended. See Rider A for the text of Section 2.3 as
amended effective January 1, 1990.
<PAGE> 6
Page 4
to a merger, consolidation or other transaction (other than a merger,
consolidation or other transaction with an entity of which fifty percent
(50%) or more of the combined voting power of the outstanding securities
having a right to vote at the election of directors is owned, directly or
indirectly, by the Paine Webber Group, Inc. both before and immediately
after the merger, consolidation or other transaction) in which PaineWebber
Incorporated is not the surviving corporation or Paine Webber Group, Inc.
is materially or completely liquidated, or (iv) Paine Webber Group, Inc.
or PaineWebber Incorporated combines with another entity and is the
surviving corporation (other than a merger, consolidation or other
transaction with an entity of which fifty percent (50%) or more of the
combined voting power of the outstanding securities having a right to vote
at the election of directors is owned, directly or indirectly, by Paine
Webber Group, Inc. both before and immediately after the merger,
consolidation or other transaction) but, immediately after the
combination, the shareholders of Paine Webber Group, Inc. hold, directly
or indirectly, less than fifty percent (50%) of the total outstanding
securities of the surviving corporation, but only with respect to such
securities having a right to vote at the election of directors; but in all
cases, if, and only if, the Disinterested Directors shall declare an
Operative Date with respect to the occurrence of any of the aforesaid
events.
2.6 "Compensation Committee" shall mean the Compensation Committee of the
Board as from time to time constituted.
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Page 5
2.7 "Disinterested Director" shall mean any member of the then Board of
Directors other than (i) an officer or employee of the Employer, (ii) an
Acquiring Person, or a nominee or representative of an Acquiring Person,
or (iii) a person who was not a member of the Board on the Effective Date
and who was nominated for election by other than a committee consisting
solely of Disinterested Directors then on the Board (or elected by a
majority of the Disinterested Directors then on the Board).
2.8 "Effective Date" shall mean January 1, 1988.
2.9 "Employer" shall mean Paine Webber Group, Inc., PaineWebber Incorpo-
rated, Rotan Mosle Financial Corp., and PaineWebber International Inc. or
any successors or assigns thereof.
2.10 "Participants" shall mean Donald B. Marron, Chairman and Chief Executive
Officer; Donald E. Nickelson, President; Paul B. Guenther, Executive Vice
President and Chief Administrative Officer; John A. Bult, President of
PaineWebber International Inc.; and such other officers as the
Compensation Committee shall, by resolution adopted by a majority of the
Disinterested Directors then members of said Compensation Committee,
determine from time to time.
2.11 "Plan" shall mean the Paine Webber Group, Inc. Supplemental Employees'
Retirement Plan for Certain Senior Officers, as contained herein or as
subsequently amended.
<PAGE> 8
Page 6
2.12 "Operative Date" shall mean the date which the majority of the Disin-
terested Directors determines any of the events set forth at items (i)
through (iv), inclusive, of Section 2.5 hereof have occurred, unless the
majority of said Disinterested Directors shall approve such merger,
consolidation or other relevant event, in which latter case an Operative
Date shall not be deemed to occur.
2.13 "SEC" shall mean the United States Securities and Exchange Commission.
<PAGE> 9
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ARTICLE III
PARTICIPATION
3.1 Initial Participants
The initial Participants in this Plan shall be certain of the proxy
officers of the Employer, viz.:
(a) Donald B. Marron, Chairman and Chief Executive Officer;
(b) Donald E. Nickelson, President;
(c) Paul B. Guenther, Executive Vice President and Chief Administrative
Officer; and
(d) John A. Bult, President of PaineWebber International Inc.
3.2 Additional Participants
Other officers shall become Participants hereunder, if, and only if, the
Compensation Committee shall, by resolution adopted by a majority of the
Disinterested Directors who are the members of said Compensation
Committee, specifically so determine from time to time.
3.3 Reemployment
If a Participant who shall terminate his participation hereunder without a
right to receive a benefit under this Plan (pursuant to Article V hereof)
shall again become an officer of the Employer (whether he was, during his
first period of employment, an initial Participant pursuant to Section 3.2
hereof or an additional Participant pursuant to Section 3.2 hereof), he
shall not again become a Participant under this Plan unless, and until,
the Compensation
<PAGE> 10
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Committee shall, by resolution adopted by a majority of the Disin-
terested Directors who are the members of the Compensation Committee,
specifically so determine.
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ARTICLE IV
NORMAL RETIREMENT BENEFIT
4.1 Retirement Benefit With Fifteen or More Years of Service
If a Participant hereunder shall retire after the Effective Date and on or
after attaining his sixty-fifth birthday and he shall then have completed
fifteen (15) or more years of service (such service being measured and
calculated in the same manner as is "Credited Service" under the Paine
Webber Pension Plan, as amended to date), then, in addition to all other
retirement income there shall be paid to him a monthly retirement
allowance which shall commence on the first day of the month coincident
with or next following his date of retirement and shall be payable monthly
thereafter as long as he shall live (but subject to the death benefit
provided by Article VI hereof), with each such monthly payment being equal
to one-twelfth of the difference between 1) item (a) below and 2) the sum
of items (b) and (c) below, as follows:
(a) The Participant's Basic Annual Compensation immediately prior to
retirement, less
(b) Twelve (12) times the primary insurance amount to which the
Participant is then entitled in accordance with Section 215 of the
Social Security Act of 1935, as amended (P.L. 74-271; 49 Stat 620),
and
(c) The annual retirement income to which the Participant is then entitled
under the Paine Webber Pension Plan.
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4.2 Retirement Benefit with Five but less than Fifteen Years of Service
If a Participant hereunder shall retire after the Effective Date and on or
after attaining his sixty-fifth birthday and he shall then have completed
five (5) or more years of service but less than fifteen (15) years of
service (such service being measured and calculated in the same manner as
is "Credited Service" under the Paine Webber Pension Plan, as amended to
date), then, in addition to all other retirement income there shall be
paid to him a monthly retirement allowance which shall commence on the
first day of the month coincident with or next following his date of
retirement and shall be payable monthly thereafter as long as he shall
live (but subject to the death benefit provided by Article VI hereof),
with each such monthly payment being equal to the difference between items
(a) and (b) below, as follows:
(a) The product of items (i) and (ii) below, as follows:
(i) The Participant's Basic Annual Compensation immediately prior to
retirement, multiplied by
(ii) A fraction, not greater than one (1), the numerator of which is
the number of years and fraction thereof of the Participant's
"Credited Service" under the Paine Webber Pension Plan, as
amended to date, at the time of his retirement, and the
denominator of which is fifteen (15), less
(b) The sum of items (i) and (ii) below, as follows:
(i) Twelve (12) times the primary insurance amount to which the
Participant is then entitled in accordance with Section 215 of
the Social Security Act of 1935, as amended (P.L. 74-271;49 Stat
620), and
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(ii) The annual retirement income to which the Participant is then
entitled under the Paine Webber Pension Plan.
4.3 No Benefit for Retirement with less than Five Years of Service
If a Participant hereunder shall retire, whether on or after attaining his
sixty-fifth birthday or otherwise and, at the time of such retirement,
shall have completed less than five (5) years of service (such service
being measured and calculated in the same manner as is "Credited Service"
under the Paine Webber Pension Plan, as amended to date), no monthly
retirement allowance or other retirement or death benefit shall be paid on
account of such retirement or otherwise.
4.4 Election of Variable Annuity
A Participant (or a spouse, contingent annuitant or beneficiary entitled
to receive monthly retirement income hereunder), may, during an election
period, elect that any such monthly retirement income be paid as a
variable annuity in accordance with this Section 4.4. Any such election
shall be made in the same manner as an election to receive an optional
form of payment pursuant to Section 6.3 hereof. The election period herein
prescribed shall commence on the ninetieth day preceding the commencement
of the monthly retirement allowance provided by Articles IV or V hereof
and shall end on the day in which such monthly retirement allowance
commences.
If so elected, then notwithstanding anything to the contrary, the
following special rules shall be applicable with respect to the monthly
retirement allowance so payable:
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(a) Effective with the date of commencement of such monthly retirement
allowance continuing thereafter as long as such monthly retirement
allowance continues to be paid, the Participant (or his spouse,
contingent annuitant or beneficiary if then in receipt of such monthly
retirement allowance) shall provide specific directions and
instructions with respect to the investment of that person's aliquot
share of the trust estate, in accordance with Section 5.3 of the
Agreement and Declaration of Trust of the concomitant trust.
(b) The amount of each such monthly retirement allowance payable until but
not including the allowance for the next January immediately following
the month in which the retirement allowance first commences shall be
equal to that prescribed by Article IV, V or VI hereof, as applicable.
(c) The amount of each such monthly retirement allowance payable for the
calendar year following the year in which the monthly retirement
allowance first commences shall be equal to the product of the amount
determined in accordance with subparagraph b above and a fraction, the
numerator of which shall be the assets representing the Participant's
(or spouse's, contingent annuitant's or beneficiary's) aliquot share
of the trust estate immediately following distribution of the
retirement allowance for the preceding December and the denominator of
which is the actuarially expected assets measured in the same manner
as described above as if the investment assumption for the calendar
year (or
<PAGE> 15
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applicable part thereof) used by the actuary in valuing the Plan was
exactly realized. Such calculation and result shall be performed by
the actuary and duly certified by him.
(d) The result determined by subparagraph c above shall constitute the
amount of each monthly retirement allowance for the twelve months of
the calendar year under consideration.
(e) The monthly retirement allowance payable each month for the next
succeeding calendar year, and each calendar year thereafter, shall be
determined by applying the formula and methodology prescribed by
subparagraph c above using the immediately prior and subsequent years
for the purpose of the numerator of the fraction and the year in which
payments are to be made, respectively.
(f) If, because of the nature of the investments, at any time in which
this election is in effect, the lack of liquidity of the investment
makes it difficult or undesirable to make periodic payments of monthly
retirement allowance, then, upon written request of the Participant
(or spouse, contingent annuitant or beneficiary in receipt of
payments) to the trustee of the concomitant trust, such payments
during such period of illiquidity shall not be distributed but shall
be accumulated on the books and records of the trustee and the total
amount so accumulated shall be paid (without interest) on the first of
the month next following written notice by the Participant (or spouse,
contin-
<PAGE> 16
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gent annuitant or beneficiary in receipt of payments) to the trustee
advising the trustee that the illiquidity period has ceased and
demanding payment from the trustee.
4.5 Determination of Social Security Amount
Wherever herein a determination is required as to the primary insurance
amount to which the Participant is entitled in accordance with Section 215
of the Social Security Act of 1935, as amended (P.L. 74-271; 49 Stat 620),
such amount may be estimated in any reasonable, consistent and uniform
manner.
<PAGE> 17
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ARTICLE V
TERMINATION OF EMPLOYMENT AND
EARLY RETIREMENT
5.1 Termination of Employment Prior to Early Retirement of Initial
Participants
Any person who became a Participant pursuant to Section 3.1 hereof shall
be fully and completely vested at all times after completion of five (5)
years of service, in accordance with Section 4.3 hereof. Upon the
termination of employment of such a Participant prior to attaining age
fifty-five (55), a deferred monthly retirement allowance shall be payable
which, at the sole election of the Participant, shall be equal to the
benefit determined in accordance with either item (a) or item (b) below,
as follows:
(a) A monthly retirement allowance payable commencing on the first day of
the month coincident with or next following the date that the
Participant attained his fifty-fifth birthday (or on the first day of
any intervening month prior to the commencement date for benefits
provided by subsection (b) below) and shall be payable thereafter as
long as he shall live (but subject to the death benefits provided by
Article VI hereof) with each such monthly payment being determined as
for retirement at or after attainment of age sixty-five (65), in
accordance with Article VI hereof, except that his actual period of
service to the date of his termination of employment shall be used,
the primary insurance benefit under the Social Security Act shall be
offset only when, and in the amount, actually payable (but the
benefit shall
<PAGE> 18
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be assumed to have been elected to commence in a reduced amount at
age sixty-two (62) unless the Participant shall provide evidence to
the contrary) and the annual retirement income under the Paine Webber
Pension Plan shall be the actual amount payable because of the
Participant's termination of employment or retirement and shall be
offset only when so payable. The resulting benefit shall be
multiplied by a percentage, said percentage to equal one hundred
percent (100%) less the sum of items (i) and (ii) below:
(i) The product of twenty-five one hundredths percent (0.25%) and
the number of months by which the later of the initial payment
date of the early retirement benefit or the first day of the
month coincident with or next following the Participant's
sixtieth birthday precedes the first day of the month
coincident with or next following the date that the Participant
attains his sixty-fifth birthday, plus
(ii) The product of one-half percent (0.5%) and the number of
months, if any, by which the initial payment date of the early
retirement benefit precedes the first day of the month
coincident with or next following the date that the Participant
attains his sixtieth birthday.
(b) A monthly retirement allowance payable commencing on the first day of
the month coincident with or next following the date that the
Participant attains his sixty-fifth birthday, and shall be payable
thereafter as long as he shall live (but subject to the death
benefits provided by Article VI hereof) with each such monthly
payment being determined as for retirement at or after
<PAGE> 19
Page 17
the attainment of age sixty-five (65), in accordance with Article IV
hereof, except that his actual period of service to his early
retirement date shall be used and that the primary insurance benefit
under the Social Security Act shall be offset only in the amount
actually payable (but the benefit shall be assumed to have been
elected to commence in a reduced amount at age sixty-two (62) unless
the Participant shall provide evidence to the contrary) and the
annual retirement income under the Paine Webber Pension Plan shall be
the actual amount payable because of the Participant's early
retirement or termination of employment.
5.2 Termination of Employment Prior to Early Retirement of Additional
Participants
Any Participant, other than a Participant described at Section 5.1 hereof,
who terminates his employment with the Employer prior to either attaining
his fifty-fifth birthday or both attaining his fiftieth birthday and
completing ten (10) or more years of service (such service being measured
and calculated in the same manner as is service for vesting purposes under
the Paine Webber Pension Plan, as amended to date) shall not be entitled
to any benefits from this Plan, but all such benefits shall be forfeited,
except in the case of total and permanent disability, in accordance with
Section 5.5 hereof. Any such Participant who terminates his employment
prior to attaining his fifty-fifth birthday but after both attaining his
fiftieth birthday and completing ten (10) or more years of service (such
service being measured and calculated in the same manner as is service for
vesting purposes under the Paine Webber Pension Plan, as amended to date)
<PAGE> 20
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shall be entitled to a deferred monthly retirement allowance which, at the
election of the Participant, shall be payable and determined in accordance
with either item (a) or item (b) below, as follows:
(a) A monthly retirement allowance payable commencing on the first day of
the month coincident with or next following the date that the
Participant attained his fifty-fifth birthday (or on the first day of
any intervening month prior to the commencement date for benefits
provided by subsection (b) below) and shall be payable thereafter as
long as he shall live (but subject to the death benefits provided by
Article VI hereof) with each such monthly payment being determined as
for retirement at or after attainment of age sixty-five (65), in
accordance with Article VI hereof, except that his actual period of
service to the date of his termination of employment shall be used,
the primary insurance benefit under the Social Security Act shall
be offset only when, and in the amount, actually payable (but the
benefit shall be assumed to have been elected to commence in a
reduced amount at age sixty-two (62) unless the Participant shall
provide evidence to the contrary) and the annual retirement income
under the Paine Webber Pension Plan shall be the actual amount
payable because of the Participant's termination of employment or
retirement and shall be offset only when so payable. The resulting
benefit shall be multiplied by a percentage, said percentage to equal
one hundred percent (100%) less the sum of items (i) and (ii) below:
<PAGE> 21
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(i) The product of twenty-five one hundredths percent (0.25%) and
the number of months by which the later of the initial payment
date of the early retirement benefit or the first day of the
month coincident with or next following, the Participant's
sixtieth birthday precedes the first day of the month
coincident with or next following the date that the Participant
attains his sixty-fifth birthday, plus
(ii) The product of one-half percent (0.5%) and the number of
months, if any, by which the initial payment date of the early
retirement benefit precedes the first day of the month
coincident with or next following the date that the Parti-
cipant attains his sixtieth birthday.
(b) A monthly retirement allowance payable commending on the first day of
the month coincident with or next following the date that the
Participant attains his sixty-fifth birthday, and shall be payable
thereafter as long as he shall live (but subject to the death
benefits provided by Article VI hereof) with each such monthly
payment being determined as for retirement at or after the attainment
of age sixty-five (65), in accordance with Article IV hereof, except
that his actual period of service to his early retirement date shall
be used and that the primary insurance benefit under the Social
Security Act shall be offset only in the amount actually payable (but
the benefit shall be assumed to have been elected to commence in a
reduced amount at age sixty-two (62) unless the Participant shall
provide evidence to the contrary) and the annual retirement income
under the Paine Webber
<PAGE> 22
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Pension Plan shall be the actual amount payable because of the
Participant's early retirement or termination of employment.
5.3 Early Retirement
If a Participant shall retire on or after both attaining his fifty- fifth
birthday and completion of five (5) years of service (such service being
measured and calculated in the same manner as is "Credited Service" under
the Paine Webber Pension Plan, as amended to date) but prior to attaining
his sixty-fifth birthday, a monthly retirement allowance shall be payable,
which, at the sole election of the Participant, shall be equal to the
benefit determined in accordance with either item (a) or item (b) below,
as follows:
(a) A monthly retirement allowance payable commencing on the first day of
the month coincident with or next following the date of the
Participant's retirement as aforesaid (or on the first day of any
intervening month prior to the commencement date for benefit provided
by subsection (b) below) and shall be payable thereafter as long as
he shall live (but subject to the death benefits provided by Article
VI hereof) with each such monthly payment being determined as for
retirement at or after attainment of age sixty-five (65), in
accordance with Article IV hereof, except that his actual period of
service to his early retirement date shall be used, the primary
insurance benefit under the Social Security Act shall be offset only
when, and in the amount, actually payable (but the benefit shall be
assumed to have been elected to commence in a reduced amount at age
sixty-two (62) unless the Participant shall provide evidence to the
contrary)
<PAGE> 23
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and the annual retirement income under the Paine Webber Pension Plan
shall be the actual amount payable because of the Participant's
early retirement. The resulting benefit shall be multiplied by a
percentage, said percentage to equal one hundred percent (100%) less
the sum of items (i) and (ii) below:
(i) The product of one-half percent (0.5%) and the number of months
by which the later of the initial payment date of the early
retirement benefit or the first day of the month coincident
with or next following the Participant's sixtieth birthday
precedes the first day of the month coincident with or next
following the date that the Participant attains his sixty-fifth
birthday, plus
(ii) The product of twenty-five one hundredths percent (0.25%) and
the number of months, if any, by which the initial payment date
of the early retirement benefit precedes the first day of the
month coincident with or next following the date that the
Participant attains his sixtieth birthday.
(b) A monthly retirement allowance payable commencing on the first day of
the month coincident with or next following the date that the
Participant attains his sixty-fifth birthday, and shall be payable
thereafter as long as he shall live (but subject to the death
benefits provided by Article VI hereof) with each such monthly
payment being determined as for retirement at or after the attainment
of age sixty-five (65), in accordance with Article IV hereof, except
that his actual period of service to his early retirement date shall
be used and that the primary insurance benefit under the Social
Security Act shall be offset only when,
<PAGE> 24
Page 22
and in the amount, actually payable (but the benefit shall be assumed
to have been elected to commence in a reduced amount at age sixty-two
(62) unless the Participant shall provide evidence to the contrary)
and the annual retirement income under the Paine Webber Pension Plan
shall be the actual amount payable because of the Participant's early
retirement.
5.4 Termination of Employment After Change in Control
Notwithstanding the aforesaid, if a Participant shall terminate his
employment with the Employer on or after the occurrence of a Change in
Control and he shall then have completed five (5) or more years of service
(such service being measured and calculated in the same manner as is
"Credited Service" under the Paine Webber Pension Plan, as amended to
date), he shall be fully vested in his benefit which shall be calculated
and payable as follows:
(a) A monthly retirement allowance shall be payable commencing on the
first day of the month coincident with or next following the date of
the Participant's termination of employment at or after the
occurrence of a Change In Control and payable thereafter as long as
he shall live (but subject to the death benefits provided by Article
VI hereof).
(b) Each such monthly payment shall be determined as for retirement at or
after attainment of age sixty-five (65), in accordance with Article
IV hereof, except that the service that he would have had upon his
attainment of age sixty-five (65), had he continued in the employ of
the Employer to such age and then retired, shall be used instead of
his actual period of service
<PAGE> 25
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to his termination date, the primary insurance benefit under the
Social Security Act shall be offset only when, and in the amount,
actually payable (but the benefit shall be assumed to have been
elected to commence in a reduced amount at age sixty-two (62) unless
the Participant shall provide evidence to the contrary) and the
annual retirement income under the Paine Webber Pension shall be the
actual amount payable because of the Participant's early retirement.
5.5 Disability Retirement
If a Participant shall retire as a result of permanent and total
disability and he shall then have completed five (5) or more years of
service (such service being measured and calculated in the same manner as
is "Credited Service" under the Paine Webber Pension Plan, as amended to
date), then (notwithstanding anything to the contrary) he shall be
entitled to a monthly retirement allowance as hereinafter described. For
this purpose "permanent and total disability" shall mean such physical or
mental incapacity from illness or accident as shall prevent said
Participant from engaging in his usual and customary employment or any
other employment for which he is reasonably fitted by education, training
and experience and which is expected to last at least twelve (12) months
or sooner result in death. A Participant eligible for Social Security
disability benefits or payments under the Paine Webber Long Term
Disability Plan shall be deemed
<PAGE> 26
Page 24
totally and permanently disabled for this purpose. In all other cases, the
Compensation Committee shall determine the total and permanent disability
of a Participant based upon the findings and recommendations of a licensed
physician.
A Participant who so retires on account of total and permanent disability
shall be entitled to a monthly retirement allowance which shall be payable
commencing on the first day of the month coincident with or next following
the date that the Participant retires from the employ of the Employer and
shall be payable thereafter as long as he shall live (but subject to the
death benefits provided by Article VI hereof) with each such monthly
payment being determined as for retirement at or after attainment of age
sixty-five (65). in accordance with Article VI hereof except that the
service that he would have had upon his attainment of age sixty-five (65)
had he continued in the employ of the Employer to such age and then
retired, shall be used instead of his actual period of service to his
termination date, the primary insurance benefit under the Social Security
Act shall be offset only when, and in the amount, actually payable (but
the benefit shall be assumed to have been elected to commence in a reduced
amount at age sixty-two (62) unless the Participant shall provide evidence
to the contrary) and the annual retirement income under the Paine Webber
Pension Plan shall be the actual amount payable and shall be offset only
when, and in the amount, so payable.
<PAGE> 27
Page 25
5.6 Forfeiture Upon Entering Into Competitive Employment
Notwithstanding anything to the contrary, if any Participant hereunder
shall, simultaneously with, or subsequent to, his employment by the
Employer (whether after retiring from the employment of the Employer or
otherwise) become an owner, principal, officer, employee, consultant or
investor in a financial services organization which is determined by the
Compensation Committee to be in substantial and direct competition with
the then core or basic lines of business of the Employer (whether the
Participant personally participates in any such activities or not), then,
in the sole and exclusive discretion of the Compensation Committee, any
benefits otherwise due to such Participant under any Article hereunder
may be forfeited and any assets related thereto reverted to the Employer.
However, this Section 5.6 shall not be applicable in any event with
respect to any of the Participant's activities after the earlier of (a)
his attainment of age sixty (60), (b) following the first anniversary
after the termination of his employment with the Employer, or (c)
following a Change in Control.
Furthermore, any investment of less than one percent (1%) of the stock of
a publicly held company, if such investment is made solely for passive
investment purposes and if such Participant shall not also become an
officer, employee or consultant in a competing financial services
organization shall not be deemed a sufficient investment so as to forfeit
the benefits under this Plan.
<PAGE> 28
Page 26
For the purpose of this Section 5.6, a "financial services organization
in substantial and direct competition with the Employer" shall mean any
organization, whether or not incorporated, engaging in any financial
activities which are in substantial competition with the then core or
basic lines of business of the Employer. Within two (2) weeks of a request
of a Participant for a ruling (either after retirement or termination of
employment or prior thereto), the Compensation Committee shall rule as to
whether a particular organization would be considered a "financial
services organization in substantial and direct competition with the
Employer," provided the Compensation Committee may delay the ruling for a
reasonable period of time for good cause, such as unavailability of
Committee members.
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ARTICLE VI
DEATH BENEFITS AND METHOD OF PAYMENT
6.1 Optional Form of Payment
In lieu of the monthly retirement income payable to a Participant pursuant
to Articles IV or V hereof, a Participant entitled to receipt of such
monthly retirement income may elect, prior to commencement of such
retirement income, to receive a lesser amount payable in accordance with
any of the options set forth below at the election of the Participant:
a. A ten year and life option. Under this option retirement income shall
be payable monthly during the Participant's lifetime but not less
than one hundred twenty (120) total monthly payments shall be made
and if the Participant shall die before the minimum number of
payments shall have been made, the remaining such payments shall be
made to the beneficiary designated in writing by the Participant or
if no such person shall be designated or no such beneficiary shall
survive the Participant, the remaining such payments shall be paid to
the Participant's estate.
b. A contingent annuitant option. Under this option retirement income
shall be payable monthly during the Participant's lifetime but if the
Participant shall die and be survived by the person that he
designated as contingent annuitant at the time his retirement income
commenced (whether his spouse or any other
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person), then either one hundred percent (100%), seventy-five percent
(75%) or fifty percent (50%), as designated by the Participant, of
the retirement income amount payable to the Participant during his
lifetime shall continue to be paid monthly during the remainder of
the contingent annuitant's lifetime.
6.2 Actuarial Equivalent
The amount of reduced monthly retirement income payable pursuant to
Section 6.1 hereof shall be the actuarial equivalent of the benefits
otherwise payable under Articles IV or V hereof, determined in the same
manner, and with the same factors, assumptions and methodology as a
similar calculation would have been performed under the Paine Webber
Pension Plan.
6.3 Election of Optional Form of Payment
A Participant may, by written election made prior to commencement of
payments, elect any optional form provided by Section 6.1 hereof.
Elections so made may be cancelled and new elections made prior to
commencement of payments, but shall become irrevocable upon the
commencement of such payments. In the case of multiple elections, the last
such election prior to commencement of payments shall govern. The
governing election shall include the name and date of birth of any
designated contingent annuitant, if applicable. The election of a
contingent annuitant option shall automatically become null and void if
the designated contingent annuitant shall die prior to commencement of
retirement income payments and the election of any option shall become
null and void if the Participant shall die prior to commence-
<PAGE> 31
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ment of monthly retirement income payments. However, a Participant may
(either before or after retirement income payments commence) designate and
redesignate the beneficiary or beneficiaries under a ten year and life
option. The person or persons so designated shall acquire no vested rights
in the designation during the lifetime of the Participant. A trust, or
other entity may also be designated as beneficiary under a ten year
certain and life option.
6.4 Special Election During Deferral Period
A Participant who has retired early (pursuant to Article V hereof) but who
has elected to defer commencement of monthly retirement income or who has
terminated employment with a vested right to a deferred monthly retirement
allowance pursuant to Section 5.1 or 5.2 hereof may elect that a payment
option (pursuant to Section 6.3 hereof) become effective during the
deferral period but not earlier than the date of retirement. The option of
a Participant who makes such an election shall become irrevocable to the
same extent provided by Section 6.3 hereof as and from the effective date
of the election. If said Participant later dies during said deferral
period but after the election became effective, monthly retirement income
shall thereafter become payable to the same extent as if the payment of
monthly retirement income commenced being paid to the Participant in the
same month that the Participant's death occurred, or if later, the first
date that the Participant could elect to receive a monthly retirement
allowance if he survived.
6.5 [A new Section 6.5 has been added and became effective January 1, 1990.
For the text of Section 6.5, see Rider B.]
<PAGE> 32
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ARTICLE VII
ADMINISTRATION
7.1 Authority to Administer
The Compensation Committee shall be responsible for administering the Plan
and shall have the exclusive authority to interpret it. The Compensation
Committee shall have all powers and authorities necessary or appropriate
to enable it to administer the Plan.
7.2 Expenses
Expenses of the Plan and the concomitant trust provided by Section 1.2
hereof shall be borne by the Employer. The Compensation Committee shall
receive no additional remuneration for administering the Plan.
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ARTICLE VIII
MISCELLANEOUS
8.1 Amendment and Termination
The Compensation Committee or the Board may terminate, modify or amend the
Plan at any time in whole or in part. However, no such termination,
modification or amendment shall adversely affect the right of any person
to receive any benefits that have accrued hereunder prior to the date of
such termination, modification, or amendment.
8.2 Spendthrift Clause
No benefit of any Participant, contingent annuitant or beneficiary
hereunder shall be subject to alienation, sale, transfer, assignment,
pledge or encumbrance of any kind, either before or after his retirement
or termination of employment. To the extent permitted by law, no such
benefit shall be subject to levy, garnishment, attachment, distraint, or
creditors' claims in bankruptcy or insolvency in any proceeding
whatsoever; except that such payments may be subject to setoff,
counterclaim or levy filed by or on behalf of the Employer.
8.3 Withholding Tax
There shall be deducted and withheld from payments (and remitted to the
taxing authority) any taxes required to be withheld by any Federal, state,
local or other taxing authority.
<PAGE> 34
Page 32
8.4 Interpretation
Headings are inserted for convenience of reference only and are to be
ignored in any interpretation of this Plan. The masculine includes the
feminine and the singular the plural in all cases in which it would so
apply.
<PAGE> 35
Exhibit A
The Plan has been amended by Board effective January 1, 1990. The
amendment of the Plan consists of the following:
(a) Section 2.3 has been revised. For the full text of Section 2.3
as amended by the Board effective January 1, 1990, see Exhibit A-1 which is
attached.
(b) A new Section 6.5 which became effective January 1, 1990, has
been added by the Board. For the full text of Section 6.5, see Exhibit A-2
which is attached.
<PAGE> 36
Exhibit A-1
2.3 "Basic Annual Compensation" shall mean the highest basic annual rate of
compensation or remuneration paid to a Participant while employed by the
Employer, exclusive of commissions, draw, bonuses or other irregular or
special compensation except as may be provided otherwise as to any or all
Participants by resolution adopted by a majority of the Disinterested
Directors who are members of the Compensation Committee.
<PAGE> 37
Exhibit A-2
6.5 Preretirement Spouse's Benefit
(a) Eligibility for Spouse's Benefit.
(i) Participants Named in Section 3.1 Hereof or who are Eligible for
Benefits at Age 55 or Age 65. A surviving spouse of a Participant
who dies while employed by the Employer (the "Spouse") shall be
eligible to receive the greater of the annual Spouse's Benefit
described in Section 6.5(b)(i) or the Spouse's Annuity described
in Section 6.5(b)(ii) hereof, provided that at the time of the
Participant's death either:
(A) The Participant is named in Section 3.1 hereof or had
attained age 55 and completed at least 10 years of service
but had not attained age 65; or
(B) The Participant had attained age 65 but he had not elected
an optional form of benefit payment.
(ii) Other Participants. If a Participant who is not named in Section
3.1 hereof and is not eligible to retire at age 55 or age 65 (A)
has a vested interest in the benefits provided under this Plan,
(B) dies before
<PAGE> 38
2
he begins receiving any retirement income, and (C) has a Spouse,
then his Spouse shall be eligible to receive the Spouse's Annuity
(as defined in Section 6.5(b)(ii)).
(b) Amount of Spouse's Benefit or Spouse's Annuity.
(i) Participants Named in Section 3.1 Hereof or who are Eligible for
Benefits at Age 55 or at Age 65. The Spouse's Benefit shall be an
annual amount equal to 50% of the amount of retirement income
which would have been payable to the Participant if he had
retired on the first day of the month in which his death
occurred. The payment of the Spouse's Benefit shall commence on
the first day of the month immediately following the death of the
Participant and subsequent payments shall be made on the first
day of each month thereafter, with the last payment being made on
the first day of the month coinciding with or preceding the death
of the Spouse.
(ii) Other Participants. For purposes of this Section, a Spouse's
Annuity shall mean an annuity for the life of the Spouse where
the amount of the payments to the Spouse shall be the same as (or
the Actuarial
<PAGE> 39
3
Equivalent of) the amount of the payments that would have been
made under this Plan if:
(A) in the case of a Participant who dies after attaining age
55, the Participant had retired on the day before his or her
death with a contingent annuitant option, as described in
Section 6.1(b) hereof, 50% payable to the Spouse, or
(B) in the case of a Participant who dies on or before attaining
age 55, the Participant had separated from service on the
date of his or her death, survived until age 55, and retired
at that time with a contingent annuitant option, as
described in Section 6.1(b) hereof, 50% payable to the
Spouse.
The period for which the Spouse shall receive a payment under Clause
(B) shall commence with the month in which the Participant would have
attained age 55.
<PAGE> 40
Rider A
Section 2.3 is amended to read as follows:
2.3 "Basic Annual Compensation" shall mean the highest basic annual rate of
compensation or remuneration paid to a Participant while employed by the
Employer, exclusive of commissions, draw, bonuses or other irregular or
special compensation except as may be provided otherwise as to any or all
Participants by resolution adopted by a majority of the Disinterested
Directors who are members of the Compensation Committee.
<PAGE> 41
Rider B
A new Section 6.5 is added to read as follows:
6.5 Preretirement Spouse's Benefit
(a) Eligibility for Spouse's Benefit.
(i) Participants Named in Section 3.1 Hereof or who are Eligible for
Benefits at Age 55 or Age 65. A surviving spouse of a Participant
who dies while employed by the Employer (the "Spouse") shall be
eligible to receive the greater of the annual Spouse's Benefit
described in Section 6.5(b)(i) or the Spouse's Annuity described
in Section 6.5(b)(ii) hereof, provided that at the time of the
Participant's death either:
(A) The Participant is named in Section 3.1 hereof or had
attained age 55 and completed at least 10 years of service
but had not attained age 65; or
(B) The Participant had attained age 65 but he had not elected
an optional form of benefit payment.
(ii) Other Participants. If a Participant who is not named in Section
3.1 hereof and is not eligible to retire at age 55 or age 65 (A)
has a vested interest in the benefits provided under this Plan,
(B) dies before
<PAGE> 42
Rider B-2
he begins receiving any retirement income, and (C) has a Spouse,
then his Spouse shall be eligible to receive the Spouse's Annuity
(as defined in Section 6.5(b)(ii)).
(b) Amount of Spouse's Benefit or Spouse's Annuity.
(i) Participants Named in Section 3.1 Hereof or who are Eligible for
Benefits at Age 55 or at Age 65. The Spouse's Benefit shall be an
annual amount equal to 50% of the amount of retirement income
which would have been payable to the Participant if he had
retired on the first day of the month in which his death
occurred. The payment of the Spouse's Benefit shall commence on
the first day of the month immediately following the death of the
Participant and subsequent payments shall be made on the first
day of each month thereafter, with the last payment being made on
the first day of the month coinciding with or preceding the death
of the Spouse.
(ii) Other Participants. For purposes of this Section, a Spouse's
Annuity shall mean an annuity for the life of the Spouse where
the amount of the payments to the Spouse shall be the same as (or
the Actuarial
<PAGE> 43
Rider B-3
Equivalent of) the amount of the payments that would have been
made under this Plan if:
(A) in the case of a Participant who dies after attaining age
55, the Participant had retired on the day before his or her
death with a contingent annuitant option, as described in
Section 6.1(b) hereof, 50% payable to the Spouse, or
(B) in the case of a Participant who dies on or before attaining
age 55, the Participant had separated from service on the
date of his or her death, survived until age 55, and retired
at that time with a contingent annuitant option, as
described in Section 6.1(b) hereof, 50% payable to the
Spouse.
The period for which the Spouse shall receive a payment under Clause
(B) shall commence with the month in which the Participant would have
attained age 55.
<PAGE> 1
EXHIBIT 10.26
DEFERRED COMPENSATION AGREEMENT
BY AND BETWEEN
PAINE WEBBER GROUP, INC.
AND
DONALD B. MARRON
THIS AGREEMENT, made as of this 29 day of August, 1988 by and between
Paine Webber Group, Inc., a corporation organized and existing under the laws of
the State of Delaware and having its principal place of business at 1285 Avenue
of the Americas, New York, New York 10019 ("Paine Webber") and Donald B. Marron
of 555 Park Avenue, New York, New York 10021 ("Marron");
WITNESSETH
WHEREAS, Marron is Chairman of the Board of Directors and Chief Executive
Officer of Paine Webber;
WHEREAS, Marron's services to Paine Webber are vital and unique; and
WHEREAS, as consideration for Marron's continued employment, Paine Webber
desires to provide Marron with deferred compensation in addition to current and
deferred compensation otherwise or subsequently agreed to between the parties;
NOW, THEREFORE, the parties hereto agree as follows, to wit:
<PAGE> 2
Page 2
ARTICLE I
ELIGIBILITY AND RELATION TO COMPENSATION AND OTHER BENEFITS
1.1 Marron shall be eligible for deferred compensation in accordance with this
deferred compensation agreement and as further provided in the Paine Webber
Group, Inc. Supplemental Employee's Retirement Plan for Certain Senior
Officers (the "Plan"). In case of any conflict between the provisions of
this deferred compensation agreement and the Plan, the provisions of the
Plan shall govern.
1.2 The deferred compensation benefits herein provided shall be in addition to,
and not in degradation of, any and all amounts of compensation, emoluments,
perquisites and other remuneration previously agreed to between the parties
or to be agreed to between the parties subsequent to the execution of this
deferred compensation agreement; including, but not by way of limitation,
any such compensation, emoluments, perquisites and other remuneration
previously agreed to or to be agreed to between Marron and Paine Webber
Incorporated, a wholely-owned subsidiary of Paine Webber, or any other
subsidiary or affiliate of Paine Webber.
DEFERRED COMPENSATION BENEFITS
2.1 If Marron shall retire from the employ of Paine Webber (or of any
subsidiary or affiliated thereof including, but not limited to, Paine
Webber Incorporated) upon or after attaining the age of sixty-five (65),
then, in addition to all other retirement income, he shall receive a
<PAGE> 3
Page 3
monthly retirement allowance payable as long as he shall live, with each
such monthly retirement allowance equal to one-twelfth of the difference
between item one below and item two below:
1. Marron's base compensation immediately prior to retirement, less
2. Marron's annual retirement income under the Paine Webber Pension
Plan plus Marron's annual Primary Insurance Amount under the
Social Security Act of 1935, as amended (49 Stat 620).
2.2 At the sole election of Marron (or his spouse, contingent annuitant or
beneficiary then entitled to commence pension payments), which election
shall be made in writing during a onetime election period which shall
commence ninety (90) days prior to commencement of a monthly retirement
allowance under any of the sections of this agreement and end on the day
that such monthly retirement allowance commences, he shall make all of the
specific investment directions and instructions with respect to his aliquot
share of the trust estate, but only with respect to that period on and
after his monthly retirement allowance commences. Marron may also designate
an investment manager to issue such directions on his behalf. If Marron
shall elect this option, the amount of each monthly retirement allowance
shall be adjusted and determined as follows:
<PAGE> 4
Page 4
(a) The monthly retirement allowance shall be equal to the amount
otherwise determined under this agreement during the calendar year in
which such monthly retirement allowance commences.
(b) Thereafter, the monthly retirement allowance payable during each
calendar year shall be equal to the monthly retirement allowance
payable during the previous calendar year multiplied by a fraction,
the numerator of which shall be Marron's aliquot share of the trust
estate immediately following distribution of the retirement allowance
of the preceding December and the denominator of which is the
actuarially expected assets if the actuarially assumed investment
assumption for the calendar year used by the actuary in valuing the
Plan was exactly realized.
2.3 If Marron shall terminate his employment with Paine Webber (or of all of
the subsidiaries and affiliates thereof, including but not limited to Paine
Webber Incorporated), or his employment shall be terminated by Paine Webber
(or the relevant subsidiary or affiliate) prior to his attaining age
fifty-five (55), then, in addition to all other retirement income he may
elect to have his benefit payable in accordance with subparagraphs (a) or
(b) below (but not both such subparagraphs):
(a) A monthly retirement allowance payable as long as he shall live to
commence on the first of the month on or after attainment of age
fifty-five, or on the first of any month thereafter prior to his
attainment of age sixty-five, with such monthly retirement allowance
determined in accordance with Section 2.1 hereof, except
<PAGE> 5
Page 5
that the offsets provided by Section 2.1(2) hereof shall be subtracted
only when, and if, actually paid (subject to the rebuttable
presumption of the payment of Social Security benefits commencing at
age sixty-two) and shall be reduced for early retirement by
multiplying the result by a percentage equal to one hundred percent
(100%) less
(i) One-half percent (0.5%) multiplied by the number of months by
which the later of (1) the initial payment date or (2) the first
day of the month coincident with or next following Marron's
attainment of age sixty (60) precedes the first day of the month
coincident with or next following the date that Marron attains
age sixty-five (65), plus
(ii) Twenty-five one hundredths percent (0.25%) multiplied by the
number of months, if any, by which the initial payment date
precedes the first day of the month coincident with or next
following the date that Marron attains age sixty (60).
(b) A monthly retirement allowance payable as long as he shall live to
commence on the first day of the month coincident with or next
following the date that Marron attains his sixty-fifth (65th)
birthday, with such monthly retirement allowance determined in
accordance with Section 2.1 hereof, except that the offsets provided
by Section 2.1(2) hereof shall be subtracted only when, and if,
actually paid (subject to the rebuttable presumption of the payment of
Social Security benefits commencing at age sixty-two).
<PAGE> 6
Page 6
2.4 If Marron shall retire from the employ of Paine Webber (or of any
subsidiary or affiliate thereof including, but not limited to, Paine Webber
Incorporated), after attaining the age of fifty-five (55) but prior to
attaining the age of sixty-five (65), then, in addition to all other
retirement income, he shall receive a monthly retirement allowance, payable
as long as he shall live, which, at his election shall be payable in
accordance with subparagraphs (a) or (b) below (but not both such
subparagraphs):
(a) A monthly retirement allowance to commence on the first day of the
month coincident with or next following his date of retirement, or the
first day of any month thereafter prior to his attainment of age
sixty-five (65), with each such monthly retirement allowance
determined in the same manner as for Section 2.3(a) hereof.
(b) A monthly retirement allowance to commence on the first day of the
month coincident with or next following the date that Marron attains
his sixty-fifth (65th) birthday, with each such monthly retirement
allowance determined in the same manner as for Section 2.3(b) hereof.
2.5 Notwithstanding anything to the contrary, if Marron shall retire or
terminate his employment with Paine Webber (or any affiliate or subsidiary
thereof) subsequent to a change in control (as defined in the Plan), then,
in addition to all other retirement income his monthly retirement allowance
hereunder shall commence on the first day of the month coincident with or
next following his termination of employment
<PAGE> 7
Page 7
and shall be payable as long as he shall live but the amount of monthly
retirement allowance so payable shall be determined as for retirement at or
after age sixty-five (65), in accordance with Section 2.1 hereof, except
that the offsets provided by Section 2.1(2) hereof shall be subtracted
when, and if, actually paid (subject to the rebuttable presumption of the
payment of Social Security benefits commencing at age sixty-two).
2.6 If Marron shall retire from the employ of Paine Webber (or of any
subsidiary or affiliate thereof including, but not limited to, Paine Webber
Incorporated) as a result of permanent and total disability (as defined in
the Plan) then, in addition to all other retirement income, his monthly
retirement allowance shall commence on the first day of the month
coincident with or next following his termination of employment and shall
be payable as long as he shall live, but the amount of monthly retirement
allowance as payable shall be determined as for retirement at or after age
sixty-five (65), in accordance with Section 2.1 hereof, except that the
offsets provided by Section 2.1(2) hereof shall be subtracted when, and if,
actually paid (subject to the rebuttable presumption of the payment of
Social Security benefits commencing at age sixty-two).
<PAGE> 8
Page 8
2.7 Notwithstanding anything to the contrary, in the sole discretion of the
Compensation Committee of the Board of Directors of Paine Webber, all
benefits hereunder shall be forfeited, or all remaining benefits shall be
forfeited, if Marron shall, at any time prior to the earliest of (1) one
(1) year after termination of employment with Paine Webber, (2) attainment
of age sixty (60) or (3) the occurrence of a Change in Control (as defined
in the Plan), become an owner, principal, officer, employee, consultant or
investor in a financial services organizations which is determined by the
Compensation Committee of the Board of Directors of Paine Webber to be in
substantial and direct competition with the then core or basic lines of
business of Paine Webber. Upon request, within two (2) weeks, or a
reasonable extension of that time for good cause, the Compensation
Committee will rule as to whether employment with a specific organization
will trigger the forfeiture herein provided. However, a passive investment
of less than one percent (1%) of the stock of a publicly held company shall
not, per se, be deemed engaging in substantial competition for this
purpose.
ARTICLE III
DEATH BENEFITS AND PAYMENT OPTIONS
3.1 Notwithstanding anything to the contrary, at the sole election of Marron
any monthly retirement allowance provided herein may be paid in any of the
following forms of payment:
a. For the lifetime of Marron only
<PAGE> 9
Page 9
b. For the lifetime of Marron with a guarantee of a minimum of one
hundred twenty (120) monthly payments (with guaranteed payments to be
paid to the beneficiary designated by Marron if he shall die prior to
receiving one hundred twenty (120) monthly payments).
c. For the lifetime of Marron with payment of (as elected by Marron) one
hundred percent (100%), seventy-five percent (75%) or fifty percent
(50%) of the amount of each payment paid during Marron's lifetime
continued after his death to his wife or other contingent annuitant
designated by Marron.
3.2 If Marron shall elect any form of payment other than in accordance with
Section 3.1(a) hereof, each monthly payment shall be the actuarial
equivalent (as set forth in the Plan) of the monthly retirement allowance
provided by Section 3.1(a) hereof.
3.3 If Marron elects, death benefit protection provided by the payment option
pursuant to Section 3.2(c) hereof shall be effective after Marron's
termination of employment or retirement but prior to commencement of the
monthly retirement allowance hereunder, so as to protect the spouse or
other contingent annuitant designated by Marron during the period in which
payments are deferred.
<PAGE> 10
Page 10
ARTICLE IV
FUNDING AND ADMINISTRATION
4.1 The Compensation Committee of the Board of Directors shall have the
authority to administer and interpret the provisions of this deferred
compensation agreement and the Plan.
4.2 The obligations herein provided and provided under the Plan shall be
contingently funded by certain assets held by a trustee, in trust, as an
inter vivos trust for this purpose. Paine Webber and Marron, however,
recognize that such assets are held in trust for this purpose subject to a
condition precedent that Paine Webber will not become insolvent (as defined
in the Agreement and Declaration of Trust) prior to any such distribution
becoming due to Marron. If Paine Webber does become insolvent prior to that
time, the trust estate will be reverted to Paine Webber or its creditors
and, in that event, Marron will have an uninsured claim against Paine
Webber for all benefits to which he is entitled under this deferred
compensation agreement and the Plan and for which he did not receive a
distribution from the assets held in the inter vivos trust aforesaid.
4.3 In any event Marron shall have the status of an unsecured creditor of Paine
Webber with respect to all benefits due to Marron pursuant to this deferred
compensation agreement and the Plan to the extent that such benefits are
not paid out of the assets held in trust as aforesaid.
<PAGE> 11
Page 11
4.4 Benefits herein provided are personal to Marron (and his beneficiary and
contingent annuitant, if applicable) and may not be assigned, pledged,
alienated, transferred, hypothecated or used for collateral and, to the
extent permitted by law, may not be levied, attached or garnished or made
subject to any proceeding in distraint or creditors' claims in bankruptcy
or insolvency.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE DULY
EXECUTED AS OF THE DATE FIRST ABOVE WRITTEN.
/s/ Donald B. Marron (L.S.) PAINE WEBBER GROUP, INC.
- --------------------------------
Donald B. Marron
By /s/ Donald E. Nicholson
-----------------------------
Title President
--------------------------
<PAGE> 12
Rider A to the Deferred
Compensation Agreement
dated August 29, 1988 By
And Between Paine Webber
Group Inc. And Donald B.
Marron.
The Deferred Compensation Agreement By And Between Paine Webber Group Inc.
and Donald B. Marron dated August 29, 1988 is hereby amended by adding a new
Section 3.4, effective as of January 1, 1990, which reads in its entirety as
follows:
3.4 In the event Marron dies while employed by Paine Webber or any affiliate
thereof and with a surviving spouse, such spouse shall be eligible to
receive the Preretirement Spouse's Benefit as provided in Section 6.5 of
the Plan, as amended.
/s/ Donald B. Marron (L.S.) Paine Webber Group Inc.
- ------------------------------
Donald B. Marron
By: /s/ James C. Treadway, Jr.
---------------------------
Title: Vice President
------------------------
<PAGE> 1
EXHIBIT 10.27
DEFERRED COMPENSATION AGREEMENT
BY AND BETWEEN
PAINE WEBBER GROUP, INC.
AND
JOHN A. BULT
THIS AGREEMENT, made as of this 29th day of August, 1988 by and between
Paine Webber Group, Inc., a corporation organized and existing under the laws
of the State of Delaware and having its principal place of business at 1285
Avenue of the Americas, New York, New York 10019 ("Paine Webber") and John A.
Bult of 980 Fifth Avenue, New York, New York 10021 ("Bult");
WITNESSETH
WHEREAS, President of PaineWebber International Inc.;
WHEREAS, Bult's services to Paine Webber are vital and unique; and
WHEREAS, as consideration for Bult's continued employment, Paine Webber
desires to provide Bult with deferred compensation in addition to current and
deferred compensation otherwise or subsequently agreed to between the parties;
NOW, THEREFORE, the parties hereto agree as follows, to wit:
<PAGE> 2
Page 2
ARTICLE I
ELIGIBILITY AND RELATION TO COMPENSATION AND OTHER BENEFITS
1.1 Bult shall be eligible for deferred compensation in accordance with this
deferred compensation agreement and as further provided in the Paine Webber
Group, Inc. Supplemental Employee's Retirement Plan for Certain Senior
Officers (the "Plan"). In case of any conflict between the provisions of
this deferred compensation agreement and the Plan, the provisions of the
Plan shall govern.
1.2 The deferred compensation benefits herein provided shall be in addition to,
and not in degradation of, any and all amounts of compensation, emoluments,
perquisites and other remuneration previously agreed to between the parties
or to be agreed to between the parties subsequent to the execution of this
deferred compensation agreement; including, but not by way of limitation,
any such compensation, emoluments, perquisites and other remuneration
previously agreed to or to be agreed to between Bult and Paine Webber
Incorporated, a wholely-owned subsidiary of Paine Webber, or any other
subsidiary or affiliate of Paine Webber.
DEFERRED COMPENSATION BENEFITS
2.1 If Bult shall retire from the employ of Paine Webber (or of any sub-
sidiary or affiliate thereof including, but not limited to, Paine Webber
Incorporated) upon or after attaining the age of sixty-five (65), then, in
addition to all other retirement income, he shall receive a
<PAGE> 3
Page 3
monthly retirement allowance payable as long as he shall live, with each
such monthly retirement allowance equal to one-twelfth of the difference
between item one below and item two below:
1. Bult's base compensation immediately prior to retirement, less
2. Bult's annual retirement income under the Paine Webber Pension
Plan plus Bult's annual Primary Insurance Amount under the Social
Security Act of 1935, as amended (49 Stat 620).
2.2 At the sole election of Bult (or his spouse, contingent annuitant or
beneficiary then entitled to commence pension payments), which election
shall be made in writing during a onetime election period which shall
commence ninety (90) days prior to commencement of a monthly retirement
allowance under any of the sections of this agreement and end on the day
that such monthly retirement allowance commences, he shall make all of the
specific investment directions and instructions with respect to his aliquot
share of the trust estate, but only with respect to that period on and
after his monthly retirement allowance commences. Bult may also designate
an investment manager to issue such directions on his behalf. If Bult shall
elect this option, the amount of each monthly retirement allowance shall be
adjusted and determined as follows:
<PAGE> 4
Page 4
(a) The monthly retirement allowance shall be equal to the amount
otherwise determined under this agreement during the calendar year in
which such monthly retirement allowance commences.
(b) Thereafter, the monthly retirement allowance payable during each
calendar year shall be equal to the monthly retirement allowance
payable during the previous calendar year multiplied by a fraction,
the numerator of which shall be Bult's aliquot share of the trust
estate immediately following distribution of the retirement
allowance of the preceding December and the denominator of which is
the actuarially expected assets if the actuarially assumed investment
assumption for the calendar year used by the actuary in valuing the
Plan was exactly realized.
2.3 If Bult shall terminate his employment with Paine Webber (or of all of the
subsidiaries and affiliates thereof, including but not limited to Paine
Webber Incorporated), or his employment shall be terminated by Paine Webber
(or the relevant subsidiary or affiliate) prior to his attaining age
fifty-five (55), then, in addition to all other retirement income he may
elect to have his benefit payable in accordance with subparagraphs (a) or
(b) below (but not both such subparagraphs):
(a) A monthly retirement allowance payable as long as he shall live to
commence on the first of the month on or after attainment of age
fifty-five, or on the first of any month thereafter prior to his
attainment of age sixty-five, with such monthly retirement allowance
determined in accordance with Section 2.1 hereof, except
<PAGE> 5
Page 5
that the offsets provided by Section 2.1(2) hereof shall be
subtracted only when, and if, actually paid (subject to the rebuttable
presumption of the payment of Social Security benefits commencing at
age sixty-two) and shall be reduced for early retirement by
multiplying the result by a percentage equal to one hundred percent
(100%) less
(i) One-half percent (0.5%) multiplied by the number of months by
which the later of (1) the initial payment date or (2) the first
day of the month coincident with or next following Bult's
attainment of age sixty (60) precedes the first day of the month
coincident with or next following the date that Bult attains age
sixty-five (65), plus
(ii) Twenty-five one hundredths percent (0.25%) multiplied by the
number of months, if any, by which the initial payment date
precedes the first day of the month coincident with or next
following the date that Bult attains age sixty (60).
(b) A monthly retirement allowance payable as long as he shall live to
commence on the first day of the month coincident with or next
following the date that Bult attains his sixty-fifth (65th) birthday,
with such monthly retirement allowance determined in accordance
with Section 2.1 hereof, except that the offsets provided by Section
2.1(2) hereof shall be subtracted only when, and if, actually paid
(subject to the rebuttable presumption of the payment of Social
Security benefits commencing at age sixty-two).
<PAGE> 6
Page 6
2.4 If Bult shall retire from the employ of Paine Webber (or of any subsidiary
or affiliate thereof including, but not limited to, Paine Webber
Incorporated), after attaining the age of fifty-five (55) but prior to
attaining the age of sixty-five (65), then, in addition to all other
retirement income, he shall receive a monthly retirement allowance, payable
as long as he shall live, which, at his election shall be payable in
accordance with subparagraphs (a) or (b) below (but not both such
subparagraphs):
(a) A monthly retirement allowance to commence on the first day of the
month coincident with or next following his date of retirement, or the
first day of any month thereafter prior to his attainment of age
sixty-five (65), with each such monthly retirement allowance
determined in the same manner as for Section 2.3(a) hereof.
(b) A monthly retirement allowance to commence on the first day of the
month coincident with or next following the date that Bult attains his
sixty-fifth (65th) birthday, with each such monthly retirement
allowance determined in the same manner as for Section 2.3(b) hereof.
2.5 Notwithstanding anything to the contrary, if Bult shall retire or
terminate his employment with Paine Webber (or any affiliate or subsidiary
thereof) subsequent to a change in control (as defined in the Plan), then,
in addition to all other retirement income his monthly retirement allowance
hereunder shall commence on the first day of the month coincident with or
next following his termination of employment and
<PAGE> 7
Page 7
shall be payable as long as he shall live but the amount of monthly
retirement allowance so payable shall be determined as for retirement at or
after age sixty-five (65), in accordance with Section 2.1 hereof, except
that the offsets provided by Section 2.1(2) hereof shall be subtracted
when, and if, actually paid (subject to the rebuttable presumption of the
payment of Social Security benefits commencing at age sixty-two).
2.6 If Bult shall retire from the employ of Paine Webber (or of any subsidiary
or affiliate thereof including, but not limited to, Paine Webber
Incorporated) as a result of permanent and total disability (as defined in
the Plan) then, in addition to all other retirement income, his monthly
retirement allowance shall commence on the first day of the month
coincident with or next following his termination of employment and shall
be payable as long as he shall live, but the amount of monthly retirement
allowance as payable shall be determined as for retirement at or after age
sixty-five (65), in accordance with Section 2.1 hereof, except that the
offsets provided by Section 2.1(2) hereof shall be subtracted when, and if,
actually paid (subject to the rebuttable presumption of the payment of
Social Security benefits commencing at age sixty-two).
<PAGE> 8
Page 8
2.7 Notwithstanding anything to the contrary, in the sole discretion of the
Compensation Committee of the Board of Directors of Paine Webber, all
benefits hereunder shall be forfeited, or all remaining benefits shall be
forfeited, if Bult shall, at any time prior to the earliest of (1) one (1)
year after termination of employment with Paine Webber, (2) attainment of
age sixty (60) or (3) the occurrence of a Change in Control (as defined in
the Plan), become an owner, principal, officer, employee, consultant or
investor in a financial services organizations which is determined by the
Compensation Committee of the Board of Directors of Paine Webber to be in
substantial and direct competition with the then core or basic lines of
business of Paine Webber. Upon request, within two (2) weeks, or a
reasonable extension of that time for good cause, the Compensation
Committee will rule as to whether employment with a specific organization
will trigger the forfeiture herein provided. However, a passive investment
of less than one percent (1%) of the stock of a publicly held company shall
not, per se, be deemed engaging in substantial competition for this
purpose.
ARTICLE III
DEATH BENEFITS AND PAYMENT OPTIONS
3.1 Notwithstanding anything to the contrary, at the sole election of Bult any
monthly retirement allowance provided herein may be paid in any of the
following forms of payment:
a. For the lifetime of Bult only
<PAGE> 9
Page 9
b. For the lifetime of Bult with a guarantee of a minimum of one hundred
twenty (120) monthly payments (with guaranteed payments to be paid to
the beneficiary designated by Bult if he shall die prior to receiving
one hundred twenty (120) monthly payments).
c. For the lifetime of Bult with payment of (as elected by Bult) one
hundred percent (100%), seventy-five percent (75%) or fifty percent
(50%) of the amount of each payment paid during Bult's lifetime
continued after his death to his wife or other contingent annuitant
designated by Bult.
3.2 If Bult shall elect any form of payment other than in accordance with
Section 3.1(a) hereof, each monthly payment shall be the actuarial
equivalent (as set forth in the Plan) of the monthly retirement allowance
provided by Section 3.1(a) hereof.
3.3 If Bult elects, death benefit protection provided by the payment option
pursuant to Section 3.2(c) hereof shall be effective after Bult's
termination of employment or retirement but prior to commencement of the
monthly retirement allowance hereunder, so as to protect the spouse or
other contingent annuitant designated by Bult during the period in which
payments are deferred.
<PAGE> 10
Page 10
ARTICLE IV
FUNDING AND ADMINISTRATION
4.1 The Compensation Committee of the Board of Directors shall have the
authority to administer and interpret the provisions of this deferred
compensation agreement and the Plan.
4.2 The obligations herein provided and provided under the Plan shall be
contingently funded by certain assets held by a trustee, in trust, as an
inter vivos trust for this purpose. Paine Webber and Bult, however,
recognize that such assets are held in trust for this purpose subject to a
condition precedent that Paine Webber will not become insolvent (as defined
in the Agreement and Declaration of Trust) prior to any such distribution
becoming due to Bult. If Paine Webber does become insolvent prior to that
time, the trust estate will be reverted to Paine Webber or its creditors
and, in that event, Bult will have an uninsured claim against Paine Webber
for all benefits to which he is entitled under this deferred compensation
agreement and the Plan and for which he did not receive a distribution from
the assets held in the inter vivos trust aforesaid.
4.3 In any event Bult shall have the status of an unsecured creditor of Paine
Webber with respect to all benefits due to Bult pursuant to this deferred
compensation agreement and the Plan to the extent that such benefits are
not paid out of the assets held in trust as aforesaid.
<PAGE> 11
Page 11
4.4 Benefits herein provided are personal to Bult (and his beneficiary and
contingent annuitant, if applicable) and may not be assigned, pledged,
alienated, transferred, hypothecated or used for collateral and, to the
extent permitted by law, may not be levied, attached or garnished or made
subject to any proceeding in distraint or creditors' claims in bankruptcy
or insolvency.
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE CAUSED THIS AGREEMENT TO BE DULY
EXECUTED AS OF THE DATE FIRST ABOVE WRITTEN.
/s/ John A. Bult (L.S.) PAINE WEBBER GROUP, INC.
- ---------------------------------
John A. Bult
By /s/ Donald B. Marron
----------------------------
Title
-------------------------
<PAGE> 12
Rider A to the Deferred
Compensation Agreement
dated August 29, 1988 By
And Between Paine Webber
Group Inc. And John A.
Bult.
The Deferred Compensation Agreement By And Between Paine Webber Group Inc.
and John A. Bult dated August 29, 1988 is hereby amended by adding a new Section
3.4, effective as of January 1, 1990, which reads in its entirety as follows:
3.4 In the event Bult dies while employed by Paine Webber or any affiliate
thereof and with a surviving spouse, such spouse shall be eligible to
receive the Preretirement Spouse's Benefit as provided in Section 6.5 of
the Plan, as amended.
/s/ John A. Bult (L.S.) PAINE WEBBER GROUP, INC.
- ---------------------------------
John A. Bult
By: /s/ James Treadway
----------------------------
Title: Vice President
-------------------------
<PAGE> 1
Exhibit 10.37
=================================================================
LEASE BETWEEN
HARTZ-PW LIMITED PARTNERSHIP,
as Landlord
and
PAINEWEBBER INCORPORATED
as Tenant
=================================================================
Premises:
Operations Center
LINCOLN HARBOR PROJECT
<PAGE> 2
INDEX
ARTICLE PAGE
1. Definitions ............................. 1
2. Demise and Term ......................... 7
3. Rent .................................... 7
4. Use of Building ......................... 9
5. Preparation of Building ................. 10
6. Tax and Operating Expense Payments ...... 12
7. Common Areas ............................ 15
6. Retail Space ............................ 17
9. Subordination ........................... 17
10. Quiet Enjoyment ......................... 20
11. Assignment, Subletting and Mortgaging ... 20
12. Compliance with Laws .................... 24
13. Insurance and Indemnity ................. 25
14. Rules and Regulations ................... 31
15. Alterations ............................. 32
16. Landlord's and Tenant's Property ........ 34
17. Repairs and Maintenance ................. 35
18. Electric Energy ......................... 37
19. Heat, Ventilation & Air Conditioning .... 37
20. Other Services: Service Interruption ... 37
21. Access, Changes and Name ................ 38
22. Mechanic's Liens and Other Liens ........ 38
23. Non-Liability and Indemnification ....... 39
24. Damage or Destruction ................... 40
25. Eminent Domain .......................... 45
26. Surrender ............................... 47
27. Conditions of Limitation ................ 48
28. Re-Entry by Landlord .................... 49
29. Damages ................................. 50
30. Affirmative Waivers ..................... 53
31. No Waivers .............................. 54
32. Curing Tenant's Defaults ................ 54
33. Broker .................................. 55
34. Notices ................................. 55
35. Estoppel Certificates ................... 56
36. Arbitration ............................. 56
37. Memorandum of Lease ..................... 57
38. Miscellaneous ........................... 57
39. Extension of Term ....................... 62
40. Determination of Fair Market Rent ....... 63
<PAGE> 3
Exhibits
Exhibit "A" Description of the Building
Exhibit "B" Demised Premises
Exhibit "C" Fixed Rent
Exhibit "D" Floor Space
Exhibit "E" Land
Exhibit "F" Landlord's Work
Exhibit "G" Loan Terms
Exhibit "H" Operating Expenses
Exhibit "I" Plans and Specifications
Exhibit "J" Tenant's Work
Exhibit "K" Parking Plan
Exhibit "L" Lincoln Harbor Project
Exhibit "M" Retail Space
Exhibit "N-1" Form of Superior Mortgage Subordination,
Nondisturbance and Attornment Agreement
Exhibit "N-2" Form of Superior Lessor Subordination,
Nondisturbance and Attornment Agreement
Exhibit "O" Form of Ground Lessor Nondisturbance
and Attornment Agreement
Exhibit "P" Cleaning Standards
ii
<PAGE> 4
Lease, dated April 14, 1986 between HARTZ-PW LIMITED PARTNERSHIP, a New
Jersey limited partnership, having an office at 400 Plaza Drive, Post Office Box
1411, Secaucus, New Jersey 07094 and PAINEWEBBER INCORPORATED, a Delaware
corporation, having an office at 1285 Avenue of the Americas, New York, New York
10019.
ARTICLE 1 - DEFINITIONS
1.01 As used in this Lease (including in all Exhibits and any Riders
attached hereto, all of which shall be deemed to be part of this Lease) the
following words and phrases shall have the meanings indicated:
A. Additional Charges: All amounts that become payable by Tenant to
Landlord hereunder other than the Fixed Rent.
B. Architect: Kenneth Carl Bonte, or as Landlord may designate, subject to
Tenant's approval, which approval shall not be unreasonably withheld or delayed.
C. Architect's Certificate: The certificate to be issued by Architect
either (i) if Landlord is not designated by Tenant to perform Tenant's Work,
that Landlord's Work has been completed in accordance with the Plans and
Specifications, to the extent necessary so that Tenant may commence Tenant's
Work, or (ii) if Landlord is designated by Tenant to perform Tenant's Work, that
the Building and the Demised Premises have been Substantially Completed in
accordance with the Plans and Specifications.
D. Broker: Joseph Hilton & Associates Incorporated.
E. Building: The building to be located on the Land as more particularly
described on the plan attached hereto as Exhibit "A" and made a part hereof.
F. Calendar Year: Any twelve-month period during the term of this Lease
commencing on a January 1.
G. Commencement Date: The earlier of (a) (i) if Landlord is not designated
by Tenant to perform Tenant's Work, eight (8) months from the completion of
Landlord's Work to the extent necessary so that Tenant may commence Tenant's
Work, together with the delivery of
<PAGE> 5
Architect's Certificate, or (ii) if Landlord is designated to perform Tenant's
Work, the date on which Landlord Substantially Completes Landlord's Work and
Tenant's Work and delivers the Demised Premises to Tenant, provided, however,
that in the case of (i) or (ii) above, the Commencement Date shall not occur
prior to the thirtieth (30th) day after delivery of the Commencement Notice, nor
earlier than July 1, 1988, (b) the date Tenant, or anyone claiming under or
through Tenant, first occupies the Demised Premises or any part thereof and is
open for business, provided that in such event, the Commencement Date shall be
deemed to have occurred only for the floors of the Demised Premises actually so
occupied, or (c) the date upon which the Commencement Date would have occurred
under (a) above, but for delays caused by the Tenant.
H. Commencement Notice: Thirty (30) days prior written notice from Landlord
to Tenant (i) if Landlord is not designated by Tenant to perform Tenant's
Work, of the date on which Landlord's Work shall be completed to the extent
necessary so that Tenant may commence Tenant's Work, or (ii) if Landlord is
designated by Tenant to perform Tenant's Work, of the date on which the Building
and the Demised Premises shall be Substantially Completed .
I. Common Areas: All areas, spaces and improvements in the Building (other
than the Demised Premises) and/or on the Land, which Landlord makes available
from time to time for the common use and benefit of the tenants and occupants of
the Building, including, without limitation, lobbies, hallways, parking areas,
and planted areas, if any.
J. Demised Premises: As defined on Exhibit "B" annexed hereto and made a
part hereof.
K. Expiration Date: The date that is the day before the twenty-fifth (25th)
anniversary of the latest to occur of (i) the Commencement Date, or (ii) the
Commencement Date of the Data Processing Lease (hereinafter defined) (as such
term is defined in the Data Processing Lease), or (iii) the Commencement Date
(as such term is defined in the Agreement of Lease, dated of even date herewith,
between Hartz-PW Hotel Limited Partnership, as landlord, and Tenant, as tenant,
for certain office premises in the Lincoln Harbor Project (the "Hotel/Office
Lease")) of the Hotel/Office Lease, if the later to occur
2
<PAGE> 6
of such dates is the first day of a month, or the twenty fifth (25th)
anniversary of the last day of the month in which the later to occur of such
dates occurs if the later to occur of such dates is not the first day of a
month. However, if the Term is extended by the Tenant's effective exercise of
any Renewal Option, the "Expiration Date" shall be changed to the last day of
the applicable Renewal Term. For the purpose of this definition, the earlier
termination of this Lease shall not affect the "Expiration Date."
L. Fixed Rent: As set forth on the Rent Schedule on Exhibit "C" annexed
hereto and made a part hereof, as redetermined pursuant to Section 39.02 hereof.
M. Fixed Rent Commencement Date: The date(s) which is the first anniversary
of the Commencement Date (or Dates) subject to adjustment as provided in Sec-
tion 5.05 hereof.
N. Floor Space: 578,028, as the same may be increased or decreased pursuant
to Section 38.11 hereof, and as more particularly set forth on Exhibit "D"
annexed hereto and made a part hereof.
0. Ground Lease: The Agreement of Lease, dated of even date herewith,
between Ground Lessor, as landlord, and Landlord, as tenant, pursuant to which
Ground Lessor, leased the Land to Landlord.
P. Ground Lessor: Hartz Mountain Industries, Inc. ("Hartz"), its successors
and assigns.
Q. Insurance Requirements: Rules, regulations, orders and other
requirements of the applicable board of underwriters and/or the applicable fire
insurance rating organization and/or any other similar body performing the same
or similar functions and having jurisdiction or cognizance over the Land and
Building, whether now or hereafter in force.
R. Land: The land described on Exhibit "E" annexed hereto and made a part
hereof.
S. Landlord: On the date as of which this Lease is made, shall mean
Hartz-PW Limited Partnership, a New Jersey limited partnership, having an
address at 400 Plaza Drive, Secaucus, New Jersey 07094, but thereafter
3
<PAGE> 7
"Landlord" shall mean only the ground lessee under the Ground Lease or if the
Ground Lease shall have ceased to exist, the fee owner of the Land, or if there
shall exist another Superior Lease or Leases, the tenant under the Superior
Lease immediately prior in estate to this Lease.
T. Landlord's Work: The materials and work to be furnished, installed and
performed by Landlord at its expense in accordance with the provisions of
Exhibit "F" annexed hereto and made a part hereof.
U. Legal Requirements: Laws and ordinances of all federal, state and local
governments, and rules, regulations, orders and directives of all departments,
subdivisions, bureaus, agencies or offices thereof, and of any other
governmental authorities having jurisdiction over the Land and Building.
V. Mortgage: The mortgage creating a lien on the leasehold estate created
by the Ground Lease, to be entered into pursuant to a loan commitment
substantially on the terms set forth in the schedule annexed hereto as Exhibit
"G" and made a part hereof, and any replacement, extension, modification or
amendment thereto.
W. Operating Expenses: An amount equal to the costs and expenses for the
items set forth on Exhibit "H" annexed hereto and made a part hereof.
X. Permitted Uses: General and executive office use and all uses incidental
to securities trading and sales (including without limitation, retail securities
trading and sales) including, without limitation, operation of trading floors
and trading support systems.
Y. Person: A natural person or persons, a partnership, a corporation, or
any other form of business or legal association or entity.
Z. Plans and Specifications: The schematics annexed hereto as Exhibit "I"
and made a part hereof which have been approved by Tenant and all plans and
specifications developed for the Building, which shall be subject to Tenant's
prior written approval, which approval shall not be unreasonably withheld or
delayed.
AA. Project Common Areas: All areas, spaces and improvements in the Lincoln
Harbor Project (other
4
<PAGE> 8
than those located on the Land) which are made available from time to time for
the common use and benefit of the tenants and occupants or the Lincoln Harbor
Project, including, without limitation, non-exclusive parking areas, roads,
walkways, sidewalks and landscapes and planted areas, if any.
BB. Real Estate Taxes: The real estate taxes, assessments and special
assessments imposed upon the Demised Premises by any federal, state, municipal
or other governments or governmental bodies or authorities. If at any time
during the Term the methods of taxation prevailing on the date hereof shall be
altered so that in lieu of, or as an addition to or as a substitute for, the
whole or any part of such real estate taxes, assessments and special assessments
now imposed on real estate there shall be levied, assessed or imposed on
Landlord specifically in substitution for any of the foregoing Real Estate
Taxes (a) a tax, assessment, levy, imposition, license fee or charge wholly or
partially as a capital levy or otherwise on the rents received therefrom, or (b)
any other such additional or substitute tax, assessment, levy, imposition or
charge, then all such taxes, assessments, levies, impositions, fees or charges
or the part thereof so measured or based shall be deemed to be included within
the term "Real Estate Taxes" for the purposes hereof, calculated as if
Landlord's only asset were the leasehold estate created by the Ground Lease.
CC. Renewal Options: Shall have the meaning set forth in Section 39.01
hereof.
DD. Renewal Terms: Shall have the meaning set forth in Section 39.01
hereof.
EE. Rent: The Fixed Rent and the Additional Charges .
FF. Rules and Regulations: The reasonable rules and regulations that may be
promulgated by Landlord from time to time, as may be reasonably changed by
Landlord from time to time.
GG. Substantially Completed: Substantially Completed or terms of similar
import shall mean the completion of construction, and the issuance of a
temporary certificate of occupancy therefore, except for minor details,
designated or punchlists delivered to Tenant, of
5
<PAGE> 9
construction, decoration and mechanical adjustment, the non-completion of which
will not materially interfere with the performance of Tenant's Work or Tenant's
use and occupancy of the Demised Premises for Tenant's normal business purposes,
and the completion of which is expected to occur within sixty (60) days after
such Substantial Completion .
HH. Successor Landlord: Shall have the meaning set forth in Section 9.03.
II. Superior Lease: Any ground or underlying lease of the Land or the
Building.
JJ. Superior Lessor: The lessor of a Superior Lease or its successor in
interest, at the time referred to .
KK. Superior Mortgage: Any mortgage, including the Mortgage, which may
hereafter affect the Land, the estate created under the Ground Lease or by any
other Superior Lease, or the Building and all renewals, extensions,
supplements, amendments, modifications, consolidations, and replacements
thereof or thereto, substitutions therefore, and advances made thereunder.
LL. Superior Mortgagee: The mortgagee of a Superior Mortgage at the time
referred to, sometimes herein referred to as a Mortgagee.
MM. Tenant: On the date of which this Lease is made shall mean PaineWebber
Incorporated, but there after, "Tenant" shall mean only the tenant under this
Lease at the time in question; provided, however, that the foregoing shall not
be deemed to relieve PaineWebber Incorporated of any liability in the event of
an assignment of its interest in this Lease except in accordance with the
provisions of Section 11.04(b) hereof.
NN. Tenant's Fraction: 95.62%, as the same may be decreased pursuant to
Section 38.11 hereof.
00. Tenant's Property: Shall have the meaning set forth in Section 16.02.
PP. Tenant's Work: The facilities, materials and work which may be
undertaken by or for the account of Tenant (other than the Landlord's Work) to
equip, deco-
6
<PAGE> 10
rate and furnish the Demised Premises for Tenant's initial occupancy in
accordance with the provisions of Exhibit "J" annexed hereto and made a part
hereof.
QQ. Term: The period commencing on the Commencment Date and ending at 11:59
P.M. of the Expiration Date unless otherwise terminated in accordance with the
provisions hereof.
RR. Unavoidable Delays: A delay arising from or as a result of a strike,
lockout, or labor difficulty, explosion, sabotage, accident, riot or civil
commotion, act of war, fire or other catastrophe, Legal Requirement or an act of
the other party and any cause beyond the reasonable control of that party,
provided that the party asserting such Unavoidable Delay has exercised its best
efforts to minimize such delay. The party asserting such delay, promptly upon
becoming aware of such Unavoidable Delay, shall give written notice of such
Unavoidable Delay to the other party.
ARTICLE 2 - DEMISE AND TERM
2.01 Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, the Demised Premises, for the Term. Promptly following the
Commencement Date, the parties hereto shall enter into an agreement in form and
substance reasonably satisfactory to Landlord and Tenant setting forth the
Commencement Date.
ARTICLE 3 - RENT
3.01 Tenant shall pay the Fixed Rent in equal monthly installments in
advance on the first day of each and every calendar month beginning on the Fixed
Rent Commencement Date. If the Fixed Rent Commencement Date occurs on a day
other than the first day of a calendar month, the Fixed Rent for such partial
calendar month shall be prorated on a per diem basis and paid on the Fixed Rent
Commencement Date.
3.02 The Rent shall be paid in lawful money of the United States to
Landlord by wire transfer of immediately available funds to a bank which is a
member of the New York Clearinghouse Association, or by check to such other
place as Landlord shall designate by notice to Tenant. Tenant shall pay the Rent
promptly when due and without any abatement, deduction or setoff for any reason
7
<PAGE> 11
whatsoever, except as may be expressly provided in this Lease. In case of
payment by check, Tenant shall assume the risk of lateness or failure of
delivery of the mails, and no lateness or failure of the mails will excuse Ten-
ant from its obligation to have made the payment in question when required under
this Lease.
3.03 No payment by Tenant or receipt or acceptance by Landlord of a
lesser amount than the correct Rent shall be deemed to be other than a payment
on account, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment deemed an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to Landlord's
right to recover the balance or pursue any other remedy in this Lease or at law
provided.
3.04 If Tenant is in arrears in payments of Rent, Tenant waives Tenant's
right, if any, to designate the items to which any payments made by Tenant are
to be credited, and Landlord may apply any payments made by Tenant to such items
as Landlord sees fit, irrespective of and notwithstanding any designation or
request by Tenant as to the items to which any such payments shall be credited.
3.05 If Tenant shall fail to pay any installment of Fixed Rent within
five (5) days or any other item of Rent within twenty (20) days after the date
when such payment is due and Landlord shall have delivered a bill for the same
(which delivery may be by invoice and shall not be required to comply with the
requirements for notices specified in Article 34 hereof), then, any such payment
shall bear interest calculated from the due date to the date such payment is
received by Landlord at a rate equal to two (2) percentage points in excess of
the rate of interest publically 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") (the "Late Payment Rate").
3.06 It is the intention of the parties that the Fixed Rent payable under
this Lease shall be net to Landlord, so that this Lease shall yield to Landlord
the Fixed Rent specified herein during the Term of this Lease, and that all
costs, expenses and obligations of every kind and nature whatsoever relating to
the Demised
8
<PAGE> 12
Premises shall be paid by Tenant, other than liens placed on the Demised
Premises by Landlord, or claims against Landlord for Landlord's negligence or
default under the terms of this Lease (nothing herein shall be construed as
affecting the provisions of any insurance carried by Landlord, Tenant, subtenant
or assign with respect to the Demised Premises, including fire and hazard
insurance, liability insurance and any other insurance).
ARTICLE 4 - USE OF BUILDING
4.01 Tenant shall use and occupy the Demised Premises only for the
Permitted Uses, and any other lawful purpose in keeping with the character of
the Building and the Lincoln Harbor Project (as defined on Exhibit "K", annexed
hereto and made a part hereof), and Tenant shall not use or permit or suffer the
use of the Demised Premises or any part thereof for any illegal or hazardous
purpose.
4.02 On or before the Commencement Date, Landlord shall obtain a
certificate of occupancy for the core and shell of the Building. Each
governmental license or permit, including the certificate of occupancy or its
lawful functional equivalent, required for the proper and lawful conduct of
Tenant's business in the Demised Premises or any part thereof, shall be duly
procured either by Tenant if Tenant shall perform Tenant's Work, or by Landlord
if Landlord shall perform Tenant's Work, and thereafter Tenant shall maintain
such license or permit and submit the same to Landlord for inspection. Tenant
shall at all times comply with the terms and conditions of each such license or
permit. Tenant shall not at any time use or occupy, or suffer or permit anyone
to use or occupy the Demised Premises, or do or permit anything on the Demised
Premises, in any manner which (a) violates the certificate of occupancy for the
Demised Premises; (b) causes injury to the Building, including the structure,
roof or building systems thereof, (c) constitutes a violation of the Legal
Requirements or Insurance Requirements; (d) impairs the character, reputation or
appearance of the Building as a first-class office building; or (e) interferes
with the right of quiet enjoyment of tenants or occupants of the Land or
adjacent premises.
9
<PAGE> 13
ARTICLE 5 - PREPARATION OF BUILDING
5.01 The Building shall be prepared for Tenant's Work in the manner
described in, and subject to the provisions of, Exhibit "F" annexed hereto, on
or before November 1, 1987, and Landlord's Work shall be Substantially
Completed on or before December 1, 1987, in either event provided that Tenant
shall deliver to Landlord plans and specifications for the core and shell of the
Building on or before April 15, 1986. Such date for Substantial Completion of
the Building shall be postponed one day for each day beyond April 15, 1986 on
which Tenant does not deliver such plans and specifications. Tenant promptly
shall enter the Demised Premises on the later to occur of the delivery of the
Architect's Certificate or the date which is thirty (30) days after receipt of
the Commencement Notice. Landlord shall, from time to time, upon request of
Tenant advise Tenant of the progress of Landlord's Work and the estimated date
that Tenant may commence or cause to be commenced Tenant's Work. Except as
expressly provided to the contrary in this Lease, the commencement by Tenant of
the Tenant's Work shall be evidence that the Demised Premises were in good and
satisfactory condition at the time Tenant's Work was undertaken except as to
(i) any defects in the Demised Premises which were not known or reasonably
discoverable by Tenant by observation or an inspection ("Latent Defects"), (ii)
any items of work performed by Landlord of which Tenant gives Landlord notice
within one hundred twenty (120) days after the Commencement Date, and (iii)
portions of the work performed by Landlord not completed, because under good
construction scheduling practice such work should be done after completion of
still incompleted finishing or other work to be done by or on behalf of Tenant.
Landlord shall complete all such items of work not so completed within sixty
(60) days after the date of Substantial Completion. Landlord, its agents,
servants, employees and contractors shall have the right to enter the Demised
Premises to complete or repair any such unfinished items and Latent Defects upon
reasonable prior notice to Tenant. Landlord shall warrant all construction and
equipment delivered in or with Landlord's Work for a period of one (1) year from
the Commencement Date. Landlord shall assign such longer warranties as may be
provided with any item of equipment or material installed in the Building shell
to Tenant, or, if the same are not assignable, shall assign to Tenant the right
to enforce the same. Landlord covenants that the warranty obtained
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with respect to the roof shall be for a minimum of ten (10) years from
completion of the roof in accordance with the Plans and Specifications. Landlord
shall furnish Tenant with an assignment of such warranties to the extent that
same are given by subcontractors or materialmen.
5.02 If the Substantial Completion of the Landlord's Work shall be delayed
due to (a) any act or omission of Tenant or any of its employees, agents or
contractors [including, without limitation, (i) any delays due to changes in
or additions to the Landlord's Work made at the request of Tenant or (ii) any
delays by Tenant in the submission of plans, drawings, specifications or other
information or in approving any working drawings or estimates or in giving any
authorizations or approval(s)], or (b) any additional time needed for the
completion of the Landlord's Work by the inclusion in the Landlord's Work of any
extra work required of Landlord by Tenant, then Landlord's Work in connection
with the Demised Premises shall be deemed Substantially Complete on the date it
would have been Substantially Complete but for such delay(s). Landlord promptly
and contemporaneously shall notify Tenant of any delay in completion claimed
to be caused by any of the items enumerated in sub-section (a) above.
5.03 Landlord reserves the right, at any time and from time to time, to
increase, reduce or change the number, type, size, location, nature and use of
any other improvements on the Land, including without limitation, the right to
move and/or remove same, provided same shall not block or unreasonably interfere
with Tenant's means of ingress or egress to and from the Building. Landlord
shall insure that in connection with the development of the Lincoln Harbor
Project, Ground Lessor shall not deviate materially from the approved site
plan without Tenant's prior consent, which consent shall not be unreasonably
withheld or delayed, and provided further that Tenant may thereupon request a
recalculation of Operating Expenses in accordance with Section 38.11 hereof.
5.04 The interior finish of the Demised Premises is he responsibility of
Tenant as Tenant's Work. Landlord shall provide an allowance ("Tenant's Fund")
equal to the product of Twenty-Four Dollars ($24) and the Floor Space.
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5.05 At Tenant's request from time to time, but not more frequently than
once each month, Landlord shall disburse within fifteen (15) days of
verification portions of the Tenant Fund to Tenant in an amount equal to the
product of Twenty-Four Dollars ($24) and the percentage of completion of
Tenant's Work, as certified by the architect employed by Tenant in connection
with Tenant's Work and verified or objected to by Architect within fifteen
(15) days of receipt thereof (it being agreed that if Architect shall fail to
respond within such fifteen (15) day period, such certification shall be
deemed to have been verified). Landlord shall be Permitted to bid upon the
Tenant's Work. Tenant shall be responsible (and may employ a construction
manager if Tenant so desires to employ such at its own expense) for all Tenant
Work. In the event Landlord shall be awarded the bid, Landlord shall complete
the Tenant Work of the Building within six (6) months of the completion of the
shell of the Building; predicated upon Landlord receiving Tenant's request for
proposal on or before August 1, 1987 and Landlord starting the Tenant Work in
the tenth (10th) month of the Building shell construction. This shall provide
eight (8) months total elasped time for Tenant's Work. In the event another
contractor is awarded the bid, Landlord shall fully cooperate with such
contractor to assist its timely completion of Tenant's Work and such contractor
shall utilize employees and subcontractors who shall not cause union labor
conflicts.
ARTICLE 6 - TAX AND OPERATING EXPENSE PAYMENTS
6.01 On or before the Commencement Date, Landlord shall use its best
efforts to obtain from the City of Weehawken, a separate tax lot and zoning lot
number for the Building. Commencing on the Commencement Date and provided that
Landlord shall have obtained a separate tax lot number for the Building, Tenant
shall pay to Landlord an amount equal to Tenant's Fraction of the Real Estate
Taxes for any year during the Term five (5) business days before any delinquency
fee would be imposed upon the payment of the same. If Landlord shall not have
obtained a separate tax lot number for the Building on or before the
Commencement Date, then, commencing on the Commencement Date, Tenant shall pay
to Landlord an amount equal to Tenant's Proportionate Share (hereinafter
defined) of the Real Estate Taxes for the tax lot of which the Land forms a part
for any year during the Term not later than five (5) business days before any
delinquency
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fee would be imposed upon the payment of the same, until such time as Landlord
shall have obtained such separate tax lot number; but in no event shall Tenant's
payment for Real Estate Taxes be more or less than that amount which Tenant
would have paid if the Building were a separate tax lot. Tenant's "Proportionate
Share" shall mean Tenant's Fraction of the sum of (x) the tax attributable to
the Building and other improvements located on the Land, as may be separately
assessed or as shown on the Tax Assessor's Notes, and (y) 4.42% of the tax
attributable to the tax lot of which the Land forms a portion. Landlord agrees
that, throughout the Term, the Building will constitute a separate tax lot,
separate and apart from other real property. In determining the amount of Real
Estate Taxes for the partial calendar years in which the Term shall commence or
expire, Real Estate Taxes payable in such calendar year shall be apportioned for
that portion of the Tax Year (hereinafter defined) occurring within the calendar
year and Real Estate Taxes for such calendar year shall be prorated for the
number of days in such calendar year occurring subsequent to the Commencement
Date or prior to the Expiration Date, as the case may be. "Tax Year" shall mean
the period January 1 through December 31 (or such other period as hereafter may
be duly adopted by the City of Weehawken as its fiscal year for Real Estate Tax
purposes), any portion of which occurs during the Term. Tenant shall have the
right to institute, and in good faith prosecute, tax certiorari proceedings with
respect to the Building and the Land. In the event of the institution of such
proceedings, such proceedings shall be at Tenant's sole cost and expense and
Landlord shall cooperate fully with Tenant in connection with any such
proceedings.
6.02(a) Not less than ninety (90) days prior to the Commencement Date,
Landlord shall deliver to Tenant a statement estimating the Operating Expenses
for the partial calendar year commencing on the Commencement Date and Tenant
shall pay to Landlord on the first day of each month during the first partial
calendar year of the Term an amount equal to such estimated Operating Expenses
divided by the number of months or partial months in such partial calendar year.
On or before March 1 of each calendar year or partial calendar year subsequent
to the first partial calendar year during the Term, Landlord shall furnish
Tenant with an operating statement (the "Operating Statement") in reasonable
detail setting forth the actual Operating Expenses for the preceding calendar
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year. If such Operating Statement shall show that the actual Operating Expenses
for the preceding calendar year were in excess of those estimated by Landlord
and previously paid by Tenant, then within thirty (30) days after receipt of
such actual Operating Statement, Tenant shall remit to Landlord any such
deficiency. If such Operating Statement shall show that Tenant shall have paid
amounts in excess of the actual Operating Expenses, then Landlord shall remit to
Tenant, together with such Operating Statement, a check in the amount equal to
such excess payments.
(b) In addition, in each Operating Statement, Landlord may set forth any
estimated increases in Operating Expenses for the then current calendar year,
provided, however, that in no event shall Landlord's estimate exceed an amount
equal to the sum of the actual Operating Expenses for the preceding calendar
year and an amount equal to such actual Operating Expenses multiplied by the
percentage increase in 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 (1967=100), or any
successor index thereto, appropriately adjusted (the "CPI"). If the CPI ceases
to be published, and there is no successor thereto, such other index as Landlord
or Tenant shall agree upon in writing shall be substituted for the CPI. If
Landlord or Tenant are unable to agree as to such substituted index, such matter
shall be submitted to the American Arbitration Association or any successor
organization for determination in accordance with the regulations and procedures
thereof then obtaining for commercial arbitration. After receipt of such
Operating Statement, Tenant shall pay to Landlord a sum equal to 1/12th of the
amount shown on such statement multiplied by the number of months of the Term in
said calendar year preceding the demand, less the amount (if any) paid by Tenant
prior to such demand pursuant hereto for such months, and hereafter, commencing
with the month in which the demand is made in continuing hereafter for each
month of the Term until the rendition of a new Operating Statement, 1/12th of
the amount shown on such Operating Statement.
6.03 Each such statement given by Landlord pursuant to Section 6.02 shall
be conclusive and binding upon Tenant unless within ninety (90) days after the
receipt of the Operating Statement provided for above
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Tenant shall notify Landlord that it disputes the correctness of the statement,
specifying, to the extent the information is available, the particular respects
in which the statement is claimed to be incorrect. If such notice is sent,
Tenant and its accountants may examine Landlord's books and records relating to
the Operating Expenses to determine the accuracy of the Operating Statement. If
after such examination, Tenant still disputes such Operating Statement, either
party may refer the decision of the issues raised to one of the so-called
"big-eight" public accounting firms, mutually satisfactory to Landlord and
Tenant, or if Landlord and Tenant shall be unable to agree, then the firm to
which the dispute shall be referred shall be chosen as follows: Landlord and
Tenant shall each be permitted to exclude one of such firms from the pool of
acceptable firms; the firm to whom such decision shall be referred shall then be
chosen by lot from the pool of remaining firms, and if the firm chosen by lot
shall refuse to serve, a substitute firm shall be chosen by lot. The firm so
chosen may, in its discretion, retain one or more consultants to assist in he
resolution of the dispute referred to it. The decision of such accountants,
absent manifest error, shall be conclusively binding upon the parties. The fees
and expenses (including he fees of such consultants) involved in such decisions
shall be borne by the unsuccessful party (and if both parties are partially
successful, the accountants shall apportion the fees and expenses between
the parties based on the degree of success of each party). If such dispute is
ultimately determined in Tenant's favor (either by agreement between Landlord or
Tenant or by decision of the accountants), Landlord promptly after such
determination shall pay to Tenant any amount overpaid by Tenant. Pending the
determination of such dispute by agreement or arbitration as aforesaid, Tenant
shall, within ten (10) days after receipt of such statement, pay the Additional
Charges in accordance with Landlord's statement, without prejudice to Tenant's
position.
ARTICLE 7 - COMMON AREAS
7.01 Subject to the provisions of Section 5.03, Landlord will operate,
manage, equip, light, repair and maintain, or cause to be operated, managed,
equipped, lighted, repaired and maintained, the Common Areas for their intended
purposes and will enforce the Reciprocal Construction Operation and Easement
Agreement,
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between Ground Lessor and the Township of Weehawken. Landlord reserves the
right, at any time and from time to time, to construct within the Common Areas
kiosks, fountains, aquariums, planters, pools and sculptures, and to install
vending machines, telephone booths, benches and the like provided same shall not
block or interfere with Tenant's means of ingress or egress to and from the
Building.
7.02 Tenant and its subtenants and and their respective officers,
employees, agents, customers and invitees, shall have the non-exclusive right,
in common with Landlord and all others to whom such right may have been or may
hereafter be granted, but subject to the Rules and Regulations, if any to use
the Common Areas. Landlord reserves the right, at any time and from time to
time, to close temporarily all or any portions of the Common Areas (provided
that such closure does not unreasonably interfere with Tenant's business at the
Demised Premises, except in cases of emergency) when in Landlord's reasonable
judgment any such closing is necessary or to (a) permit Hartz or its successors
or assigns or designees to make repairs or changes or to effect construction
within the Lincoln Harbor Project; (b) prevent the acquisition of public rights
in such areas; or (c) to protect or preserve natural persons or property.
Landlord may do such other acts in and to the Common Areas as in its reasonable
judgment may be desirable to improve or maintain same, provided, however that
Landlord shall not change the standard of maintenance of the Common Areas
without Tenant's approval, which approval shall not be unreasonably withheld or
delayed. In all such events, Landlord's Work shall be commenced and prosecuted
diligently and with as little interference as possible with Tenant's use of
the Demised Premises.
7.03 Tenant agrees that it, any subtenant or licensee and their respective
officers, employees, contractors and agents will park their automobiles and
other vehicles only where and as permitted by Landlord. Tenant will, if and when
so requested by Landlord, furnish Landlord with the license numbers of any
vehicles of Tenant, any subtenant or licensee and their respective officers,
employees and agents. Tenant shall be furnished with the use of 1 unreserved
parking space for every 690 square feet of Floor Space in the Demised Premises,
as more particularly shown on Exhibit "K" annexed hereto and made a part hereof,
of which spaces, at Tenant's request, five
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percent (5%) shall be reserved for exclusive executive parking. Tenant shall
have access to all such spaces twenty-four (24) hours a day, throughout the
Term. Landlord shall maintain or cause to be maintained all such parking in a
manner reasonably satisfactory to Tenant.
ARTICLE 8 - RETAIL SPACE
8.01 Upon sixty (60) days' prior written notice from Tenant, Landlord will
cause Hartz Mountain Industries, Inc. to enter into an agreement of sublease,
substantially similar to the provisions hereof, to include up to 5,000 square
feet of floor space (measured in accordance with Exhibit "C" annexed hereto and
made a part hereof) in the retail area of the Building as shown on Exhibit "M"
annexed hereto and made a part hereof, provided that such notice shall be given
prior to the date which is the later to occur of (a) three (3) months from the
date hereof, and (b) the date on which Landlord gives Tenant ten (10) business
days' notice that there is a prospective lessee for such space and within such
ten (10) business day period Tenant elects not to lease the same. The Fixed
Rent, Operating Expenses and Tenant's Proportionate Share shall be determined in
accordance with the ratio of such space to the aggregate rentable Floor Space in
the retail area of the Building. Tenant shall use such space for the conduct of
retail operations in connection with its normal business operations.
8.02 Landlord agrees that if Tenant shall exercise its option pursuant to
Section 8.01 hereof to lease retail space in the Building, Landlord shall not
lease, nor permit there to be used, any other space in the Lincoln Harbor
Project for a retail brokerage operation; provided, however, that Landlord may
lease other space in the Lincoln Harbor Project for a retail brokerage
operation if the same is required by another major office tenant of the Lincoln
Harbor Project in connection with the execution of such tenant's lease for
office space in the Lincoln Harbor Project.
ARTICLE 9 - SUBORDINATION
9.01 Provided that (a) a Superior Mortgagee shall execute and deliver to
Tenant an agreement, in recordable form, substantially in the form attached
hereto and made a part hereof as Exhibit "N-1", to the effect that, provided
no event of default has occurred and is continuing hereunder, such Superior
Mortgagee will not
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name or join Tenant as a party defendant or otherwise in any suit, action or
proceeding to enforce any rights granted to such Superior Mortgagee under its
Superior Mortgage, and to the further effect that if there shall be a
foreclosure of its Superior Mortgage, that the Superior Mortgagee will not
make Tenant a party defendant to such foreclosure, evict Tenant, disturb
Tenant's possession under this Lease, or terminate or disturb Tenant's
leasehold estate or rights hereunder, or (b) a Superior Lessor shall execute and
deliver to Tenant an agreement, in recordable form, substantially in the form
annexed hereto as Exhibit "N-2", to the effect that, provided no Event of
Default shall have occurred and is continuing hereunder, such Superior Lessor
will not name or join Tenant as a party defendant or otherwise in any suit,
action or proceeding to enforce any rights granted to such Lessor under its
Superior Lease, and to the further effect that if its Superior Lease shall
terminate or be terminated for any reason, such Superior Lessor will recognize
Tenant as the direct tenant of such Superior Lessor on the same terms and
conditions as are contained in this Lease (any such agreement, or any agreement
of similar import from a Superior Mortgagee or Superior Lessor, as the case may
be, being hereinafter called a "Nondisturbance Agreement"), this Lease shall be
subject and subordinate to such Superior Mortgage or to such Superior Lease in
respect of which a Nondisturbance Agreement shall have been delivered, and to
all renewals, extensions, supplements, amendments, modifications, con-
solidations and replacements of such Superior Mortgage or Superior Lease or any
substitutions therefor, and advances made thereunder. The provisions of this
Section 9.01 shall be self-operative and no further instrument of
subordination shall be required upon delivery of such Nondisturbance Agreement,
however, in confirmation of such subordination, Tenant shall promptly execute,
acknowledge and deliver an instrument of evidencing such subordination; and if
Tenant fails to execute, acknowledge or deliver any such instruments within
thirty (30) days after request therefor, Tenant hereby irrevocably constitutes
and appoints Landlord as Tenant's attorney-in-fact, coupled with an interest,
to execute and deliver any such instruments for and on behalf of Tenant.
9.02 If any act or omission of Landlord would give Tenant the right,
immediately or after lapse of a period of time, to cancel or terminate this
Lease, or to claim a partial or total eviction, Tenant shall not exer-
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cise such right until and unless (a) it has given written notice of such act or
omission to Landlord and each Superior Mortgagee and each Superior Lessor whose
name and address shall previously have been furnished to Tenant, and (b) such
act or omission shall not have been remedied within thirty (30) days following
the giving of such notice and following the time when such Superior Mortgagee or
Superior Lessor shall have become entitled under such Superior Mortgage or
Superior Lease, as the case may be, to remedy the same (or such longer period as
may be reasonably required if such condition is not susceptible to remedy within
such thirty (30) day period provided such Superior Lessor or Superior Mortgagee
commences and diligently pursues such remedy, which reasonable period shall in
no event be less than the period to which the Landlord would be entitled under
this Lease or otherwise, after similar notice, to effect such remedy).
9.03 If any Superior Lessor or Superior Mortgagee shall succeed to the
rights of Landlord under this Lease, whether through possession or foreclosure
action or delivery of a new lease or deed, then at the request of such party so
succeeding to Landlord's rights ("Successor Landlord") and upon such Successor
Landlord's written agreement to accept Tenant's attornment, Tenant shall
attorn to and recognize such Successor Landlord as Tenant's landlord under
this Lease and shall promptly execute and deliver any instrument that such
Successor Landlord may reasonably request to evidence such attornment provided
that such Successor Landlord shall then be entitled to possession of the Demised
Premises and shall have either agreed to assume the obligations of Landlord
hereunder or shall have entered into a Nondisturbance Agreement with Tenant.
Upon such attornment this Lease shall continue in full force and effect as a
direct lease between the Successor Landlord and Tenant upon all of the terms,
conditions and covenants as are set forth in this Lease except that the
Successor Landlord (unless such Successor Landlord is an affiliated entity of
Landlord) shall not (a) be liable for any previous act or omission of Landlord
under this Lease unless the same shall be continuing; (b) be subject to any
offset, not expressly provided for in this Lease, which theretofore shall have
accrued to Tenant against Landlord; or (c) be bound by any previous modification
of this Lease or by any previous prepayment of more than one month's Fixed Rent
or Additional Charges, unless such modification or prepayment shall have been
expressly approved in writing by the
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Superior Lessor of the Superior Lease or the Mortgagee of the Superior Mortgage
through or by reason of which the Successor Landlord shall have succeeded to the
rights of Landlord under this Lease.
9.04 If any then present or prospective Superior Mortgagee shall require
any modifications of this Lease, Tenant shall promptly execute and deliver to
Landlord such instruments effecting such modification(s) as Landlord shall
request, provided that such modification(s) do not adversely affect in any
material respect any of Tenant's rights under this Lease, materially increase
Tenant's obligations under this Lease or materially diminish Landlord's
obligations under this Lease.
ARTICLE 10 - QUIET ENJOYMENT
10.01 So long as no Event of Default shall have occurred and be continuing,
Tenant shall peaceably and quietly have, hold and enjoy the Demised Premises
without hindrance, ejection or molestation by Landlord or any person lawfully
claiming through or under Landlord, subject, nevertheless, to the provisions of
this Lease and the Ground Lease.
ARTICLE 11 - ASSIGNMENT, SUBLETTING AND MORTGAGING
11.01 Tenant shall have the absolute right, at any time, without Landlord's
consent, to (a) assign or otherwise transfer this Lease, or offer or advertise
to do so, and (b) sublet the Demised Premises or any part thereof, or offer or
advertise to do so, or allow the same to be used, occupied or utilized by anyone
other than Tenant, or (c) mortgage, pledge, encumber or otherwise hypothecate
this Lease in any manner whatsoever.
11.02(a) Notwithstanding anything contained in Section 11.01 hereof, prior
to the earlier to occur of either the fifth anniversary of the Commencement Date
and the date on which the improvements to be constructed in the Lincoln Harbor
Project, as more particularly set forth on Exhibit "L" annexed hereto and made a
part hereof, shall be 90% leased, Tenant may not assign its interest in this
Lease or sublet all or any portion of the Demised Premises, provided, however,
that Tenant shall have the right during such period, without Landlord's prior
consent, to sublet a portion or portions of the Demised Premises not to exceed
75,000 square feet of
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floor space in the aggregate (such amount to be reduced, foot for foot, by an
amount equal to the area sublet by Tenant pursuant to a similar provision in any
other lease of which Tenant is tenant in the Lincoln Harbor Project) which
amount Tenant agrees is fair and reasonable.
(b) Notwithstanding the foregoing, however, the provisions of clause
(a) of this Section 11.02 shall not be deemed to apply to (x) any assignment of
Tenant's interest in this Lease to an Affiliate (hereinafter defined) or to
any assignment, whether by operation of law or otherwise, to a company which is
Tenant's successor-in-interest either by merger or consolidation, or to any
assignment to a purchaser of all or substantially all of Tenant's assets, or (y)
any subleasing of all or any portion of the Demised Premises to an Affiliate un-
less the primary purpose of any such transaction is to transfer the estate
created by this Lease in violation of Section 11.02(a) hereof. For purposes
hereof, "Affiliate" shall be deemed to mean a corporation or other entity
which shall (1) control, (2) be under the control of, or (3) shall be under
common control with, Tenant (the term "control" as used herein shall be deemed
to mean ownership of more than 5% of the voting stock of a corporation on a
fully diluted basis, if such corporation is publically traded, or more than 50%
of the voting stock of a privately held corporation, or other majority equity
and control interest, if not a corporation.
11.03 If this Lease is assigned, Landlord may collect rent from the
assignee. If the Demised Premises or any part thereof are sublet or used or
occupied by anybody other than Tenant, Landlord may, after default by Tenant,
and expiration of Tenant's time to cure such default, collect rent from the
subtenant or occupant. In either event, Landlord may apply the net amount
collected to the Rent, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver of any of the provisions of this Article 11,
or the acceptance of the assignee or subtenant as occupant or a release of
Tenant from the performance by Tenant of Tenant's obligations under this Lease.
11.04(a) Any assignment or transfer shall be made only if, and shall not be
effective until, the assignee shall execute, acknowledge and deliver to Landlord
an agreement in form and substance satisfactory to Landlord whereby the
assignee shall assume Tenant's obliga-
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tions under this Lease and whereby the assignee shall agree that all of the
provisions in this Article 11 shall, notwithstanding such assignment or
transfer, continue to be binding upon it in respect to all future assignments
and transfers. Notwithstanding any assignment or transfer, whether or not in
violation of the provisions of this Lease, and notwithstanding the acceptance
of Rent by Landlord from an assignee, transferee, or any other party, the
original Tenant and any other person(s) who at any time was or were Tenant shall
remain fully liable for the payment of the Rent and for Tenant's other
obligations under this Lease unless, in the event of such permitted assignment
or transfer, Landlord releases Tenant from its obligations under this Lease as
provided in Section 11.04(b) of this Lease.
(b) In the event Tenant assigns its interest in this Lease, Landlord
agrees, subject to the prior consent of any Superior Mortgagee, to release
Tenant from its obligations under this Lease provided all of the following
conditions are met:
(i) Such permitted assignee has a net worth at least equal to
$500,000,000, as the same shall be increased or decreased on each
anniversary of the Commencement Date commencing on the fifth (5th)
anniversary of the Commencement Date by an amount equal to the product of
$500,000,000 and seventy-five percent (75%) of the percentage increase
or decrease in the CPI for the immediately preceding twelve (12) month
period; provided, however, that in no event shall the same be decreased
to be less than $500,000,000; and
(ii) Such permitted assignee is a well known business entity of
high repute having a standing in the business community, in Landlord's
reasonable judgment, at least equivalent to Paine Webber, Inc.; and
(iii) Such permitted assignee executes an agreement in substance
and form reasonably satisfactory to Landlord whereby such assignee assumes
all of Tenant's obligations under this Lease.
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11.05 Promptly after request therefor by Tenant, Landlord shall enter
into a Nondisturbance Agreement with any permitted subtenant of Tenant occupying
one or more full floors of the Demised Premises, substantially in the form
annexed hereto as Exhibit "O".
11.06 The liability of the original named Tenant and any other Person(s)
who at any time was or were Tenant for Tenant's obligations under this Lease
shall not be discharged, released or impaired by any agreement or stipulation
made by Landlord extending the time of, or modifying any of the obligations of,
this Lease, or by any waiver or failure of Landlord to enforce any of the
obligations of this Lease.
11.07 The listing of any name other than that of Tenant, whether on the
doors of the Building, the Building directory or otherwise, shall not operate to
vest any right or interest in this Lease or in the Building, nor shall it be
deemed to be the consent of Landlord to any assignment or transfer of this Lease
or to any sublease of the Building or to the use or occupancy thereof by others.
11.08 Without limiting any of the provisions of Article 27, if pursuant to
the Federal Bankruptcy Code (or any similar law hereafter enacted having the
same general purpose), Tenant assigns this Lease, adequate assurance of future
performance by an assignee expressly permitted under such Code shall be deemed
to mean the deposit of cash security in an amount equal to the sum of one (1)
year's Fixed Rent plus an amount equal to the Additional Charges for the
Calendar Year preceding the year in which such assignment is intended to become
effective, which deposit shall be held by Landlord for the balance of the
Term, without interest, as security for the full performance of all of Tenant's
obligations under this Lease, that if Tenant defaults in the full and prompt
payment and performance of any of its obligations under this Lease, including,
without limitation, the payment of Rent, Landlord may use, apply or retain the
whole or any part of the security so deposited to the extent required for the
payment of any Rent or any other sums as to which such tenant is in default or
for any sum which Landlord may expend or may be required to expend by reason of
Tenant's default in respect of any of such Tenant's obligations under this
Lease, including, without limitation, any damages or deficiency in the reletting
of
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the Demised Premises, whether such damages or deficiency accrue before or after
summary proceedings or other reentry by Landlord. If Landlord shall so sue,
apply or retain the whole or any part of the security, Tenant shall upon demand
immediately deposit with Landlord a sum equal to the amount so used, applied and
retained, as security as aforesaid. If Tenant shall fully and faithfully pay and
perform all of Tenant's obligations under this Lease, the security or any
balance thereof to which such tenant is entitled shall be returned or paid over
to such tenant after the date on which this Lease shall expire or sooner end or
terminate, and after delivery to Landlord of entire possession of the Demised
Premises. In the event of any sale or leasing of the Building or leasing of
Demised Premises, Landlord shall have the right to transfer the security to
which Tenant is entitled to the vendee or lessee and Landlord shall thereupon
be released by such tenant from all liability for the return or payment thereof;
Tenant shall look solely to the new landlord for the return or payment of the
same; and the provisions hereof shall apply to every transfer or assignment made
of the same to a new landlord. Tenant shall not assign or encumber or attempt to
assign or encumber the monies deposited herein as security, and neither Landlord
nor its successors or assigns shall be bound by any such assignment,
encumbrance, attempted assignment or attempted encumbrance.
ARTICLE 12 - COMPLIANCE WITH LAWS
12.01 Tenant shall comply with all Legal Requirements which shall, in
respect of the Demised Premises or the use and occupation thereof, or the
abatement of any nuisance in, on or about the Demised Premises, impose any
violation, order or duty on Landlord or Tenant; and Tenant shall pay all the
cost, expenses, fines, penalties and damages which may be imposed upon Landlord
or any Superior Lessor by reason of or arising out of Tenant's failure to fully
and promptly comply with and observe the provisions of this Section 12.01.
However, Tenant need not comply with any such law or requirement of any public
authority so long as Tenant shall be contesting the validity thereof, or the
applicability thereof to the Demised Premises, in accordance with Section
12.02. Landlord shall be in full compliance with any Legal Requirements
applicable to Landlord's Work on or before the Commencement Date, and the
obligation of Tenant to comply with any Legal Requirement as set forth
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immediately above shall not arise with respect to any such Legal Requirement
with which Landlord is not in compliance as of the Commencement Date, until such
time as non-compliance shall have been cured by Landlord.
12.02 Tenant may contest, by appropriate proceedings prosecuted
diligently and in good faith, the validity, or applicability to the Demised
Premises, of any Legal Requirement, provided that (a) Landlord shall not be
subject to criminal penalty or to prosecution for a crime and neither the
Demised Premises nor any part thereof shall be subject to being condemned or
vacated, by reason of non-compliance or otherwise by reason of such contest; (b)
before the commencement of such contest, Tenant shall furnish to Landlord
either (i) the bond of a surety company satisfactory to Landlord, which bond
shall be, as to its provisions and form, satisfactory to Landlord, and shall be
in an amount at least equal to 125% of the cost of such compliance (as
estimated by a reputable contractor designated by Landlord) and shall indemnify
Landlord against the cost thereof and against all liability for damages,
interest, penalties and expenses (including reasonable attorneys' fees and
expenses), resulting from or incurred in connection with such contest or
noncompliance, or (ii) other security in place of such bond satisfactory to
Landlord; (c) Tenant shall keep Landlord advised as to the status of such
proceedings. Notwithstanding anything herein to the contrary, the provisions of
(b) above shall not apply during such time as Paine Webber, Inc. remains
obligated for Tenant's obligations under this Lease. Without limiting the
application of the above, Landlord shall be deemed subject to prosecution for a
crime if Landlord, or its managing agent, or any officer, director, partner,
shareholder or employee of Landlord or its managing agent, as a individual, is
charged with a crime of any kind or degree whatsoever, whether by service of a
summons or otherwise, unless such charge is withdrawn before Landlord or its
managing agent, or such officer, director, partner, shareholder or employee of
Landlord or its managing agent (as the case may be) is required to plead or
answer thereto.
ARTICLE 13 - INSURANCE AND INDEMNITY
13.01(a) Tenant shall at all times during the term hereof maintain or cause
to be maintained business interruption insurance with a rent insurance
endorsement
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payable to Landlord, covering a period of at least twelve (12) months. Landlord
shall obtain and keep in full force and effect insurance against loss or damage
by fire and other casualty to the Building, including any item of Tenant's Work,
as may be insurable under then available standard forms of "all risk" insurance
policies, in an amount equal to 100% of the replacement value thereof (and
Tenant shall pay Tenant's Fraction of the cost thereof in accordance with
Exhibit "H" annexed hereto and made a part hereof). Tenant shall notify Landlord
of the completion of any Tenant's Work and of the costs thereof, and shall
maintain adequate records with respect to such Tenant's Work to facilitate the
adjustment of any insurance claims with respect thereto. Tenant shall
cooperate with Landlord and Landlord's insurance companies in the adjustment of
any claims for any damage to the Building or to such Tenant's Work. On or prior
to the Commencement Date, Landlord shall deliver to Tenant appropriate
certificates of insurance, including evidence of waivers of subrogation required
pursuant to Section 13.05 hereof, required to be carried by Landlord pursuant to
this Article 13. Evidence of each renewal or replacement of a policy shall be so
delivered by Landlord to Tenant at least ten days prior to the expiration of
such policy. Any certificates so deposited by Landlord with Tenant shall
indicate whether the insurance required by this Article 13 is affected under a
blanket insurance policy and, if so, shall certify to the aggregate amount of
such blanket insurance policy and to the fact that there are no sublimits which
derogate from the coverage required by this Article.
13.02 Tenant also shall maintain the following insurance: (a) comprehensive
general public liability insurance in respect of the Demised Premises and the
conduct and operation of business therein, with Landlord as an additional named
insured, and at Landlord's request with any Superior Lessors as additional named
insured(s), with limits of not less than $3,000,000 for bodily injury or death
to any one person and $5,000,000 for bodily injury or death to any number of
persons in any one occurrence, and $500,000 for property damage, including water
damage and sprinkler leakage legal liability, and (b) any other insurance
required for compliance with the Insurance Requirements. Tenant shall also
obtain and keep in full force and effect a policy of insurance against loss or
damage by fire, and such other risks and hazards (including burglary and theft)
as are insurable under then available standard forms of "all risk" insurance
policies, to Tenant's Property, for one hundred percent (100%) of the
replacement value thereof or for such less-
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er amount as will avoid co-insurance (including an "agreed amount" endorsement),
protecting Landlord, Landlord's agents, any Superior Mortgagee, any Superior
Lessor and Tenant as insured, as their interest may appear; provided, however,
that no such additional insured party shall be entitled to adjust, or
participate in the adjustment of, any loss or receive any proceeds under any
such insurance policy, and the policies may so provide. Tenant shall deliver to
Landlord and any additional named insured(s) certificates for such fully
paid-for policies at least ten (10) days before the Commencement Date. Tenant
shall procure and pay for renewals of such insurance from time to time before
the expiration thereof, and Tenant shall deliver to Landlord and any additional
insured(s) certificates therefor at least 30 days before the expiration of any
existing policy. All such policies shall be issued by companies of recognized
responsibility licensed to do business in New Jersey, and all such policies
shall contain a provision whereby the same cannot be cancelled unless Landlord
and any additional insured(s) are given at least 20 days' prior written notice
of such cancellation.
13.03 Tenant shall not do, permit or suffer to be done any act, matter,
thing or failure to act in respect of the Demised Premises or use or occupy the
Demised Premises or conduct or operate Tenant's business in any manner
objectionable to any insurance company or companies whereby the fire insurance
or any other insurance then in effect in respect to the Land and Building or
any part thereof shall become void or suspended or whereby any premiums in
respect of insurance maintained by Landlord shall be higher than those which
would normally have been in effect for the occupancy contemplated under the
Permitted Uses. In case of a breach of the provisions of this Section 13.03, in
addition to all other rights and remedies of Landlord hereunder, Tenant shall
(a) indemnify Landlord and the Superior Lessors and hold Landlord and the
Superior Lessors harmless from and against any loss which would have been
covered by insurance which shall have become void or suspended because of such
breach by Tenant and (b) pay to Landlord any and all increases of premiums on
any insurance, including, without limitation, rent insurance, resulting from
any such breach.
13.04(a) Tenant shall indemnify and hold harmless Landlord and all
Superior Lessors and its and their respective partners, joint venturers,
directors, officers, agents, servants and employees from and against any and all
claims arising from or in connection with (a)
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Tenant's conduct or management of the Demised Premises or of any business
therein, or any work or thing whatsoever done, or any condition created (other
than by Landlord) in the Demised Premises during the Term or during the period
of time, if any, prior to the Commencement Date that Tenant may have been given
access to the Demised Premises, except to the extent due to Landlord's wrongful
acts or gross negligence; (b) any act, omission or negligence of Tenant or any
of its subtenants or licensees or its or their partners, joint ventures,
directors, officers, agent, employees or contractors; (c) any accident, injury
or damage whatever (except to the extent caused by Landlord's acts or
negligence) occurring in the Demised Premises or the Common Areas; and (d) any
breach or default by Tenant in the full and prompt payment and performance of
Tenant's obligations under this Lease; together with all costs, expenses and
obligations under this Lease; together with all costs, expenses and liabilities
incurred in or in connection with each such claim or action or proceeding
brought thereon, including, without limitation, all attorneys' fees and
expenses. In case any action or proceeding is brought against Landlord and/or
any Superior Lessor and/or its or their partners, joint venturers, directors,
officers, agents and/or employees by reason of any such claim, Tenant, upon
notice from Landlord or such Superior Lessor, shall resist and defend such
action or proceeding by counsel reasonably satisfactory to Landlord. Counsel
appointed by the insurance company insuring the Building shall be deemed
satisfactory to Landlord.
(b) Landlord shall indemnify and hold harmless Tenant and its
directors, officers, agents, servants and employees from and against any and all
claims arising from or in connection with (a) Landlord's conduct or management
of the Building or any business therein, or other work or thing whatsoever done,
or any condition created (other than by Tenant), in the Building during the Term
or during the period of time, if any, prior to the Commencement Date that Tenant
may have been given access to the Demised Premises, to the extent due to
Landlord's wrongful acts or gross negligence; (b) any act, omission or
negligence of Landlord or its agents or their partners, joint ventures,
directors, officers, agents, employees or contractors; (c) any accident, injury
or damage whatever (except to the extent caused by Tenant's acts or
negligence) occurring in the Building and (d) any breach or default by Landlord
in the prompt payment and performance of Landlord's obligations under this
Lease; together with all costs, expenses and liabilities incurred in or in
connection with each such claim
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or action or proceeding brought thereon, including, without limitation, all
attorneys' fees and expenses. In case any action or proceeding is brought
against Tenant and/or its directors, officers, agents and/or employees by
reason of any such claim, Landlord, upon notice from Tenant, shall resist and
defend such action or proceeding by counsel reasonably satisfactory to Tenant.
Counsel appointed by the insurance company insuring the Building shall be deemed
satisfactory to Tenant.
13.05 The parties hereto shall procure an appropriate clause in, or
endorsement on, any fire or extended coverage insurance covering the Demised
Premises, the Building and personal property, fixtures and equipment located
thereon or therein, pursuant to which the insurance companies waive subrogation
or consent to a waiver of right of recovery, or an express agreement that the
applicable insurance policy shall not be invalidated if the insured waives, or
has waived before the casualty, the right of recovery, or an express agreement
that the applicable insurance policy shall not be invalidated if the insured
waives, or has waived before the casualty, the right of recovery against any
party responsible for a casualty covered by such policy, and having obtained
such clauses or endorsements or agreements of waiver of subrogation or consent
to a waiver of right of recovery, the parties agree that they will not make any
claim against or seek to recover from the other or anyone acting or claiming
under or through the other or any of their respective officers, directors,
shareholders, partners, employees, agents or contractors, for any loss or damage
to its property or the property of others resulting from fire or other hazards
covered by such fire and extended coverage insurance, 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 or recovery. 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 or if
such clause may not be obtained, even with the payment of an additional premium,
then (in either event) such party shall so notify the first party and the first
party's
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agreement not to make any claim or seek recover shall not be effective
thereafter. If either party shall be unable to obtain the inclusion of such
clause even with the payment of an additional premium, then such party shall
attempt to name the other party as an additional insured (but not a loss payee)
under the policy. If the payment of an additional premium is required for naming
the other party as an additional insured (but not a loss payee), each party
shall advise the other of the amount of any such additional premium 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
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 or if
it shall not be possible to have the other party named as an additional insured
(but not loss payee), even with the payment of an additional premium, then (in
either event) such party shall so notify the first party and the first party's
agreement to name the other party as an additional insured shall be satisfied.
If either party shall fail to have fire or extended coverage insurance in
effect as required pursuant to this Article 13, the agreement not to make any
claim or seek recovery contained in the first sentence of this Section 13.05
shall be in full force and effect to the same extent as if such required
insurance (containing the required waiver of subrogation clause, endorsement or
agreement) were in effect.
ARTICLE 14 - RULES AND REGULATIONS
14.01 Tenant and its employees and agents shall faithfully observe and
comply with the Rules and Regulations and such reasonable changes therein
(whether by modification, elimination or addition) as Landlord at any time or
times hereafter may make and communicate to Tenant, which in Landlord's
reasonable judgment, shall be necessary for the reputation, safety, care or
appearance of the Land and Building, or the preservation of good order therein,
or the operation or maintenance of the Building or its equipment and fixtures,
or the Common Areas, and which do not unreasonably affect the conduct of
Tenant's business in the Building; provided, however, that in case of any
conflict or inconsistency between the provisions of this Lease and any of the
Rules and Regulations, the provisions of this Lease shall control. Nothing
in this Lease contained shall be construed to impose
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upon Landlord any duty or obligation to enforce the Rules and Regulations
against any other tenant or any employees or agents of any other Tenant, and
Landlord shall not be liable to Tenant for violation of the Rules and Regula-
tions by any other tenant or its employees, agents, invitees or licensees,
provided, however, Landlord shall not enforce any Rule or Regulation against
Tenant which Landlord shall not then be enforcing against all other tenants
in the Building, in the case of the Common Areas. If Tenant disputes the
reasonableness of any additional Rule or Regulation hereafter adopted by
Landlord, the dispute shall be determined by arbitration in the City of Newark
in accordance with the rules and regulations then obtaining of the American
Arbitration Association or its successor. Any such determination shall be final
and binding upon the parties hereto, whether or not a judgment shall be
entered in any court.
ARTICLE 15 - ALTERATIONS
15.01 Tenant shall not make any structural alterations or additions to the
Demised Premises which would adversely affect the structural integrity of the
Building, or change the exterior color or architectural treatment of the
Building, or which would otherwise impair the value of the Building without on
each occasion first obtaining the prior written consent of Landlord, it being
acknowledged that Landlord's consent shall not be required for any other
alterations or additions. Tenant shall submit to Landlord plans and
specifications for such work at the time landlord's consent is sought. Tenant
shall pay to Landlord upon demand the reasonable cost and expense of Landlord
for any action of Landlord in excess of (a) reviewing said plans and
specifications and (b) inspecting the alterations to determine whether the same
are being performed in accordance with the approved plans and specifications and
all Legal Requirements and Insurance Requirements including without limitation,
the fees of any architect or engineer employed by Landlord for such purpose.
Before proceeding with any permitted alteration which will cost more than
$350,000 (exclusive of the costs of decorating work and items constituting
Tenant's Property), as estimated by a reputable contractor designated by
Landlord, Tenant shall obtain and deliver to Landlord either (i) a performance
bond and a labor and materials payment bond (issued by a corporate surety
licensed to do business in New Jersey), each in an amount equal to 125% of such
estimated cost and in form
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satisfactory to Landlord, or (ii) such other security as shall be satisfactory
to Landlord. Notwithstanding anything herein to the contrary, the provisions
of the immediately preceding sentence shall not apply during such time as Paine
Webber, Inc. remains liable for Tenant's obligations under this Lease. Tenant
shall fully and promptly comply with and observe the Rules and Regulations
then in force in respect of the making of such alterations. My review or
approval by Landlord of any plans and/or specifications with respect to any such
alterations is solely for Landlord's benefit, and without any representation or
warranty whatsoever to Tenant in respect to the adequacy, correctness or
efficiency thereof or otherwise.
15.02 Tenant shall obtain all necessary governmental permits and
certificates for the commencement and prosecution of alterations and for final
approval thereof upon completion, and shall cause alterations to be performed in
compliance therewith all applicable Legal Requirements and Insurance
Requirements. Alterations shall be diligently performed in a good and
workmanlike manner, using new materials and equipment at least equal in quality
and class to the better of the original installations of the Building.
Alterations requiring Landlord's consent shall be performed by contractors
licensed in the State of New Jersey (if applicable), whose use shall not
invalidate any warranties applicable to the Building or its systems, and which
contractors are either employed in connection with the performance of Landlord's
Work or Tenant's Work or are reputable and skilled in their respective trades.
Alterations shall be made in such a manner as not to unreasonably interfere with
or delay and as not to impose any additional expense upon Landlord in the
maintenance, repair or operation of the Building; and if any such additional
expense shall be incurred by Landlord as a result of Tenant's making of any
alterations, Tenant shall pay any such additional expense upon demand.
Throughout the making of alterations, Tenant shall carry, or cause to be
carried, workmen's compensation insurance in statutory limits and general
liability insurance, with completed operation endorsement, for any occurrence in
or about the Building, under which Landlord and its managing agent and any Supe-
rior Lessor whose name and address shall previously have been furnished to
Tenant shall be named as parties insured, in such limits as landlord may
reasonably require, with issuers reasonably satisfactory to Landlord. Tenant
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shall furnish Landlord with reasonably satisfactory evidence that such
insurance is in effect at or before the commencement of alterations and, on
request, at reasonable intervals thereafter during the making of alterations.
ARTICLE 16 - LANDLORD'S AND TENANT'S PROPERTY
16.01 All fixtures, equipment, improvements and appurtenances attached to
or built into the Building at the commencement of or during the Term at the
expense of Tenant (exclusive of the items to which Tenant's Fund has been
applied) shall be deemed to be the property of Tenant.
16.02 All movable partitions, business and trade fixtures, machinery and
equipment, communications equipment and office equipment, whether or not
attached to or built into the Building, which are installed in the Building by
or for the account of Tenant and can be removed without structural damage to
the Building and all furniture, furnishings, and other personal property owned
by Tenant and located in the Building (collectively, "Tenant's Property") shall
be and shall remain the property of Tenant and may be removed by Tenant at any
time during the Term; provided that if any of the Tenant's Property is removed,
Tenant shall repair or pay the cost of repairing any damage to the Building or
the Common Areas resulting from the installation and/or removal thereof. Any
equipment or other property for which Landlord shall have granted any allowance
or credit to Tenant shall not be deemed to have been installed by or for the
account of Tenant without expense to Landlord, shall not be considered as the
Tenant's Property and shall be deemed the property of Landlord.
16.03 At or before the Expiration Date or the date of any earlier
termination of this Lease, or within fifteen (15) days after such an earlier
termination date, Tenant shall surrender the Demised Premises broom clean,
vacant and in good condition, reasonable wear and tear and damage by casualty,
excepted. Tenant may remove any alterations and fixtures and shall remove any
alterations or fixtures which are not usual or customary for general office use
and which would materially impair the reletting of the Demised Premises for
general office use. Tenant shall repair any structural damage to the Demised
Premises, the Building and the Common Areas and the Pro-
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ject Common Areas resulting from any installation and/or removal of the Tenant's
Property. Any items of the Tenant's Property which shall remain at the Demised
Premises after the Expiration Date or after a period of fifteen (15) days
following an earlier termination date, may, at the option of Landlord, be deemed
to have been abandoned and in such case such items may be retained by Landlord
as its property or disposed of by Landlord, without accountability, in such
manner as Landlord shall determine at Tenant's Expense.
ARTICLE 17 - REPAIRS AND MAINTENANCE
17.01 Tenant shall, throughout the Term, take good care of the Demised
Premises, the fixtures and appurtenances therein.
Tenant shall be responsible for the cost and expense of all non-structural
repairs (or replacements, if required), ordinary and extraordinary, in and to
the Demised Premises (including the Building systems), including, but not
limited to, repairs the need for which arises out of (a) the performance or
existence of the Tenant's Work or alterations, (b) the installation, use or
operation of the Tenant's Property in the Demised Premises, (c) the moving of
the Tenant's Property in or out of the Building, or (d) the act, omission,
misuse or neglect of Tenant or any of its subtenants or its or their employees,
agents, contractors, or invitees. Tenant shall promptly replace all scratched,
damaged or broken doors and glass in or about the Demised Premises and shall be
responsible for all repairs, maintenance and replacement of wall and floor
coverings in the Demised Premises and for the repair and maintenance of all
sanitary and electrical fixtures and equipment therein. Tenant shall promptly
make all repairs in or to the Demised Premises for which Tenant is responsible,
provided that any repairs to the mechanical, electrical, plumbing, heating,
ventilating or air conditioning systems of the Building shall only be made by
contractors approved by Landlord in accordance with Section 15.02 hereof. Any
other repairs in or to the Building and the facilities and systems thereof for
which Tenant is responsible shall be performed by Landlord at Tenant's expense;
but Landlord may, at its option, before commencing any such work or at any time
thereafter, during such time as Paine Webber, Inc. is no longer liable for
Tenant's obligations under this Lease, require Tenant to furnish to Landlord
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such security, in form (including, without limitation, a bond issued by a
corporate surety licensed to do business in New Jersey) and amount, as Landlord
shall deem necessary to assure the payment for such work by Tenant.
17.02 Tenant shall be responsible for the ordinary maintenance, but not the
repair or replacement, of the roof of the Building. Landlord shall be responsi-
ble for the repair and replacement of the structure of the Building and the roof
of the Building in excess of the Reserve Amounts (hereinafter defined) and for
the maintenance of the Common Areas, all which shall be maintained in accordance
with standards reasonably satisfactory to Landlord and Tenant. To the extent
that Landlord shall fail to maintain the structure of the Building, the roof or
such Common Areas, Tenant shall have the right to perform any such maintenance
work on behalf of the Landlord and Landlord, promptly after receipt of demand
therefor from Tenant, shall reimburse Tenant for any expenses incurred by Tenant
on behalf of Landlord for such maintenance, together with interest thereon at
the Late Payment Rate, calculated from the date of expenditure by Tenant through
the date of repayment by Landlord.
17.03 Tenant shall deposit with Landlord, on or before the tenth (10th) day
of each calendar year or portion thereof during the term, commencing on the
Fixed Rent Commencement Date, an amount equal to the product of the Floor Space
and three cents (.03 cents) (collectively, the "Reserve Amount") (which amount
shall be prorated on a pro rata basis for any partial year during the Term
hereof). Landlord shall hold such funds in escrow for the benefit of Tenant and
shall invest such amounts as Tenant shall reasonably approve. Landlord shall
have the right to apply any such amounts, together with all interest thereon, to
the cost of any bona fide roof repairs to the Building (excluding, however, any
amounts which are reimbursed to Landlord by reason of insurance, condemnation
awards, warranties or otherwise, and any amounts required to fulfill Landlord's
obligations hereunder with respect to the satisfactory completion of Landlord's
Work), up to an amount not to exceed Tenant's Fraction of such cost. To the
extent that as of the Expiration Date there shall remain any such funds,
Landlord shall promptly return the same to Tenant, together with a full
accounting thereof, on the Expiration Date.
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17.04 Except as otherwise expressly provided in this Lease, Landlord shall
have no liability to Tenant, nor shall Tenant's covenants and obligations under
this Lease be reduced or abated in any manner whatsoever, by reason of any
inconvenience, annoyance, interruption or injury to business arising from
Landlord's doing any repairs, maintenance or changes which Landlord is re-
quired or permitted by this Lease, or required by Law, to make in or to any
portion of the Building.
ARTICLE 18 - ELECTRIC ENERGY
18.01 Tenant shall purchase the electric energy required by it in the
Demised Premises at its own expense on a direct-metered basis from the public
utility servicing the Building, and Landlord shall permit the rises, conduits
and feeders in the Building, to the extent available, suitable and safely
capable, to be used for the purpose of transmitting such electrical energy
through the Building. Landlord shall not be liable for any failure, inadequacy
or defect in the character or supply of electric current furnished to the
Building except for actual damage suffered by Tenant by reason of any such
failure, inadequacy or defect caused by the negligence or willful acts of
Landlord.
18.02 Tenant's use of electric energy in the Demised Premises shall not at
any time exceed the capacity of any of the electrical conductors and equipment
in or otherwise serving the Building. Any additional risers or other equipment
required by Tenant at any time during the Term shall be provided by Landlord and
the actual cost thereof shall be paid by Tenant to Landlord on demand.
ARTICLE 19 - HEAT, VENTILATION AND AIR CONDITIONING
Tenant shall, at Tenant's sole cost and expense, subject to any
guaranties or warranties made by Ground Lessor pursuant to the Guarantee,
maintain and operate the heating, ventilating and air-conditioning systems
("HVAC") serving the Demised Premises, and shall furnish HVAC in the Demised
Premises as Tenant may require.
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ARTICLE 20 - OTHER SERVICES: SERVICE INTERRUPTION
20.01 Landlord shall cause the Common Areas to be cleaned in accordance
with the standards set forth in Exhibit "P" annexed hereto and made a part
hereof.
20.02 Landlord shall, at Tenants' sole cost and expense, cause water to be
supplied to the Demised Premises and Tenant shall pay for such as shown on the
public utility meters therefore.
ARTICLE 21 - ACCESS, CHANGES AND NAME
21.01 Landlord and its agents shall have the right, with as little
interference of Tenant's business as possible, to enter and/or pass through the
Demised Premises upon reasonable notice and at reasonable times (a) to examine
the Demised Premises and to show them to actual and prospective Superior
Lessors, Superior Mortgagees, or prospective purchasers of the Building, and
(b) to make such repairs, alterations, additions and improvements in or to the
Building and/or its facilities and equipment as Landlord is required or desires
to make. Landlord shall be allowed to take all materials into and upon the
Demised Premises that may be required in connection therewith, without any
liability to Tenant and without any reduction of Tenant's obligations hereunder.
The right of Landlord and Landlord's agent to enter into the Demised Premises
shall not include any area of the Demised Premises designated on written
notice to Landlord as a "security area" unless a representative of Tenant shall
be present, which representative Tenant agrees to have present at the Demised
Premises upon reasonable advance oral notice by Landlord, provided, however,
that in the event of any emergency, Landlord shall have the right to enter into
any such security area without being accompanied by such representative of
Tenant but shall be accompanied by a police officer, fireman or other public
official. During the period of eighteen (18) months prior to the Expiration
Date, Landlord and its agents may exhibit the Demised Premises to prospective
tenants.
21.02 During such time as Paine Webber, Inc. or an affiliated entity is the
Tenant, Tenant may name the Building, the Paine Webber Building, or any other
name associated with Paine Webber, Inc. or its Affiliates, as the same may
change from time to time as the result of mergers or consolidations or
otherwise.
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ARTICLE 22 - MECHANICS' LIENS AND OTHER LIENS
Nothing contained in this Lease shall be deemed, construed or interpreted
to imply any consent or agreement on the part of Landlord to subject Landlord's
interest or estate to any liability under the mechanic's or other lien law. If
any mechanic's or other lien or any notice of intention to file a lien is filed
against the Land, or any part thereof, for any work, labor, service or materials
claimed to have been performed or furnished for or on behalf of Tenant or
anyone holding any part of the Demised Premises through or under Tenant, Tenant
shall cause the same to be cancelled and discharged of record by payment, bond
or order of a court of competent jurisdiction within fifteen (15) days after
notice by Landlord to Tenant.
ARTICLE 23 - NON-LIABILITY AND INDEMNIFICATION
23.01 In addition to the provisions of Article 13 of this Lease, except as
set forth in the Guarantees, dated of even date herewith, by Ground Lessor for
the benefit of Tenant (collectively, the "Guarantees"), neither Landlord nor
any partner, joint venturer, director, officer, agent, servant or employee of
Landlord shall be liable to Tenant for any loss, injury or damage to Tenant or
to any other Person, or to its or their property, irrespective of the cause of
such injury, damage or loss, except to the extent caused by or resulting from
the negligence of Landlord, its agents, servants or employees in the operating
or maintenance of the Land or Building. Further, neither Landlord nor any
partner, joint venturer, director, officer, agent, servant or employee of
Landlord shall be liable (a) for any such damage caused by other tenants or
Persons in, upon or about the Land or Building, or caused by operations in
construction of any private, public or quasi-public work; or (b) even if
negligent, for consequential damages arising out of any loss of use of the
Demised Premises or any equipment or facilities therein by Tenant or any Person
claiming through or under Tenant.
23.02 Notwithstanding any provision to the contrary, except as set forth in
the Guarantees, Tenant shall look solely to the estate and property of Landlord
in and to the Land and Building (or the proceeds net of bona fide liens and
expenses received by Landlord on a sale of such estate and property). In the
event of any
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claim against Landlord arising out of or in connection with this Lease, the
relationship of Landlord and Tenant or Tenant's use of the Building, the Demised
Premises, the Common Areas or the Project Common Areas, Tenant, (and its
successor and assigns) agrees that the liability of Landlord arising out of or
in connection with this Lease, the relationship of Landlord and Tenant or
Tenant's use of the Building, the Demised Premises, the Common Areas or the
Project Common Areas shall be limited to such estate and property of Landlord
(or sale proceeds net of bona fide liens and expenses). No other properties or
assets of Landlord or any partner, joint venturer, director, officer, agent,
servant or employee of Landlord shall be subject to levy, execution or other
enforcement procedures for the satisfaction of any judgment (or other judicial
process) or for the satisfaction of any other remedy of Tenant arising out of,
or in connection with, this Lease, the relationship of Landlord and Tenant or
Tenant's use of the Building, the Demised Premises, the Common Areas or the
Project Common Areas. If Tenant shall acquire a lien on or interest in any other
properties or assets by judgment or otherwise, Tenant shall promptly release
such lien on or interest in such other properties and assets by executing,
acknowledging and delivering to Landlord an instrument to that effect prepared
by Landlord's attorneys.
ARTICLE 24 - DAMAGE OR DESTRUCTION
24.01 If the Building shall be partially or totally damaged or destroyed by
fire or other casualty (and if this Lease shall not be terminated as in this
Article 24 hereinafter provided), Landlord shall repair the damage and restore
and rebuild the Building (except for the Tenant's Property) in accordance with
the Plans and Specifications, together with such changes as may be approved by
Tenant, with reasonable dispatch after notice to it of the damage or destruction
and the collection of the insurance proceeds attributable to such damage.
24.02 Subject to the provisions of Section 24.05, if all or part of the
Demised Premises shall be damaged or destroyed or rendered completely or
partially untenantable on account of fire or other casualty, the Rent shall not
be abated or reduced, as the case may be, to the extent of payments pursuant to
Tenants business interruption insurance allocable to rental and, subsequent to
the exhaustion of payments thereunder, the Rent
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shall be abated or reduced, as the case may be, in proportion to the
untenantable area of the Demised Premises for the period from the date of the
damage or destruction to the date the damage to the Demised Premises shall be
substantially repaired; provided, however, should Tenant reoccupy a portion of
the Demised Premises during the period the repair or restoration work is taking
place and prior to the date that the Demised Premises is substantially
repaired or made tenantable the Rent allocable to such reoccupied portion, shall
be payable by Tenant from the date of such occupancy.
24.03 If (a) the Demised Premises shall be totally damaged or destroyed by
fire or other casualty, or (b) the Building shall be so damaged or destroyed by
fire or other casualty that its repair or restoration requires the expenditure,
as estimated by a reputable contractor or architect designated by Landlord and
approved by Tenant, which approval shall not be unreasonably withheld, of more
than twenty percent (20%) of the full insurable value of the Building
immediately prior to the casualty, and, in either event, an engineer selected by
Landlord and approved by Tenant, which approval shall not be unreasonably
withheld or delayed, shall reasonably estimate that there will be less than two
(2) years remaining in the Term (including all Renewal Terms for which Tenant
has validly exercised the applicable Renewal Option) upon completion of
restoration of the Building or the Demised Premises, as the case may be, then in
either such case Landlord or Tenant may terminate this Lease by giving the other
notice to such effect within ninety (90) days after the date of the fire or
other casualty. Notwithstanding anything contained in this Lease to the
contrary, if there shall occur such a casualty at such time as there shall be
estimated to be less than two years remaining in the Term of this Lease after
completion of restoration but prior to the time that pursuant to the
provisions of Article 39 hereof Tenant shall have the right to exercise any
Renewal Option, then, prior to Landlord terminating this Lease, Tenant shall
have the right to exercise any such Renewal Option otherwise in accordance with
the provisions of Article 39 hereof. If either party shall elect to so terminate
this Lease, the Term shall expire upon the tenth (10th) day after such notice is
given and Tenant shall vacate the Demised Premises and surrender the same to
Landlord in accordance with the provisions of this Lease. Upon the termination
of this Lease in accordance with this Section 24.03,
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Tenant's liability for Rent thereafter due and payable shall cease and any
prepaid portion of Rent for any period after such date shall be refunded by
Landlord to Tenant.
24.04 Except as provided for in Section 24.08 of this Lease, Tenant shall
not be entitled to terminate this Lease and no damages, compensation or claim
shall be payable by Landlord for inconvenience, loss of business or annoyance
arising from any repair or restoration of any portion of the Demised Premises
pursuant to this Article 24. Landlord shall use its best efforts to make such
repair or restoration promptly and in such manner as to not unreasonably
interfere with Tenant's use and occupancy of the Demised Premises, but
Landlord shall not be required to do such repair or restoration work on an
overtime basis unless fully reimbursed by Tenant.
24.05 Notwithstanding any of the foregoing provisions of this Article 24,
if by reason of some act or omission on the part of Tenant or any of its
subtenants or its or their partners, directors, officers, servants, employees,
agents or contractors, either (a) Landlord or any Superior Lessor or any
Superior Mortgagee shall be unable to collect all of the insurance process
(including, without limitation, rent insurance proceeds) applicable to damage or
destruction of the Building by fire or other casualty, or (b) the Demised
Premises shall be damaged or destroyed or rendered completely or partially
untenantable on account of fire or other casualty, then, without prejudice to
any other remedies which may be available against Tenant, there shall be no
abatement or reduction of the Rent. Further, nothing contained in this Article
24 shall relieve Tenant from any liability that may exist as a result of any
damage or destruction by fire or other casualty.
24.06 Landlord will not carry insurance of any kind on the Tenant's
Property, and, except as provided by law or by reason of Landlord's breach of
any of its obligations hereunder, shall not be obligated to repair any damage
or to replace the Tenant's Property.
24.07 The provisions of this Article 24 shall be deemed an express
agreement governing any case of damage or destruction of the Building by fire or
other casualty, and any law providing for such a contingency in
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the absence of an express agreement, now or hereafter in force, shall have no
application in such case.
24.08 Anything contained in this Article 24 to the contrary
notwithstanding, within thirty (30) days after Landlord has notice of any damage
that materially impairs Tenant's ability to conduct its business in the Demised
Premises, Landlord shall deliver to Tenant a statement prepared by a reputable
contractor approved by Tenant, which approval shall not be unreasonably withheld
or delayed, setting forth such contractor's estimate as to the time required to
repair such damage and the assumptions regarding the use of labor (including
overtime labor, if applicable) and construction methods considered in arriving
at such estimate. If the estimated time period exceeds twelve (12) months from
the date of such damage or if such estimate is not delivered to Tenant as
required, Tenant may elect to terminate this Lease by notice to Landlord not
later than thirty (30) days following receipt of such statement or, if no
statement is delivered, not later than thirty (30) days after the date such
statement was to have been delivered. If Tenant makes such election, the Term
shall expire upon the thirtieth (30th) day after notice of such election is
given by Tenant and Tenant shall vacate the Demised Premises and surrender the
same to Landlord in accordance with the provisions of this Lease. If Tenant
shall not have elected to terminate this Lease pursuant to this Article 24 (or
is not entitled to terminate this Lease pursuant to this Article 24) and such
repairs are (i) not commenced by Landlord within sixty (60) days after the
date Landlord has notice of such damage, (ii) not prosecuted substantially on
the basis specified in the contractor's estimate referred to in this paragraph
so that the repairs cannot be Substantially Completed within the estimated
time period (unless Landlord agrees to take such other measures required to
Substantially Complete such repairs within such period), or (iii) not
Substantially Completed by Landlord within twelve (12) months after the date
Landlord has such notice, subject to Unavoidable Delays, but in no event later
than fifteen (15) months after Landlord has such notice, Tenant may elect to
terminate this Lease by notice to Landlord not later than fifteen (15) days
following the expiration of either of the periods specified in clauses (i) and
(iii) above or fifteen (15) days notice if Landlord shall not be prosecuting
such repairs as required by clause (ii) hereof. Notwithstanding the foregoing,
if at any time Tenant
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believes that Landlord shall not be diligently prosecuting such repairs and
shall so notify Landlord, Tenant shall have the right to seek injunctive relief.
If Tenant makes such election, the Term of this Lease shall expire upon the
thirtieth (30th) day after notice of such election is given by Tenant and Tenant
shall vacate the Demised Premises and surrender the same to Landlord in
accordance with the provisions of this Lease. Upon the termination of this Lease
under the conditions provided in this Section, Tenant's liability for Rent
thereafter due and payable shall cease and any prepaid portion of Rent for any
period after such date shall be refunded by Landlord to Tenant. Landlord shall
advise Tenant of any Unavoidable Delays the Landlord shall have incurred in
connection with any such repair, promptly after the same shall have occurred and
the length thereof.
24.09 If, at any time during the Term, the Building shall be so damaged or
destroyed by fire or other casualty that its repair or restoration requires the
expenditure, as estimated by a reputable contractor or architect designated by
Landlord and approved by Tenant, which approval shall not be unreasonably
withheld, of more than twenty-five percent (25%) of the full insurable value
of the Building immediately prior to the casualty and there shall be
insufficient insurance proceeds available to Landlord to pay for the estimated
cost of repair and restoration, then Landlord may terminate this Lease, whether
or not Tenant shall have elected to terminate this Lease pursuant to Section
24.08 hereof, by giving Tenant notice to such effect within sixty (60) days
after the date of the fire or other casualty. If Landlord shall elect to so
terminate this Lease, the Term shall expire upon the tenth (10th) day after such
notice is given and Tenant shall vacate the Demised Premises and surrender the
same to Landlord in accordance with the provisions of this Lease. Upon the
termination of this Lease in accordance with this Section 24.09, Tenant's
liability for Rent thereafter due and payable shall cease and any prepaid
portion of Rent for any period after such date shall be refunded by Landlord to
Tenant.
24.10 Notwithstanding anything contained in this Lease to the contrary, if
pursuant to the provisions of the Data Processing Center Lease, dated of even
date herewith, between Landlord, as landlord and Tenant, as tenant, (the "Data
Processing Lease") the tenant thereunder shall have the right to, and shall,
terminate such
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lease in connection with a casualty and such tenant shall be Tenant or an
affiliate of Tenant (and, if either the Demised Premises or the premises leased
pursuant to the Data Processing Lease shall have been sublet, operations in one
premises shall be dependent upon operations in the other premises) then Tenant,
at Tenant's sole option, shall also have the right to terminate this Lease
simultaneously with the termination of the Data Processing Lease. If Tenant
shall make such election, the Term of this Lease shall expire on the date
specified in such notice of election, which date shall be not less than six (6)
months nor more than eighteen (18) months from the date of such notice, and
Tenant shall vacate the Demised Premises and surrender the same to Landlord in
accordance with the provisions hereof. Upon the termination of this Lease
hereunder, Tenant's liability for Rent thereafter due and payable shall cease
and any prepaid portion of Rent for any period after such date shall be refunded
by Landlord to Tenant.
ARTICLE 25 - EMINENT DOMAIN
25.01 If the whole of the Demised Premises shall be taken by any public or
quasi-public authority under the power of condemnation, eminent domain or expro-
priation, or in the event of conveyance of the whole of the Demised Premises in
lieu thereof, this Lease shall terminate as of the day possession shall be taken
by such authority. If fifteen percent (15%) or less of the Floor Space of the
Demised Premises shall be so taken or conveyed, this Lease shall terminate
only in respect of the part so taken or conveyed as of the day possession shall
be taken by such authority. If more than fifteen percent (15%) of the Floor
Space of the Demised Premises shall be so taken or conveyed, this Lease shall
terminate only in respect of the part so taken or conveyed as of the day
possession shall be taken by such authority, but either party shall have the
right to terminate this Lease upon notice given to the other party within thirty
(30) days after taking such possession. If so much of the parking facilities
shall be so taken or conveyed that the number of parking spaces necessary, for
the continued operation of the Demised Premises shall not be available, Tenant
may, by notice to Landlord, terminate this Lease as of the day possession shall
be taken. If this Lease shall continue in effect as to any portion of the
Demised Premises not so taken or conveyed, the Rent shall be reduced in the
proportion which the area of the part of the De-
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mised Premises so acquired or condemned bears to the total area of the Demised
Premises immediately prior to such acquisition or condemnation. Except as
specifically provided herein, in the event of any such taking or conveyance
there shall be no reduction in Rent. If this Lease shall be terminated in
accordance with the provisions of this Section 25.01, this Lease and the Term
shall come to an end and expire as of the date of the taking, with the same
effect as if such date were the Expiration Date, and the Rent shall be
apportioned as of the date of such termination and any prepaid portion of Rent
for any period after such date shall be refunded by Landlord to Tenant. If this
Lease shall continue in effect, Landlord shall, at its expense, but shall be
obligated only to the extent of the net award or other compensation (after
deducting all expenses in connection with obtaining same) available to Landlord
for the improvements taken or conveyed (excluding any award or other
compensation for land or for the unexpired portion of the term of any Superior
Lease), make all necessary alterations so as to constitute the remaining
Demised Premises a complete architectural and tenantable unit, except for the
Tenant's Property, and Tenant shall make all alterations or replacements to the
Tenant's Property and decorations in the Demised Premises. All awards and
compensation for any taking or conveyance, whether for the whole or a part of
the Land or Building, the Demised Premises or otherwise, shall be property of
Landlord, and Tenant hereby assigns to Landlord all of Tenant's right, title
and interest in and to any and all such awards and compensation. Tenant shall
be entitled to claim, prove and receive in the condemnation proceeding such
award or compensation as may be allowed for the Tenant's Property, Tenant's
trade fixtures and for loss of business, good will, moving and depreciation or
injury to and cost of removal of the Tenant's Property, to the extent such
award or compensation shall be made by the condemning authority in addition to,
and shall not result in a reduction of, the award or compensation made by it to
Landlord.
25.02 If the temporary use or occupancy of all or any part of the Demised
Premises shall be taken during the Term, Tenant shall be entitled, except as
hereinafter set forth, to receive that portion of the award or payment for such
taking which represents compensation for the use and occupancy of the Demised
Premises, for the taking of the Tenant's Property and for moving expenses,
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and Landlord shall be entitled to receive that portion which represents
reimbursement for the cost of restoration of the Demised Premises. This Lease
shall be and remain unaffected by such taking and Tenant shall continue
responsible for all of its obligations hereunder insofar as such obligations
are not affected by such taking and shall continue to pay the Rent in full when
due. If the period of temporary use or occupancy shall extend beyond the
Expiration Date, that part of the award or payment which represents compensation
for the use and occupancy of the Demised Premises (or a part thereof) shall be
divided between Landlord and Tenant so that Tenant shall receive (except as
otherwise provided below) so much thereof as represents compensation for the
period up to and including the Expiration Date and Landlord shall receive so
much thereof as represents compensation for the period after the Expiration
Date.
25.03 In the event the premises leased pursuant to the Data Processing
Lease are taken or such portions of said facilities are taken resulting in a
termination of the Data Processing Lease, and the tenant under the Data
Processing Lease shall be Tenant or an affiliate of Tenant (and, if either the
Demised Premises or the premises leased pursuant to the Data Processing Lease
shall have been sublet, operations in one premises shall be dependent upon
operations in the other premises) then Tenant, at Tenant's option, shall have
the right to terminate this Lease on the date specified in such notice of
election, which date shall be not less than six (6) months nor more than
eighteen (18) months from the date of such notice; provided, however, that
Tenant shall have the right to continue its occupancy of the Demised Premises
subject to the terms of this Lease on a month-to-month basis (not to exceed
twelve (12) months) until suitable moving arrangements are made.
ARTICLE 26 - SURRENDER
26.01 On the Expiration Date, or upon any earlier termination of this
Lease, or upon any re-entry by Landlord upon the Demised Premises, Tenant shall
quit and surrender the Demised Premises to Landlord "broom-clean" and in good
order, condition and repair, except for ordinary wear and tear and such damage
or destruction as Landlord is required to repair or restore under this Lease,
and Tenant shall remove any item of Tenant's Property therefrom required
pursuant to this Lease.
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26.02 If Tenant remains in possession of the Demised Premises after the
expiration of the Term, Tenant shall be deemed to be occupying the Demised
Premises as a tenant from month to month subject to all of the provisions of
this Lease, except that the monthly Fixed Rent shall be twice the Fixed Rent in
effect during the last month of the Term.
26.03 No act or thing done by Landlord or its agents shall be deemed an
acceptance of a surrender of the Demised Premises, and no agreement to accept
such surrender shall be valid unless in writing and signed by Landlord.
ARTICLE 27 - CONDITIONS OF LIMITATION
27.01 This Lease is subject to the limitation that whenever Tenant (a)
shall make an assignment for the benefit of creditors, or (b) shall commence a
voluntary case or have entered against it an order for relief under any chapter
of the Federal Bankruptcy Code (Title II of the United States Code) or any
similar order or decree under any federal or state law, now in existence, or
hereafter enacted having the same general purpose, and such order or decree
shall have not been stayed or vacated within 30 days after entry, or (c) shall
cause, suffer, permit or consent to the appointment of a receiver, trustee,
administrator, conservator, sequestrator, liquidator or similar official in
any federal, state or foreign judicial or non-judicial proceeding, to hold,
administer and/or liquidate all or substantially all of its assets, and such
appointment shall not have been revoked, terminated, stayed or vacated and such
official discharged of his duties within 30 days of his appointment then
Landlord, at any time after the occurrence of any such event, may give Tenant a
notice of intention to end the Term at the expiration of five (5) days from the
date of service of such notice of intention, and upon the expiration of said
five (5) period, whether or not the Term shall theretofore have commenced, this
Lease shall terminate with the same effect as if that day were the Expiration
Date of this Lease, but Tenant shall remain liable for damages as provided in
Article 29.
27.02 This Lease is subject to the further limitations (collectively,
"Events of Default") that: (a) if Tenant shall default in the payment of any in-
stallment of Fixed Rent, and such default shall continue
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for five (5) days after invoice for same by Landlord or for five (5) days after
notice of such default, whichever is shorter, or (b) if Tenant shall, whether by
action or inaction, be in default of any of its obligations under this Lease
(other than a default in the payment of Fixed Rent) and such default shall
continue and not be remedied within thirty (30) days after Landlord shall have
given to Tenant a notice specifying the same, or, in the case of a default which
cannot with due diligence be cured within a period of thirty (30) days and the
continuance of which for the period required for cure will not subject
Landlord or any Superior Lessor or prosecution for a crime (as more particularly
described in the last sentence of Section 12.02) or termination of any
Superior Lease or foreclosure of any Superior Mortgage, if Tenant shall not, (i)
within said thirty (30) day period advise Landlord of Tenant's intention to take
all steps necessary to remedy such default, (ii) duly commence within said
thirty (30) day period, and thereafter diligently prosecute to completion all
steps necessary to remedy the default, and (iii) complete such remedy within a
reasonable time after the date of said notice by Landlord, (c) if Tenant shall
abandon the Demised Premises, or (d) if there shall be any default by Tenant (or
any person which, directly or indirectly, controls, is controlled by, or is
under common control with Tenant) under any other lease with Landlord (or any
person which, directly or indirectly, controls, is controlled by, or is under
common control with Landlord) which shall not be remedied within the applicable
grace period, if any, provided therefor under such other lease, then in any of
said cases Landlord may give to Tenant a notice of intention to end the Term at
the expiration of five (5) days from the date of the service of such notice of
intention, and upon the expiration of said five (5) days, whether or not the
Term shall theretofore have commenced this Lease shall terminate with the same
effect as if that day were the expiration date of this Lease, but Tenant shall
re main liable for damages as provided in Article 29.
ARTICLE 28 - RE-ENTRY BY LANDLORD
28.01 If this Lease shall terminate as provided in Article 27, Landlord
or Landlord's agents and employees may immediately or at any time thereafter re-
enter the Demised Premises, or any part thereof, either by summary dispossess
proceedings or by any suitable action or proceeding at law, or otherwise,
without being
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liable to indictment, prosecution or damages therefor, and may repossess the
same, and may remove any Person therefrom, to the end that Landlord may have,
hold and enjoy the Demised Premises. The word "re-enter", as used herein, is not
restricted to its technical legal meaning. If this Lease is terminated under the
provisions of Article 27, or if Landlord shall re-enter the Demised Premises
under the provisions of this Article 28, or in the event of the termination of
this Lease, or of re-entry, by or under any summary dispossess or other
proceedings or action or any provision of law by reason of default hereunder on
the part of Tenant, Tenant shall thereupon pay to Landlord the Rent payable up
to the time of such termination of this Lease, or of such recovery of posses-
sion of the Demised Premises by Landlord, as the case may be, and shall also pay
to Landlord damages as provided in Article 29.
28.02 In the event of a breach by Tenant of any of its obligations under
this Lease, Landlord shall also have the right of injunction. The special
remedies to which Landlord may resort hereunder are cumulative and are not
intended to be exclusive of any other remedies to which Landlord may lawfully be
entitled at any time and Landlord may invoke any remedy allowed at law or in
equity as if specific remedies were not provided for herein.
28.03 If this Lease shall terminate under the provisions of Article 27, or
if Landlord shall re-enter the Demised Premises under the provisions of this
Article 28, or in the event of the termination of this Lease, or of re-entry, by
or under any summary dispossess or other proceeding or action or any provision
of law by reason of default hereunder on the part of Tenant, Landlord shall be
entitled to retain all monies, if any, paid by Tenant to Landlord, whether as
advance Rent, security or other wise, but such monies shall be credited by
Landlord against any Rent due from Tenant at the time of such termination or
re-entry or, at Landlord's option, against any damages payable by Tenant under
Article 29 or pursuant to law.
ARTICLE 29 - DAMAGES
29.01 If this Lease is terminated under the provisions of Article 27, or if
Landlord shall re-enter the Demised Premises under the provisions of Article 28,
or in the event of the termination of this Lease, or of
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re-entry, by or under any summary dispossess or other proceeding or action or
any provision of law by reason of default hereunder on the part of Tenant,
Tenant shall pay to Landlord as damages, at the election of Landlord, either:
(a) a sum which at the time of such termination of this Lease or at the
time of any such re-entry by Landlord, as the case may be, represents the
then value of the excess, if any, of (i) the aggregate amount of the Rent
which would have been payable by Tenant (conclusively presuming the
average monthly Additional Charges payable for the year, or if less than
365 days have then elapsed since the Commencement Date, the partial year,
immediately preceding such termination of re-entry) for the period
commencing with such earlier termination of this Lease or the date of any
such re-entry, as the case may be, and ending with the Expiration Date,
over (ii) the aggregate rental value of the Demised Premises for the same
period, which amounts shall be discounted to present worth at a rate equal
to nine percent (9%) per annum; or
(b) sums equal to the Fixed Rent and the Additional Charges which would
have been payable by Tenant had this Lease not so terminated, or had
Landlord not so re-entered the Demised Premises, payable upon the due dates
therefor specified herein following such termination or such re-entry and
until the Expiration Date, provided, however, that if Landlord shall
relet the Demised Premises during said period, Landlord shall credit Tenant
with the net rents received by Landlord from such reletting, such net
rents to be determined by first deducting from the gross rents as and when
received by Landlord from such reletting the expenses incurred or paid by
Landlord in terminating this Lease or in re-entering the Demised Premises
and in securing possession thereof, as well as the expenses of reletting,
including, without limitation, altering and preparing the Demised Premises
for new tenants, brokers' commissions, legal fees, and all other expenses
properly chargeable against the Demised Prem-
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ises and the rental therefrom, it being understood that any such
reletting may be for a period shorter or longer than the period ending on
the Expiration Date; but in no event shall Tenant be entitled to receive
any excess of such net rents over the sums payable by Tenant to Landlord
hereunder, nor shall Tenant be entitled in any suit for the collection of
damages pursuant to this subdivision (b) to a credit in respect of any
rents from a reletting, except to the extent that such net rents are
actually received by Landlord. If the Demised Premises or any part thereof
should be relet in combination with other space, then proper apportionment
on a square foot basis shall be made of the rent received from such
reletting and of the expenses of reletting.
If the Demised Premises or any part thereof be relet by Landlord before
presentation of proof of such damages to any court, commission or tribunal, the
amount of rent reserved upon such reletting shall, prima facie, be the fair and
reasonable rental value for the Demised Premises, or part thereof, so relet
during the term of the reletting. Landlord shall not be liable in any way
whatsoever for its failure or refusal to relet the Demised Premises or any part
thereof, or if the Demised Premises or any part thereof are relet, for its
failure to collect the rent under such reletting, and no such refusal or failure
to relet or failure to collect rent shall release or affect Tenant's liability
for damages or otherwise under this Lease.
29.02 Suit or suits for the recovery of such damages or, any installments
thereof, may be brought by Landlord at any time and from time to time at its
election, and nothing contained herein shall be deemed to require Landlord to
postpone suit until the date when the Term would have expired if it had not been
so terminated under the provisions of Article 27, or under any provision of
law, or had Landlord not re-entered the Demised Premises. Nothing herein
contained shall be construed to limit or preclude recovery by Landlord against
Tenant of any sums or damages to which, in addition to the damages particularly
provided above, Landlord may lawfully be entitled by reason of any default
hereunder on the part of Tenant. Nothing herein contained shall be construed to
limit or prejudice the right of Landlord to prove for
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and obtain as damages by reason of the termination of this Lease or re-entry on
the Demised Premises for the default of Tenant under this Lease an amount equal
to the maximum allowed by any statute or rule of law in effect at the time when,
the governing the proceedings in which, such damages are to be proved whether or
not such amount be greater than, equal to, or less than any of the sums referred
to in Section 29.01.
29.03 In addition, if this Lease is terminated under the provisions of
Article 27, or if Landlord shall re-enter the Demised Premises under the
provisions of Article 28, Tenant covenants that: (a) the Demised Premises then
shall be in the same condition as that in which Tenant has agreed to surrender
the same to Landlord at the Expiration Date; (b) Tenant shall have performed
prior to any such termination any obligation of Tenant contained in this Lease
for the making of any alteration or for restoring or rebuilding the Demised
Premises, or any part thereof; and (c) for the breach of any covenant of Tenant
set forth above in this Section 29.03, Landlord shall be entitled immediately,
without notice or other action by Landlord, to recover, and Tenant shall pay, as
and for liquidated damages therefor, the cost of performing such covenant (as
estimated by an independent contractor selected by Landlord).
29.04 In addition to any other remedies Land lord may have under this
Lease, and without reducing or adversely affecting any of Landlord's rights and
remedies under this Article 29, if any Rent or damages payable hereunder by
Tenant to Landlord are not paid within five (5) days after demand therefor, the
same shall bear interest at the Late Payment Rate from the due date thereof
until paid, and the amounts of such interest shall be Additional Charges
hereunder.
ARTICLE 30 - AFFIRMATIVE WAIVERS
30.01 Tenant, on behalf of itself and any and all persons claiming through
or under Tenant, does hereby waive and surrender all right and privilege which
it, they or any of them might have under or by reason of any any present or
future law, to redeem the Demised Premises or to have a continuance of this
Lease after being dispossessed or ejected from the Demised Premises by process
of law or under the terms of this Lease or after the termination of this Lease
as provided in this Lease.
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30.02 Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim brought by either against the other on any matter
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, and Tenant's use or occupancy of the
Demised Premises and use of the Common Areas, including, without limitation,
any claim of injury or damage, and any emergency and other statutory remedy with
respect thereto. Tenant shall not interpose any counterclaim of any kind in any
action or proceeding commenced by Landlord to recover possession of the Demised
Premises (unless failure to do so would constitute a waiver thereof) nor attempt
to remove such action or proceeding to the law division of the Superior Court of
New Jersey.
ARTICLE 31 - NO WAIVERS
The failure of either party to insist in. any one or more instances upon
the strict performance of any one or more of the obligations of this Lease, or
to exercise any election herein contained, shall not be construed as a waiver
or relinquishment for the future of the performance of such one or more
obligations of this Lease or of the right to exercise such election, but the
same shall continue and remain in full force and effect with respect to any
subsequent breach, act or omission. The receipt by Landlord of Fixed Rent or
Additional Charges with knowledge of breach by Tenant of any obligation of
this Lease shall not be deemed a waiver of such breach.
ARTICLE 32 - CURING TENANT'S DEFAULTS
If Tenant shall default in the performance of any of Tenant's obligations
under this Lease, Landlord, without thereby waiving such default, may (but shall
not be obligated to) perform the same for the account and at the expense of
Tenant, without notice in a case of emergency, and in any other case only if
such default continues after the expiration of thirty (30) days from the date
Landlord gives Tenant notice of the default. Bills for any expenses incurred by
Landlord in connection with any such performance by it for the account of
Tenant, and bills for all costs, expenses and disbursements of every kind and
nature whatsoever, including reasonable attorneys fees and expenses, involved in
collecting or endeavoring to collect the Rent or any part thereof or
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enforcing or endeavoring to enforce any rights against Tenant or Tenant's
obligations hereunder, under or in connection with this Lease or pursuant to
law, including any such cost, expense and disbursement involved in instituting
and prosecuting summary proceedings or in recovering possession of the Demised
Premises after default by Tenant or upon the expiration of the Term or sooner
termination of this Lease, and interest on all sums advanced by Landlord under
this Article at the Late Payment Rate, may be sent to Landlord to Tenant
monthly, or immediately, at Landlord's option, and such among shall be due and
payable in accordance with the terms of such bills.
ARTICLE 33 - BROKER
Landlord and Tenant each represent to the other that no broker except the
Broker was instrumental in bringing about or consummating this Lease and that it
had no conversations or negotiations with any broker except the Broker
concerning the leasing of the Demised Premises. Each party agrees to indemnify
and hold harmless the other against and from any claims for any brokerage
commissions and all costs, expenses and liabilities in connection therewith,
including, without limitation, attorneys' fees and expenses, arising out of any
conversations or negotiations had by the indemnifying party with any broker
other than the Broker. Landlord shall pay any brokerage commissions due the
Broker pursuant to a separate agreement between Landlord and the Broker.
ARTICLE 34 - NOTICES
Any notice, statement, demand, consent, approval or other communication
required or permitted to be given, rendered or made by either party to the
other, pursuant to this Lease or pursuant to any applicable Legal Requirement,
shall be in writing and shall be deemed to have been properly given, rendered or
made only if hand delivered or sent by United States registered or certified
mail, return receipt requested, addressed to the other party at the address
hereinabove set forth (except that after the Commencement Date, Tenant's
address, unless Tenant shall give notice to the contrary, shall be the Building)
as to Landlord, to the attention of General Counsel with a copy to the attention
of President and to Horowitz, Bross, Sinins and Imperial, 1180 Raymond
Boulevard, Newark, New Jersey 07102-4172, Atten-
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tion: Irwin A. Horowitz, Esq., and as to Tenant, to the attention of Facilities
Department - Vice President, with a copy to Skadden, Arps, Slate, Meagher &
Flom, 919 Third Avenue, New York, New York 10022, Attention: Benjamin F.
Needell, Esq., and shall be deemed to have been given, rendered or made on the
day after the day so delivered or mailed, unless mailed outside the State of New
Jersey in which case it shall be deemed to have been given, rendered or made
on the third business day after the day so mailed. Either party may, by notice
as aforesaid, designate a different address or addresses for notices,
statements, demands, consents, approvals or other communications intended
for it.
ARTICLE 35 - ESTOPPEL CERTIFICATES
Each party shall, at any time and from time to time, as requested by the
other party, upon not less than ten (10) days' prior notice, execute and deliver
to the requesting party a statement certifying that this Lease is unmodified and
in full force and effect (or if there have been modifications, that the same is
in full force and effect as modified and stating the modifications), certifying
the dates to which the Fixed Rent and Additional Charges have been paid,
stating whether or not, to the best knowledge of the party giving the statement,
the requesting party is in default in performance of any of its obligations
under this Lease, and, if so, specifying each such default of which the party
giving the statement shall have knowledge, and stating whether or not, to the
best knowledge of the party giving the statement, any event has occurred which
with the giving of notice of passage of time, or both, would constitute such a
default of the requesting party, and, if so, specifying each such event; any
such statement delivered pursuant hereto shall be deemed a representation and
warranty to be relied upon by the party requesting the certificate and by others
with whom such party may be dealing, regardless of independent investigation.
Each party also shall include in any such statement such other information
concerning this Lease as the other party may reasonably request.
ARTICLE 36 - ARBITRATION
Landlord or Tenant may at any time request arbitration, of any matter in
dispute. The party requesting arbitration shall do so by giving notice to that
effect to the other party, specifying in said notice the
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nature of the dispute, and said dispute shall be determined in Newark, New
Jersey, by a single arbitrator, in accordance with the rules then obtaining of
the American Arbitration Association (or any organization which is the successor
thereto). The award in such arbitration may be enforced on the application of
either party by the order or judgment of a court of competent jurisdiction. The
fees and expenses of any arbitration shall be borne by the parties equally, but
each party shall bear the expense of its own attorneys and experts and the
additional expenses of presenting its own proof.
ARTICLE 37 - MEMORANDUM OF LEASE
This Lease shall not be recorded, however, at the request of either party,
Landlord and Tenant shall promptly execute, acknowledge. and deliver to the
other party (i) a memorandum of lease in respect of this Lease sufficient for
recording, and (ii) after each of the Commencement Date, the Fixed Rent
Commencement Date, and any Renewal Term Commencement Date, either an agreement
or a restated memorandum (if a memorandum shall have been executed or recorded
as provided immediately above) stating the Commencement Date, Fixed Rent
Commencement Date or any Renewal Term Commencement Date, as the case may be,
each sufficient for recording. Failure by either party to request or to execute,
acknowledge or deliver any such memorandum or agreement, however, shall not
affect the determination of the Commencement Date, the Fixed Rent Commencement
Date or any Renewal Term Commencement Date, as the case may be. Such
memorandum shall not be deemed to change or otherwise affect any of the
obligations or provisions of this Lease. Whichever party records such memorandum
of Lease shall pay all recording costs and expenses, including any taxes that
are due upon such recording.
ARTICLE 38 - MISCELLANEOUS
38.01 Tenant expressly acknowledges and agrees that Landlord has not made
and is not making, and Tenant, in executing and delivering this Lease, is not
relying upon, any warranties, representations, promises or statements, except
to the extent that the same are expressly set forth in this Lease or in any
other written agreement(s) which may be made between the parties concurrently
with the execution and delivery of this Lease. All understandings and
agreements heretofore had between the
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parties are merged in this Lease and any other written agreement(s) made
concurrently herewith, which alone fully and completely express the agreement of
the parties and which are entered into after full investigation. Neither party
has relied upon any statement or representation not embodied in this Lease or in
any other written agreement(s) made concurrently herewith.
38.02 No agreement shall be effective to change, modify, waive, release,
discharge, terminate or effect an abandonment of this Lease, in whole or in
part, unless such agreement is in writing, refers expressly to this Lease and is
signed by Landlord and Tenant.
38.03 If Tenant shall at any time request Landlord to sublet or let the
Demised Premises for Tenant's account, Landlord or its agent is authorized to
receive keys for such purposes without releasing Tenant from any of its
obligations under this Lease, and Tenant hereby releases Landlord of any
liability for loss or damage to any of the Tenant's Property in connection with
such subletting or letting.
38.04 Except as otherwise expressly provided in this Lease, the obligations
under this Lease shall bind and benefit the successors and assigns of the
parties hereto with the same effect as if mentioned in each instance where a
party is named or referred to; provided, however, that the provisions of this
Section 38.04 shall not be construed as modifying the conditions of limitation
contained in Article 27.
38.05 Except for Tenant's obligations to pay Rent, the time for Landlord or
Tenant, as the case may be, to perform any of their respective obligations
hereunder shall be extended if and to the extent that the performance thereof
shall be prevented due to any Unavoidable Delays. Except as expressly provided
to the contrary, the obligations of Tenant hereunder shall not be affected,
impaired or excused, nor shall Landlord have any liability whatsoever to Tenant,
(a) because Landlord is unable to fulfill, or is delayed in fulfilling, any of
its obligations under this Lease due to any of the matters set forth in the
first sentence of this Section 38.05, or (b) because of any failure or defect in
the supply, quality or character of electricity, water or any other utility or
service furnished to the Demised Premises for any reason beyond Landlord's
reasonable control.
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38.06 Any liability for payments or reimbursement of payments hereunder
(including, without limitation, Additional Charges) shall survive the expiration
of the Term or earlier termination of this Lease.
38.07 Tenant shall not exercise its rights under Article 15 or any other
provision of this Lease in a manner which would violate Landlord's union
contracts or create any work stoppage, picketing labor disruption or dispute or
any interference with the business of Landlord.
38.08 Tenant shall give prompt notice to Landlord of (a) any occurrence
in or about the Demised Premises for which Landlord might be liable, (b) any
fire or other casualty in the Demised Premises, (c) any damage to or defect in
the Demised Premises, including the fixtures and equipment thereof, for the
repair of which Landlord might be responsible, and (d) any damage to or defect
in any part of the Demised Premises, sanitary, electrical, heating, ventilating,
airconditioning, elevator or other systems located in passing through the
Demised Premises or any part thereof.
38.09 This Lease shall be governed by and construed in accordance with the
laws of the State of New Jersey. If any provision of this Lease shall, be
invalid or unenforceable, the remainder of this Lease shall not be affected and
shall be enforced to the extent permitted by law. The table of contents,
captions, headings and titles in this Lease are solely for convenience of
reference and shall not affect its interpretation. If any words or phrases in
this Lease shall have been stricken out or otherwise eliminated, whether or not
any other words or phrases have been added, this Lease shall be construed as if
the words or phrases so stricken out or otherwise eliminated were never included
in this Lease and no implication or inference shall be drawn from the fact that
said words or phrases were so stricken out or otherwise eliminated. Each
covenant, agreement, obligation or other provision of this Lease on Tenant's
part to be performed, shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any other provision of this
Lease. All terms and words used in this Lease, regardless of the number or
gender in which they are used, shall be deemed to include any other number and
any other gender as the context may require.
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38.10 Within thirty (30) days of each anniversary date of this Lease,
annually Tenant shall furnish to Landlord a copy of its then current audited
financial statement (or form 10-K) which shall not be distributed without the
prior authorization of Tenant.
38.11 At any time after the Commencement Date, but prior to the Fixed Rent
Commencement Date, Tenant shall have the right to request a recalculation of
Floor Space and Tenant's Fraction. In addition, at any time during the Term,
Tenant shall have the right to request a redetermination of Operating Expenses
because of a claimed increase in the floor space of improvements constructed in
the Lincoln Harbor Project, or because of a redetermination of Floor Space
pursuant to this Section, the Floor Space shall be less than 578,028. If Tenant
shall make any such request, then the Architect and an architect appointed by
Tenant shall remeasure the floors of the Demised Premises or the floor space of
the improvements in the Lincoln Harbor Project, as the case may be, in
accordance with the standards set forth on Exhibit "D" annexed hereto and made a
part hereof. If Architect and the architect appointed by Tenant shall agree, the
Floor Space, Tenant's Fraction or the Operating Expenses, as the case may be, as
determined by such architects shall be conclusive and binding upon the parties.
If the Architect and the architect appointed by Tenant shall be unable to agree
as to the Floor Space, Tenant's Fraction, or the Operating Expenses, as the case
may be, then such architects shall select a third architect (or if such
architects shall be unable to agree upon such third architect, the same shall be
selected by the American Arbitration Association or successor organization)
and such third architect shall select either the Floor Space, Tenant's Fraction
or the Operating Expenses, as the case may be, as calculated by the Architect or
the Floor Space, Tenant's Fraction or the Operating Expenses, as the case may
be, as calculated by the architect appointed by Tenant. In no event, however,
may either the Floor Space, Tenant's Fraction or the Operating Expenses be
increased from the amounts set forth herein. Such finding shall be conclusive
and binding upon the parties.
38.12 Notwithstanding anything contained in this Lease to the contrary, if
Landlord shall have failed to deliver to Tenant the premises demised to Tenant
pursuant to the Data Processing Lease on or before January 1, 1987, as the
same may be extended by reason of Un-
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avoidable Delays to a date no later than June 1, 1987, as to which date time
shall be of the essence, Tenant shall have the option to cancel this Lease and
the Term by giving thirty (30) days' notice to Landlord of such cancellation
no later than the tenth (10th) day after such date. Upon the giving of such
notice, this Lease and the Term shall expire and come to an end as of the
expiration of such thirty (30) day period provided that Landlord shall not have
delivered such premises to Tenant during such period, and Landlord and Tenant
shall be released and discharged of and from all liabilities under the
provisions of this Lease as of the date of such Termination.
In addition, if for any reason other than Tenants' fault, Substantial
Completion of Landlord's Work shall not have occurred on or before January 1,
1989, as to which date time shall be of the essence, then, in addition to any
other remedies set forth in this Lease, Tenant shall have the option to cancel
this Lease and the Term by giving thirty (30) days' notice to Landlord of such
cancellation no later than the fifteenth (15th) day after such date. Upon the
giving of such notice, this Lease and the Term shall expire and come to an end
as of the expiration of such thirty (30) day period provided that the
Commencement Date shall not have occurred during such period, and Landlord and
Tenant shall be released from all liabilities under the provisions of this Lease
as of the date of such termination. In addition, if for any reason other than
Landlord's or Tenant's fault, the Commencement Date shall not have occurred on
or before August 1, 1989, then, on the later to occur of August 1, 1989 and the
date on which construction on the Building and the Demised Premises shall have
experienced Unavoidable Delays equal to twelve (12) months in the aggregate,
Landlord and Tenant each shall have the option to cancel this Lease and the Term
by giving thirty (30) days' notice of such cancellation to the other party. Upon
the giving of such notice, this Lease and the Term shall expire and come to an
end as of the expiration of such thirty (30) day period, and Landlord and Tenant
shall be released from all liabilities under the provisions of this Lease as of
the date of such termination.
38.13 Tenant acknowledges that pursuant to the provisions of the Agreement
of Limited Partnership, dated of even date herewith, of Landlord, Tenant, as
limited partner thereunder, has pledged its partnership interest
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thereunder pursuant to Section 14.13 thereof to secure its obligations hereunder
for a period of five (5) years from the Fixed Rent Commencement Date.
ARTICLE 39 - EXTENSION OF TERM
39.01 Tenant shall have the option (the "Renewal Option") to extend the
Term for two (2) additional periods of ten (10) years each (the "Renewal
Terms"), shall (i) commence on the original Expiration Date and end on the date
preceding the tenth (10th) anniversary of the original Expiration Date (the
"First Renewal Term") and (ii) commence on the date immediately succeeding the
last day of the First Renewal Term and end on the date preceding the twentieth
(20th) anniversary of the original Expiration Date (the "Second Renewal Term")
provided that (a) this Lease shall not have been previously terminated and (b)
no material Event of Default shall have occurred and be continuing as of the
date Tenant shall give the Renewal Notice (hereinafter defined). Each Renewal
Option may be exercised with respect to the entire Demised Premises only and
shall be exercisable by Tenant delivering to Landlord written notice (the
"Renewal Notice") of Tenant's election to exercise the applicable Renewal
Option at least nine (9) months prior to the original Expiration Date with
respect to the First Renewal Term, and at lease nine (9) months prior to the
tenth (10th) anniversary of the Commencement Date with respect to the Second
Renewal Term. Upon the giving of the Renewal Notice with respect to the Second
Renewal Term, Tenant shall have no further option or right to extend the Term.
If Tenant exercises a Renewal Option, the Renewal Term with respect to which
Tenant shall exercise the Renewal Option shall be on the same terms, covenants,
and conditions as those contained in this Lease, except (i) the Fixed Rent
payable for the Demised Premises during each Renewal Term shall be determined
as provided in Section 39.03 hereof, and (ii) the provisions of Section 39.01
hereof with respect to Tenant's right to renew the Term of this Lease shall not
be applicable during the Second Renewal Term. It is expressly understood that
during the First Renewal Term that Tenant shall have the right as set forth in
Section 39.01 only with respect to the Second Renewal Term, that during the
Second Renewal Term Tenant shall have no further right to renew this Lease.
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39.02 If Tenant exercises the Renewal Option applicable to the First
Renewal Term or the Second Renewal Term, as the case may be, the Fixed Rent
for the Demised Premises shall be an amount equal to the Fair Market Rent
(hereinafter defined), determined in accordance with Article 40 hereof, for the
Demised Premises.
39.03 If, for any reason whatsoever, the Fair Market Rent shall not have
been determined pursuant to Article 40 hereof by the commencement of the First
Renewal Term or Second Renewal Term, as the case may be, the Tenant shall pay
to Landlord in monthly installments until such determination, on account of the
Fixed Rent, an amount equal to the Fixed Rent in effect on the date immediately
prior to commencement of the First Renewal Term or Second Renewal Term, as the
case may be. Following the final determination of Fair Market Rent, a
reconciliation shall be made as follows: if the monthly installments of Fixed
Rent determined pursuant to this Article 39 are more than the amounts Tenant had
paid therefor, Tenant shall pay to Landlord within ten (10) days of such
determination the amount of such underpayment of Fixed Rent due.
ARTICLE 40 - DETERMINATION OF FAIR MARKET RENT
40.01 For purposes of this Lease the term "Fair Market Rent" shall mean the
annual fair market rental value of the Demised Premises determined as if the
Demised Premises were available in the then rental market for comparable
buildings in the Northern New Jersey metropolitan area on the terms of this
Lease and assuming that Landlord has had a reasonable time to locate a tenant
who rents with the knowledge of the uses permitted pursuant to this Lease, and
that neither Landlord nor the prospective tenant is under any compulsion to
rent, and taking into account: (i) tenant is required to pay the Operating
Expenses; (ii) the remaining Term of this Lease and any remaining Renewal Term,
as well as the portion of the Term then elapsed; (iii) the fact that the tenant
is a major tenant, occupying in excess of 200,000 square feet; (iv) the fact
that Landlord will not be obligated to perform any work in the Demised Premises
to prepare the same for Tenant's occupancy or to contribute or to loan any money
on account thereof whether in the form of rent, credit, cash or otherwise.
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40.02 The Fair Market Rent shall be determined on the basis set forth in
Section 40.01 of this Article and with the assumption that the tenant need not
perform any work in order to occupy the Demised Premises for the conduct of
business.
40.03 Landlord shall give Tenant written notice (the "Rent Notice")
setting forth Landlord's determination of the Fair Market Rent (the
"Landlord's Determination"). Such notice will be sent not later than forty-five
(45) days after receipt by Landlord of each of the Renewal Notices.
40.04 Tenant shall give Landlord written notice ("Tenant's Notice"),
within forty-five (45) days after Tenant's receipt of the Rent Notice, as to
whether Tenant accepts or disputes Landlord's Determination or any portion
thereof. If Tenant in Tenant's Notice accepts Landlord's Determination, or if
Tenant fails or refuses to give Tenant's Notice as aforesaid, Tenant shall be
deemed to have accepted Landlord's Determination. If Tenant in Tenant's Notice
disputes any portion of Landlord's Determination, Tenant shall deliver to
Landlord together with Tenant's Notice, Tenant's determination of the Fair
Market Rent of the portion of the Demised Premises for which Tenant disputes
Landlord's Determination (the "Tenant's Determination"); simultaneously
therewith Tenant shall notify Landlord of an individual ("Tenant's Advisor")
selected by Tenant to act on its behalf for the purposes of this Article 40.
40.05 Landlord shall give Tenant written notice ("Landlord's Notice")
within ten (10) business days of after Landlord's receipt of Tenant's
Determination, as to whether Landlord accepts or disputes Tenant's
Determination. If Landlord in Landlord's Notice accepts Tenant's Determination
or if Landlord fails or refuses to give Landlord's Notice as aforesaid, Landlord
shall be deemed to have accepted Tenant's Determination. If Landlord in
Landlord's Notice disputes Tenant's Determination, Landlord shall in such
Notice advise Tenant of the name of an individual ("Landlord's Advisor")
selected by Landlord to act on its behalf for the purposes of this Article 40.
If within twenty (20) days after Tenant's receipt of Landlord's Notice,
Landlord's Advisor and Tenant's Advisor shall mutually agree upon the determina-
tion ("Mutual Determination") of the Fair Market Rent, their determination shall
be final and binding upon the
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parties. If Landlord's Advisor and Tenant's Advisor shall be unable to reach a
Mutual Determination within said twenty (20) day period, both of the advisors
shall jointly select an independent real estate appraiser (the "Appraiser")
whose fee shall be borne equally by Landlord and Tenant. In the event that
Landlord's Advisor and Tenant's Advisor shall be unable to jointly agree on the
designation of the Appraiser within five (5) 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 to designate the Appraiser in
accordance the rules, regulations and/or procedures of the American Arbitration
Association or successor organization then obtaining with respect to real
estate valuation disputes.
40.06 The Appraiser shall proceed to determine the Fair Market Rent in
accordance herewith. The two determinations of the Advisors and the Appraiser
which are closest shall then be averaged and such averaged amount 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
Article 40, including the expenses and fees of any Advisor selected by it in
accordance with the provisions of this Article 40. The Appraiser appointed
pursuant to this Article 40 shall be a real estate appraiser with at least ten
(10) years experience in the leasing of office space in, and valuation, of
properties which are similar in character to the Building, a member of the
American Institute of Appraisers of the National Association Real Estate Boards
or successor organization and a member of the Society of Real Estate Appraiser
or its successor organization. Neither the Appraiser nor the Advisors shall have
the power to add to, modify or change any of the provisions of this Lease.
40.07 If the Fair Market Rent shall be finally determined to be in excess
of five percent (5%) greater than Tenants' Determination, then Tenant, within
ten (10) days after receipt of the final determination may notify Landlord of
its election not to renew the Term, in which event, Tenant shall be deemed not
to have exercised the applicable Renewal Option and this Lease and the Term
shall expire as if such applicable Renewal Option had not been exercised.
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40.08 It is expressly understood that any determination of the Fair Market
Rent pursuant to this Article 40 shall be based upon the criteria stated
herein.
40.09 Anything herein to the contrary notwithstanding, the Fair Market
Rent shall not be less than the Fixed Rent payable immediately prior to the
commencement of the Renewal Term in question.
40.10 After final determination has been made of Fair Market Rent for any
purpose of this Lease, the parties shall execute and deliver to each other an
instrument setting forth the amount thereof and the amount of Fixed Rent
payable as a result of such determination; provided, however, that failure to
execute such supplementary agreement shall not affect the determination of Fixed
Rent.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of
the day and year first above written.
Landlord:
HARTZ-PW LIMITED PARTNERSHIP
By: Hartz Mountain
Industries, Inc.,
general partner
By: /s/ Stephen M. Kelty
--------------------------------
Stephen M. Kelty, Vice President
Tenant:
PAINEWEBBER INCORPORATED
By: /s/ Rodger Parker
--------------------------------------
Rodger Parker, Senior Vice President
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EXHIBIT "A"
Description of the Building
The proposed Operations Center is to be located at the Lincoln Harbor
Project. The 10-11 story, center core building, of approximately 604,528 gross
square feet, will house a retail area, cafeteria, print center, bulk storage and
mail area. The Operations Center is to be connected by a "skywalk" to the
existing Data Processing Center.
A-1
<PAGE> 70
EXHIBIT "B"
Demised Premises
The Demised Premises shall consist of all of that space, including the
"skywalk," excluding retail space and the Common Areas.
B-1
<PAGE> 71
EXHIBIT "C"
Fixed Rent
The Fixed Rent during the Term, subject to adjustment as provided in this
Lease, shall be determined as follows:
(a) Commencing on the Fixed Rent Commencement Date and terminating on the
day prior to the nineteenth (19th) anniversary of the Fixed Rent
Commencement Date, the Fixed Rent shall be equal to the sum of (i) the
Base Amount (as defined below), and (ii) 77.56% of debt service* per
annum (principal and interest) under the Mortgage. The percentage of
debt service for the Mortgage shall be determined by dividing (x)
the Floor Space of the Demised Premises by (y) the floor space upon
which the Mortgage is based (578,028 / 745,926 = .7756). Debt
service shall be determined by using a debt service constant not to
exceed 11.979.
<TABLE>
<CAPTION>
Years Commencing on the
Fixed Rent Commencement Date "Base Amount" per Year
--------------------------- ----------------------
<S> <C>
1 - 4 $ 545,692.00
5 - 9 $ 996,627.00
10 -14 $2,717,511.00
15 -19 $5,012,023.00
</TABLE>
- ----------------
* The stated percentage is predicated upon there being one (1) mortgage
covering both the Ground Lease and the Agreement of Ground Lease, dated of
even date herewith, between Fee Owner, as landlord, and Landlord, as
tenant, for the premises known as the Operations Center and the Data
Processing Center, respectively. In the event that a separate mortgage is
obtained in connection with each such leasehold estate this Exhibit shall
be amended accordingly.
C-1
<PAGE> 72
(b) Notwithstanding the foregoing, in no event shall the Fixed Rent
(inclusive of the "Base Amount") per square foot exceed $11.97 for
years 1-4, $13.47 for years 5-9, $16.47 for years 10-14, or $20.47
for years 15-19.
(c) Commencing on the twentieth anniversary of the Commencement Date and
terminating on the original Expiration Date, the Fixed Rent shall be
an amount equal to the lesser of (x) the Fair Market Rent,
determined in accordance with Article 40 hereof and (y) the product of
the Floor Space and Forty-Two and 45/100 Dollars ($42.45), but in no
event less than the Fixed Rent payable during the twentieth (20th)
year of the Term.
Promptly after the closing of the Mortgage and upon each occasion of
redetermination of Fixed Rent, as provided in this Lease, the parties hereto
shall prepare and execute a revised schedule of such redetermined Fixed Rent.
C-2
<PAGE> 73
EXHIBIT "D"
Floor Space
As to a demised premises, the sum of the floor area stated in square feet
bounded by the exterior faces of the exterior walls, or by the exterior or
common areas face of any wall between the premises and any portion of the common
areas, or by the center line of any wall between the premises and space leased
or available to be leased to another tenant or occupant. Any reference to floor
space of a building shall mean the floor area of all levels or stories of such
building, excluding any roof, except such portion thereof as is permanently
enclosed, and including any interior basement level or mezzanine area not
occupied or used by a tenant on a continuing or repetitive basis, and any
mechanical room, enclosed or interior truck dock, interior common areas, and
areas used by a landlord for storage, for housing meters and/or other equipment
or for other purposes. Any reference to the floor space is intended to refer to
floor space of the entire area in question irrespective of the person(s) who may
be the owner(s) of all or any part thereof.
The anticipated Floor Space of the Demised Premises is estimated to be
578,028.
D-1
<PAGE> 74
EXHIBIT "E"
Land
(including skywalk easement)
BLOCK 34C LOT 4.03
TOWNSHIP OF WEEHAWKEN
HUDSON COUNTY, NEW JERSEY
Commencing at a point in the easterly line of Park Avenue, said point being
N 21 degrees-21'-30" E, 1129.16 feet along the same from its intersection with
the northerly line of 15th Street, all as shown on a map entitled "Subdivision
of Properties of Hartz Mountain Industries, Inc.," and prepared by Azzolina &
Feury Engineering Company, dated February 27, 1986, revised to March 19, 1986,
and running; thence,
A) N 21 degrees-21'-30" E, 86.70 feet along said property line to a point
on curve; thence,
B) Northeasterly, along the property line on a curve to the left having a
radius of 1093.01 and a radial bearing of N 14 degrees-11'-23" W
through a central angle of 25 degrees-01'-56" for an arc distance of
477.53 feet; thence,
C) Along said property line, N 38 degrees-30'-00" E, 550.05 feet; thence,
D) Departing from said property line, S 50 degrees-33'-12" E, 86.23 feet
to the point of beginning; thence,
1) N 38 degrees-52'-10" E, 383.37 feet to a point of curvature;
thence,
2) Northeasterly, on a curve to the right having a radius of 40 feet
through a central angle of 90 degrees-00'-00" for an arc distance
of 62.83 feet; thence,
3) S 51 degrees-07'-50" E, 156.00 feet; thence,
4) S 38 degrees-52'-10" W, 286.00 feet; thence,
E-1
<PAGE> 75
5) Along the outer face of the wall of Tower 1, S 51 degrees-07'-50"
E, 392.18 feet; thence,
6) S 38 degrees-52'-10" W, 132.37 feet to a point of curvature;
thence,
7) Southwesterly, on a curve to the right having a radius of 40 feet
through a central angle of 90 degrees-00'-00" for an arc distance
of 62.83 feet; thence,
8) N 51 degrees-07'-50" W, 513.18 feet to a point of curvature;
thence
9) Northwesterly, on a curve to the right having a radius of 35 feet
through a central angle of 90 degrees-00'-00" for an arc distance
of 54.98 feet to the point or place of beginning.
Containing 156,420 square feet (3.59 acres).
and
The easement created pursuant to the Reciprocal Easement and
Maintenance Agreement, dated of even date herewith, among Hartz, Landlord and
Landlord for the "skywalk."
E-2
<PAGE> 76
[SURVEY OF SUBDIVISION OF LINCOLN HARBOR]
E-3
<PAGE> 77
EXHIBIT "F"
Landlord's Work
F-1
<PAGE> 78
[PAINEWEBBER LETTERHEAD]
March 4, 1986
Stephen M. Kelty, Vice President
Hartz Mountain Industries
400 Plaza Drive
Secaucas, NJ
RE: PaineWebber, Inc.
Dear Steve:
I have reviewed the two feasibility studies and have found the following changes
required to be made:
Data Center
We have added two pages (6A and 6B) plus section 12 which is a summary of
budgetary costs of PaineWebber data center.
Operations Building
We have added the summary of budgetary costs of PaineWebber operations center
(page 30).
If you have any questions, please call at (212) 437-3532.
Sincerely
/s/ Rodger G. Parker/at
Rodger G. Parker
Senior Vice President
at
Attachments
<PAGE> 79
Exhibit "F"
HARTZ MOUNTAIN INDUSTRIES, INC.
LINCOLN HARBOR FEASIBILITY STUDY
OPERATIONS BUILDING
<PAGE> 80
PROJECT DESCRIPTION
The proposed Paine Webber Operations Building is to be located at Lincoln
Harbor, Weehawken, New Jersey. The 10-11 story, center core building, of
approximately 550,000 gross square feet, will have a population of 3300 and will
house a cafeteria, print center, bulk storage and mail area. The Operations
Center is to be connected by above ground bridge, to the existing Seatrain
Building.
In addition to the requirements described herein, the construction of the
building and all related facilities shall be in conformance with the most recent
editions of all applicable codes, standards, specifications and regulations.
- 1 -
<PAGE> 81
SITE DEVELOPMENT
A. Site Preparation: Sufficient fill will be brought into the site so that all
occupied first floor elevation will be at +11.0 feet. This is above the 100 year
flood level.
1. All utilities, which will be underground, will be brought to the
building site.
2. All major supporting roads on the site will be constructed to insure
adequate access and traffic circulation, to include a bridge over railroad
right of way.
B. Building Foundations: Foundation will be supported by end bearing piles which
will be driven to bedrock. Piles will be concrete filled, steel casing, rated at
100 tons. Concrete pile caps will complete the foundation.
C. Parking: Grade and structured parking will be provided for a total of 1,000
cars. About 350 parking spaces will be provided in a structure on the south side
of the existing office building (data center).
1. Elevated covered walkway will be provided to connect this structure to
both office buildings. The remaining 650 spaces will be provided in a
parking structure to the immediate west of the new office building, part of
which will be above the print plant/mail room.
2. Structure will be designed and constructed so as to have normal drainage
and waterproofing expected of a structural roof.
D. Landscaping: The area to the east of the new office building will be
developed into a large plaza leading to Harbor Boulevard.
1. All areas around both buildings will be heavily landscaped.
- 2 -
<PAGE> 82
STRUCTURAL
A. Structural System Description: The primary structural system for the building
shall be a structural steel frame. All steel members shall be standard rolled
sections.
The typical floor and roof slab consist of composite metal decking and
concrete reinforced with welded wire fabric. The floor framing shall be sized to
act compositely with the metal deck slab. Floor framing shall be evaluated by
deflection and vibration control criteria in addition to strength. Floor framing
shear connections shall be sized for a minimum of 125% of the maximum uniform
load capacity of the composite member.
The minimum structural bay size shall be 30 ft. by 30 ft. Steel columns
shall transmit the gravity loads. A positive means of resisting laterals loads
shall be provided. The structure shall be spray-fireproofed to the applicable
ratings required by code.
B. Structural Loadings:
1. Live Loads
Typical Floor 100 psf
Roof per Code (incl.
(boca snow drift)
Print Center 200 psf minimum
(subject to verification
of equipment)
Live Load reduction per code on floor girders,
columns and foundations only.
2. Lateral Loads
Structural Steel per Code
Cladding plus/minus 30 psf minimum
C. Structural Materials:
1. Structural Steel A-36 or A-527, gr. 50
2. Concrete fc = 4000 psi min.
- 3 -
<PAGE> 83
EXTERIOR ENCLOSURE
A. Vertical Walls Above Grade: Wall system shall be based upon two distinct
lines of defense against water and air infiltration.
1. Wall system shall resist positive and negative loads of 35 psf.
2. Glazing System: Facade glass to be insulating type with CBA
certification. All glass thickness and heat treatment to sustain wind loads
and to resist temperature stress breakage. Limit breakage to 8 lites per
1,000. Fixed aluminum frames with continuous PVC thermal break with either
hard coat anodized finish or resinous ("Kynar") coated of selected color.
Provide a glazing system utilizing neoprene gaskets and a pressure plate
system designed using the pressure equalized rain screen principle.
3. Insulation: Rigid insulation with vapor barrier which will achieve a
total wall "R" value of 12.5 minimum installed.
4. Water Control: Continuous at line coincident with head of windows at
each level to anticipate water infiltration potential at sealant joints.
Weep system incorporated at glazing enframement. There will be a continuous
vapor barrier between interior and exterior spaces.
5. Mock-up and Testing: Cladding material, anchorage, glazing
enframement, glass, sealant and flashing systems will be tested for air
infiltration, water penetration, and structural performance. Extent of
mock-ups will be shown on drawing.
The entire exterior wall system is estimated to be 140,000 square feet and is
budgeted to cost no more than $22.00 per square foot or $3,080,000 complete,
including mock-up test estimated at $100,000.
B. Roofing: The roofing is to be designed for controlled flow drainage. Provide
a complete insulated membrane (IRMA) roofing system; consisting of steel framing
with metal decking, covered with 5/8" type X gypsum board. A three ply build up
roof consisting of fiberglass felts to be applied over gypsum board covered by
styrofoam R M brand insulation with a "U" value of 0.08 BTU/sq./ft. Deg F. and
stone ballast.
- 4 -
<PAGE> 84
C. Parking Structure: Requirements to be determined.
D. Moisture Protection: Provide the following systems as required in
conjunction with other assemblies as follows:
1. Waterproofing: Provide fluid applied two-part orethane rubber
waterproofing (Gates) with protection board as specified by the
manufacturer.
2. Damproofing: Provide a cold applied asphalt based damproofing to all
exterior foundations not requiring waterproofing. Provide asphaltic
protection board.
3. Elevator Pit Waterproofing: Capillary waterproofing (Vandex).
4. Sealants: Provide two component urethane sealant (Tramco/Dymeric) for
all building seals other than structural glazing.
5. Flashing: ASTM A167, Tpe 304, deal soft fully annealed, 0.015 in.
unless greater thickness required.
6. Roof Accessories: Premanufactured products best suited for intended
use. Provide stainless steel fabrications.
7. Insulation:
a. Fire Safing: Thermafiber Safing (US Gypsum).
b. Insulation: Rigid fiberglass board insulation with reinforced
foil vapor barrier facing on each side. Thickness as required for "U"
value required.
E. Roll-Up Doors: Electrically operated automatic roll-up doors (Cornell Iron
Works)
F. Loading Dock Equipment: Provide manual dock levelers, dock bumpers and
other accessories (Kelly Dock Levelers).
G. Ornamental Metals: ASTM A167, Tpe 302 or 304 stainless steel, No. 8 mirror
finish. Thicknesses as required to provide flat surfaces free from distortion.
- 5 -
<PAGE> 85
INTERIOR - BASE BUILDING:
A. Entrance Lobby:
1. Floors: Granite. (costing no more than $15.00 per sq. ft.) 3 cm. min.
set in a full mortar bed (see sample)
2. Walls: Granite adhesive applied (see sample)
3. Ceilings: Portland cement plaster on suspended metal lath.
4. Lighting: Recessed incandescent.
B. Typical Floor Elevator Lobbies:
1. Floors: Carpet (allowance $2.00 per sq. ft.)
2. Walls: Vinyl (allowance $1.50 per sq. ft.)
3. Ceilings: Gypsum wallboard.
4. Lighting: Recessed incandescent.
C. General Office Area:
1. Floors: Steel troweled concrete, sealed for dustproofing.
D. Toilets and Vestibules:
1. Floors: 1" x 1" ceramic mosaic tile with sanitary cove base, of color to
be selected, set onto waterproof membrane.
- 6 -
<PAGE> 86
2. Walls: All walls with 2" x 2" ceramic tile, of color to be selected, set
on moisture resistant gypsum wallboard with organic adhesive, extending to
ceiling.
a. Shaft walls: Cavity walls with 2 hr. fire-rating, minimum STC of 47
db., consisting of 1" shaft wall liner panel, C-H studs 24" o.c., and
two layers 1/2" gypsum wallboard.
b. Fire-rates Walls: 2 hr. fire-rating and minimum STC of 48 db.,
consisting of two layers 5/8" gypsum wallboard on each side of metal
studs spaced 24" o.c., painted.
c. Non-Fire-rated Walls: One layer 5/8" gypsum wallboard on each side
of metal studs (with insulation to underside of construction, STC 45
db.)
3. Ceilings: Suspended 5/8" thick gypsum wallboard with required metal
access panels, painted with enamel.
4. Lighting: Recessed parabolic fluorescent fixtures.
5. Doors, Frames, Hardware:
a. Doors: Flush seamless hollow metal 1-3/4" thick, 16 ga., full
height, width as required, factory primed, field painted, and labeled
at fire-rated walls and partitions.
b. Frames: Welded hollow metal, 16 ga., size as required, factory
primed, field painted, and labeled at fire-rated walls and partitions.
c. Hardware: Mortise locksets with lever handles, ball bearing hinges
and parallel arm closers; polished stainless steel finish.
6. Toilet Partitions: Ceiling hung flush metal type with baked enamel
finish and vandalproof hardware.
7. Toilet Accessories: Stainless steel units with No. 4 satin finish,
including combination towel dispenser and disposal, napkin dispenser and
disposal, tissue dispenser, soap dispenser, grab bars, mirrors and shelves.
Provide 1/4" thick mirrors complying with FS DD-G-451 type 1 class 1
quality 9.
8. Lavatory Countertops: "Corian" on marine grade plywood with back and
side splashes with miscellaneous metal framing.
- 7 -
<PAGE> 87
E. Stairs:
1. Stairs and Landings: Cement filled steel pan, surfaces hardened and
sealed. Underside and other exposed metal surfaces finish painted.
2. Railings, Guards: 1-1/2" diameter steel tube, finish painted.
3. Walls: Continuous metal stud and gypsum board partitions for full height
of stair enclosure. Painted finish.
4. Ceilings: Exposed construction, painted.
5. Lighting: Strip fluorescent fixtures, surface mounted.
F. Doors and Frames, Hardware:
1. Doors: Flush, hollow metal, 1-3/4" thick, 18-gauge at interior, 16-gauge
galvanized at exterior, ceiling high, width as required, factory prime,
field painted, labeled at rated walls and partitions. Provide vision panel
in all service vestibule doors.
2. Frames: Welded hollow metal, 16-gauge at interior, 14-gauge galvanized
at exterior, size as required, factory prime, field painted, labeled at
rated walls and partitions.
3. Hardware: Same as D5c.
G. Electrical and Telephone Closers:
1. Floors: Steel troweled concrete, sealed for dustproofing. Alternate: 8"
raised floor consisting of 2' x 2' steel panel with high pressure plastic
laminate finish.
Alternate: Add raised flooring in electrical and telephone closets. Based
on 1,900 square feet total areas and sevein model 50 by Donn Corporation
1,900 sq. ft. @ $7.11 per sq. ft. $14,650
2. Shaft Walls: Cavity walls with 2 hr. fire-rating and minimum STC of
47db. consisting of 1" shaft wall liner panel, C-H studs at 24" o.c. and
two layers 1/2" gypsum wallboard on room side, painted. Spacing of studs to
be doubled at blind shaft conditions.
- 8 -
<PAGE> 88
H. Parking Area:
1. Floor: All floors above occupied areas to be waterproofed.
I. Interior Masonry Walls: Concrete masonry units complying with ASTM C90, Grade
N-1 and ASTM C145, Grade N-1, maximum density of 95 lbs. Provide
portland-cement-lime mortar complying with ASTM C270, Type N.
J. Miscellaneous Metals: Shop primed, A36 steel, rolled sections. Sizes and
shapes best suited for intended use and capable of sustained imposed loads.
K. Rough Carpentry: Provide rough carpentry as required for use with other work.
Provide fire-resistance treated wood for all interior locations.
L. Ornamental Metals: ASM A167, Type 302 and 304 stainless steel, No. 8 mirror
finish. Thickness is required to provide flat surfaces free from distortion.
M. Paint: First line quality, alkyd enamel of PPG, Glidden or Benjamin Moore.
Provide eggshell finish.
- 9 -
<PAGE> 89
VERTICAL TRANSPORTATION:
A. Materials and Equipment:
1. Elevators required to serve a building population of approximately 3300
people on Floors 2 - 11 will consist of two (2) groups of six (6) elevators
each at approximately 1/3 points of the long dimension of the building.
Each group will be six (6) 4000 pound elevators operating at 350 fpm, with
48 inch wide center-opening doors.
2. The elevators are designed to provide a five minute handling capacity of
14.1% of the population at an interval of 27.1 seconds.
3. Passenger elevators shall be based on Westinghouse Epoch supervisory
control system, center opening doors and traffic sentinel door controls (or
equal).
4. Two (2) service elevators are required. Each will have a capacity of
6000 pounds and be designed to handle 10 foot sections of drywall.
B. Materials Handling: A materials handling system is recommended to provide
both vertical and horizonal delivery of documents from central mail, file,
supply and reproduction center. Such system will consist of self-propelled
automatic "tote" boxes on a dedicated track system operating in vertical
shaftways and ceiling space. Multiple entry and re-entry stations are envisioned
on each floor.
This item description is too vague and has not been priced and it is not the
obligation of Hartz.
- 10 -
<PAGE> 90
Plumbing:
A. Sanitary System: Provide a complete system of sanitary services, including
toilet facilities, fixtures, drains, veins, water, etc., including all
connections to site work services.
1. Provide a complete plumbing system with mens and ladies facilities on
each floor to handle the total population of the Tenant. A minimum of 12
flush valve fixtures and 8 lavatories shall be provided on each floor for
each sex. Toilet facilities shall be so located that no paint on the floor
is more than 200 feet from a Toilet room. Provisions shall be made in each
toilet for the physically handicapped. Four drinking fountains shall be
provided per floor.
2. Provide 8 wet stacks consisting of soil vent, cold water and hot water
to facilitate future Tenant installations.
3. All branch water connections shall include a stop valve for maintenance
purposes.
B. Hot and Cold Water Piping System:
1. Provide a system of hot and cold water piping, as required, for plumbing
fixtures, interior and exterior hose bibbs, water coolers, etc. The hot
water system shall include a central heating plant utilizing the most
efficient energy source available. Submit for Paine Webber approval an
economic analysis for the various fuel sources considered. Provide
circulation pumps and piping to assure prompt availability of water at a
minimum of 110 degrees F. The cold water system shall include pumps,
tanks and valves as required to supply water to fixtures at a minimum of
25 psig and a maximum of 85 psig.
- 11 -
<PAGE> 91
2. Provide for flushing and sterilization as required by code of all
domestic water piping.
C. Sanitary Drains and Vents: Provide a system of drains and vents to convey
sanitary wastes from the building to the sewer system.
D. Storm Drainage: Provide a system of drains and piping to convey the storm
water from the building to a point of disposal on the site.
- 12 -
<PAGE> 92
E. Plumbing Fixtures:
1. Plumbing fixtures specified are as manufactured by Kohler or American
Standard, or the equal may be furnished at Paine Webber's option.
2. Flush valves specified are as manufactured by Sloan. The same type
flush valves as manufactured by Delaney may be furnished at the
Contractor's option.
3. Carriers as manufactured by Zurn, J.R. Smith or Wade shall be
furnished.
4. All exposed metal parts and fittings on plumbing fixtures shall be
chrome plated unless otherwise called for.
5. Provide stop valves on hot and cold water lines for all plumbing
fixtures.
F. Water Closets:
1. Vitreous china, wall hung, siphon jet action, elongate bowl, 1-1/2
inch top spud for chrome plated exposed flush valve with metal
oscillating handle 1 inch screwdriver angle stop vacuum breaker, flush
connection, coupling for 1-1/2 inch top spud, wall and spud flanges.
White seat, with extended back for elongated bowl, open front, no
cover, stainless steel check hinge.
2. Horizontal or vertical carrier with short foot. Use neoprene gaskets
and bolt carrier to floor. Mount closet with rim 15 inches above
floor.
3. Equipment manufacturers and model numbers are as follows:
Bowl Afwall
Flush Valve 110
Seat Church 5320.114, white
G. Lavatories: Vitreous china, front overflow, antisplash rim, cast-in soap
dish American Standard "Roxalyn" pattern in 20 inch size. Fittings to be
American Standard "Heritage" N2131 combination supply and drain fitting
with aerator spout. Drain plug with integral perforated grid and 1-1/2 inch
tailpiece. Provide 3/8 inch chrome plated supply stop valves R-2604-1 with
screwdriver stop and escutcheons.
H. Drinking Fountains: Remote, wall recessed cooler, completely automatic with
precooler, tank, cooling coil, hermetic condensing unit, insulated cooling
system, serving stainless steel wall mounted fountains. A minimum of one
dual level fountain for handicapped shall be provided per floor.
- 13 -
<PAGE> 93
I. Materials:
Service Materials
Underground water and site Cement lined ductile iron
fire protection
Underground gas and air Welded wrapped black steel
Site storm drainage 12 inches and below - PVC or
concrete pipe
14 inches and above - reinforce
concrete
Site sanitary Cast iron or PVC
Underslab sanitary Cast iron or PVC
Above slab sanitary Cast iron
Plumbing vents Cast iron
J. Insulation: Insulate pipes and other surfaces inside the building as
follows:
1. Hot water pipes.
2. Cold water pipes.
3. Horizontal storm pipes over tenanted areas including leader to roof
drain.
- 14 -
<PAGE> 94
Fire Protection:
A. Provide a full standpipe and sprinkler system in accordance with applicable
NFPA Standards. Sprinkler system shall be hydraulically designed to deliver .1
gpm/sq. ft. in office areas and appropriate densities in ordinary hazard areas.
Sufficient heads shall be allowed for partitioning. Standpipe system shall
include pumps and valves as required, but hose may be eliminated if permitted by
the authorities.
Hartz will, as part of its "base building" provide the system in the core
of the building. Distribution into floors will be part of tenant allowance at an
estimated cost of $320,000. This price is based on chrome pendant heads.
- 15 -
<PAGE> 95
ELECTRICAL (Core Work)
A. Electric Service:
1. Electric service to be capable of supporting the demand load on a first
contingency basis for service feeders and transformers.
2. If unit substations are employed, they shall be primary selective
double-ended with secondary tie. Each transformer shall be sized to
accommodate the total demand load based on an overload rating with forced
air cooling.
3. Two levels of ground fault protection shall be provided at 460 volt.
4. Provide (2) 4160 volt emergency feeder from generator distribution
switchgear located in Data Center Building sized to support, in addition to
code required systems, a unit demand load density of 7.2 watts per sq. ft.
of gross area distributed as detailed in Paragraph B below.
B. Normal/Emergency Lighting and Utility Distribution: Interior distribution for
lighting and utility shall all be on emergency service, and be sized at 8.5
watts per sq. ft. demand at 265/460 volts, 3 phase 4 wire through two (2)
vertical risers of plug-in bus ducts. Local dry type transformers shall be
provided for 5 watts per sq. ft. at 120/208 volts, 3 phase 4 wire with the
number of branch circuits based on a per circuit loading of 1200 watts, equally
distributed on the floor at four (4) closet locations.
The number of branch circuits for lighting panels shall be based on a per
circuit loading of 3600 watts equally distributed on the floor at two (2) closet
locations.
H. Life Safety System: Shall be in accordance with governing high rise Code
requirements.
- 16 -
<PAGE> 96
HEATING, VENTILATING AND AIR CONDITIONING:
A. Temperature and Humidity Design Conditions:
Summer: Outside Air: Dry bulb: 91 degrees F.
Wet bulb: 76 degrees F.
Inside Air: Dry bulb: 75 degrees F.
Wet bulb: 63 degrees F.
Winter: Outside Air: Dry bulb: 0 degrees F.
Inside Air: Dry bulb: 70 degrees F.
Cooling Tower
Summer Design: Wet bulb: 78 degrees F.
Return Water
Temperature: 95 degrees F.
Supply Water
Temperature: 85 degrees F.
B. Load Conditions: In addition to the solar and transmission loads, the
supply air quantities and refrigeration tonnage shall be designed for the
following unit load densities:
Lighting: 2.0 watts/sq.ft. useable
Power: 3.0 watts/sq.ft. useable
C. Air Conditioning Systems:
1. The air conditioning system shall be an all air-variable air volume
system. Supply air shall originate at a central Fan Room consisting of
multiple supply air and return air systems. The supply air systems
shall be built-up type arranged in a blow-through configuration,
utilizing vane-axial fans with variable speed motors. The return air
fans shall also be vane-axial type with variable speed motors. The
supply fans shall be headered together for operating flexibility and
reliability.
2. Supply air to and return air from each floor shall be distributed to
the various floors by means of four (4) riser shafts with a supply air
takeoff on each floor off of each riser. A pneumatically operated
two-position automatic damper shall be provided in each supply air and
return air duct tap on each floor. Supply duct construction from
fan discharge to capped outlets on each floor shall be of medium
pressure construction with all seams and joints sealed and completely
insulated.
- 17 -
<PAGE> 97
3. The air quantities shall be based on a room temperature minus entering
room supply air temperature differential of 18 degrees F.
D. Heating Systems:
1. The building will be heated by forced hot water convectors located at
the perimeter of the building below the sill of the window. The system
will be fed by a pair of supply and return risers located every 60
feet at the perimeter columns and piped in a reverse return
arrangement. An automatic control valve shall be provided for every 30
lineal feet of exterior wall. Convector lengths and locations shall be
arranged such that each curtain wall module is covered by a heating
element.
2. Operating supply water temperature shall be 180 degrees F. with a 20
degrees F. or 30 degrees F. temperature differential. An alternate
price shall be provided for a system utilizing heat pump water at a
supply temperature of 105 degrees F. and a 10 degrees F. temperature
differential.
3. The boiler plant shall consist of three packaged hot water fire tube
boilers with dual fuel burners (natural gas and No. 2 fuel oil). NOTE:
The primary fuel should be natural gas with fuel oil as a backup. Two
boilers shall be each sized at 67% of total load. The third boiler
shall be sized for summertime domestic hot water load requirements.
E. Refrigeration Plant: Shall consist of three machines, one sized at 20% of
the total load and the other two each sized at 40% of load. Machines shall be
hermetic electric motor driven type. Space shall be provided for a redundant or
standby machine of each size. A chilled water and condenser water pump shall be
provided for each machine plus a standby pump for each service and size.
Machines shall be piped in a parallel flow arrangement. Refrigeration machines
shall produce 44 degrees F. supply water with a 56 degrees F. return water
temperature with condenser water at 85 degrees F. supply and 95 degrees F.
return.
F. Cooling Tower:
1. Cooling tower shall consist of multiple cells sized for tonnage
required plus an allowance of 400 tons of additional capacity for
future needs. A spare cooling tower cell shall be provided.
2. Cooling tower cells shall be of the packaged cross-flow type with
two-speed reversing motors. Towers shall have stainless steel basins
and sumps with hot dipped galvanized frames and noncombustible fill.
- 18 -
<PAGE> 98
3. Each cooling tower cell shall be winterized. 400 ton space capacity is
to be distributed by means of a separate pair of risers sized for the
full capacity from top to bottom of the building. A separate set of
circulating pumps shall be provided (three pumps each sized at 50% of
1200 qpm). Valved outlets shall be provided at floor (sized at 4
inches).
G. Automatic Controls and Building Automation System:
1. The building control system shall be, in general, a pneumatic system.
Building automation system shall be an electronic microprocessor based
system employing direct digital control technology. Each main air
handling system and each water system shall be provided with a
separate DDC cabinet.
2. System shall be able to start and stop all equipment remotely and
monitor and reset from a remote location air system supply air
temperatures, outside air temperatures, fan discharge temperatures,
return air temperatures, supply and return temperatures of all water
systems with reset of supply water temperatures. In addition to points
required for the operations building allow five hundred (500) points
for data center.
3. System shall provide alarms for all off-normal conditions and status
of remotely controlled motors by either pressure or floor switches.
4. System graphics shall be provided for each system.
5. System shall remotely control each supply air and each return air
automatic damper in the duct tape at each floor from a central
location both for part load operation and smoke control.
6. Provide a duplicate operators console (color CRT, alarm printer,
logging printer, etc.) at data center in addition to that required at
operations center.
H. Boiler Plant Fuel Oil System: Provide a fuel oil system for the boiler
plant.
Provide a 15,000 gallon fuel oil tank (No. 2 fuel oil) for main storage
with fuel oil transfer pumps and day tank at the boiler room.
I. Life Safety System and Smoke Control System: In general, the normal
building air conditioning supply and return fans shall be utilized for
smoke control by means of pressurization and exhaust.
J. Elevator Machine Rooms: Elevator Machine Rooms shall be air conditioned
utilizing packaged DX condenser water cooled units.
- 19 -
<PAGE> 99
The HVAC system as specified will result in an additional cost to Paine
Webber of $716,500 which is above the Hartz $1,700,000 cost for the base system
in the core. The additional items of cost are broken down as follows:
Increased prices / JB - B outline specifications over Hartz standard.
<TABLE>
<S> <C> <C>
1. Refrigeration Plant
JB-B 3 chillers
Hartz design 2 dual chillers
increase chiller cost plus
piping and rigging 22,000
2. Increase air system
JB-B 18 degrees D T
Hartz design 20 degrees D T
V A V system increase 40,000
cfm @ $3.50 140,000
@ $3.50
3. Spare 400 tons capacity in cooling
tower with 3 pumps @ 600 gpn and 8" pipe
with capped valves 37,500
4. Spare cell with cooling tower 600
T.R. 30,000
5. Stainless Steel Basin and Sump in
lieu of standard 20,000
6. Condenser water and chilled water
pumping system
JB-B 5 pumps ea system
Hartz design 4 pumps ea system 8,500
7. Back-up fuel oil system 18,000
</TABLE>
- 20 -
<PAGE> 100
<TABLE>
<S> <C> <C>
8. V A V Fan system control
JB-B variable speed,
motor drive
Hartz Design vortex inlet dampers 88,500
9. Control system
JB-B pneumatic control
Hartz Design electric controls 98,000
10. Baseboard Radiation 7200 lf
JB-B Architectural covers 254,000
w/Z tier 105 degrees
radiation
total increase in
base design cost $716,000
</TABLE>
NOTE: No cost has been developed for heat recovery piping system between
buildings.
- 21 -
<PAGE> 101
INTERIOR - TENANT WORK:
<TABLE>
<CAPTION>
* A. General Office Area: Usable Sq. Ft.
------------------- --------------
<S> <C> <C> <C>
1. Space Allocation:
*SEE NEXT PAGE
FOR a. Enclosed Offices 10'-0"X15'-0" 100,000 sq.ft.
VERIFICATION
b. Low Wall Partition Cubicles 10'-0"X10'-0" 50,000 sq.ft.
c. Open Office Area 240,000 sq.ft.
d. Vault 5,000 sq.ft.
e. Print Shop/Mail Room 40,000 sq.ft.
f. Bulk Storage Room 20'-0"Xceiling 10,000 sq.ft.
-------
445,000 sq.ft.
2. Finishes
a. Floors: High quality modular carpet tile of
anti-static synthetic fiber, PLUS Roberson Walker
Duct.
* Alternate: Accessible floor consisting of 2' x 2'
*SEE NEXT PAGE cement filled steel panel, 8' high, pedestals
FOR ALTERNATE interconnected with stringers. Provide high quality
modular carpet tile of anti-static synthetic fiber.
Vinyl composition tile to be used in utility areas
such as print shop, storage room, mail room etc.
b. Column Enclosures: 5/8" gypsum wallboard attached to
metal furring secured to the underside of construction
above, painted as required. Fire rated as required.
c. Walls: Metal stud and gypsum wallboard partitions to
underside of construction above. Painted finish with
resilient wall base. Aluminum framed glass partition
system with baked on paint finish with flush wood
doors maximum 9'-0" high, for perimeter office walls
parallel to the exterior wall.
d. Ceiling: Fully accessible, 2' X 2' acoustical tile.
e. Lighting: Recessed parabolic fluorescent fixtures -
size to be determined.
f. Window Treatment: Perimeter windows with 1" slat
venetian blinds.
</TABLE>
- 22 -
<PAGE> 102
General Office Areas:
<TABLE>
<S> <C>
Floors (carpet tiles) 445,000 sq. ft. $ 925,600
@ $2.08/PSF
Floors (Roberson Walker Duct) 445,000 sq. ft.
@ $2.50/PSF (see item 9 of qualification) 1,112,500
ALTERNATE BID:
A D D RAISED FLOORS
395,000 sq. ft. @ $8.95/PSF 3,535,250
(including electrical grounding)
V A T 50,000 sq. ft. @ $9.80/PSF 40,000
DEDUCT BASE BID
CARPET TILES & ROBERSON WALKER DUCT (2,038,100)
-----------
TOTAL ALTERNATIVE Add 1,537,150
-----------
Walls (allowance) 863,840
Ceilings 445,000 sq.ft. @ $.90/PSF 400,000
Window Treatment 1,800 blinds @ $75 ea 135,000
Doors/H.M.D./Frames 90 @ $550 ea 49,500
Glass Partition 6,600 lin.ft.
@ $106 l.f. (incl. 660 doors) 699,600
</TABLE>
Qualifications:
1. Partition Walls ARE NOT INCLUDED IN OPEN OFFICE AREA
2. Lin. footage of partitions for vault, print/mail room and bulk storage is
determined by 1 LF partition (to 9" A.F.F.) per 20 sq.ft. of area.
3. Door quantity is determined by 1 door per office at enclosed offices; no door
at low wall partition cubicles and 1 door per 50 LF of partition at vault,
print/mail room and bulk storage.
4. Window treatment - 1: slat Riviera aluminum venetian blinds 5' x 5' each.
(see sample)
5. Carpet tiles are based on 18" x 18" tile glued direct, 22 oz. Olefin
antistatic under 1KV, 10 G.A. level loop.
6. Ceiling tile is based on 2' x 2' x 5/8" square edge fissure lay-in system
standard grid. ARMSTRONG MINABOARD #756 or APPROVED EQUAL. (see sample)
- 23 -
<PAGE> 103
7. Aluminum framed glass partitions system is based on H.L. Bryun Series #200
with birch stain grade doors, locksets with layer handles ballbearing hinges,
polished stainless steel finish. (see sample)
8. Raised floor based on Donn-Severn model 54. 1000 lb. concentrated load. (see
sample)
9. a. Electrified deck based on Robertson Q Floor/Taproute system. Wiring unit
costs are called out in electrical section.
b. Provide a horizontal distribution system for power, telephone and data
on each floor with interface to respective closets at each floor. System
shall be a three cell electrified deck with three compartment trench header
system or accessible raised floor. Cellular deck sections shall utilize a
cell section providing a minimum cross-sectional area of 15 square inches
each for telephone and data with electrified sections on a maximum of 5
foot centers. Trench header capacity shall be based on a minimum allowance
of one square inch total per 100 square feet net useable area for both data
and telephone.
Alternate: In lieu of electrified cellular floor provide grounding for 25%
of accessible floor pedestals furnished by others and described in INTERIOR
TENANT WORK item A.2.a.
c. Any additional cost for spray fireproofing if necessary for Robertson
electrified deck system will be at tenants expense.
- 24 -
<PAGE> 104
* B. Cafeteria:
1. Space Allocation USABLE SQ. FT.
a. Kitchen Area 10,000 sq. ft.
b. Dining Area 10,000 sq. ft.
------
20,000 sq. ft.
*SEE NEXT PAGE
FOR VERIFICATION
2. Finishes
a. Floors: Carpet tile.
b. Kitchen Floor: Quarry tile, non-slip.
c. Walls: Gypsum wallboard, with ceramic in kitchen.
d. Ceiling: Mineral fiber, acoustical tile. Perforated
metal tile in kitchen.
e. Lighting: same as A.2.a.
* C. Print Center:
1. Space Allocation USABLE SQ. FT.
a. Print Center 25,000 sq. ft.
2. Finishes
a. Floors: Accessible floor consisting of 2' x 2' steel
panels 24" h. with high pressure laminate finish,
pedestals interconnected with stringers, grounded.
b. Column Enclosures: Same as A.2.b.
c. Walls: Gypsum wallboard partitions to underside of
construction above. Painted finish, resilient wall base.
Sound attenuation blankets as required. Support
partitions for equipment provided as required,
structural metal studs and gypsum wallboard.
d. Ceilings: Same as A.2.d.
e. Lighting: Same as A.2.e.
D. Security:
1. Security provisions including, but not limited to
electronic hardware connected to life safety system and/or
building security such as contact switches, electric
lock, electric strike release, electric hold-open devices,
cameras, card readers and intercoms connected to security
station; location to be determined.
THIS ITEM IS VAGUE AND HAS NOT BEEN PRICED AND IS NOT THE
OBLIGATION OF HARTZ.
- 25 -
<PAGE> 105
Cafeteria Kitchen Area:
Floors (Quarry Tile) - 10,000 sq.ft. @ $8.45 sq.ft. = $84,500
Walls 3,600 sq.ft. @ $7.55 sq.ft. = 27,180
Ceilings 10,000 sq.ft. @ $2.75 sq.ft. = 27,500
Qualifications:
1. Quarry tile floor is based on 6"x6"x1/2" by American Oleson, mud set,
Standard Colors. (See sample)
2. Ceramic tile walls is based on 4 1/2" X 4 1/2" Standard Colors. 400
lin. ft. @ 9' A.F.F. (See sample)
3. Ceiling is based on 2' x 4' x 5/8" conwed suspended unperforated metal
tile. (See sample)
Cafeteria Dining Area:
Floors - (Carpet Tiles) 10,000 sq.ft. @ $2.08 sq.ft. = $20,800
Walls 3,600 sq.ft. @ $2.54 sq.ft. = 9,144
Ceilings 10,000 sq.ft. @ $ .90 sq.ft. = 9,000
Qualifications:
1. Carpet tiles are the same as general office area.
2. Wall is based on 400 lin. ft. at 9' A.F.F., no wall finishes indicated
except vinyl base.
Print Center:
Floors 25,000 sq. ft. @ $7.39 sq. ft. = $184,750
Walls 1,250 lin. ft. @ $38.70 l.f. = 48,375
Ceilings 25,000 sq.ft. @ $0.90 sq. ft. = 22,500
Qualifications:
1. Access flooring is based on Severn Model 50 by Donn Corporation (See
sample)
2. Ceiling tile is 2'x2'x5/8" square edge fissure lay-in system Standard
grid. (See sample)
ARMSTRONG MINABOARD #756 OR APPROVED EQUAL.
- 26 -
<PAGE> 106
TENANT FINISHING FOR HVAC SYSTEM
H V A C Tenant work will consist of all work throughout the occupied space
starting from the main shaft. The work will consist of all medium pressure duct
work, variable air volume terminal units, low pressure air distribution duct
work with 2' x 2' ceiling diffusers, automatic temperature control, start up
check, test and balance.
$1,569,130
- 27 -
<PAGE> 107
ELECTRICAL (Tenant Work)
<TABLE>
<S> <C>
1. 2 x 4 Parabolic light fixtures with
(4) 40W cool white bulbs included. Branch
wiring to C.B. panel board 1,072,500
Allow one switch per 8 fixtures (812) 44,660
2. Telecommunications Provisions: Two main and
one satellite closets shall be provided for
vertical and horizontal telecommunication
services. Three inch conduit ties shall be
provided on each floor between the two main
riser closets and each of two satellite
closets. Six 4 inch riser sleeves shall be
provided between floors in each main closet. 45,748
3. Data Provisions: Two main data communication
closets shall be provided for vertical and
horizontal data distribution. Four 4 inch
riser sleeves shall be provided between floors
with a three inch horizontal conduit tie between
closets on each floor. 16,590
4. Special Grounding: Provide a 4/0 copper
insulated isolated ground riser in each of
two main electric riser closets terminating
in each closet in a ground detail box. Each riser
shall connect directly to main service ground
point for the building. 7,439
5. Each lighting panel shall be provided with a
split bus and remotely controlled contractor to
enable 2/3 of the lighting to be shed upon
loss of normal power. 16,000
6. Lighting Protection: Provide a Master Labeled
lightning protection system. 35,000
7. Tenant feeder & panels including power of
1 1/2 watts per square foot for mini
computer rooms. 184,000
8. Kitchen equipment connection & panels
(allowance) 80,000
</TABLE>
- 28 -
<PAGE> 108
<TABLE>
<S> <C>
9. Empty conduits between buildings (96)
4" conduits (allowance) 12,915
10. Print shop/mail room equipment connection
and panels (allowance) 189,126
</TABLE>
The following are unit prices for general purpose power distribution which are
an addition to above costs.
<TABLE>
<CAPTION>
Unit Prices
- -----------
<S> <C>
1. Duplex receptacle in dry wall partition 55.00 ea
2. Power outlet in underfloor system (8/ckt) 148.00 ea
3. Power monument on raised floor (8/ckt) 148.00 ea
4. Data and/or telephone floor outlet
(excluded conduit & cables) 81.00 ea
5. Fire annunciator speakers in tenant space 110.00 ea
</TABLE>
- 29 -
<PAGE> 109
BUDGETARY COSTS OF PAINE WEBBER OPERATIONS CENTER
550,000 Square Feet
All Tenant Work Based on 1986 Prices
<TABLE>
<CAPTION>
ITEM UPGRADE COST
---- ------- ----
<S> <C> <C>
H V A C (add) 1,440,000 J B & B spec $1,569,130
H V A C (specified upgrade) (add) 716,500 (core)
Plumbing (specified upgrade) (add) 40,000 (fixtures & wet cols)
(add) (room size)
Cafeteria area (finishes) 139,180
Dining area (finishes) 38,944
Print center (finishes) 255,625
Roberson deck 1,112,500
Carpet tiles 925,600
Raised flooring (alt) (add) 1,537,150
Walls (allowance) 863,840
Ceilings 400,000
Window treatment 135,000
Doors/hardware/frames 49,500
Glass partitions 699,600
Sprinkler 320,000
Electrical 1,704,000
Electrical general outlets
(est. 5,000 x $100) 500,000
----------
TOTAL $8,712,919
SQUARE FOOT COST 550,000/ $ 15.84
Total Upgrade $3,469,570 (Westinghouse Elev)
</TABLE>
- 30 -
<PAGE> 110
EXHIBIT "G"
Loan Terms
PRINCIPAL AMOUNT: $75,000,000
TERM: Minimum 17 years 6 months
from the Commencement Date
(as defined in the Data Pro-
cessing Lease)
AMORTIZATION SCHEDULE: 11.979 constant
INTEREST RATE: 11.25% or less per annum
SECURITY: Senior leasehold mortgage,
subordinated fee, no personal
liability
G-1
<PAGE> 111
EXHIBIT "H"
Operating Expenses
Operating Expenses: The sum of the following: (a) The operating cost and
expense (whether or not within the contemplation of the parties) for the repair,
maintenance, and operation of the Common Areas, of the Building and Land, as set
forth in detail below; and (b) the Operating Expenses (as such term is defined
in the Ground Lease of the Land upon which this Building is located, dated of
even date herewith) attributable to the Demised Premises thereunder through the
RCOEA. Operating Expenses shall mean the operating costs specified in Category A
hereof to the extent that such costs are properly allocable to the operation,
repair and maintenance of the Common Areas of the Building and Land during the
year, it being understood that, notwithstanding anything to the contrary
contained herein:
(i) any cost allocable to the items specified in Category B hereof shall be
excluded from Operating Expenses; and
(ii) the Operating Expense for each year shall, if the Building shall not have
been ninety-five percent (95%) occupied by tenants during such year, be
calculated as though the Building had been ninety-five percent (95%)
occupied by tenants during such year.
Items Included in Building and Land Common Area Operating Expense ("Category
A"):
1. Labor costs (as hereinafter defined) for the services of the following
classes of employees of Landlord for the portion of their time reasonably
devoted to performing services required in connection with the operation,
repair and maintenance of the Common Areas of the Building and Land;
(i) the property manager, his assistants and the clerical staff attached
to the Building superintendent's office; provided, however, that
such expenses with regard to a property manager and his staff shall
not be included
H-1
<PAGE> 112
within Operating Expenses in the event Landlord engages a managing
agent;
(ii) elevator operators;
(iii) window cleaners, miscellaneous handymen, and cleaning services for
the Common Areas;
(iv) cleaners and janitors employed in the Building for the performance of
services with respect to the exterior or interior of the Common Areas
of the Building and Land or the sidewalks adjoining the Building;
(v) watchmen, caretakers and persons engaged in patrolling and protecting
the Common Areas of the Building and Land; and
(vi) carpenters, engineers, firemen, mechanics, electricians and plumbers
engaged in the operation, repair and maintenance of any part of the
Common Areas of the Building and Land, and the heating, air
conditioning, ventilating ("HVAC") plumbing, electrical and elevator
systems of the Common Areas of the Building and Land.
2. the cost of tools, equipment, materials and supplies used in the operation,
repair and maintenance of the Common Areas of the Building;
3. amounts charged to Landlord by independent contractors for services,
materials, and supplies furnished in connection with the operation, repair,
maintenance and cleaning of any part of the Common Areas of the Building
and Land excluding such work or service performed for a tenant, and the
HVAC, plumbing, electrical and elevator systems of the Common Areas of
the Building;
4. premiums for casualty, including fire (with extended coverage) and public
liability insurance maintained by Landlord in respect of the Common Areas,
the Building and the Land;
5. charges (including applicable taxes) for utilities (except utilities for
the use of any tenant) re-
H-2
<PAGE> 113
quired in the operation of the Common Areas of the Building and Land;
6. water charges and sewer rents of the Common Areas of the Building;
7. the cost of painting or otherwise decorating any part of any Floor Space in
the Common Areas of the Building, but such cost shall not include any
painting, repainting, decorating cost incurred in connection with the
occupancy of any tenant;
8. the cost of furnishing HVAC services during business hours on business days
to the Common Areas of the Building;
9. the management fees paid to a third party managing the Building which are
not in excess of the then prevailing rates for management fee of other
first-class office facilities in Hudson County;
10. reasonable legal, accounting and other professional fees with respect to
operation of the Building, except insofar as related to the financing,
refinancing, construction on, or sale of the Land and/or Building; and
11. if no managing agent is employed four percent (4%) of the resulting total
(excluding those items contemplated in (i) and 9.) of all of the
foregoing items for Landlord's office administration and overhead.
Operating Expense shall be "net" only, and for that purpose shall be
reduced by the amounts of any reimbursement or credit in respect of any
Operating Expense received by Landlord.
"Labor Costs" shall mean all expense incurred by Landlord which shall
be directly related to employment of personnel, including amounts incurred for
wages, salaries and other compensation for services, payroll, social security,
unemployment and other similar taxes, workmen's compensation insurance,
disability benefits, pensions, hospitalization, retirement plans and group
insurance, uniforms and working clothes and the cleaning thereof, and expenses
imposed on Landlord pursuant to any collective bargaining agreement.
H-3
<PAGE> 114
Notwithstanding anything to the contrary contained in this Lease these items are
excluded from Building Operating Expense ("Category B"):
1. the cost of any electric current furnished to the Demised Premises or to
other leased or leasable portions of the Building;
2. the cost of any work or service performed for or facilities furnished by
any tenant or by Landlord pursuant to an agreement with any such tenant
(including Tenant) at such tenant's cost either directly or through
rent, including, without limitation, the cost of tenant installations and
decorations incurred in connection with preparing space for new tenants;
3. the cost of installing, operating and maintaining any special facilities,
such as broadcasting facilities or luncheon, athletic or recreational
club;
4. Landlord's costs in respect of officers and executives of Landlord;
however, the property manager shall not be deemed such an officer or
executive;
5. the cost of any insurance premium to the extent that Landlord is entitled
to be reimbursed therefor by any tenant in the Building;
6. the cost of any work or service performed for or facilities furnished to
any tenant of the Building (other than Tenant);
7. the cost of any items for which Landlord is reimbursed through the
proceeds of insurance or other wise compensated or has the right to be
compensated by any tenant (including Tenant) of the Building;
8. the cost of any tools, equipment, materials and supplies, repairs,
alterations, additions, charges, replacements and other items which under
generally accepted accounting principles are or should be properly
classified as capital expenditures except for the portion of the useful
life thereof that falls within such year;
9. any costs directly or indirectly incurred in furnishing overtime HVAC or
overtime use of elevators
H-4
<PAGE> 115
or other services to Tenant or any other tenant of the Building;
10. depreciation of the Building or interest or amortization expense with
respect to the Building Mortgage;
11. any costs allocable to activities relating to the solicitation or entering
into of leases of space in the Building or in connection with the
collection of money under such lease or the enforcement of same;
12. any monies whatsoever owed by another tenant of the Building to Landlord;
13. leasing commissions;
14. franchise or income taxes imposed upon Landlord;
15. ground rent;
16. financing costs; and
17. legal fees incurred in connection with the negotiation of, or disputes
arising out of, any space lease in the Building.
Notwithstanding anything contained herein to the contrary, it is the
intention of the parties that the sum of Tenants' Fraction of Operating Expenses
and Tenant's Fraction (as such term is defined in the Agreement of Lease, dated
of even date herewith, between Landlord, as landlord, and Hartz, as tenant, for
certain premises located in the Building) of Operating Expenses shall equal
100%.
H-5
<PAGE> 116
EXHIBIT "I"
Plans and Specifications
The Plans and Specifications for Landlord's Work are contained in the
Exhibit entitled Landlord's Work. In addition to the Plans and Specifications
for Landlord's Work, such Exhibit includes items in excess thereof, which items
are identified as budgeted amounts, which amounts are based upon the price as of
the date hereof, and which prices are used for estimating purposes only.
In the event Tenant elects to have those budgeted items of Tenant's
Work performed by the Landlord, Tenant shall reimburse Landlord in such amount
for that specific work, increased by such increases, if any, as may occur in
construction or labor costs.
I-1
<PAGE> 117
EXHIBIT "J"
Tenant's Work
Tenant's Work shall consist of that work performed by Tenant in
addition to Landlord's Work to finish the interior of the shell of the Building
to Tenant's requirements.
Within the Landlord's Work Exhibit are items in excess of Landlord's
Work obligation which items are identified as budgeted amounts, which amounts
are based upon the 1986 price and which prices are used for estimating purposes
only.
In the event Tenant elects to have those budgeted items of Tenant's
Work performed by the Landlord, Tenant shall reimburse Landlord in such amount
for that specific work, increased by such increases, if any, as may occur in
construction or labor costs.
J-1
<PAGE> 118
EXHIBIT "K"
Parking Plan
The parking shall be located on the parking decks constituting part of
the Building and the parking lot located on the premises leased pursuant to the
Data Processing Lease.
K-1
<PAGE> 119
EXHIBIT "L"
Lincoln Harbor Project
L-1
<PAGE> 120
[SURVEY OF BOUNDARY LINE OF LINCOLN HARBOR]
L-2
<PAGE> 121
EXHIBIT "M"
Retail Space
M-1
<PAGE> 122
[SURVEY OF RETAIL AREA ON GRADE]
M-2
<PAGE> 123
EXHIBIT "N-1"
Form of Superior Mortgagee Subordination, Non-
disturbance and Attornment Agreement
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made as of the ____ day of ___________, 19__ , by and
between ________________, a _________________ corporation having an office at
___________________ (the "Mortgagee"), and PAINEWEBBER INCORPORATED having an
office at 1285 Avenue of the Americas, New York, New York 10019 (the "Space
Tenant").
W I T N E S S E T H :
WHEREAS, the Mortgagee is the owner and holder of a Promissory Note, dated of
even date herewith, in the amount of $______, by HARTZ-PW LIMITED PARTNERSHIP
(the "Landlord"), payable to the Mortgagee (the "Note"), which Note is secured
by a Mortgage, dated of even date herewith, between the Landlord, as mortgagor,
and the Mortgagee, as mortgagee (the "Mortgagee"), covering the Landlord's
right, title and interest in the Building and any other improvements located on
the Land, as such terms are defined in the Agreement of Lease (the "Ground
Lease"), dated __________, 1986, between Fee Owner, as landlord, and the
Landlord, as tenant, and the leasehold estate created thereby (the "Leasehold
Estate") in the land, located in the Lincoln Harbor Project, in Weehawken, New
Jersey, as such land is more particularly described in Exhibit A annexed hereto
and made a part hereof (said Land, Building, improvements and such other
property being hereinafter collectively referred to as the "Premises"), and
pursuant to which Mortgage Hartz Mountain Industries, Inc. ("Fee Owner")
executed the same for purposes of subordination of its fee interest in the Land
to the Mortgagee; and
WHEREAS, the Space Tenant has entered into a lease (the "Space Lease") with the
Landlord, dated as of __________, 1986, covering a portion of the Premises (the
"Demised Premises"); and
N-1-1
<PAGE> 124
WHEREAS, the parties hereto desire to provide inter alia for the non-disturbance
of the Space Tenant by the Mortgagee.
NOW THEREFORE, in consideration of the covenants and agreements contained
herein, and intending to be legally bound thereby, the Mortgagee and the Space
Tenant hereby covenant and agree as follows:
1. The Space Tenant covenants and agrees that the Space Lease shall at
all times be subject and subordinate in each and every respect to the Mortgage
and the lien thereof and to all renewals, extensions, supplements, amendments,
modifications, consolidations and replacements of such Mortgage, with the same
force and effect as if the Mortgage had been executed and delivered prior to the
execution and delivery of the Space Lease and without regard to the order of
priority of recording of the Mortgage and the Space Lease or any Memorandum of
the Space Lease.
2. Mortgagee expressly agrees that no subsequent modification of the
Mortgage shall adversely affect in any material respect any of Space Tenant's
rights under the Space Lease, materially increase Space Tenant's obligations
under the Space Lease or materially diminish Landlord's obligations under the
Space Lease.
3. The Space Tenant and Mortgagee agree that if any act or omission of
Landlord would give Space Tenant the right, immediately or after lapse of a
period of time or after notice or after both, to cancel or terminate the Space
Lease, or which Space Tenant claims gives it the right, immediately or after
lapse of a period of time or after notice or after both, to cancel or terminate
the Space Lease, or to claim a partial or total eviction, Space Tenant shall not
exercise such right (a) until and unless it has given written notice of such act
or omission to Mortgagee and any successor or assign whose name and address
shall previously have been furnished to Space Tenant, and (b) until a thirty
(30) day period for remedying such act or omission shall have elapsed following
the giving of such notice and following the time when Mortgagee shall have
become entitled under the Mortgage to remedy the same or such longer period as
may be reasonably required if such condition is not susceptible to remedy within
such thirty (30) day period provided Mortgagee commences and diligently pursues
such
N-1-2
<PAGE> 125
remedy (which reasonable period shall in no event be less than the period to
which Landlord would be entitled under the Space Lease or otherwise, after
similar notice, to effect such remedy).
The Space Tenant and Mortgagee further agree that in the event of any
default on the part of the Landlord, arising out of or accruing under the
Mortgage, whereby the Mortgage might be accelerated, terminated or foreclosed by
the Mortgagee, by reason of any such default or defaults, the Mortgagee will
given written notice thereof to the Space Tenant at the address set forth
herein, or its successor or assigns whose name and address previously shall have
been furnished to the Mortgagee in writing, and after the time when the Landlord
shall have become entitled under the Mortgage to cure such defaults, grant to
the Space Tenant a reasonable time (in no event to exceed ninety (90) days, for
all defaults other than payment of principal or interest on the Mortgage, for
which the time period shall be limited to ten (10) business days), which shall
be not less than the period of time granted to the Landlord by the terms of the
Mortgage, after the giving of such notice by the Mortgagee to the Space Tenant
to cure or to undertake the elimination of such defaults, provided that after
receipt of such notice, Space Tenant shall with due diligence give the Mortgagee
notice of intention to remedy such act or omission, and to the extent possible
and reasonably reasonable shall commence and continue to remedy such act or
omission, it being expressly understood that such right on the part of the Space
Tenant to cure any such default or defaults shall not be deemed to create any
obligation on the Space Tenant's part to cure or to undertake the elimination of
any such default or defaults.
4. As long as no default under the Space Lease exists which is
continuing beyond the expiration of any applicable grace period, which would
entitle the Landlord to terminate the Space Lease or dispossess the Space Tenant
thereunder as of the date Mortgagee files a lis pendens in, or otherwise
commences, a foreclosure action or any time thereafter, the Mortgagee shall not
name the Space Tenant as a party defendant to any action for foreclosure or
other enforcement thereof, nor shall the Space Lease be terminated by the
Mortgagee in connection with or by reason of foreclosure or other proceedings
for the enforcement of the Mortgage or by reason of a transfer of the Landlord's
interest under the Space Lease or under
N-1-3
<PAGE> 126
the Ground Lease or the Fee Owner's interest in the Land pursuant to an
assignment in lieu of foreclosure, or otherwise, and any sale, or assignment
pursuant thereto shall be subject to the Space Lease nor shall the Space
Tenant's use or possession of the Demised Premises be interfered with by the
Mortgagee or any such assignee or purchaser, except that the person acquiring
the interest of the Landlord or Fee Owner as a result of any such action or
proceeding and such person's successors and assigns (any of the foregoing being
hereinafter referred to as the "Successor") shall not be (a) subject to any
credits, offsets, defenses or claims, not expressly provided for in the Space
Lease, which the Space Tenant might have against any prior landlord, (b) bound
by any previous modification or amendment of the Space Lease or by any
prepayment of more than one month's Fixed Rent or Additional Charges (as such
terms are defined in the Space Lease), unless such modification or prepayment
shall have been made with the Mortgagee's prior written consent, or (c) liable
for any act or omission of any prior landlord which constitutes a default under
the Space Lease, provided, however, Successor shall be liable for any such
default or defaults which are continuing beyond the time where the interest of
the Landlord under the Space Lease has been transferred to the Successor.
5. If the interest of the Landlord under the Space Lease or under the
Ground Lease or the interest of Fee Owner in the Land shall be transferred to
the Mortgagee by reason of foreclosure or other proceedings for enforcement of
the Mortgage or pursuant to any assignment in lieu of foreclosure, or otherwise,
the Space Lease shall not terminate but shall continue in full force and effect
as, or as if it were, a direct lease between the Successor, or its designee and
Space Tenant, whereby the Space Tenant shall be bound to the Successor, and,
except as provided in this Agreement, the Successor shall be bound to the Space
Tenant, under all of the terms, covenants and conditions of the Space Lease for
the balance of the term thereof remaining, and the Space Tenant does hereby
agree to attorn to the Successor, including the Mortgagee if it be the
Successor, as its landlord, to affirm its obligations under the Space Lease and
does agree to make payments of all sums due under the Space Lease to the
Successor. Space Tenant shall promptly execute and deliver any instrument that
Mortgagee may reasonably request to evidence such attornment.
N-1-4
<PAGE> 127
6. If and to the extent that the Space Lease or any provision of law
shall entitle the Space Tenant to notice of any mortgage, the Space Tenant
acknowledges and agrees that this Agreement shall constitute said notice to the
Space Tenant of the existence of the Mortgage.
7. This Agreement may not be modified except by an agreement in writing
signed by the parties hereto or their respective successors in interest. This
Agreement shall inure to the benefit of and be binding upon the parties hereto,
their respective heirs, representatives, successors and assigns.
8. Nothing contained in this Agreement shall in any way impair or
affect the lien created by the Mortgage, except as specifically set forth
herein.
9. The Space Tenant agrees that this Agreement satisfies any condition
or requirement in the Space Lease relating to the granting of a non-disturbance
agreement. The Space Tenant and Mortgagee agree that Mortgagee shall be deemed a
"Superior Mortgagee" as such term is defined in the Space Lease, subject however
to the terms and provisions of this Agreement. The Space Tenant further agrees
that in the event there is any inconsistency between the terms and provisions
hereof and the terms and provisions of the Space Lease dealing with
non-disturbance by the Mortgagee, the terms and provisions hereof shall be
controlling.
The Mortgagee agrees that this Agreement satisfies any condition or
requirement in the Mortgage (or mortgage commitment) relating to the granting of
a subordination agreement and attornment agreement. The Mortgagee further agrees
that in the event there is any inconsistency between the terms and provisions
hereof and the terms and provisions of the Space Lease dealing with
subordination and attornment by the Space Tenant, the terms and provisions
hereof shall be controlling.
10. The Space Tenant acknowledges that it has notice that the Space
Lease and the rent and all other sums due thereunder have been assigned to the
Mortgagee as part of the security for the note secured by the Mortgage.
11. All notices, demands or requests made pursuant to, under, or by
virtue of this Agreement must
N-1-5
<PAGE> 128
be in writing and mailed to the party to whom the notice, demand or request is
being made by certified or registered mail, return receipt requested, at its
address set forth above. Any party may change the place that notices and demands
are to be sent by written notice delivered in accordance with this Agreement.
12. This Agreement shall be governed by the laws of the State of New
Jersey. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the remainder
of this Agreement or the application of such term to any person or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
13. Each of the parties hereto agrees to execute and deliver, upon the
request of the other, such documents and instruments (in recordable form, if
requested) as may be necessary or appropriate to fully implement or to further
evidence the understandings and agreements contained in this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
Mortgagee:
By:___________________________,
Space Tenant:
PAINEWEBBER INCORPORATED
By:___________________________
N-1-6
<PAGE> 129
[ACKNOWLEDGEMENTS]
N-1-7
<PAGE> 130
EXHIBIT A
Land
N-1-8
<PAGE> 131
EXHIBIT "N-2"
Form of Superior Lessor Subordination, Nondisturbance and
Attornment Agreement
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made as of the ____ day of __________, 1986, by and
between _______________________, a ______________________ having an office at
_____________________________ ("Superior Lessor"), and PAINEWEBBER INCORPORATED
having an office at 1285 Avenue of the Americas, New York, New York 10019
("Space Tenant").
W I T N E S S E T H :
WHEREAS, HARTZ MOUNTAIN INDUSTRIES, INC. ("Ground Lessor") is the owner
of the land (the "Land") described in Schedule "A" annexed hereto and made a
part hereof; and
WHEREAS, Ground Lessor has entered into a ground lease (the "Superior
Lease"), dated as of ___________, whereby Ground Lessor demised and leased, as
ground lessor, all of the Land to Superior Lessor; and
WHEREAS, Superior Lessor has become the landlord under the entered
ground lease (the "Ground Lease") , dated as of ___________, 1986 whereby Ground
Lessor demised and leased, all of the Land to HARTZ-PW LIMITED PARTNERSHIP
("Ground Lessee"); and
WHEREAS, Space Tenant has entered into a lease (the "Space Lease") with
Ground Lessee, dated as of ____________, 1986 , covering a portion of the space
in the building known as the [Paine Webber Building (the "Demised Premises"), as
more fully described in such Space Lease; and
WHEREAS, the parties hereto desire to provide inter alia for the
non-disturbance of Space Tenant by Superior Lessor.
N-2-1
<PAGE> 132
NOW THEREFORE, in consideration of the covenants and agreements
contained herein, and intending to be legally bound thereby, Superior Lessor and
Space Tenant hereby covenant and agree as follows:
1. Space Tenant covenants and agrees that the Space Lease shall at all
times be subject and subordinate in each and every respect to the Ground Lease
and to all renewals , extensions, supplements , amendments , modifications,
consolidations and replacements of such Ground Lease, with the same force and
effect as if the Ground Lease had been executed and delivered prior to the
execution and delivery of the Space Lease and without regard to the order of
priority of recording of the Ground Lease and the Space Lease or any Memorandum
of the Space Lease.
2. Space Tenant and Superior Lessor agree that if any act or omission
of Ground Lessee would give Space Tenant the right, immediately or after lapse
of a period of time or after notice or after both, to cancel or terminate the
Space Lease, or which Space Tenant claims gives it the right, immediately or
after lapse of a period of time or after notice or after both, to cancel or
terminate the Space Lease, or to claim a partial or total eviction, Space Tenant
shall riot exercise such right (a) until and unless it has given written notice
of such act or omission to Ground Lessee and Superior Lessor whose name and
address shall previously have been furnished to Space Tenant, and (b) until a
thirty (30) day period for remedying such act or omission shall have elapsed
following the giving of such notice and following the time when Superior Lessor
shall have become entitled under the Ground Lease to remedy the same or such
longer period as may be reasonably required if such condition is not susceptible
to remedy within such thirty (30) day period provided Superior Lessor commences
and diligently pursues such remedy (which reasonable period shall in no event be
less than the period to which Ground Lessee would be entitled under the Space
Lease or otherwise, after similar notice, to effect such remedy).
3. As long as no default under the Space Lease exists which is
continuing beyond the expiration of any applicable grace period, which would
entitle Ground Lessee to terminate the Space Lease or dispossess Space Tenant
thereunder, Superior Lessor shall not name Space Tenant as a party defendant or
otherwise in any suit, action or proceeding brought to enforce any rights grant-
N-2-2
<PAGE> 133
ed to Superior Lessor under its Ground Lease, and Superior Lessor will not
terminate the Space Lease or take any action to recover the premises demised to
Space Tenant or affect or disturb Space Tenant's possession or rights under the
Space Lease.
4. If Superior Lessor shall enter into and become lawfully possessed of
the Demised Premises and shall succeed to the rights of Ground Lessee under the
Space Lease by reason of the termination of the Ground Lease or otherwise, and
if Space Tenant is not then in default under the Space Lease beyond the time
permitted therein to cure such default, then (a) the Space Lease shall not
terminate, (b) Space Tenant shall attorn to Superior Lessor, and recognize it as
its landlord, such attornment to be upon the then executory terms and conditions
of the Space Lease, and (c) Superior Lessor shall accept such attornment and
recognize Space Tenant as Superior Lessor's lessee under the Space Lease. Upon
such attornment and recognition, the Space Lease shall continue in full force
and effect as, or as if it were, a direct lease between Superior Lessor and
Space Tenant, upon all of the then executory terms, conditions and covenants as
set forth in the Space Lease and which shall be applicable after such
attornment, except that Superior Lessor shall not be (i) liable for any previous
act or omission of Ground Lessee which constitutes a default under the Space
Lease; (ii) subject to any offset or defenses not expressly provided for in the
Space Lease which Space Tenant might have against Ground Lessee; (iii) bound by
any prepayment of more than one month's [Fixed Rent] or (Additional Charges] (as
such terms are defined in the Space Lease); and (d) bound by any amendment or
modification of the Space Lease made without Superior Lessor's prior written
consent.
5. This Agreement may not be modified except by an agreement in writing
signed by the parties hereto or their respective successors in interest. This
Agreement shall inure to the benefit of and be binding upon the parties hereto,
their respective heirs, representatives, successors and assigns.
6. Space Tenant and Superior Lessor agree that this Agreement satisfies
any condition or requirement in the Space Lease relating to the granting of a
non-disturbance agreement. Space Tenant and Superior Lessor agree that Superior
Lessor shall be deemed a "Superior
N-2-3
<PAGE> 134
Lessor" as such term is defined in the Space Lease, subject however to the terms
and provisions of this Agreement. Space Tenant and Superior Lessor further agree
that in the event there is any inconsistency between the terms and provisions
hereof and the terms and provisions of the Space Lease dealing with
non-disturbance by Superior Lessor, the terms and provisions hereof shall be
controlling.
7. All notices, demands or requests made pursuant to, under, or by
virtue of this Agreement must be in writing and mailed to the party to whom the
notice, demand or request is being made by certified or registered mail, return
receipt requested, at its address set forth above. Any party may change the
place that notices and demands are to be sent by written notice delivered in
accordance with this Agreement.
8. This Agreement shall be governed by the laws of the State of New
Jersey. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the remainder
of this Agreement or the application of such term to any person or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
9. Each of the parties hereto agrees to execute and deliver, upon the
request of the other, such documents and instruments (in recordable form, if re-
quested) as may be necessary or appropriate to fully
N-2-4
<PAGE> 135
implement or to further evidence the understandings and agreements contained in
this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
Superior Lessor:
By:_________________________
Space Tenant:
PAINEWEBBER INCORPORATED
By:_________________________
N-2-5
<PAGE> 136
[Acknowledgements]
N-2-6
<PAGE> 137
SCHEDULE "A"
Land
N-2-7
<PAGE> 138
EXHIBIT "O"
Form of Ground Lessor Nondisturbance Agreement
THIS AGREEMENT, dated as of the ___ day of ___________, 19__, between
HARTZ-PW LIMITED PARTNERSHIP, a New Jersey limited partnership, having an office
at 400 Plaza Drive, Post Office Box 1411, Secaucus, New Jersey 07094
("Landlord"), and __________, a __________ having an office at __________
("Subtenant").
W I T N E S S E T H :
WHEREAS, Landlord has entered into an Agreement of Lease, dated as of
the ____ day of _____________, 1986 (the "Space Lease"), with PAINEWEBBER
INCORPORATED (the "Space Tenant") pursuant to which Landlord leased and demised
to Space Tenant a portion of the space in the building known as the [Paine
Webber Building] (the "Demised Premises"), as more fully described in such Space
Lease;
WHEREAS, Space Tenant has entered into an Agreement of Sublease (the
"Sublease") , dated as of the ___ day of ___________, 19__, pursuant to which
Space Tenant subleased and demised to Subtenant [the Demised Premises or a
portion thereof], as more fully described in Exhibit "A" annexed hereto and made
a part hereof; and
WHEREAS, the parties hereto desire to provide inter alia for the
non-disturbance of Subtenant by Landlord.
NOW, THEREFORE, the parties hereto agree as follows :
1. So long as the Sublease is in full force and effect, and no default
of Subtenant exists nor has any event occurred which with the passage of time or
notice would entitle Space Tenant to terminate the Sublease or dispossess
Subtenant, Landlord will not name or join Subtenant as a party defendant or
otherwise in any suit, action or proceeding brought to enforce any rights
granted to Landlord under the Space Lease or to terminate such Space Lease, and
the Landlord will not terminate the Sublease or take any action to recover
possession of the premises demised to Subtenant or affect or disturb Subtenant's
possession or rights under the Sublease.
O-1
<PAGE> 139
2. If Landlord or its designee shall enter into and become lawfully
possessed of the Demised Premises and shall succeed to the rights of Space
Tenant under the Space Lease by reason of the termination of the Space Lease or
otherwise, and if Subtenant is not then in default under the Sublease beyond the
time permitted therein to cure such default, then (a) the Sublease shall not
terminate, (b) Subtenant shall attorn to Landlord or its designee, and recognize
it as its landlord, such attornment to be upon the then executory terms and
conditions of the Sublease, and (c) Landlord or its designee shall accept such
attornment and recognize Subtenant as the Landlord's lessee under the Sublease.
Upon such attornment and recognition, the Sublease shall continue in full force
and effect as, or as if it were, a direct lease between the Landlord or its
designee and Subtenant, upon all of the then executory terms, conditions and
covenants as set forth in the Sublease and which shall be applicable after such
attornment, except that Landlord shall not be (i) liable for any previous act or
omission of Space Tenant which constitutes a default under the Sublease; (ii)
subject to any offset or defenses not expressly provided for in the Sublease
which the Subtenant might have against Space Tenant; (iii) bound by any
prepayment of more than one month's [Fixed Rent] or [Additional Charges] (as
such terms are defined in the Sublease); and (d) bound by any amendment or
modification of the Sublease made without Landlord's prior written consent.
3. The terms of this Agreement shall bind and inure to the benefit of
the parties hereto, and their respective heirs, successors and assigns.
4. All notices and other communications hereunder shall be in writing
and shall be hand delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed (a) if to Landlord at 400 Plaza
Drive, Post Office Box 1411, Secaucus, New Jersey 07094, Attention: General
Counsel with a copy to Horowitz, Bross, Sinins & Imperial, P. A., 1180 Raymond
Boulevard, Newark, New Jersey 07102, Attention: Irwin Horowitz, Esq., or at such
other address as Landlord shall have furnished to Subtenant in writing, or (b)
if to Subtenant , at __________________________________________ ____________
Attention: ___________________, or at such other address as Subtenant shall have
furnished to Landlord in writing.
O-2
<PAGE> 140
5. This Agreement shall be governed by the laws of the State of New
Jersey. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the remainder
of this Agreement or the application of such term to any person or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
6. This Agreement may not be discharged or modified orally or in any
manner other than by an agreement in writing specifically referring to this
Agreement and signed by the party or parties to be charged thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HARTZ-PW LIMITED PARTNERSHIP
By: Hartz Mountain Industries,
Inc.
By: ________________________________
[SUBTENANT]
By: ________________________________
<PAGE> 141
[ACKNOWLEDGEMENT]
O-4
<PAGE> 142
EXHIBIT "A"
Demised Premises
O-5
<PAGE> 143
EXHIBIT "P"
Cleaning Standards
NIGHTLY ENTRANCE LOBBY AREAS
Sweep and wash flooring including spray buffing.
Wash all rubber mats.
Clean all cigarette urns and replace sand and water as necessary.
Vacuum floors, dust and rub down walls, metalwork and saddles in all
elevator cabs.
NIGHTLY FOR GENERAL CLEANING
Thoroughly vacuum all carpeted areas moving light furniture.
Wash all stairways.
MONTHLY HIGH DUSTING
Dust all pictures, frames, charts and other wall hangings not reached
in nightly cleaning.
Dust all vertical surfaces such as walls, partitions, doors, brick,
louvers, not reached in nightly cleaning.
Dust all window frames.
Machine scrub all ceramic tile floors.
Thoroughly wash and polish all wall tile and stalls in toilet areas.
Dust and wash down lobby walls.
Window washing will be performed TWO times per year.
P-1
<PAGE> 1
Exhibit 10.38
LEASE BETWEEN
HARTZ-PW LIMITED PARTNERSHIP,
as Landlord
and
PAINEWEBBER INCORPORATED
as Tenant
Premises:
Data Processing Center
LINCOLN HARBOR PROJECT
<PAGE> 2
INDEX
ARTICLE PAGE
------- ----
1. Definitions ............................... 1
2. Demise and Term ........................... 6
3. Rent ...................................... 6
4. Use of Building ........................... 8
5. Preparation of Building ................... 8
6. Tax and Operating Expense Payments ........ 11
7. Common Areas .............................. 14
8. Labor Harmony ............................. 15
9. Subordination ............................. 15
10. Quiet Enjoyment ........................... 18
11. Assignment, Subletting and Mortgaging ..... 18
12. Compliance with Laws ...................... 22
13. Insurance and Indemnity ................... 23
14. Rules and Regulations ..................... 28
15. Alterations ............................... 29
16. Landlord's and Tenant's Property .......... 31
17. Repairs and Maintenance ................... 32
18. Electric Energy ........................... 33
19. Heat, Ventilation & Air Conditioning ...... 33
20. Other Services: Service Interruption ..... 33
21. Access, Changes and Name .................. 33
22. Mechanic's Liens and Other Liens .......... 34
23. Non-Liability and Indemnification ......... 35
24. Damage or Destruction ..................... 36
25. Eminent Domain ............................ 41
26. Surrender ................................. 44
27. Conditions of Limitation .................. 44
28. Re-Entry by Landlord ...................... 46
29. Damages ................................... 47
30. Affirmative Waivers ....................... 50
31. No Waivers ................................ 50
32. Curing Tenant's Defaults .................. 50
33. Broker .................................... 51
34. Notices ................................... 52
35. Estoppel Certificates ..................... 52
36. Arbitration ............................... 53
37. Memorandum of Lease ....................... 53
38. Miscellaneous ............................. 54
39. Extension of Term ......................... 57
40. Determination of Fair Market Value ........ 59
<PAGE> 3
Exhibits
--------
Exhibit "A" Description of the Building
Exhibit "B" Fixed Rent
Exhibit "C" Floor Space
Exhibit "D" Land
Exhibit "E" Landlord's Work
Exhibit "F" Loan Terms
Exhibit "G" Operating Expenses
Exhibit "H" Plans and Specifications
Exhibit "I" Tenant's Work
Exhibit "J" Lincoln Harbor Project
Exhibit "K-1" Form of Superior Mortgagee Subordina-
tion, Nondisturbance and Attornment
Agreement
Exhibit "K-2" Form of Superior Lessor Subordina-
tion, Nondisturbance and Attornment
Agreement
Exhibit "M" Form of Ground Lessor Nondisturbance
Agreement
ii
<PAGE> 4
Lease, dated April 14, 1986 between HARTZ-PW LIMITED PARTNERSHIP, a New
Jersey limited partnership, having an office at 400 Plaza Drive, Post Office Box
1411, Secaucus, New Jersey 07094 and PAINEWEBBER INCORPORATED, a Delaware
corporation having an office at 1285 Avenue of the Americas, New York, New York
10019.
ARTICLE 1 - DEFINITIONS
1.01 As used in this Lease (including in all Exhibits and any Riders
attached hereto, all of which shall be deemed to be part of this Lease) the
following words and phrases shall have the meanings indicated:
A. Additional Charges: All amounts that become payable by Tenant to
Landlord hereunder other than the Fixed Rent.
B. Architect: Kenneth Carl Bonte, or as Landlord may designate, subject
to Tenant's approval, which approval shall not be unreasonably withheld or
delayed.
C. Architect's Certificate: The certificate to be issued by Architect
that the Building has been Substantially Completed in accordance with the Plans
and Specifications.
D. Broker: Joseph Hilton & Associates Incorporated.
E. Building: The improvements located on the Land as more particularly
described on the plan attached hereto as Exhibit "A" and made a part hereof.
F. Calendar Year: Any twelve-month period during the term of this Lease
commencing on a January 1.
G. Commencement Date: August 1, 1986, as the same may be extended
pursuant to the provisions hereof.
H. Demised Premises: The Building and the Land, collectively.
I. Expiration Date: The date that is the day before the twenty-fifth
(25th) anniversary of the latest to occur of (i) the Commencement Date, or (ii)
the Commencement Date of the Office Lease (hereinafter defined) (as such term
is defined in the Office Lease), or (iii)
<PAGE> 5
the Commencement Date (as such term is defined in the Agreement of Lease, dated
of even date herewith, between Hartz-PW Hotel Limited Partnership, as landlord,
and Tenant, as tenant, for certain office premises in the Lincoln Harbor Project
(the "Hotel/Office Lease")) of the Hotel/Office Lease, if the later to occur of
such dates is the first day of a month, or the twenty-fifth (25th) anniversary
of the last day of the month in which the later to occur of such dates occurs if
the later to occur of such dates is not the first day of a month. However, if
the Term is extended by the Tenant's effective exercise of any Renewal Option,
the "Expiration Date" shall be changed to the last day of the applicable Renewal
Term. For the purpose of this definition, the earlier termination of this Lease
shall not affect the "Expiration Date."
J. Fixed Rent: As set forth on the Rent Schedule on Exhibit "B" annexed
hereto and made a part hereof, as redetermined pursuant to Section 39.02 hereof.
K. Fixed Rent Commencement Date: The date(s) which is the first
anniversary of the Commencement Date, subject to adjustment as provided in
Section 5.05 hereof.
L. Floor Space: 140,768 and as more particularly set forth on Exhibit
"C" annexed hereto and made a part hereof.
M. Ground Lease: The Agreement of Lease, dated of even date herewith,
between Ground Lessor, as landlord, and Landlord, as tenant, pursuant to which
Ground Lessor, leased the Land to Landlord.
N. Ground Lessor: Hartz Mountain Industries, Inc. ("Hartz"), its
successors and assigns.
O. Insurance Requirements: Rules, regulations, orders and other
requirements of the applicable board of underwriters and/or the applicable fire
insurance rating organization and/or any other similar body performing the same
or similar functions and having jurisdiction or cognizance over the Demised
Premises, whether now or hereafter in force.
P. Land: The land described on Exhibit "D" annexed hereto and made a
part hereof.
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Q. Landlord: On the date as of which this Lease is made, shall mean
Hartz-PW Limited Partnership, a New Jersey limited partnership, having an
address at 400 Plaza Drive, Secaucus, New Jersey 07094, but thereafter
"Landlord" shall mean only the ground lessee under the Ground Lease or if the
Ground Lease shall have ceased to exist, the fee owner of the Land, or if there
shall exist another Superior Lease or Leases, the tenant under the Superior
Lease immediately prior in estate to this Lease.
R. Landlord's Work: The materials and work to be furnished, installed
and performed by Landlord at its expense in accordance with the provisions of
Exhibit "E" annexed hereto and made a part hereof in accordance with the Plans
and Specifications.
S. Legal Requirements: Laws and ordinances of all federal, state and
local governments, and rules, regulations, orders and directives of all
departments, subdivisions, bureaus, agencies or offices thereof, and of any
other governmental authorities having jurisdiction over the Demised Premises.
T. Mortgage: The mortgage creating a lien on the leasehold estate
created by the Ground Lease, to be entered into pursuant to a loan commitment
substantially on the terms set forth in the schedule annexed hereto as Exhibit
"F" and made a part hereof, and any replacement, extension, modification or
amendment thereto.
U. Operating Expenses: An amount equal to the costs and expenses for
the items set forth on Exhibit "G" annexed hereto and made a part hereof.
V. Permitted Uses: General and executive office use, use for data
processing services and all uses incidental thereto.
W. Person: A natural person or persons, a partnership, a corporation,
or any other form of business or legal association or entity.
X. Plans and Specifications: The schematics annexed hereto as Exhibit
"H" and made a part hereof which have been approved by Tenant and all plans and
specifications developed for the restoration of the Building, which shall be
subject to Tenant's prior writ-
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ten approval, which approval shall not be unreasonably withheld or delayed.
AA. Project Common Areas: All areas, spaces and improvements in the
Lincoln Harbor Project (other than those located on the Land) which are made
available from time to time for the common use and benefit of the tenants and
occupants of the Lincoln Harbor Project, including, without limitation,
non-exclusive parking areas, roads, walkways, sidewalks and landscapes and
planted areas, if any.
BB. Real Estate Taxes: The real estate taxes, assessments and special
assessments imposed upon the Demised Premises by any federal, state, municipal
or other governments or governmental bodies or authorities. If at any time
during the Term the methods of taxation prevailing on the date hereof shall be
altered so that in lieu of, or as an addition to or as a substitute for, the
whole or any part of such real estate taxes, assessments and special assessments
now imposed on real estate there shall be levied, assessed or imposed on
Landlord specifically in substitution for any of the foregoing Real Estate Taxes
(a) a tax, assessment, levy, imposition, license fee or charge wholly or
partially as a capital levy or otherwise on the rents received therefrom, or (b)
any other such additional or substitute tax, assessment, levy, imposition or
charge, then all such taxes, assessments, levies, impositions, fees or charges
or the part thereof so measured or based shall be deemed to be included within
the term "Real Estate Taxes" for the purposes hereof, calculated as if
Landlord's only asset were the leasehold estate created by the Ground Lease.
CC. Renewal Options: Shall have the meaning set forth in Section 39.01
hereof.
DD. Renewal Terms: Shall have the meaning set forth in Section 39.01
hereof.
EE. Rent: The Fixed Rent and the Additional Charges.
FF. Substantially Completed: Substantially Completed or terms of
similar import shall mean the completion of construction, and the issuance of a
temporary certificate of occupancy therefore, except for minor details,
designated or punchlists delivered to Tenant, of
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construction, decoration and mechanical adjustment, the non-completion of which
will not materially interfere with the performance of Tenant's Work or Tenant's
use and occupancy of the Demised Premises for Tenant's normal business purposes,
and the completion of which is expected to occur within sixty (60) days after
such Substantial Completion.
GG. Successor Landlord: Shall have the meaning set forth in Section
9.03.
HH. Superior Lease: Any ground or underlying lease of the Land or the
Building.
II. Superior Lessor: The lessor of a Superior Lease or its successor in
interest, at the time referred to.
JJ. Superior Mortgage: Any mortgage, including the Mortgage, which may
hereafter affect the Land, the estate created under the Ground Lease or by any
other Superior Lease, or the Building and all renewals, extensions, supplements,
amendments, modifications, consolidations, and replacements thereof or thereto,
substitutions therefore, and advances made thereunder.
KK. Superior Mortgagee: The mortgagee of a Superior Mortgage at the
time referred to, sometimes herein referred to as a Mortgagee.
LL. Tenant: On the date of which this Lease is made shall mean
PaineWebber Incorporated but thereafter, "Tenant" shall mean only the tenant
under this Lease at the time in question, provided, however, that the foregoing
shall not be deemed to relieve Paine Webber, Inc. of any liability in the event
of an assignment of its interest in this Lease except in accordance with the
provisions of Section 11.04(b) hereof.
MM. Tenant's Fraction: One hundred percent (100%).
NN. Tenant's Property: Shall have the meaning set forth in Section
16.02.
OO. Tenant's Work: The facilities, materials and work which may be
undertaken by or for the account of Tenant (other than the Landlord's Work) to
equip, deco-
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rate and furnish the Building for Tenant's initial occupancy in accordance with
the provisions of Exhibit "I" annexed hereto and made a part hereof.
PP. Term: The period commencing on the Commencement Date and ending at
11:59 P.M. of the Expiration Date unless otherwise terminated in accordance with
the provisions hereof.
QQ. Unavoidable Delays: A delay arising from or as a result of a
strike, lockout, or labor difficulty, explosion, sabotage, accident, riot or
civil commotion, act of war, fire or other catastrophe, Legal Requirement or an
act of the other party and any cause beyond the reasonable control of that
party, provided that the party asserting such Unavoidable Delay has exercised
its best efforts to minimize such delay. The party asserting such delay,
promptly upon becoming aware of such Unavoidable Delay, shall give written
notice of such Unavoidable Delay to the other party.
ARTICLE 2 - DEMISE AND TERM
2.01 Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, the Demised Premises, for the Term. Promptly following the
Commencement Date, the parties hereto shall enter into an agreement in form and
substance reasonably satisfactory to Landlord and Tenant setting forth the
Commencement Date.
ARTICLE 3 - RENT
3.01 Tenant shall pay the Fixed Rent in equal monthly installments in
advance on the first day of each and every calendar month beginning on the Fixed
Rent Commencement Date. If the Fixed Rent Commencement Date occurs on a day
other than the first day of a calendar month, the Fixed Rent for such partial
calendar month shall be prorated on a per diem basis and paid on the Fixed Rent
Commencement Date.
3.02 The Rent shall be paid in lawful money of the United States to
Landlord by wire transfer of immediately available funds to a bank which is a
member of the New York Clearing House Association or by check to such other
place, as Landlord shall designate by notice to Tenant. Tenant shall pay the
Rent promptly when due and without any abatement, deduction or setoff for any
reason
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whatsoever, except as may be expressly provided in this Lease. In case of
payment by check, Tenant shall assume the risk of lateness or failure of
delivery of the mails, and no lateness or failure of the mails will excuse
Tenant from its obligation to have made the payment in question when required
under this Lease.
3.03 No payment by Tenant or receipt or acceptance by Landlord of a
lesser amount than the correct Rent shall be deemed to be other than a payment
on account, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment deemed an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance or pursue any other remedy in this Lease or at law
provided.
3.04 If Tenant is in arrears in payments of Rent, Tenant waives
Tenant's right, if any, to designate the items to which any payments made by
Tenant are to be credited, and Landlord may apply any payments made by Tenant to
such items as Landlord sees fit, irrespective of and notwithstanding any
designation or request by Tenant as to the items to which any such payments
shall be credited.
3.05 If Tenant shall fail to pay any installment of Fixed Rent within
five (5) days or any other item of Rent within twenty (20) days after the date
when such payment is due and Landlord shall have delivered a bill for the same
(which delivery may be by invoice and shall not be required to comply with the
requirements for copies of notices specified in Article 34 hereof), then, any
such payment shall bear interest calculated from the due date to the date such
payment is received by Landlord at a rate equal to two (2) percentage points in
excess of 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") (the "Late Payment Rate").
3.06 It is the intention of the parties that the Fixed Rent payable
under this Lease shall be net to Landlord, so that this Lease shall yield to
Landlord the Fixed Rent specified herein during the Term of this Lease, and that
all costs, expenses and obligations of every kind and nature whatsoever relating
to the Demised
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Premises shall be paid by Tenant, other than liens placed on the Demised
Premises by Landlord, or claims against Landlord for Landlord's negligence or
default under the terms of this Lease (nothing herein shall be construed as
affecting the provisions of any insurance carried by Landlord, Tenant, subtenant
or assign with respect to the Demised Premises, including fire and hazard
insurance, liability insurance and any other insurance).
ARTICLE 4 - USE OF BUILDING
4.01 Tenant shall use and occupy the Building only for the Permitted
Uses, and any other lawful purpose in keeping with the character of the Lincoln
Harbor Project (as defined on Exhibit "J", annexed hereto and made a part
hereof), and Tenant shall not use or permit or suffer the use of the Building or
any part thereof for any illegal or hazardous purpose.
4.02 On or before the Commencement Date, Landlord shall obtain a
certificate of occupancy for the Building. Each governmental license or permit,
including the certificate of occupancy or its lawful functional equivalent,
required for the proper and lawful conduct of Tenant's business in the Demised
Premises or any part thereof, shall be duly procured by Landlord, and thereafter
Tenant shall maintain such license or permit and submit the same to Landlord for
inspection. Tenant shall at all times comply with the terms and conditions of
each such license or permit. Tenant shall not at any time use or occupy, or
suffer or permit anyone to use or occupy the Building, or do or permit anything
on the Building, in any manner which (a) violates the certificate of occupancy
for the Building; (b) causes injury to the Building, including the structure,
roof or building systems thereof, (c) constitutes a violation of the Legal
Requirements or Insurance Requirements; (d) impairs the character, reputation or
appearance of the Building as a first-class office building; or (e) interferes
with the right of quiet enjoyment of tenants or occupants of the adjacent
premises.
ARTICLE 5 - PREPARATION OF BUILDING
5.01 The Building, including Tenant's Work, shall be Substantially
Completed on or before August 1, 1986, provided that Tenant shall have provided
Landlord with the Plans and Specifications and all plans and
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specifications for each item of Tenant's Work at such time and to permit
Landlord to complete Landlord's Work and Tenant's Work on or before August 1,
1986, in accordance with good construction practices and taking into
consideration the requirements of any "long lead time" items. Landlord agrees to
cooperate to the fullest extent and to use good faith and due diligence in the
design and performance of Landlord's Work and Tenant's Work, provided, however,
that Landlord shall not be obligated to employ labor at overtime rates in
connection with Landlord's Work or Tenant's Work unless Tenant shall reimburse
Landlord therefor. Landlord shall notify Tenant of any anticipated delays
arising by reason of Tenant's action or inaction. Taking possession of the
Building by Tenant shall be evidence that the Building was in good and
satisfactory condition at the time of Tenants' taking of possession except as to
(i) any defects in the Building which were not known or reasonably discoverable
by Tenant by observation or an inspection ("Latent Defects"), (ii) any items of
work performed by Landlord of which Tenant gives Landlord notice within one
hundred twenty (120) days after the Commencement Date, and (iii) portions of the
work performed by Landlord not completed, because under good construction
scheduling practice such work should be done after completion of still
incompleted finishing or other work to be done by or on behalf of Tenant.
Landlord shall complete all such items of work not so completed within sixty
(60) days after the date of Substantial Completion. Landlord, its agents,
servants, employees and contractors shall have the right to enter the Building
to complete or repair any such unfinished items and Latent Defects upon
reasonable prior notice to Tenant. Landlord shall warrant all construction and
equipment delivered in or with Landlord's Work for a period of one (1) year from
the Commencement Date. Landlord shall assign such longer warranties as may be
provided with any item of equipment or material installed in the Building to
Tenant, or, if the same are not assignable, shall assign to Tenant the right to
enforce the same. Landlord covenants that the warranty to be assigned with
respect to the roof shall be for a minimum of ten (10) years from completion of
the roof in accordance with the Plans and Specifications. Landlord shall furnish
Tenant with an assignment of such warranties to the extent that same are given
by subcontractors or materialmen.
5.02 If the Substantial Completion of the
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Landlord's Work or Tenant's Work performed by Landlord shall be delayed, in
spite of Landlord's and Tenant's compliance with the provisions of Section 5.01
hereof, due to (a) any act or omission of Tenant or any of its employees, agents
or contractors including, without limitation, (i) any delays due to changes in
or additions to the Landlord's Work made at the request of Tenant or (ii) any
delays by Tenant in the submission of plans, drawings, specifications or other
information or in approving any working drawings or estimates or in giving any
authorizations or approval(s), or (b) any additional time needed for the
completion of the Landlord's Work by the inclusion in the Landlord's Work of any
extra work required of Landlord by Tenant, then Landlord's Work in connection
with the Building shall be deemed Substantially Complete on the date it would
have been Substantially Complete but for such delay(s). Landlord covenants that
the warranty to be assigned with respect to the roof shall be for a minimum of
ten (10) years from completion of the roof in accordance with the Plans and
Specifications.
5.03 Landlord reserves the right, at any time and from time to time, to
increase, reduce or change the number, type, size, location, nature and use of
any other improvements on the Land including without limitation, the right to
move and/or remove same, provided same shall not block or unreasonably interfere
with Tenant's means of ingress or egress to and from the Building. Landlord
shall insure that in connection with the development of Lincoln Harbor Project,
Ground Lessor shall not deviate materially from the approved site plan without
Tenant's prior consent, which consent shall not be unreasonably withheld or
delayed, and provided further that Tenant may thereupon request a recalculation
of Operating Expenses in accordance with Section 38.10 hereof.
5.04 Tenants' Work is the financial responsibility of Tenant. Landlord
shall provide an allowance ("Tenant's Fund") equal to the product of Twenty-Four
Dollars ($24) and the Floor Space.
5.05 Landlord shall credit Tenant's Fund against the cost of Tenant's
Work as certified by the Architect and verified or objected to by the architect
employed by Tenant in connection with Tenant's Work within fifteen (15) days of
receipt thereof (it being agreed
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that if the architect employed by Tenant in connection with Tenant's Work shall
fail to respond within such fifteen (15) day period, such certification shall be
deemed to have been verified). To the extent the cost of Tenants' Work shall
exceed Tenant's Fund, Tenant shall pay Landlord therefor (together with
Landlord's fee equal to eight percent (8%) of the cost of Tenant's Work) within
fifteen (15) days after Substantial Completion of each line item of Tenant's
Work and receipt of an invoice therefor so certified and verified.
ARTICLE 6 - TAX AND OPERATING EXPENSE PAYMENTS
6.01 On or before the Commencement Date, Landlord shall use its best
efforts to obtain from the City of Weehawken, a separate tax lot and zoning lot
number for the Demised Premises. Commencing on the Commencement Date and
provided that Landlord shall have obtained a separate tax lot number for the
Demised Premises, Tenant shall pay to the appropriate governmental authority the
Real Estate Taxes for the Land and the Building for any year during the Term
five (5) business days before any delinquency fee would be imposed upon the
payment of the same. If Landlord shall not have obtained a separate tax lot
number for the Demised Premises on or before the Commencement Date, then,
commencing on the Commencement Date, Tenant shall pay to Landlord an amount
equal to Tenant's Proportionate Share (hereinafter defined) of the Real Estate
Taxes for the tax lot of which the Land forms a part not later than five (5)
business days before any delinquency fee would be imposed upon the payment of
the same, until such time as Landlord shall have obtained such separate tax lot
number; but in no event shall Tenant's payment for Real Estate Taxes be more or
less than that amount which Tenant would have paid if the Demised Premises were
a separate tax lot. Tenant's "Proportionate Share" shall mean Tenant's Fraction
of the sum of (x) the tax attributable to the Building and other improvements
located on the Land, as may be separately assessed or as shown on the Tax
Assessor's notes, and (y) 3.60% of the tax attributable to the tax lot of which
the Land forms a portion. Landlord agrees that, throughout the Term, the Demised
Premises will constitute a separate tax lot, separate and apart from other real
property. In determining the amount of Real Estate Taxes for the partial
calendar years in which the Term shall commence or expire, Real Estate Taxes
payable in such calendar year shall be apportioned for that portion of the Tax
Year
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(hereinafter defined) occurring within the calendar year and Real Estate Taxes
for such calendar year shall be prorated for the number of days in such calendar
year occurring subsequent to the Commencement Date or prior to the Expiration
Date, as the case may be. "Tax Year" shall mean the period January 1 through
December 31 (or such other period as hereafter may be duly adopted by the City
of Weehawken as its fiscal year for Real Estate Tax purposes), any portion of
which occurs during the Term. Tenant shall have the right to institute, and in
good faith prosecute, tax certiorari proceedings with respect to the Demised
Premises. In the event of the institution of such proceedings, such proceedings
shall be at Tenant's sole cost and expense and Landlord shall cooperate fully
with Tenant in connection with any such proceedings.
6.02(a) Not later than the Commencement Date, Landlord shall deliver to
Tenant a statement estimating the Operating Expenses for the partial calendar
year commencing on the Commencement Date and Tenant shall pay to Landlord on the
first day of each month during the first partial calendar year of the Term an
amount equal to such estimated Operating Expenses divided by the number of
months or partial months in such partial calendar year. On or before March 1 of
each calendar year or partial calendar year subsequent to the first partial
calendar year during the Term, Landlord shall furnish Tenant with an operating
statement (the "Operating Statement") in reasonable detail setting forth the
actual Operating Expenses for the preceding calendar year. If such Operating
Statement shall show that the actual Operating Expenses for the preceding
calendar year were in excess of those estimated by Landlord and previously paid
by Tenant, then within thirty (30) days after receipt of such actual Operating
Statement, Tenant shall remit to Landlord any such deficiency. If such Operating
Statement shall show that Tenant shall have paid amounts in excess of the actual
Operating Expenses, then Landlord shall remit to Tenant, together with such
Operating Statement, a check in the amount equal to such excess payments .
(b) In addition, in each Operating Statement, Landlord may set
forth any estimated increases in Operating Expenses for the then current
calendar year, provided, however, that in no event shall Landlord's estimate
exceed an amount equal to the sum of the actual
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Operating Expenses for the preceding calendar year and an amount equal to such
actual Operating Expenses multiplied by the percentage increase in 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 (1967 = 100), or any successor index hereto, appropriately
adjusted (the "CPI"). If the CPI ceases to be published, and there is no
successor thereto, such other index as Landlord or Tenant shall agree upon in
writing shall be substituted for the CPI. If Landlord or Tenant are unable to
agree as to such substituted index, such matter shall be submitted to the
American Arbitration Association or any successor organization for determination
in accordance with the regulations and procedures thereof then obtaining for
commercial arbitration. After receipt of such Operating Statement, Tenant shall
pay to Landlord a sum equal to 1/12th of the amount shown on such statement
multiplied by the number of months of the Term in said calendar year preceding
the demand, less the amount (if any) paid by Tenant prior to such demand
pursuant hereto for such months, and thereafter, commencing with the month in
which the demand is made in continuing thereafter for each month of the Term
until the rendition of a new Operating Statement, 1/12th of the amount shown on
such Operating Statement.
6.03 Each such statement given by Landlord pursuant to Section 6.02
shall be conclusive and binding upon Tenant unless within ninety (90) days after
the receipt of the Operating Statement provided for above Tenant shall notify
Landlord that it disputes the correctness of the statement, specifying, to the
extent the information is available, the particular respects in which the
statement is claimed to be incorrect. If such notice is sent, Tenant and its
accountants may examine Landlord's books and records relating to the Operating
Expenses to determine the accuracy of the Operating Statement. If after such
examination, Tenant still disputes such Operating Statement, either party may
refer the decision of the issues raised to one of the so-called "Big-Eight"
public accounting firms, mutually satisfactory to Landlord and Tenant, or if
Landlord and Tenant shall be unable to agree, then the firm to which the dispute
shall be referred shall be chosen as follows: Landlord and Tenant shall each be
permitted to exclude one of such firms from the pool of acceptable firms; the
firm to whom such decision shall be referred shall then
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be chosen by lot from the pool of remaining firms, and if the firm chosen by lot
shall refuse to serve, a substitute firm shall be chosen by lot. The firm so
chosen may, in its discretion, retain one or more consultants to assist in the
resolution of the dispute referred to it. The decision of such accountants,
absent manifest error, shall be conclusively binding upon the parties. The fees
and expenses (including the fees of such consultants) involved in such decisions
shall be borne by the unsuccessful party (and if both parties are partially
successful, the accountants shall apportion the fees and expenses between the
parties based on the degree of success of each party). If such dispute is
ultimately determined in Tenant's favor (either by agreement between Landlord or
Tenant or by decision of the accountants), Landlord promptly after such
determination shall pay to Tenant any amount overpaid by Tenant. Pending the
determination of such dispute by agreement or arbitration as aforesaid, Tenant
shall, within ten (10) days after receipt of such statement, pay the Additional
Charges in accordance with Landlord's statement, without prejudice to Tenant's
position.
ARTICLE 7 - COMMON AREAS
7.01 Subject to the provisions of Section 5.03, Landlord will enforce
the Reciprocal Construction Operation and Easement Agreement, between Ground
Lessor and the Township of Weehawken.
7.02 Tenant and its subtenants and their respective officers,
employees, agents, customers and invitees, shall have the non-exclusive right,
in common with Landlord and all others to whom such right may have been or may
hereafter be granted, but subject to the Rules and Regulations, if any, to use
the common areas. Landlord reserves the right, at any time and from time to
time, to close temporarily all or any portions of the common areas of the
Lincoln Harbor Project (provided that such closure does not unreasonably
interfere with Tenant's business at the Demised Premises, except in cases of
emergency) when in Landlord's reasonable judgment any such closing is necessary
or to (a) permit Hartz or its successors or assigns or designees to make repairs
or changes or to effect construction within the Lincoln Harbor project; (b)
prevent the acquisition of public rights in such areas; or (c) to protect or
preserve natural persons or property. Landlord may do such other acts in and to
the
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common areas of the Lincoln Harbor Project as in its reasonable judgment may be
desirable to improve or maintain same, provided, however that Landlord shall not
change the standard of maintenance of the common areas of the Lincoln Harbor
Project without Tenant's approval, which approval shall not be unreasonably
withheld or delayed. In all such events, Landlord's Work shall be commenced and
prosecuted diligently and with as little interference as possible with Tenant's
use of the Demised Premises.
7.03 Tenant agrees that it, any subtenant or licensee and their
respective officers, employees, contractors and agents will park their
automobiles and other vehicles only where and as permitted by Landlord. Tenant
will, if and when so requested by Landlord, furnish Landlord with the license
numbers of any vehicles of Tenant, any subtenant or licensee and their
respective officers, employees and agents. Tenant shall be furnished with the
use of 1 unreserved parking space for every 690 square feet of Floor Space in
the Building, of which spaces, at Tenant's request, five percent (5%) shall be
reserved for exclusive executive parking. Tenant shall have access to all such
spaces twenty-four (24) hours a day, throughout the Term. Landlord shall
maintain or cause to be maintained all such parking in a manner reasonably
satisfactory to Tenant.
ARTICLE 8 - LABOR HARMONY
8.01 Tenant shall not exercise its rights under Article 15 or any other
provision of this Lease in a manner which would violate Landlord's union
contracts or create any work stoppage, picketing labor disruption or dispute or
any interference with the business of Landlord.
ARTICLE 9 - SUBORDINATION
9.01 Provided that (a) a Superior Mortgagee shall execute and deliver
to Tenant an agreement, in recordable form, substantially in the form attached
hereto and made a part hereof as Exhibit "K-1", to the effect that, provided no
event of default has occurred and is continuing hereunder, such Superior
Mortgagee will not name or join Tenant as a party defendant or otherwise in any
suit, action or proceeding to enforce any rights granted to such Superior
Mortgagee under its Superior
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Mortgage, and to the further effect that if there shall be a foreclosure of its
Superior Mortgage, that the Superior Mortgagee will not make Tenant a party
defendant to such foreclosure, evict Tenant, disturb Tenant's possession under
this Lease, or terminate or disturb Tenant's leasehold estate or rights
hereunder, or (b) a Superior Lessor shall execute and deliver to Tenant an
agreement, in recordable form, substantially in the form annexed hereto as
Exhibit "K-2", to the effect that, provided no Event of Default shall have
occurred and is continuing hereunder, such Superior Lessor will not name or join
Tenant as a party defendant or otherwise in any suit, action or proceeding to
enforce any rights granted to such Lessor under its Superior Lease, and to the
further effect that if its Superior Lease shall terminate or be terminated for
any reason, such Superior Lessor will recognize Tenant as the direct tenant of
such Superior Lessor on the same terms and conditions as are contained in this
Lease (any such agreement, or any agreement of similar import from a Superior
Mortgagee or Superior Lessor, as the case may be, being hereinafter called a
"Nondisturbance Agreement"), this Lease shall be subject and subordinate to such
Superior Mortgage or to such Superior Lease in respect of which a Nondisturbance
Agreement shall have been delivered, and to all renewals, extensions,
supplements, amendments, modifications, consolidations and replacements of such
Superior Mortgage or Superior Lease or any substitutions therefor, and advances
made thereunder. The provisions of this Section 9.01 shall be self-operative and
no further instrument of subordination shall be required upon delivery of such
Nondisturbance Agreement, however, in confirmation of such subordination, Tenant
shall promptly execute, acknowledge and deliver an instrument of evidencing such
subordination; and if Tenant fails to execute, acknowledge or deliver any such
instruments within thirty (30) days after request therefor, Tenant hereby
irrevocably constitutes and appoints Landlord as Tenant's attorney-in-fact,
coupled with an interest, to execute and deliver any such instruments for and on
behalf of Tenant.
9.02 If any act or omission of Landlord would give Tenant the right,
immediately or after lapse of a period of time, to cancel or terminate this
Lease, or to claim a partial or total eviction, Tenant shall not exercise such
right until and unless (a) it has given written notice of such act or omission
to Landlord and each Superior Mortgagee and each Superior Lessor whose name and
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address shall previously have been furnished to Tenant, and (b) such act or
omission shall not have been remedied within thirty (30) days following the
giving of such notice and following the time when such Superior Mortgagee or
Superior Lessor shall have become entitled under such Superior Mortgage or
Superior Lease, as the case may be, to remedy the same (or such longer period as
may be reasonably required if such condition is not susceptible to remedy within
such thirty (30) day period provided such Superior Lessor or Superior Mortgagee
commences and diligently pursues such remedy, which reasonable period shall in
no event be less than the period to which the Landlord would be entitled under
this Lease or otherwise, after similar notice, to effect such remedy).
9.03 If any Superior Lessor or Superior Mortgagee shall succeed to the
rights of Landlord under this Lease, whether through possession or foreclosure
action or delivery of a new lease or deed, then at the request of such party so
succeeding to Landlord's rights ("Successor Landlord") and upon such Successor
Landlord's written agreement to accept Tenant's attornment, Tenant shall attorn
to and recognize such Successor Landlord as Tenant's landlord under this Lease
and shall promptly execute and deliver any instrument that such Successor
Landlord may reasonably request to evidence such attornment provided that such
Successor Landlord shall then be entitled to Possession of the Demised Premises
and shall have either agreed to assume the obligations of Landlord hereunder or
shall have entered into a Nondisturbance Agreement with Tenant. Upon such
attornment this Lease shall continue in full force and effect as a direct lease
between the Successor Landlord and Tenant upon all of the terms, conditions and
covenants as are set forth in this Lease except that the Successor Landlord
(unless such Successor Landlord is an affiliated entity of Landlord) shall not
(a) be liable for any previous act or omission of Landlord under this Lease
unless the same shall be continuing; (b) be subject to any offset, not expressly
provided for in this Lease, which theretofore shall have accrued to Tenant
against Landlord; or (c) be bound by any previous modification of this Lease or
by any previous prepayment of more than one month's Fixed Rent or Additional
Charges, unless such modification or prepayment shall have been expressly
approved in writing by the Superior Lessor of the Superior Lease or the
Mortgagee of the Superior Mortgage through or by reason of which the
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Successor Landlord shall have succeeded to the rights of Landlord under this
Lease.
9.04 If any then present or prospective Superior Mortgagee shall
require any modifications of this Lease, Tenant shall promptly execute and
deliver to Landlord such instruments effecting such modification(s) as Landlord
shall request, provided that such modification(s) do not adversely affect in any
material respect any of Tenant's rights under this Lease, materially increase
Tenant's obligations under this Lease or materially diminish Landlord's
obligations under this Lease.
ARTICLE 10 - QUIET ENJOYMENT
10.01 So long as no Event of Default shall have occurred and be
continuing, Tenant shall peaceably and quietly have, hold and enjoy the Demised
Premises without hindrance, ejection or molestation by Landlord or any person
lawfully claiming through or under Landlord, subject, nevertheless, to the
provisions of this Lease and the Ground Lease.
ARTICLE 11 - ASSIGNMENT, SUBLETTING AND MORTGAGING
11.01 Tenant shall have the absolute right, at any time, without
Landlord's consent, to (a) assign or otherwise transfer this Lease, or offer or
advertise to do so, and (b) sublet the Demised Premises or any part thereof, or
offer or advertise to do so, or allow the same to be used, occupied or utilized
by anyone other than Tenant, or (c) mortgage, pledge, encumber or otherwise
hypothecate this Lease in any manner whatsoever.
11.02(a) Notwithstanding anything contained in Section 11.01 hereof,
prior to the earlier to occur of either the fifth anniversary of the
Commencement Date and the date on which the improvements to be constructed in
the Lincoln Harbor Project, as more particularly set forth on Exhibit "K"
annexed hereto and made a part hereof, shall be 90% leased, Tenant may not
assign its interest in this Lease or sublet all or any portion of the Demised
Premises, provided, however, that Tenant shall have the right during such
period, without Landlord's prior consent, to sublet a portion or portions of the
Demised Premises not to exceed 75,000 square feet of floor space in the
aggregate (such amount to be reduced, foot for foot, by an amount equal to the
area sublet by
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Tenant pursuant to a similar provision in any other lease of which Tenant is
tenant in the Lincoln Harbor Project) which amount Tenant agrees is fair and
reasonable.
(b) Notwithstanding the foregoing, however, the provisions of
clause (a) of this Section 11.02 shall not be deemed to apply to (x) any
assignment of Tenant's interest in this Lease to an Affiliate (hereinafter
defined) or to any assignment, whether by operation of law or otherwise, to a
company which is Tenant's successor-in-interest either by merger or
consolidation, or to any assignment to a purchaser of all or substantially all
of Tenant's assets, or (y) any subleasing of all or any portion of the Demised
Premises to an Affiliate unless the summary purpose of any such transaction is
to transfer the estate created by this Lease in violation of Section 11.02(a)
hereof. For purposes hereof, "Affiliate" shall be deemed to mean a corporation
or other entity which shall (1) control, (2) be under the control of, or (3)
shall be under common control with, Tenant (the term "control" as used herein
shall be deemed to mean ownership of more than 5% of the voting stock of a
corporation on a fully diluted basis, if such corporation is publicly traded, or
more than 50% of the voting stock of a privately held corporation, or other
majority equity and control interest, if not a corporation.
11.03 If this Lease is assigned, Landlord may collect rent from the
assignee. If the Demised Premises or any part thereof are sublet or used or
occupied by anybody other than Tenant, Landlord may, after default by Tenant,
and expiration of Tenant's time to cure such default, collect rent from the
subtenant or occupant. In either event, Landlord may apply the net amount
collected to the Rent, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver of any of the provisions of this Article 11,
or the acceptance of the assignee or subtenant as occupant or a release of
Tenant from the performance by Tenant of Tenant's obligations under this Lease.
11.04(a) Any assignment or transfer shall be made only if, and shall
not be effective until, the assignee shall execute, acknowledge and deliver to
Landlord an agreement in form and substance satisfactory to Landlord whereby the
assignee shall assume Tenant's obligations under this Lease and whereby the
assignee shall agree that all of the provisions in this Article 11
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shall, notwithstanding such assignment or transfer, continue to be binding upon
it in respect to all future assignments and transfers. Notwithstanding any
assignment or transfer, whether or not in violation of the provisions of this
Lease, and notwithstanding the acceptance of Rent by Landlord from an assignee,
transferee, or any other party, the original Tenant and any other person(s) who
at any time was or were Tenant shall remain fully liable for the payment of the
Rent and for Tenant's other obligations under this Lease unless, in the event of
such permitted assignment or transfer, Landlord releases Tenant from its
obligations under this Lease as provided in Section 11.04(b) of this Lease.
(b) In the event Tenant assigns its interest in this Lease,
Landlord agrees, subject to the prior consent of any Superior Mortgagee, to
release Tenant from its obligations under this Lease provided all of the
following conditions are met:
(i) Such permitted assignee has a net worth at least
equal to $250,000,000, as the same shall be increased or decreased on each
anniversary of the Commencement Date commencing on the fifth (5th)
anniversary of the Commencement Date by an amount equal to the product of
$250,000,000 and seventy-five percent (75%) of the percentage increase or
decrease in the CPI for the immediately preceding twelve (12) month period;
provided, however, that in no event shall the same be decreased to be less
than $250,000,000; and
(ii) Such permitted assignee is a well known business
entity of high repute having a standing in the business community, in
Landlord's reasonable judgment, at least equivalent to Paine Webber, Inc.;
and
(iii) Such permitted assignee executes an agreement in
substance and form reasonably satisfactory to Landlord whereby such
assignee assumes all of Tenant's obligations under this Lease.
11.05 Promptly after request therefor by Tenant, Landlord shall enter
into a Nondisturbance Agreement with any subtenant of Tenant occupying one or
more full
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floors of the Demised Premises, substantially in the form annexed hereto as
Exhibit "L".
11.06 The liability of the original named Tenant and any other
Person(s) who at any time was or were Tenant for Tenant's obligations under this
Lease shall not be discharged, released or impaired by any agreement or
stipulation made by Landlord extending the time of, or modifying any of the
obligations of, this Lease, or by any waiver or failure of Landlord to enforce
any of the obligations of this Lease.
11.07 The listing of any name other than that of Tenant, whether on the
doors of the Building or otherwise, shall not operate to vest any right or
interest in this Lease or in the Demised Premises, nor shall it be deemed to be
the consent of Landlord to any assignment or transfer of this Lease or to any
sublease of the Demised Premises or to the use or occupancy thereof by others.
11.08 Without limiting any of the provisions of Article 27, if pursuant
to the Federal Bankruptcy Code (or any similar law hereafter enacted having the
same general purpose), Tenant assigns this Lease, adequate assurance of future
performance by an assignee expressly permitted under such Code shall be deemed
to mean the deposit of cash security in an amount equal to the sum of one (1)
year's Fixed Rent plus an amount equal to the Additional Charges for the
Calendar Year preceding the year in which such assignment is intended to become
effective, which deposit shall be held by Landlord for the balance of the Term,
without interest, as security for the full performance of all of Tenant's
obligations under this Lease, that if Tenant defaults in the full and prompt
payment and performance of any of its obligations under this Lease, including,
without limitation, the payment of Rent, Landlord may use, apply or retain the
whole or any part of the security so deposited to the extent required for the
payment of any Rent or any other sums as to which such tenant is in default or
for any sum which Landlord may expend or may be required to expend by reason of
Tenant's default in respect of any of such Tenant's obligations under this
Lease, including, without limitation, any damages or deficiency in the reletting
of the Demised Premises, whether such damages or deficiency accrue before or
after summary proceedings or other re-entry by Landlord. If Landlord shall so
sue, apply or retain the whole or any part of the security, Tenant
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shall upon demand immediately deposit with Landlord a sum equal to the amount so
used, applied and retained, as security as aforesaid. If Tenant shall fully and
faithfully pay and perform all of Tenant's obligations under this Lease, the
security or any balance thereof to which such tenant is entitled shall be
returned or paid over to such tenant after the date on which this Lease shall
expire or sooner end or terminate, and after delivery to Landlord of entire
Possession of the Demised Premises. In the event of any sale or leasing of the
Building or leasing of Demised Premises, Landlord shall have the right to
transfer the security to which Tenant is entitled to the vendee or lessee and
Landlord shall thereupon be released by such tenant from all liability for the
return or payment thereof; Tenant shall look solely to the new landlord for the
return or payment of the same; and the provisions hereof shall apply to every
transfer or assignment made of the same to a new landlord. Tenant shall not
assign or encumber or attempt to assign or encumber the monies deposited herein
as security, and neither Landlord nor its successors or assigns shall be bound
by any such assignment, encumbrance, attempted assignment or attempted
encumbrance.
ARTICLE 12 - COMPLIANCE WITH LAWS
12.01 Tenant shall comply with all Legal Requirements which shall, in
respect of the Demised Premises or the use and occupation thereof, or the
abatement of any nuisance in, on or about the Demised Premises, impose any
violation, order or duty on Landlord or Tenant; and Tenant shall pay all the
cost, expenses, fines, penalties and damages which may be imposed upon Landlord
or any Superior Lessor by reason of or arising out of Tenant's failure to fully
and promptly comply with and observe the provisions of this Section 12.01.
However, Tenant need not comply with any such law or requirement of any public
authority so long as Tenant shall be contesting the validity thereof, or the
applicability thereof to the Demised Premises, in accordance with Section 12.02.
Landlord shall be in full compliance with any Legal Requirements applicable to
Landlord's Work on or before the Commencement Date, and the obligation of Tenant
to comply with any Legal Requirement as set forth immediately above shall not
arise with respect to any such Legal Requirement with which Landlord is not in
compliance as of the Commencement Date, until such time as non-compliance shall
have been cured by Landlord.
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12.02 Tenant may contest, by appropriate proceedings prosecuted
diligently and in good faith, the validity, or applicability to the Demised
Premises, of any Legal Requirement, provided that (a) Landlord shall not be
subject to criminal penalty or to prosecution for a crime and neither the
Demised Premises nor any part thereof shall be subject to being condemned or
vacated, by reason of non-compliance or otherwise by reason of such contest; (b)
before the commencement of such contest, Tenant shall furnish to Landlord either
(i) the bond of a surety company satisfactory to Landlord, which bond shall be,
as to its provisions and form, satisfactory to Landlord, and shall be in an
amount at least equal to 125% of the cost of such compliance (as estimated by a
reputable contractor designated by Landlord) and shall indemnify Landlord
against the cost thereof and against all liability for damages, interest,
penalties and expenses (including reasonable attorneys' fees and expenses),
resulting from or incurred in connection with such contest or noncompliance, or
(ii) other security in place of such bond satisfactory to Landlord; (c) Tenant
shall keep Landlord advised as to the status of such proceedings.
Notwithstanding anything herein to the contrary, the provisions of (b) above
shall not apply during such time as Paine Webber, Inc. remains obligated for
Tenant's obligations under this Lease. Without limiting the application of the
above, Landlord shall be deemed subject to prosecution for a crime if Landlord,
or its managing agent, or any officer, director, partner, shareholder or
employee of Landlord or its managing agent, as an individual, is charged with a
crime of any kind or degree whatsoever, whether by service of a summons or
otherwise, unless such charge is withdrawn before Landlord or its managing
agent, or such officer, director, partner, shareholder or employee of Landlord
or its managing agent (as the case may be) is required to plead or answer
thereto.
ARTICLE 13 - INSURANCE AND INDEMNITY
13.01(a) Tenant shall at all times during the term hereof maintain or
cause to be maintained business interruption insurance with a rent insurance
endorsement payable to Landlord, covering a period of at least twelve (12)
months. Landlord shall obtain and keep in full force and effect insurance
against loss or damage by fire and other casualty to the Building, including any
item of Tenant's Work, as may be insurable under then available
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standard forms of "all risk" insurance policies, in an amount equal to 100% of
the replacement value thereof (and Tenant shall pay Tenant's Fraction of the
cost thereof in accordance with Exhibit "H" annexed hereto and made a part
hereof). Tenant shall notify Landlord of the completion of any Tenant's Work and
of the costs thereof, and shall maintain adequate records with respect to such
Tenant's Work to facilitate the adjustment of any insurance claims with respect
thereto. Tenant shall cooperate with Landlord and Landlord's insurance companies
in the adjustment of any claims for any damage to the Building or to such
Tenant's Work. On or prior to the Commencement Date, Landlord shall deliver to
Tenant appropriate certificates of insurance, including evidence of waivers of
subrogation required pursuant to Section 13.05 hereof, required to be carried by
Landlord pursuant to this Article 13. Evidence of each renewal or replacement of
a policy shall be so delivered by Landlord to Tenant at least ten days prior to
the expiration of such policy. Any certificates so deposited by Landlord with
Tenant shall indicate whether the insurance required by this Article 13 is
affected under a blanket insurance policy and, if so, shall certify to the
aggregate amount of such blanket insurance policy and to the fact that there are
no sublimits which derogate from the coverage required by this Article.
13.02 Tenant also shall maintain the following insurance: (a)
comprehensive general public liability insurance in respect of the Demised
Premises and the conduct and operation of business therein, with Landlord as an
additional named insured, and at Landlord's request with any Superior Lessors as
additional named insured(s), with limits of not less than $3,000,000 for bodily
injury or death to any one person and $5,000,000 for bodily injury or death to
any number of persons in any one occurrence, and $500,000 for property damage,
including water damage and sprinkler leakage legal liability, and (b) any other
insurance required for compliance with the Insurance Requirements. Tenant shall
also obtain and keep in full force and effect a policy of insurance against loss
or damage by fire, and such other risks and hazards (including burglary and
theft) as are insurable under then available standard forms of "all risk"
insurance policies, to Tenant's Property, for one hundred percent (100%) of the
replacement value thereof or for such lesser amount as will avoid co-insurance
(including an "agreed amount" endorsement), protecting Landlord, Land-
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lord's agents, any Superior Mortgagee, any Superior Lessor and Tenant as
insured, as their interest may appear; provided, however, that no such
additional insured party shall be entitled to adjust, or participate in the
adjustment of, any loss or receive any proceeds under any such insurance policy,
and the policies may so provide. Tenant shall deliver to Landlord and any
additional named insured(s) certificates for such fully paid-for policies at
least ten (10) days before the Commencement Date. Tenant shall procure and pay
for renewals of such insurance from time to time before the expiration thereof,
and Tenant shall deliver to Landlord and any additional insured(s) certificates
therefor at least 30 days before the expiration of any existing policy. All such
policies shall be issued by companies of recognized responsibility licensed to
do business in New Jersey, and all such policies shall contain a provision
whereby the same cannot be cancelled unless Landlord and any additional
insured(s) are given at least 20 days' prior written notice of such
cancellation.
13.03 Tenant shall not do, permit or suffer to be done any act, matter,
thing or failure to act in respect of the Demised Premises or use or occupy the
Demised Premises or conduct or operate Tenant's business in any manner
objectionable to any insurance company or companies whereby the fire insurance
or any other insurance then in effect in respect to the Demised Premises or any
part thereof shall become void or suspended or whereby any premiums in respect
of insurance maintained by Landlord shall be higher than those which would
normally have been in effect for the occupancy contemplated under the Permitted
Uses. In case of a breach of the provisions of this Section 13.03, in addition
to all other rights and remedies of Landlord hereunder, Tenant shall (a)
indemnify Landlord and the Superior Lessors and hold Landlord and the Superior
Lessors harmless from and against any loss which would have been covered by
insurance which shall have become void or suspended because of such breach by
Tenant and (b) pay to Landlord any and all increases of premiums on any
insurance, including, without limitation, rent insurance, resulting from any
such breach.
13.04(a) Tenant shall indemnify and hold harmless Landlord and all
Superior Lessors and its and their respective partners, joint venturers,
directors, officers, agents, servants and employees from and against any
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and all claims arising from or in connection with (a) Tenant's conduct or
management of the Demised Premises or of any business therein, or any work or
thing whatsoever done, or any condition created (other than by Landlord) in the
Demised Premises during the Term or during the period of time, if any, prior to
the Commencement Date that Tenant may have been given access to the Demised
Premises, except to the extent due to Landlord's wrongful acts or gross
negligence; (b) any act, omission or negligence of Tenant or any of its
subtenants or licensees or its or their partners, joint ventures, directors,
officers, agent, employees or contractors; (c) any accident, injury or damage
whatever (except to the extent caused by Landlord's acts or negligence)
occurring in the Demised Premises or the common areas of the Lincoln Harbor
Project; and (d) any breach or default by Tenant in the full and prompt payment
and performance of Tenant's obligations under this Lease; together with all
costs, expenses and obligations under this Lease; together with all costs,
expenses and liabilities incurred in or in connection with each such claim or
action or proceeding brought thereon, including, without limitation, all
attorneys ' fees and expenses. In case any action or proceeding is brought
against Landlord and/or any Superior Lessor and/- or its or their partners,
joint venturers, directors, officers, agents and/or employees by reason of any
such claim, Tenant, upon notice from Landlord or such Superior Lessor, shall
resist and defend such action or proceeding by counsel reasonably satisfactory
to Landlord. Counsel appointed by the insurance company insuring the Building
shall be deemed satisfactory to Landlord.
(b) Landlord shall indemnify and hold harmless Tenant and its
directors, officers, agents, servants and employees from and against any and all
claims arising from or in connection with (a) Landlord's conduct or management
of the Building or any business therein, or other work or thing whatsoever done,
or any condition created (other than by Tenant), in the Building during the Term
or during the period of time, if any, prior to the Commencement Date that Tenant
may have been given access to the Demised Premises, to the extent due to
Landlord's wrongful acts or gross negligence; (b) any act, omission or
negligence of Landlord or its agents or their partners, joint ventures,
directors, officers, agents, employees or contractors; (c) any accident, injury
or damage whatever (except to the extent caused by Tenant's acts or negligence)
occurring in the Building
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and (d) any breach or default by Landlord in the prompt payment and performance
of Landlord's obligations under this Lease; together with all costs, expenses
and liabilities incurred in or in connection with each such claim or action or
proceeding brought thereon, including, without limitation, all attorneys' fees
and expenses. In case any action or proceeding is brought against Tenant and/or
its directors, officers, agents and/or employees by reason of any such claim,
Landlord, upon notice from Tenant, shall resist and defend such action or
proceeding by counsel reasonably satisfactory to Tenant. Counsel appointed by
the insurance company insuring the Building shall be deemed satisfactory to
Tenant.
13.05 The parties hereto shall procure an appropriate clause in, or
endorsement on, any fire or extended coverage insurance covering the Building
and personal property, fixtures and equipment located thereon or therein,
pursuant to which the insurance companies waive subrogation or consent to a
waiver of right of recovery, or an express agreement that the applicable
insurance policy.shall not be invalidated if the insured waives, or has waived
before the casualty, the right of recovery, or an express agreement that the
applicable insurance policy shall not be invalidated if the insured waives, or
has waived before the casualty, the right of recovery against any party
responsible for a casualty covered by such policy, and having obtained such
clauses or endorsements or agreements of waiver of subrogation or consent to a
waiver of right of recovery, the parties agree that they will not make. any
claim against or seek to recover from the other or anyone acting or claiming
under or through the other or any of their respective officers, directors,
shareholders, partners, employees, agents or contractors, for any loss or damage
to its property or the property of others resulting from fire or other hazards
covered by such fire and extended coverage insurance, 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 or recovery. 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
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shall not elect to pay such additional premium or if such clause may not be
obtained, even with the payment of an additional premium, then (in either event)
such party shall so notify the first party and the first party's agreement not
to make any claim or seek recover shall not be effective thereafter. If either
party shall be unable to obtain the inclusion of such clause even with the
payment of an additional premium, then such party shall attempt to name the
other party as an additional insured (but not a loss payee) under the policy. If
the payment of an additional premium is required for naming the other party as
an additional insured (but not a loss payee), each party shall advise the other
of the amount of any such additional premium 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 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 or if it shall not be possible to
have the other party named as an additional insured (but not loss payee), even
with the payment of an additional premium, then (in either event) such party
shall so notify the first party and the first party's agreement to name the
other party as an additional insured shall be satisfied. If either party shall
fail to have fire or extended coverage insurance in effect as required pursuant
to this Article 13, the agreement not to make any claim or seek recovery
contained in the first sentence of this Section 13.05 shall be in full force and
effect to the same extent as if such required insurance (containing the required
waiver of subrogation clause, endorsement or agreement) were in effect.
ARTICLE 14 - RULES AND REGULATIONS
14.01 Tenant and its employees and agents shall faithfully observe and
comply with the Rules and Regulations and such reasonable changes therein
(whether by modification, elimination or addition) as Landlord at any time or
times hereafter may make and communicate to Tenant, which in Landlord's
reasonable judgment, shall be necessary for the reputation, safety, care or
appearance of the Demised Premises, or the preservation of good order therein,
or the operation or maintenance of the Building or its equipment and fixtures,
or the common areas of the Lincoln Harbor Project, and which do not unreasonably
affect the conduct of Tenant's business in
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the Building; provided, however, that in case of any conflict or inconsistency
between the provisions of this Lease and any of the Rules and Regulations, the
provisions of this Lease shall control. Nothing in this Lease contained shall be
construed to impose upon Landlord any duty or obligation to enforce the Rules
and Regulations against any other tenant or any employees or agents of any other
Tenant, and Landlord shall not be liable to Tenant for violation of the Rules
and Regulations by any other tenant or its employees, agents, invitees or
licensees, provided, however, Landlord shall not enforce any Rule or Regulation
against Tenant which Landlord shall not then be enforcing against all other
tenants of the Lincoln Harbor Project. If Tenant disputes the reasonableness of
any additional Rule or Regulation hereafter adopted by Landlord, the dispute
shall be determined by arbitration in the City of Newark in accordance with the
rules and regulations then obtaining of the American Arbitration Association or
its successor. Any such determination shall be final and binding upon the
parties hereto, whether or not a judgment shall be entered in any court.
ARTICLE 15 - ALTERATIONS
15.01 Tenant shall not make any structural alterations or additions to
the Building which would adversely affect the structural integrity of the
Building, or change the exterior color or architectural treatment of the
Building, or which would otherwise impair the value of the Building without on
each occasion first obtaining the prior written consent of Landlord, it being
acknowledged that Landlord's consent shall not be required for any other
alterations or additions. Tenant shall submit to Landlord plans and
specifications for such work at the time landlord's consent is sought. Tenant
shall pay to Landlord upon demand the reasonable cost and expense of Landlord
for any action of Landlord in excess of (a) reviewing said plans and
specifications and (b) inspecting the alterations to determine whether the same
are being performed in accordance with the approved plans and specifications and
all Legal Requirements and Insurance Requirements including without limitation,
the fees of any architect or engineer employed by Landlord for such purpose.
Before proceeding with any permitted alteration which will cost more than
$350,000 (exclusive of the costs of decorating work and items constituting
Tenant's Property), as estimated by a reputable contrac-
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tor designated by Landlord, Tenant shall obtain and deliver to Landlord either
(i) a performance bond and a labor and materials payment bond (issued by a
corporate surety licensed to do business in New Jersey), each in an amount equal
to 125% of such estimated cost and in form satisfactory to Landlord, or (ii)
such other security as shall be satisfactory to Landlord. Notwithstanding
anything herein to the contrary, the provisions of the immediately preceding
sentence shall not apply during such time as Paine Webber, Inc. remains liable
for Tenant's obligations under this Lease. Tenant shall fully and promptly
comply with and observe the Rules and Regulations then in force in respect of
the making of such alterations. Any review or approval by Landlord of any plans
and/or specifications with respect to any such alterations is solely for
Landlord's benefit, and without any representation or warranty whatsoever to
Tenant in respect to the adequacy, correctness or efficiency thereof or
otherwise.
15.02 Tenant shall obtain all necessary governmental permits and
certificates for the commencement and prosecution of alterations and for final
approval thereof upon completion, and shall cause alterations to be performed in
compliance therewith all applicable Legal Requirements and Insurance
Requirements. Alterations shall be diligently performed in a good and
workmanlike manner, using new materials and equipment at least equal in quality
and class to the better of the original installations of the Building.
Alterations requiring Landlord's consent shall be performed by contractors
licensed in the State of New Jersey (if applicable), whose use shall not
invalidate any Warranties applicable to the Building or its systems, and which
contractors are either employed in connection with the performance of Landlord's
Work and Tenant's Work or are reputable and skilled in their respective trades.
Alterations shall be made in such a manner as not to unreasonably interfere with
or delay and as not to impose any additional expense upon Landlord in the
maintenance, repair or operation of the Building; and if any such additional
expense shall be incurred by Landlord as a result of Tenant's making of any
alterations, Tenant shall pay any such additional expense upon demand.
Throughout the making of alterations, Tenant shall carry, or cause to be
carried, workmen's compensation insurance in statutory limits and general
liability insurance, with completed operation endorsement, for any occurrence in
or about the Building,
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under which Landlord and its managing agent and any Superior Lessor whose name
and address shall previously have been furnished to Tenant shall be named as
parties insured, in such limits as landlord may reasonably require, with issuers
reasonably satisfactory to Landlord. Tenant shall furnish Landlord with
reasonably satisfactory evidence that such insurance is in effect at or before
the commencement of alterations and, on request, at reasonable intervals
thereafter during the making of alterations.
ARTICLE 16 - LANDLORD'S AND TENANT'S PROPERTY
16.01 All fixtures, equipment, improvements and appurtenances attached
to or built into the Building at the commencement of or during the Term at the
expense of Tenant (exclusive of the items to which Tenant's Fund has been
applied) shall be deemed to be the property of Tenant.
16.02 All movable partitions, business and trade fixtures, machinery
and equipment, communications equipment and office equipment, whether or not
attached to or built into the Building, which are installed in the Building by
or for the account of Tenant and can be removed without structural damage to the
Building and all furniture, furnishings, and other personal property owned by
Tenant and located in the Building (collectively, "Tenant's Property") shall be
and shall remain the property of Tenant and may be removed by Tenant at any time
during the Term; provided that if any of the Tenant's Property is removed,
Tenant shall repair or pay the cost of repairing any damage to the Building
resulting from the installation and/or removal thereof. Any equipment or other
property for which Landlord shall have granted any allowance or credit to Tenant
shall not be deemed to have been installed by or for the account of Tenant
without expense to Landlord, shall not be considered as the Tenant's Property
and shall be deemed the property of Landlord.
16.03 At or before the Expiration Date or the date of any earlier
termination of this Lease, or within fifteen (15) days after such an earlier
termination date, Tenant shall surrender the Demised Premises broom clean,
vacant and in good condition, reasonable wear and tear and damage by casualty,
excepted. Tenant may remove any alterations and fixtures and shall remove any
alterations
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or fixtures which are not usual or customary for general office use and which
would materially impair the reletting of the Demised Premises for general office
use. Tenant shall repair any structural damage to the Building resulting from
any installation and/or removal of the Tenant's Property. Any items of the
Tenant's Property which shall remain at the Demised Premises after the
Expiration Date or after a period of fifteen (15) days following an earlier
termination date, may, at the option of Landlord, be deemed to have been
abandoned and in such case such items may be retained by Landlord as its
property or disposed of by Landlord, without accountability, in such manner as
Landlord shall determine at Tenant's Expense.
ARTICLE 17 - REPAIRS AND MAINTENANCE
17.01 Tenant shall, throughout the Term, take good care of the Demised
Premises, the fixtures and appurtenances therein.
Tenant shall be responsible for the cost and expense of all repairs
(including replacement, if required), ordinary and extraordinary, structural and
non-structural, in and to the Building (including the Building systems) and for
the ordinary maintenance including, but not limited to, repairs the need for
which arises out of (a) the performance or existence of the Tenant's Work or
alterations, (b) the installation, use or operation of the Tenant's Property in
the Building, (c) the moving of the Tenant's Property in or out of the Building,
or (d) the act, omission, misuse or neglect of Tenant or any of its subtenants
or its or their employees, agents, contractors, or invitees. Tenant shall
promptly replace all scratched, damaged or broken doors and glass in or about
the Building and shall be responsible for all repairs, maintenance and
replacement of wall and floor coverings in the Building and for the repair and
maintenance of all sanitary and electrical fixtures and equipment therein.
Tenant shall promptly make all repairs in or to the Building for which Tenant is
responsible, provided that any repairs to the mechanical, electrical, plumbing,
heating, ventilating or air conditioning systems of the Building shall only be
made by contractors approved by Landlord in accordance with Section 15.02
hereof.
17.02 Except as otherwise expressly provided in this Lease, Landlord
shall have no liability to Ten-
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ant, nor shall Tenant's covenants and obligations under this Lease be reduced or
abated in any manner whatsoever, by reason of any inconvenience, annoyance,
interruption or injury to business arising from Landlord's doing any repairs,
maintenance or changes which Landlord is permitted by this Lease, or required by
law, to make in or to any portion of the Building.
ARTICLE 18 - ELECTRIC ENERGY
18.01 Tenant shall purchase the electric energy required by it in the
Building at its own expense on a direct-metered basis from the public utility
servicing the Building. Landlord shall not be liable for any failure, inadequacy
or defect in the character or supply of electric current furnished to the
Building except for actual damage suffered by Tenant by reason of any such
failure, inadequacy or defect caused by the negligence or willful acts of
Landlord.
18.02 Tenant's use of electric energy in the Building shall not at any
time exceed the capacity of any of the electrical conductors and equipment in or
otherwise serving the Building.
ARTICLE 19 - HEAT, VENTILATION AND AIR CONDITIONING
19.01 Tenant shall, at Tenant's sole cost and expense, subject to any
guaranties or warranties made by Ground Lessor pursuant to the Guarantee
maintain and operate the heating, ventilating and air-conditioning systems
("HVAC") serving the Demised Premises, and shall furnish HVAC in the Demised
Premises as Tenant may require.
ARTICLE 20 - OTHER SERVICES: SERVICE INTERRUPTION
20.01 Landlord shall, at Tenants' sole cost and expense, cause water to
be supplied to the Demised Premises and Tenant shall pay for such as shown on
the public utility meters therefore.
ARTICLE 21 - ACCESS, CHANGES AND NAME
21.01 Landlord and its agents shall have the right, with as little
interference of Tenant's business as possible, to enter and/or pass through the
Demised Premises upon reasonable notice and at reasonable times
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(a) to examine the Demised Premises and to show them to actual and prospective
Superior Lessors, Superior Mortgagees, or prospective purchasers of the Demised
Premises, and (b) to make such repairs, alterations, additions and improvements
in or to the Building and/or its facilities and equipment as Landlord is
required or desires to make. Landlord shall be allowed to take all materials
into and upon the Demised Premises that may be required in connection therewith,
without any liability to Tenant and without any reduction of Tenant's
obligations hereunder. The right of Landlord and Landlord's agent to enter into
the Demised Premises shall not include any area of the Demised Premises
designated on written notice to Landlord as a "security area" unless a
representative of Tenant shall be present, which representative Tenant agrees to
have present at the Demised Premises upon reasonable advance oral notice by
Landlord, provided, however, that in the event of any emergency, Landlord shall
have the right to enter into any such security area without being accompanied by
such representative of Tenant but shall be accompanied by a police officer,
fireman or other public official. During the period of eighteen (18) months
prior to the Expiration Date, Landlord and its agents may exhibit the Demised
Premises to prospective tenants.
21.02 During such time as Paine Webber, Inc. or an affiliated entity is
the Tenant, Tenant may name the Building, any name associated with Paine Webber,
Inc. or its Affiliates, as the same may change from time to time as the result
of mergers or consolidations or otherwise.
ARTICLE 22 - MECHANICS' LIENS AND OTHER LIENS
22.01 Nothing contained in this Lease shall be deemed, construed or
interpreted to imply any consent or agreement on the part of Landlord to subject
Landlord's interest or estate to any liability under the mechanic's or other
lien law. If any mechanic's or other lien or any notice of intention to file a
lien is filed against the Land, or any part thereof, for any work, labor,
service or materials claimed to have been performed or furnished for or on
behalf of Tenant or anyone holding any part of the Demised Premises through or
under Tenant, Tenant shall cause the same to be cancelled and discharged of
record by payment, bond or order of a court of
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competent jurisdiction within fifteen (15) days after notice by Landlord to
Tenant.
ARTICLE 23 - NON-LIABILITY AND INDEMNIFICATION
23.01 In addition to the provisions of Article 13 of this Lease, except
as set forth in the Guarantees, dated of even date herewith, by Ground Lessor
for the benefit of Tenant (collectively, the "Guarantees"), neither Landlord nor
any partner, joint venturer, director, officer, agent, servant or employee of
Landlord shall be liable to Tenant for any loss, injury or damage to Tenant or
to any other Person, or to its or their property, irrespective of the cause of
such injury, damage or loss, except to the extent caused by or resulting from
the negligence of Landlord, its agents, servants or employees in the operating
or maintenance of the Demised Premises. Further, neither Landlord nor any
partner, joint venturer, director, officer, agent, servant or employee of
Landlord shall be liable (a) for any such damage caused by other tenants or
Persons in, upon or about the Demised Premises, or caused by operations in
construction of any private, public or quasi-public work; or (b) even if
negligent, for consequential damages arising out of any loss of use of the
Demised Premises or any equipment or facilities therein by Tenant or any Person
claiming through or under Tenant.
23.02 Notwithstanding any provision to the contrary, except as set
forth in the Guarantees, Tenant shall look solely to the estate and property of
Landlord in and to the Demised Premises (or the proceeds received by Landlord on
a sale of such estate and property net of bona fide liens and expenses). In the
event of any claim against Landlord arising out of or in connection with this
Lease, the relationship of Landlord and Tenant or Tenant's use of the Demised
Premises or the Project Common Areas, Tenant, (and its successor and assigns)
agrees that the liability of Landlord arising out of or in connection with this
Lease, the relationship of Landlord and Tenant or Tenant's use of the Demised
Premises or the Project Common Areas shall be limited to such estate and
property of Landlord (or sale proceeds net of bona fide liens and expenses). No
other properties or assets of Landlord or any partner, joint venturer, director,
officer, agent, servant or employee of Landlord shall be subject to levy,
execution or other enforcement procedures for the satisfaction of any judgment
(or other
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judicial process) or for the satisfaction of any other remedy of Tenant arising
out of, or in connection with, this Lease, the relationship of Landlord and
Tenant or Tenant's use of the Demised Premises or the Project Common Areas. If
Tenant shall acquire a lien on or interest in any other properties or assets by
judgment or otherwise, Tenant shall promptly release such lien on or interest in
such other properties and assets by executing, acknowledging and delivering to
Landlord an instrument to that effect prepared by Landlord's attorneys.
ARTICLE 24 - DAMAGE OR DESTRUCTION
24.01 If the Building shall be partially or totally damaged or
destroyed by fire or other casualty (and if this Lease shall not be terminated
as in this Article 24 hereinafter provided), Landlord shall repair the damage
and restore and rebuild the Building (except for the Tenant's Property) in
accordance with the Plans and Specifications, together with such changes as may
be approved by Tenant, with reasonable dispatch after notice to it of the damage
or destruction and the collection of the insurance proceeds attributable to such
damage.
24.02 Subject to the provisions of Section 24.05, if all or part of the
Building shall be damaged or destroyed or rendered completely or partially
untenantable on account of fire or other casualty, the Rent shall not be
abated or reduced, as the case may be, to the extent of payments pursuant to
Tenant's business interruption insurance allocable to rental and, subsequent to
the exhaustion of payments thereunder, the Rent shall be abated or reduced, as
the case may be, in proportion to the untenantable area of the Building for the
period from the date of the damage or destruction to the date the damage to the
Building shall be substantially repaired; provided, however, should Tenant
reoccupy a portion of the Building during the period the repair or restoration
work is taking place and prior to the date that the Building is substantially
repaired or made tenantable the Rent allocable to such reoccupied portion, shall
be payable by Tenant from the date of such occupancy.
24.03 If (a) the Building shall be totally damaged or destroyed by fire
or other casualty, or (b) the Building shall be so damaged or destroyed by fire
or other casualty that its repair or restoration requires the expenditure, as
estimated by a reputable contractor
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or architect designated by Landlord and approved by Tenant which approval shall
not be unreasonably withheld, of more than twenty percent (20%) of the full
insurable value of the Building immediately prior to the casualty, and, in
either event, an engineer selected by Landlord and approved by Tenant, which
approval shall not be unreasonably withheld or delayed, shall reasonably
estimate that there will be less than two (2) years remaining in the Term
(including all Renewal Terms for which Tenant has validly exercised the
applicable Renewal Option) upon completion of restoration of the Building, then
in either such case Landlord or Tenant may terminate this Lease by giving the
other notice to such effect within ninety (90) days after the date of the fire
or other casualty. Notwithstanding anything contained in this Lease to the
contrary, if there shall occur such a casualty at such time as there shall be
estimated to be less than two years remaining in the Term of this Lease after
completion or restoration but prior to the time that pursuant to the provisions
of Article 39 hereof Tenant shall have the right to exercise any Renewal Option,
then, prior to Landlord terminating this Lease, Tenant shall have the right to
exercise any such Renewal Option otherwise in accordance with the provisions of
Article 39 hereof. If either party shall elect to so terminate this Lease, the
Term shall expire upon the tenth (10th) day after such notice is given and
Tenant shall vacate the Demised Premises and surrender the same to Landlord in
accordance with the provisions of this Lease. Upon the termination of this Lease
in accordance with this Section 24.03, Tenant's liability for Rent thereafter
due and payable shall cease and any prepaid portion of Rent for any period after
such date shall be refunded by Landlord to Tenant.
24.04 Except as provided for in Section 24.08 of this Lease, Tenant
shall not be entitled to terminate this Lease and no damages, compensation or
claim shall be payable by Landlord for inconvenience, loss of business or
annoyance arising from any repair or restoration of any portion of the Building
pursuant to this Article 24. Landlord shall use its best efforts to make such
repair or restoration promptly and in such manner as to not unreasonably
interfere with Tenant's use and occupancy of the Demised Premises, but Landlord
shall not be required to do such repair or restoration work on an overtime basis
unless fully reimbursed by Tenant.
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24.05 Notwithstanding any of the foregoing provisions of this Article
24, if by reason of some act or omission on the part of Tenant or any of its
subtenants or its or their partners, directors, officers, servants, employees,
agents or contractors, either (a) Landlord or any Superior Lessor or any
Superior Mortgagee shall be unable to collect all of the insurance proceeds
(including, without limitation, rent insurance proceeds) applicable to damage or
destruction of the Building by fire or other casualty, or (b) the Building shall
be damaged or destroyed or rendered completely or partially untenantable on
account of fire or other casualty, then, without prejudice to any other remedies
which may be available against Tenant, there shall be no abatement or reduction
of the Rent. Further, nothing contained in this Article 24 shall relieve Tenant
from any liability that may exist as a result of any damage or destruction by
fire or other casualty.
24.06 Landlord will not carry insurance of any kind on the Tenant's
Property, and, except as provided by law or by reason of Landlord's breach of
any of its obligations hereunder, shall not be obligated to repair any damage or
to replace the Tenant's Property.
24.07 The provisions of this Article 24 shall be deemed an express
agreement governing any case of damage or destruction of the Building by fire or
other casualty, and any law providing for such a contingency in the absence of
an express agreement, now or hereafter in force, shall have no application in
such case.
24.08 Anything contained in this Article 24 to the contrary
notwithstanding, within thirty (30) days after Landlord has notice of any damage
that materially impairs Tenant's ability to conduct its business in the
Building, Landlord shall deliver to Tenant a statement prepared by a reputable
contractor approved by Tenant, which approval shall not be unreasonably withheld
or delayed, setting forth such contractor's estimate as to the time required to
repair such damage and the assumptions regarding the use of labor (including
overtime labor, if applicable) and construction methods considered in arriving
at such estimate. If the estimated time period exceeds twelve (12) months from
the date of such damage or if such estimate is not delivered to Tenant as
required, Tenant may elect to terminate this Lease by notice to Landlord not
later than thirty (30) days fol-
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lowing receipt of such statement or, if no statement is delivered, not later
than thirty (30) days after the date such statement was to have been delivered.
If Tenant makes such election, the Term shall expire upon the thirtieth (30th)
day after notice of such election is given by Tenant and Tenant shall vacate the
Demised Premises and surrender the same to Landlord in accordance with the
provisions of this Lease. If Tenant shall not have elected to terminate this
Lease pursuant to this Article 24 (or is not entitled to terminate this Lease
pursuant to this Article 24) and such repairs are (i) not commenced by Landlord
within sixty (60) days after the date Landlord has notice of such damage, (ii)
not prosecuted substantially on the basis specified in the contractor's estimate
referred to in this paragraph so that the repairs cannot be Substantially
Completed within the estimated time period (unless Landlord agrees to take such
other measures required to Substantially Complete such repairs within such
period), or (iii) not Substantially Completed by Landlord within twelve (12)
months after the date Landlord has such notice, subject to Unavoidable Delays,
but in no event later than fifteen (15) months after Landlord has such notice,
Tenant may elect to terminate this Lease by notice to Landlord not later than
fifteen (15) days following the expiration of either of the periods specified in
clauses (i) and (iii) above or fifteen (15) days notice if Landlord shall not be
prosecuting such repairs as required by clause (ii) hereof. Notwithstanding the
foregoing, if at any time Tenant believes that Landlord shall not be diligently
prosecuting such repairs and shall so notify Landlord, Tenant shall have the
right to seek injunctive relief. If Tenant makes such election, the Term of this
Lease shall expire upon the thirtieth (30th) day after notice of such election
is given by Tenant and Tenant shall vacate the Demised Premises and surrender
the same to Landlord in accordance with the provisions of this Lease. Upon the
termination of this Lease under the conditions provided in this Section,
Tenant's liability for Rent thereafter due and payable shall cease and any
prepaid portion of Rent for any period after such date shall be refunded by
Landlord to Tenant. Landlord shall advise Tenant of any Unavoidable Delays the
Landlord shall have incurred in connection with any such repair, promptly after
the same shall have occurred and the length thereof. Notwithstanding the
foregoing, however, if Tenant shall elect to terminate this Lease and within ten
(10) days after notice of such election is given by Tenant, Landlord shall
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offer to relocate Tenant's entire operation (or so much thereof as Tenant may
request) located at the Demised Premises to other premises located in the
Lincoln Harbor Project, which shall permit Tenant to promptly resume its
operations, and Landlord shall in fact so relocate Tenant within ninety (90)
days after notice of such election, (or such shorter period as may be possible
and provided that Landlord shall use its best efforts) then Tenant's election to
terminate this Lease shall be deemed to be rescinded and of no further force or
effect, and Tenant's obligations hereunder shall remain unaffected. Landlord
shall proceed with the restoration and repair of the Demised Premises in
accordance with the provisions hereof.
24.09 If, at any time during the Term, the Building shall be so damaged
or destroyed by fire or other casualty that its repair or restoration requires
the expenditure, as estimated by a reputable contractor or architect designated
by Landlord and approved by Tenant, which approval shall not be unreasonably
withheld, of more than twenty-five percent (25%) of the full insurable value of
the Building immediately prior to the casualty and there shall be insufficient
insurance proceeds available to Landlord to pay for the estimated cost of repair
and restoration, then Landlord may terminate this Lease, whether or not Tenant
shall have elected to terminate this Lease pursuant to Section 24.08 hereof, by
giving Tenant notice to such effect within sixty (60) days after the date of the
fire or other casualty. If Landlord shall elect to so terminate this Lease, the
Term shall expire upon the tenth (10th) day after such notice is given and
Tenant shall vacate the Demised Premises and surrender the same to Landlord in
accordance with the provisions of this Lease. Upon the termination of this Lease
in accordance with this Section 24.09, Tenant's liability for Rent thereafter
due and payable shall cease and any prepaid portion of Rent for any period after
such date shall be refunded by Landlord to Tenant.
24.10 Notwithstanding anything contained in this Lease to the contrary,
if pursuant to the provisions of the Office Premises Lease, dated of even date
herewith, between Landlord, as landlord and Tenant, as tenant, (the "Office
Lease") the Tenant thereunder shall have the right to, and shall, terminate such
lease in connection with a casualty, and such tenant shall be Tenant or an
affiliate of Tenant, then Tenant, at Tenant's sole
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option, shall also have the right to terminate this Lease simultaneously with
the termination of the Office Lease. If Tenant shall make such election, the
Term of this Lease shall expire on the date specified in such notice of
election, which date shall be not less than six (6) months nor more than
eighteen (18) months from the date of such notice, and Tenant shall vacate the
Demised Premises and surrender the same to Landlord in accordance with the
provisions hereof. Upon the termination of this Lease hereunder, Tenant's
liability for Rent thereafter due and payable shall cease and any prepaid
portion of Rent for any period after such date shall be refunded by Landlord to
Tenant.
ARTICLE 25 - EMINENT DOMAIN
25.01 If the whole of the Demised Premises shall be taken by any public
or quasi-public authority under the power of condemnation, eminent domain or
expropriation, or in the event of conveyance of the whole of the Demised
Premises in lieu thereof, this Lease shall terminate as of the day possession
shall be taken by such authority. If fifteen percent (15%) or less of the Floor
Space of the Building shall be so taken or conveyed, this Lease shall terminate
only in respect of the part so taken or conveyed as of the day possession shall
be taken by such authority. If more than fifteen percent (15%) of the Floor
Space of the Building shall be so taken or conveyed, this Lease shall terminate
only in respect of the part so taken or conveyed as of the day possession shall
be taken by such authority, but either party shall have the right to terminate
this Lease upon notice given to the other party within thirty (30) days after
taking such possession. If so much of the parking facilities shall be so taken
or conveyed that the number of parking spaces necessary, for the continued
operation of the Demised Premises shall not be available, Tenant may, by notice
to Landlord, terminate this Lease as of the day possession shall be taken. If
this Lease shall continue in effect as to any portion of the Demised Premises
not so taken or conveyed, the Rent shall be reduced in the proportion which the
area of the part of the Building so acquired or condemned bears to the total
area of the Building immediately prior to such acquisition or condemnation.
Except as specifically provided herein, in the event of any such taking or
conveyance there shall be no reduction in Rent. If this Lease shall be
terminated in accordance with the provisions of this Section 25.01,
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this Lease and the Term shall come to an end and expire as of the date of the
taking, with the same effect as if such date were the Expiration Date, and the
Rent shall be apportioned as of the date of such termination and any prepaid
portion of Rent for any period after such date shall be refunded by Landlord to
Tenant. Notwithstanding the foregoing, however, if this Lease shall be
terminated by reason of a taking of the whole of the Demised Premises or by
reason of Tenant electing to terminate this Lease pursuant to the provisions
hereof, and if Landlord, within five (5) days after such taking or after notice
of such election is given by Tenant, Landlord shall offer to relocate Tenant's
entire operation located at the Demised Premises to other premises located in
the Lincoln Harbor Project, which other premises shall be of comparable size and
quality and Landlord in fact shall so relocate Tenant within ninety (90) days
(or such shorter period as may be possible and provided that Landlord shall use
its best efforts) after notice of such election, then either such Termination
shall be deemed to be rescinded and of no further force or effect and Tenant's
obligations hereunder shall remain unaffected. In the case of such relocations,
Fixed Rent, Tenants' Fraction, Tenants' Proportionate Share, if applicable, and
Operating Expenses shall be equitably adjusted based upon the floor space of
such other premises. If this Lease shall continue in effect, Landlord shall, at
its expense, but shall be obligated only to the extent of the net award or other
compensation (after deducting all expenses in connection with obtaining same)
available to Landlord for the improvements taken or conveyed (excluding any
award or other compensation for land or for the unexpired portion of the term of
any Superior Lease), make all necessary alterations so as to constitute the
remaining Building a complete architectural and tenantable unit, except for the
Tenant's Property, and Tenant shall make all alterations or replacements to the
Tenant's Property and decorations in the Building. All awards and compensation
for any taking or conveyance, whether for the whole or a part of the Land or
Building or otherwise, shall be property of Landlord, and Tenant hereby assigns
to Landlord all of Tenant's right, title and interest in and to any and all such
awards and compensation. Tenant shall be entitled to claim, prove and receive in
the condemnation proceeding such award or compensation as may be allowed for the
Tenant's Property, Tenant's trade fixtures and for loss of business, goodwill,
moving and depreciation or injury to and cost of removal of the Tenant's
Property, to the
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extent such award or compensation shall be made by the condemning authority in
addition to, and shall not result in a reduction of, the award or compensation
made by it to Landlord.
25.02 If the temporary use or occupancy of all or any part of the
Demised Premises shall be taken during the Term, Tenant shall be entitled,
except as hereinafter set forth, to receive that portion of the award or payment
for such taking which represents compensation for the use and occupancy of the
Demised Premises, for the taking of the Tenant's Property and for moving
expenses, and Landlord shall be entitled to receive that portion which
represents reimbursement for the cost of restoration of the Demised Premises.
This Lease shall be and remain unaffected by such taking and Tenant shall
continue responsible for all of its obligations hereunder insofar as such
obligations are not affected by such taking and shall continue to pay the Rent
in full when due. If the period of temporary use or occupancy shall extend
beyond the Expiration Date, that part of the award or payment which represents
compensation for the use and occupancy of the Demised Premises (or a part
thereof) shall be divided between Landlord and Tenant so that Tenant shall
receive (except as otherwise provided below) so much thereof as represents
compensation for the period up to and including the Expiration Date and Landlord
shall receive so much thereof as represents compensation for the period after
the Expiration Date.
25.03 In the event the premises leased pursuant to the Office Lease are
taken or such portions of said facilities are taken resulting in a termination
of the Office Lease and the tenant under the Office Lease shall be Tenant or an
affiliate of Tenant, then Tenant, at Tenant's option, shall have the right to
terminate this Lease on the date specified in such notice of election, which
date shall be not less than six (6) months nor more than eighteen (18) months
from the date of such notice; provided, however, that Tenant shall have the
right to continue its occupancy of the Demised Premises subject to the terms of
this Lease on a month-to-month basis (not to exceed twelve (12) months) until
suitable moving arrangements are made.
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ARTICLE 26 - SURRENDER
26.01 On the Expiration Date, or upon any earlier termination of this
Lease, or upon any re-entry by Landlord upon the Demised Premises, Tenant shall
quit and surrender the Demised Premises to Landlord "broom-clean" and in good
order, condition and repair, except for ordinary wear and tear and such damage
or destruction as Landlord is required to repair or restore under this Lease,
and Tenant shall remove any item of Tenant's Property therefrom required
pursuant to this Lease.
26.02 If Tenant remains in possession of the Demised Premises after the
expiration of the Term, Tenant shall be deemed to be occupying the Demised
Premises as a tenant from month to month subject to all of the provisions of
this Lease, except that the monthly Fixed Rent shall be twice the Fixed Rent in
effect during the last month of the Term.
26.03 No act or thing done by Landlord or its agents shall be deemed an
acceptance of a surrender of the Demised Premises, and no agreement to accept
such surrender shall be valid unless in writing and signed by Landlord.
ARTICLE 27 - CONDITIONS OF LIMITATION
27.01 This Lease is subject to the limitation that whenever Tenant (a)
shall make an assignment for the benefit of creditors, or (b) shall commence a
voluntary case or have entered against it an order for relief under any chapter
of the Federal Bankruptcy Code (Title II of the United States Code) or any
similar order or decree under any federal or state law, now in existence, or
hereafter enacted having the same general purpose, and such order or decree
shall have not been stayed or vacated within 30 days after entry, or (c) shall
cause, suffer, permit or consent to the appointment of a receiver, trustee,
administrator, conservator, sequestrator, liquidator or similar official in any
federal, state or foreign judicial or non-judicial proceeding, to hold,
administer and/or liquidate all or substantially all of its assets, and such
appointment shall not have been revoked, terminated, stayed or vacated and such
official discharged of his duties within 30 days of his appointment then
Landlord, at any time after the occurrence of any such event, may give Tenant a
notice of intention to end
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the Term at the expiration of five (5) days from the date of service of such
notice of intention, and upon the expiration of said five (5) period, whether or
not the Term shall theretofore have commenced, this Lease shall terminate with
the same effect as if that day were the Expiration Date of this Lease, but
Tenant shall remain liable for damages as provided in Article 29.
27.02 This Lease is subject to the further limitations (collectively,
"Events of Default") that: (a) if Tenant shall default in the payment of any
installment of Fixed Rent, and such default shall continue for five (5) days
after invoice for same by Landlord or for five (5) days after notice of such
default, whichever is shorter, or (b) if Tenant shall, whether by action or
inaction, be in default of any of its obligations under this Lease (other than a
default in the payment of Fixed Rent) and such default shall continue and not be
remedied within thirty (30) days after Landlord shall have given to Tenant a
notice specifying the same, or, in the case of a default which cannot with due
diligence be cured within a period of thirty (30) days and the continuance of
which for the period required for cure will not subject Landlord or any Superior
Lessor or prosecution for a crime (as more particularly described in the last
sentence of Section 12.02) or termination of any Superior Lease or foreclosure
of any Superior Mortgage, if Tenant shall not, (i) within said thirty (30) day
period advise Landlord of Tenant's intention to take all steps necessary to
remedy such default, (ii) duly commence within said thirty (30) day period, and
thereafter diligently prosecute to completion all steps necessary to remedy the
default, and (iii) complete such remedy within a reasonable time after the date
of said notice by Landlord, (c) if Tenant shall abandon the Demised Premises, or
(d) if there shall be any default by Tenant (or any person which, directly or
indirectly, controls, is controlled by, or is under common control with Tenant)
under any other lease with Landlord (or any person which, directly or
indirectly, controls is controlled by, or is under common control with Landlord)
which shall not be remedied within the applicable grace period, if any, provided
therefor under such other lease, then in any of said cases Landlord may give to
Tenant a notice of intention to end the Term at the expiration of five (5) days
from the date of the service of such notice of intention, and upon the
expiration of said five (5) days, whether or not the Term shall theretofore have
commenced this Lease
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shall terminate with the same effect as if that day were the expiration date of
this Lease, but Tenant shall remain liable for damages as provided in Article
29.
ARTICLE 28 - RE-ENTRY BY LANDLORD
28.01 If this Lease shall terminate as provided in Article 27, Landlord
or Landlord's agents and employees may immediately or at any time thereafter
re-enter the Demised Premises, or any part thereof, either by summary dispossess
proceedings or by any suitable action or proceeding at law, or otherwise,
without being liable to indictment, prosecution or damages therefor, and may
repossess the same, and may remove any Person therefrom, to the end that
Landlord may have, hold and enjoy the Demised Premises. The word "re-enter", as
used herein, is not restricted to its technical legal meaning. If this Lease is
terminated under the provisions of Article 27, or if Landlord shall re-enter the
Demised Premises under the provisions of this Article 28, or in the event of the
termination of this Lease, or of re-entry, by or under any summary dispossess or
other proceedings or action or any provision of law by reason of default
hereunder on the part of Tenant, Tenant shall thereupon pay to Landlord the Rent
payable up to the time of such termination of this Lease, or of such recovery of
possession of the Demised Premises by Landlord, as the case may be, and shall
also pay to Landlord damages as provided in Article 29.
28.02 In the event of a breach by Tenant of any of its obligations
under this Lease, Landlord shall also have the right of injunction. The special
remedies to which Landlord may resort hereunder are cumulative and are not
intended to be exclusive of any other remedies to which Landlord may lawfully be
entitled at any time and Landlord may invoke any remedy allowed at law or in
equity as if specific remedies were not provided for herein.
28.03 If this Lease shall terminate under the provisions of Article 27,
or if Landlord shall re-enter the Demised Premises under the provisions of this
Article 28, or in the event of the termination of this Lease, or of re-entry, by
or under any summary dispossess or other proceeding or action or any provision
of law by reason of default hereunder on the part of Tenant, Landlord shall be
entitled to retain all monies, if any, paid by Tenant to Landlord, whether as
advance Rent, security or otherwise,
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but such monies shall be credited by Landlord against any Rent due from Tenant
at the time of such termination or re-entry or, at Landlord's option, against
any damages payable by Tenant under Article 29 or pursuant to law.
ARTICLE 29 - DAMAGES
29.01 If this Lease is terminated under the provisions of Article 27,
or if Landlord shall re-enter the Demised Premises under the provisions of
Article 28, or in the event of the termination of this Lease, or of re-entry, by
or under any summary dispossess or other proceeding or action or any provision
of law by reason of default hereunder on the part of Tenant, Tenant shall pay to
Landlord as damages, at the election of Landlord, either:
(a) a sum which at the time of such termination of this Lease or
at the time of any such re-entry by Landlord, as the case may be,
represents the then value of the excess, if any, of (i) the aggregate
amount of the Rent which would have been payable by Tenant (conclusively
presuming the average monthly Additional Charges payable for the year, or
if less than 365 days have then elapsed since the Commencement Date, the
partial year, immediately preceding such termination of re-entry) for the
period commencing with such earlier termination of this Lease or the date
of any such re-entry, as the case may be, and ending with the Expiration
Date, over (ii) the aggregate rental value of the Demised Premises for the
same period, which amounts shall be discounted to present worth at a rate
equal to nine percent (9%) per annum; or
(b) sums equal to the Fixed Rent and the Additional Charges which
would have been payable by Tenant had this Lease not so terminated, or had
Landlord not so re-entered the Demised Premises, payable upon the due dates
therefor specified herein following such termination or such re-entry and
until the Expiration Date, provided, however, that if Landlord shall relet
the Demised Premises during said period, Landlord shall credit Tenant with
the net rents received by Landlord from such relet-
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ting, such net rents to be determined by first deducting from the gross
rents as and when received by Landlord from such reletting the expenses
incurred or paid by Landlord in terminating this Lease or in re-entering
the Demised Premises and in securing possession thereof, as well as the
expenses of reletting, including, without limitation, altering and
preparing the Demised Premises for new tenants, brokers' commissions, legal
fees, and all other expenses properly chargeable against the Demised
Premises and the rental therefrom, it being understood that any such
reletting may be for a period shorter or longer than the period ending on
the Expiration Date; but in no event shall Tenant be entitled to receive
any excess of such net rents over the sums payable by Tenant to Landlord
hereunder, nor shall Tenant be entitled in any suit for the collection of
damages pursuant to this subdivision (b) to a credit in respect of any
rents from a reletting, except to the extent that such net rents are
actually received by Landlord. If the Demised Premises or any part thereof
should be relet in combination with other space, then proper apportionment
on a square foot basis shall be made of the rent received from such
reletting and of the expenses of reletting.
If the Demised Premises or any part thereof be relet by Landlord before
presentation of proof of such damages to any court, commission or tribunal, the
amount of rent reserved upon such reletting shall, prima facie, be the fair and
reasonable rental value for the Demised Premises, or part thereof, so relet
during the term of the reletting. Landlord shall not be liable in any way
whatsoever for its failure or refusal to relet the Demised Premises or any part
thereof, or if the Demised Premises or any part thereof are relet, for its
failure to collect the rent under such reletting, and no such refusal or failure
to relet or failure to collect rent shall release or affect Tenant's liability
for damages or otherwise under this Lease.
29.02 Suit or suits for the recovery of such damages or, any
installments thereof, may be brought by Landlord at any time and from time to
time at its election, and nothing contained herein shall be deemed to
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require Landlord to postpone suit until the date when the Term would have
expired if it had not been so terminated under the provisions of Article 27, or
under any provision of law, or had Landlord not re-entered the Demised Premises.
Nothing herein contained shall be construed to limit or preclude recovery by
Landlord against Tenant of any sums or damages to which, in addition to the
damages particularly provided above, Landlord may lawfully be entitled by reason
of any default hereunder on the part of Tenant. Nothing herein contained shall
be construed to limit or prejudice the right of Landlord to prove for and obtain
as damages by reason of the termination of this Lease or re-entry on the Demised
Premises for the default of Tenant under this Lease an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, the
governing the proceedings in which, such damages are to be proved whether or not
such amount be greater than, equal to, or less than any of the sums referred to
in Section 29.01.
29.03 In addition, if this Lease is terminated under the provisions of
Article 27, or if Landlord shall re-enter the Demised Premises under the
provisions of Article 28, Tenant covenants that: (a) the Demised Premises then
shall be in the same condition as that in which Tenant has agreed to surrender
the same to Landlord at the Expiration Date; (b) Tenant shall have performed
prior to any such termination any obligation of Tenant contained in this Lease
for the making of any alteration or for restoring or rebuilding the Demised
Premises, or any part thereof; and (c) for the breach of any covenant of Tenant
set forth above in this Section 29.03, Landlord shall be entitled immediately,
without notice or other action by Landlord, to recover, and Tenant shall pay, as
and for liquidated damages therefor, the cost of performing such covenant (as
estimated by an independent contractor selected by Landlord).
29.04 In addition to any other remedies Landlord may have under this
Lease, and without reducing or adversely affecting any of Landlord's rights and
remedies under this Article 29, if any Rent or damages payable hereunder by
Tenant to Landlord are not paid within five (5) days after demand therefor, the
same shall bear interest at the Late Payment Rate from the due date thereof
until paid, and the amounts of such interest shall be Additional Charges
hereunder.
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ARTICLE 30 - AFFIRMATIVE WAIVERS
30.01 Tenant, on behalf of itself and any and all persons claiming
through or under Tenant, does hereby waive and surrender all right and privilege
which it, they or any of them might have under or by reason of any present
or future law, to redeem the Demised Premises or to have a continuance of this
Lease after being dispossessed or ejected from the Demised Premises by process
of law or under the terms of this Lease or after the termination of this Lease
as provided in this Lease.
30.02 Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim brought by either against the other on any matter
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, and Tenant's use or occupancy of the
Demised Premises and use of the Common Areas, including, without limitation, any
claim of injury or damage, and any emergency and other statutory remedy with
respect thereto. Tenant shall not interpose any counterclaim of any kind in any
action or proceeding commenced by Landlord to recover possession of the De-
mised Premises (unless failure to do so would constitute a waiver thereof) nor
attempt to remove such action or proceeding to the law division of the Superior
Court of New Jersey.
ARTICLE 31 - NO WAIVERS
The failure of either party to insist in any one or more instances upon
the strict performance of any one or more of the obligations of this Lease, or
to exercise any election herein contained, shall not be construed as a waiver or
relinquishment for the future of the performance of such one or more obligations
of this Lease or of the right to exercise such election, but the same shall
continue and remain in full force and effect with respect to any subsequent
breach, act or omission. The receipt by Landlord of Fixed Rent or Additional
Charges with knowledge of breach by Tenant of any obligation of this Lease shall
not be deemed a waiver of such breach.
ARTICLE 32 - CURING TENANT'S DEFAULTS
If Tenant shall default in the performance of any of Tenant's
obligations under this Lease, Landlord,
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without thereby waiving such default, may (but shall not be obligated to)
perform the same for the account and at the expense of Tenant, without notice in
a case of emergency, and in any other case only if such default continues after
the expiration of thirty (30) days from the date Landlord gives Tenant notice of
the default. Bills for any expenses incurred by Landlord in connection with any
such performance by it for the account of Tenant, and bills for all costs,
expenses and disbursements of every kind and nature whatsoever, including
reasonable attorneys' fees and expenses, involved in collecting or endeavoring
to collect the Rent or any part thereof or enforcing or endeavoring to enforce
any rights against Tenant or Tenant's obligations hereunder, under or in
connection with this Lease or pursuant to law, including any such cost, expense
and disbursement involved in instituting and prosecuting summary proceedings or
in recovering possession of the Demised Premises after default by Tenant or upon
the expiration of the Term or sooner termination of this Lease, and interest on
all sums advanced by Landlord under this Article at the Late Payment Rate, may
be sent to Landlord to Tenant monthly, or immediately, at Landlord's option, and
such among shall be due and payable in accordance with the terms of such bills.
ARTICLE 33 - BROKER
Landlord and Tenant each represent to the other that no broker except
the Broker was instrumental in bringing about or consummating this Lease and
that it had no conversations or negotiations with any broker except the Broker
concerning the leasing of the Demised Premises. Each party agrees to indemnify
and hold harmless the other against and from any claims for any brokerage
commissions and all costs, expenses and liabilities in connection therewith,
including, without limitation, attorneys' fees and expenses, arising out of any
conversations or negotiations had by the indemnifying party with any broker
other than the Broker. Landlord shall pay any brokerage commissions due the
Broker pursuant to a separate agreement between Landlord and the Broker.
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ARTICLE 34 - NOTICES
Any notice, statement, demand, consent, approval or other communication
required or permitted to be given, rendered or made by either party to the
other, pursuant to this Lease or pursuant to any applicable Legal Requirement,
shall be in writing and shall be deemed to have been properly given, rendered or
made only if hand delivered or sent by United States registered or certified
mail, return receipt requested, addressed to the other party at the address
hereinabove set forth (except that after the Commencement Date, Tenant's
address, unless Tenant shall give notice to the contrary, shall be the Building)
as to Landlord, to the attention of General Counsel with a copy to the attention
of President and to Horowitz, Bross, Sinins and Imperial, 1180 Raymond
Boulevard, Newark, New Jersey 07102-4172, Attention: Irwin A. Horowitz, Esq.,
and as to Tenant, to the attention of Facilities Department-Vice President, with
a copy to Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New
York 10022, Attention: Benjamin F. Needell, Esq., and shall be deemed to have
been given, rendered or made on the day after the day so delivered or mailed,
unless mailed outside the State of New Jersey in which case it shall be deemed
to have been given, rendered or made on the third business day after the day so
mailed. Either party may, by notice as aforesaid, designate a different address
or addresses for notices, statements, demands, consents, approvals or other
communications intended for it.
ARTICLE 35 - ESTOPPEL CERTIFICATES
Each party shall, at any time and from time to time, as requested by
the other party, upon not less than ten (10) days' prior notice, execute and
deliver to the requesting party a statement certifying that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as modified and stating the
modifications), certifying the dates to which the Fixed Rent and Additional
Charges have been paid, stating whether or not, to the best knowledge of the
party giving the statement, the requesting party is in default in performance of
any of its obligations under this Lease, and, if so, specifying each such
default of which the party giving the statement shall have knowledge, and
stating whether or not, to the best knowledge of the party giving the statement,
any
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event has occurred which with the giving of notice of passage of time, or both,
would constitute such a default of the requesting party, and, if so, specifying
each such event; any such statement delivered pursuant hereto shall be deemed a
representation and warranty to be relied upon by the party requesting the
certificate and by others with whom such party may be dealing, regardless of
independent investigation. Each party also shall include in any such statement
such other information concerning this Lease as the other party may reasonably
request.
ARTICLE 36 - ARBITRATION
Landlord or Tenant may at any time request arbitration, of any matter
in dispute. The party requesting arbitration shall do so by giving notice to
that effect to the other party, specifying in said notice the nature of the
dispute, and said dispute shall be determined in Newark, New Jersey, by a single
arbitrator, in accordance with the rules then obtaining of the American
Arbitration Association (or any organization which is the successor thereto).
The award in such arbitration may be enforced on the application of either party
by the order or judgment of a court of competent jurisdiction. The fees and
expenses of any arbitration shall be borne by the parties equally, but each
party shall bear the expense of its own attorneys and experts and the additional
expenses of presenting its own proof.
ARTICLE 37 - MEMORANDUM OF LEASE
This Lease shall not be recorded, however, at the request of either
party, Landlord and Tenant shall promptly execute, acknowledge and deliver to
the other party (i) a memorandum of lease in respect of this Lease sufficient
for recording, and (ii) after each of the Commencement Date, the Fixed Rent
Commencement Date, and any Renewal Term Commencement Date, either an agreement
or a restated memorandum (if a memorandum shall have been executed or recorded
as provided immediately above) stating the Commencement Date, Fixed Rent
Commencement Date or any Renewal Term Commencement Date, as the case may be,
each sufficient for recording. Failure by either party to request or to execute,
acknowledge or deliver any such memorandum or agreement, however, shall not
affect the determination of the Commencement Date, the Fixed Rent Commencement
Date or any Renewal Term Commencement Date, as the case may be. Such memorandum
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shall not be deemed to change or otherwise affect any of the obligations or
provisions of this Lease. Whichever party records such memorandum of Lease shall
pay all recording costs and expenses, including any taxes that are due upon such
recording.
ARTICLE 38 - MISCELLANEOUS
38.01 Tenant expressly acknowledges and agrees that Landlord has not
made and is not making, and Tenant, in executing and delivering this Lease, is
not relying upon, any warranties, representations, promises or statements,
except to the extent that the same are expressly set forth in this Lease or in
any other written agreement(s) which may be made between the parties
concurrently with the execution and delivery of this Lease. All understandings
and agreements heretofore had between the parties are merged in this Lease and
any other written agreement(s) made concurrently herewith, which alone fully and
completely express the agreement of the parties and which are entered into after
full investigation. Neither party has relied upon any statement or
representation not embodied in this Lease or in any other written agreement(s)
made concurrently herewith.
38.02 No agreement shall be effective to change, modify, waive,
release, discharge, terminate or effect an abandonment of this Lease, in whole
or in part, unless such agreement is in writing, refers expressly to this Lease
and is signed by Landlord and Tenant.
38.03 If Tenant shall at any timer request Landlord to sublet or let
the Demised Premises for Tenant's account, Landlord or its agent is authorized
to receive keys for such purposes without releasing Tenant from any of its
obligations under this Lease, and Tenant hereby releases Landlord of any
liability for loss or damage to any of the Tenant's Property in connection with
such subletting or letting.
38.04 Except as otherwise expressly provided in this Lease, the
obligations under this Lease shall bind and benefit the successors and assigns
of the parties hereto with the same effect as if mentioned in each instance
where a party is named or referred to; provided, however, that the provisions of
this Section 38.04 shall not be construed as modifying the conditions of
limitation contained in Article 27.
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38.05 Except for Tenant's obligations to pay Rent, the time for
Landlord or Tenant, as the case may be, to perform any of their respective
obligations hereunder shall be extended if and to the extent that the
performance thereof shall be prevented due to any Unavoidable Delays. Except as
expressly provided to the contrary, the obligations of Tenant hereunder shall
not be affected, impaired or excused, nor shall Landlord have any liability
whatsoever to Tenant, (a) because Landlord is unable to fulfill, or is delayed
in fulfilling, any of its obligations under this Lease due to any of the matters
set forth in the first sentence of this Section 38.05, or (b) because of any
failure or defect in the supply, quality or character of electricity, water or
any other utility or service furnished to the Demised Premises for any reason
beyond Landlord's reasonable control.
38.06 Any liability for payments or reimbursement of payments hereunder
(including, without limitation, Additional Charges) shall survive the expiration
of the Term or earlier termination of this Lease.
38.07 Tenant shall give prompt notice to Landlord of (a) any occurrence
in or about the Demised Premises for which Landlord might be liable, (b) any
fire or other casualty in the Building, (c) any damage to or defect in the
Building, including the fixtures and equipment thereof, for the repair of which
Landlord might be responsible, and (d) any damage to or defect in any part of
the Building, sanitary, electrical, heating, ventilating, airconditioning,
elevator or other systems located in passing through the Building or any part
thereof.
38.08 This Lease shall be governed by and construed in accordance with
the laws of the State of New Jersey. If any provision of this Lease shall, be
invalid or unenforceable, the remainder of this Lease shall not be affected and
shall be enforced to the extent permitted by law. The table of contents,
captions, headings and titles in this Lease are solely for convenience of
reference and shall not affect its interpretation. If any words or phrases in
this Lease shall have been stricken out or otherwise eliminated, whether or not
any other words or phrases have been added, this Lease shall be construed as if
the words or phrases so stricken out or otherwise eliminated were never included
in this Lease and no implication or inference shall be drawn from the fact that
said words or phrases were so stricken out or
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otherwise eliminated. Each covenant, agreement, obligation or other provision of
this Lease on Tenant's part to be performed, shall be deemed and construed as a
separate and independent covenant of Tenant, not dependent on any other
provision of this Lease. All terms and words used in this Lease, regardless of
the number or gender in which they are used, shall be deemed to include any
other number and any other gender as the context may require.
38.09 Within thirty (30) days of each anniversary date of this Lease,
annually Tenant shall furnish to Landlord a copy of its then current audited
financial statement (or form 10-K) which shall not be distributed without the
prior authorization of Tenant.
38.10 In addition, at any time during the Term, Tenant shall have the
right to request a redetermination of Operating Expenses because of a claimed
increase in the floor space of improvements constructed in the Lincoln Harbor
Project. If Tenant shall make any such request, then the Architect and an
architect appointed by Tenant shall remeasure the floor space of the
improvements in the Lincoln Harbor Project, in accordance with the standards set
forth on Exhibit "D" annexed hereto and made a part hereof. If Architect and the
architect appointed by Tenant shall agree, the Operating Expenses as determined
by such architects shall be conclusive and binding upon the parties. If the
Architect and the architect appointed by Tenant shall be unable to agree as to
the Operating Expenses, then such architects shall select a third architect (or
if such architects shall be unable to agree upon such third architect, the same
shall be selected by the American Arbitration Association or successor
organization) and such third architect shall select either the Operating
Expenses as calculated by the Architect or the Operating Expenses as calculated
by the architect appointed by Tenant. In no event, however, may the Operating
Expenses be increased from the amounts set forth herein. Such finding shall be
conclusive and binding upon the parties.
38.11 Notwithstanding anything contained in this Lease to the contrary,
if Landlord shall have failed to deliver to Tenant the Demised Premises to
Tenant on or before January 1, 1987, as the same may be extended by reason of
Unavoidable Delays to a date no later than June 1, 1987, as to which date time
shall be of the essence, Tenant shall have the option to cancel this Lease
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and the Term by giving thirty (30) days' notice to Landlord of such cancellation
no later than the tenth (10th) day after such date. Upon the giving of such
notice, this Lease and the Term shall expire and come to an end as of the
expiration of such thirty (30) day period provided that Landlord shall not have
delivered the Demised Premises to Tenant during such period, and Landlord and
Tenant shall be released and discharged of and from all liabilities under the
provisions of this Lease as of the date of such Termination.
In addition, if for any reason other than Landlord's fault, the
Commencement Date shall not have occurred on or before June 1, 1987, then, on
the later to occur of June 1, 1987 and the date on which restoration of the
Demised Premises shall have experienced Unavoidable Delays equal to twelve (12)
months in the aggregate, Landlord shall have the option to cancel this Lease and
the Term by giving thirty (30) days' notice of such cancellation to Tenant. Upon
the giving of such notice, this Lease and the Term shall expire and come to an
end as of the expiration of such thirty (30) day period, and Landlord and Tenant
shall be released from all liabilities under the provisions of this Lease as of
the date of such termination.
38.12 Tenant acknowledges that pursuant to the provisions of the
Agreement of Limited Partnership, dated of even date herewith, of Landlord,
Tenant, as limited partner thereunder, has pledged its partnership interest
thereunder pursuant to Section 14.13 thereof to secure its obligations hereunder
for a period of five (5) years from the Fixed Rent Commencement Date.
38.13 Landlord hereby represents and warrants that the floor load
capacity of the Building is not less than 100 pounds live load. Landlord
acknowledges that Tenant has informed it that it believes that the Building may
not have such a floor load; if any repairs or reinforcements are, in fact,
required to make such representation true and correct, Landlord, at its sole
cost and expense, promptly after request by Tenant, shall perform and each work.
ARTICLE 39 - EXTENSION OF TERM
39.01 Tenant shall have the option (the "Renewal Option") to extend the
Term for two (2) additional
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periods of ten (10) years each (the "Renewal Terms"), shall (i) commence on the
original Expiration Date and end on the date preceding the tenth (10th)
anniversary of the original Expiration (the "First Renewal Term"), and (ii)
commence on the date immediately succeeding the last day of the First Renewal
Term and end on the date preceding the twentieth (20th) anniversary of the
original Expiration Date (the "Second Renewal Term") provided that (a) this
Lease shall not have been previously terminated and (b) no material Event of
Default shall have occurred and be continuing as of the date Tenant shall give
the Renewal Notice (hereinafter defined). Each Renewal Option may be exercised
with respect to the entire Demised Premises only and shall be exercisable by
Tenant delivering to Landlord written notice (the "Renewal Notice") of Tenant's
election to exercise the applicable Renewal Option at least nine (9) months
prior to the original Expiration Date with respect to the First Renewal Term,
and at lease nine (9) months prior to the tenth (10th) anniversary of the
Commencement Date with respect to the Second Renewal Term. Upon the giving of
the Renewal Notice with respect to the Second Renewal Term, Tenant shall have no
further option or right to extend the Term. If Tenant exercises a Renewal
Option, the Renewal Term with respect to which Tenant shall exercise the Renewal
Option shall be on the same terms, covenants, and conditions as those contained
in this Lease, except (i) the Fixed Rent payable for the Demised Premises during
each Renewal Term shall be determined as provided in Section 39.03 hereof, and
(ii) the provisions of Section 39.01 hereof with respect to Tenant's right to
renew the Term of this Lease shall not be applicable during the Second Renewal
Term. It is expressly understood that during the First Renewal Term that Tenant
shall have the right as set forth in Section 39.01 only with respect to the
Second Renewal Term, that during the Second Renewal Term Tenant shall have no
further right to renew this Lease.
39.02 If Tenant exercises the Renewal Option applicable to the First
Renewal Term or the Second Renewal Term, as the case may be, the Fixed Rent for
the Demised Premises shall be an amount equal to the Fair Market Rent
(hereinafter defined), determined in accordance with Article 40 hereof, for the
Demised Premises.
39.03 If, for any reason whatsoever, the Fair Market Rent shall not
have been determined pursuant to Article 40 hereof by the commencement of the
First Renew-
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al Term or Second Renewal Term, as the case may be, the Tenant shall pay to
Landlord in monthly installments until such determination, on account of the
Fixed Rent, an amount equal to the Fixed Rent in effect on the date immediately
prior to commencement of the First Renewal Term or Second Renewal Term, as the
case may be. Following the final determination of Fair Market Rent, a
reconciliation shall be made as follows: if the monthly installments of Fixed
Rent determined pursuant to this Article 39 are more than the amounts Tenant had
paid therefor, Tenant shall pay to Landlord within ten (10) days of such
determination the amount of such underpayment of Fixed Rent due.
ARTICLE 40 - DETERMINATION OF FAIR MARKET RENT
40.01 For purposes of this Lease the term "Fair Market Rent" shall mean
the annual fair market rental value of the Demised Premises determined as if the
Demised Premises were available in the then rental market for comparable
buildings in the northern New Jersey metropolitan area on the terms of this
Lease and assuming that Landlord has had a reasonable time to locate a tenant
who rents with the knowledge of the uses permitted pursuant to this Lease, and
that neither Landlord nor the prospective tenant is under any compulsion to
rent, and taking into account: (i) tenant is required to pay the Operating
Expenses; (ii) the remaining Term of this Lease and any remaining' Renewal Term,
as well as the portion of the Term then elapsed; (iii) the fact that the tenant
is the sole tenant; (iv) the fact that Landlord will not be obligated to perform
any work in the Demised Premises to prepare the same for Tenant's occupancy or
to contribute or to loan any money on account thereof whether in the form of
rent, credit, cash or otherwise.
40.02 The Fair Market Rent shall be determined on the basis set forth
in Section 40.01 of this Article and with the assumption that the tenant need
not perform any work in order to occupy the Demised Premises for the conduct of
business.
40.03 Landlord shall give Tenant written notice (the "Rent Notice")
setting forth Landlord's determination of the Fair Market Rent (the "Landlord's
Determination"). Such notice will be sent not later than forty-five (45) days
after receipt by Landlord of each of the Renewal Notices.
59
<PAGE> 63
40.04 Tenant shall give Landlord written notice ("Tenant's Notice"),
within forty-five (45) days after Tenant's receipt of the Rent Notice, as to
whether Tenant accepts or disputes Landlord's Determination or any portion
thereof. If Tenant in Tenant's Notice accepts Landlord's Determination, or if
Tenant fails or refuses to give Tenant's Notice as aforesaid, Tenant shall be
deemed to have accepted Landlord's Determination. If Tenant in Tenant's Notice
disputes any portion of Landlord's Determination, Tenant shall deliver to
Landlord together with Tenant's Notice, Tenant's determination of the Fair
Market Rent of the portion of the Demised Premises for which Tenant disputes
Landlord's Determination (the "Tenant's Determination"); simultaneously
therewith Tenant shall notify Landlord of an individual ("Tenant's Advisor")
selected by Tenant to act on its behalf for the purposes of this Article 40.
40.05 Landlord shall give Tenant written notice ("Landlord's Notice")
within ten (10) business days of after Landlord's receipt of Tenant's
Determination, as to whether Landlord accepts or disputes Tenant's
Determination. If Landlord in Landlord's Notice accepts Tenant's Determination
or if Landlord fails or refuses to give Landlord's Notice as aforesaid, Landlord
shall be deemed to have accepted Tenant's Determination. If Landlord in
Landlord's Notice disputes Tenant's Determination, Landlord shall in such Notice
advise Tenant of the name of an individual ("Landlord's Advisor") selected by
Landlord to act on its behalf for the purposes of this Article 40. If within
twenty (20) days after Tenant's receipt of Landlord's Notice, Landlord's Advisor
and Tenant's Advisor shall mutually agree upon the determination ("Mutual
Determination") of the Fair Market Rent, their determination shall be final and
binding upon the parties. If Landlord's Advisor and Tenant's Advisor shall be
unable to reach a Mutual Determination within said twenty (20) day period, both
of the advisors shall jointly select an independent real estate appraiser (the
"Appraiser") whose fee shall be borne equally by Landlord and Tenant. In the
event that Landlord's Advisor and Tenant's Advisor shall be unable to jointly
agree on the designation of the Appraiser within five (5) 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 to designate the Appraiser
in accordance the rules, regulations and/or procedures of the American
Arbitration Association or suc-
60
<PAGE> 64
cessor organization then obtaining with respect to real estate valuation
disputes.
40.06 The Appraiser shall proceed to determine the Fair Market Rent in
accordance herewith. The two determinations of the Advisors and the Appraiser
which are closest shall then be averaged and such averaged amount 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
Article 40, including the expenses and fees of any Advisor selected by it in
accordance with the provisions of this Article 40. The Appraiser appointed
pursuant to this Article 40 shall be a real estate appraiser with at least ten
(10) years experience in the leasing of office space in, and valuation, of
properties which are similar in character to the Building, a member of the
American Institute of Appraisers of the National Association Real Estate Boards
or successor organization and a member of the Society of Real Estate Appraiser
or its successor organization. Neither the Appraiser nor the Advisors shall have
the power to add to, modify or change any of the provisions of this Lease.
40.07 If the Fair Market Rent shall be finally determined to be in
excess of five percent (5%) greater than Tenants' Determination, then Tenant,
within ten (10) days after receipt of the final determination may notify
Landlord of its election not to renew the Term, in which event, Tenant shall be
deemed not to have exercised the applicable Renewal Option and this Lease and
the Term shall expire as if such applicable Renewal Option had not been
exercised.
40.08 It is expressly understood that any determination of the Fair
Market Rent pursuant to this Article 40 shall be based upon the criteria stated
herein.
40.09 Anything herein to the contrary notwithstanding, the Fair Market
Rent shall not be less than the Fixed Rent payable immediately prior to the
commencement of the Renewal Term in question.
61
<PAGE> 65
40.10 After final determination has been made of Fair Market Rent for
any purpose of this Lease, the parties shall execute and deliver to each other
an instrument setting forth the amount thereof and the amount of Fixed Rent
payable as a result of such determination; provided, however, that failure to
execute such supplementary agreement shall not affect the determination of Fixed
Rent.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease
as of the day and year first above written.
Landlord:
HARTZ-PW LIMITED PARTNERSHIP
By: Hartz Mountain
Industries,
general partner
By: /s/ Steven M. Kelty
--------------------------------
Steven M. Kelty, Vice President
Tenant:
PAINEWEBBER INCORPORATED
By: /s/ Rodger Parker
--------------------------------------
Rodger Parker, Senior Vice President
62
<PAGE> 66
Exhibit "A"
Building
The proposed Data Processing Center is to be the renovated existing Seatrain
Building, in the Lincoln Harbor Project. The existing building consists of four
floors, designated as Ground, Mezzanine, First and Second.
A-1
<PAGE> 67
Exhibit "B"
Fixed Rent
The Fixed Rent during the Term, subject to adjustment as provided in
this Lease, shall be determined as follows:
(a) Commencing on the Fixed Rent Commencement Date and terminating on
the day prior to the nineteenth (19th) anniversary of the Fixed
Rent Commencement Date, the Fixed Rent shall be equal to the sum
of (i) the Base Amount (as defined below), and (ii) 18.87% of debt
service* per annum (principal and interest) under the Mortgage.
The percentage of debt service for the Mortgage shall be
determined by dividing (x) the Floor Space Premises by (y) the
floor space upon which the Mortgage is based (140,768/745,926 =
.1887). Debt service shall be determined by using a debt service
constant not to exceed 11.979.
Years commencing on the
Fixed Rent Commencement Date "Base Amount" Per Year
- ---------------------------- ----------------------
1-4 $ 133,930.00
5-9 $ 244,603.00
10-14 $ 666,961.00
15-19 $1,230,105.00
(b) Notwithstanding the foregoing, in no event shall the Fixed Rent
(inclusive of the "Base Amount") per square foot exceed
- ---------------
* The stated percentage is predicated upon there being one (1) mortgage
covering both the Ground Lease and the Agreement of Ground Lease, dated of
even date herewith, between Fee Owner, as landlord, and Landlord, as
tenant, for the premises known as Operations Center and the Data Processing
Center, respectively. In the event that a separate mortgage is obtained in
connection with each such leasehold estate this Exhibit shall be amended
accordingly.
B-1
<PAGE> 68
$11.97 for years 1-4, $13.47 for years 5-9, $16.47 for years
10-14, or $20.47 for years 15-19.
(c) Commencing on the twentieth anniversary of the Commencement Date
and terminating on the original Expiration Date, the Fixed Rent
shall be an amount equal to the lesser of (x) the Fair Market
Rent, determined in accordance with Article 40 hereof and (y) the
product of the Floor Space and Forty-Two and 45/100 Dollars
($42.45), but in no event less than the Fixed Rent payable
during the twentieth (20th) year of the Term.
Promptly after the closing of the Mortgage and upon each occasion of
redetermination of Fixed Rent, as provided in this Lease, the parties hereto
shall prepare and execute a revised schedule of such redetermined Fixed Rent.
B-2
<PAGE> 69
Exhibit "C"
Floor Space
As to a demised premises, the sum of the floor area stated in square
feet bounded by the exterior faces of the exterior walls, or by the exterior or
common areas face of any wall between the premises and any portion of the common
areas, or by the center line of any wall between the premises and space leased
or available to be leased to another tenant or occupant. Any reference to floor
space of a building shall mean the floor area of all levels or stories of such
building, excluding any roof, except such portion thereof as is permanently
enclosed, and including any interior basement level or mezzanine area not
occupied or used by a tenant on a continuing or repetitive basis, and any
mechanical room, enclosed or interior truck dock, interior common areas, and
areas used by a landlord for storage, for housing meters and/or other equipment
or for other purposes. Any reference to the floor space is intended to refer to
floor space of the entire area in question irrespective of the person(s) who may
be the owner(s) of all or any part thereof.
C-1
<PAGE> 70
Exhibit "D"
Land
PROPOSED BLOCK 34C LOT 4.02
TOWNSHIP OF WEEHAWKEN
HUDSON COUNTY, NEW JERSEY
Commencing at a point in the easterly line of Park Avenue, said point
being N 21 degrees-21'-30"E, 1129.16 feet along the same from its intersection
with the northerly line of 15th Street, all as shown on a map entitled
"Subdivision of Lincoln Harbor Block 34C Lots 4, 5-1, 5 and Block 36D Lot 6C,"
and prepared by Azzolina & Feury Engineering Company, dated February 26, 1986,
revised to March 19, 1986, and running; thence,
A) N 21 degrees-21'-30" E, 86.70 feet along said property line to a point
on curve; thence,
B) Northeasterly, along the property line on a curve to the left having a
radius of 1093.01 feet, said radial having a bearing of N 14
degrees-11'-23" W, through a central angle of 25 degrees-01'-56", an
arc distance of 477.53 feet; thence,
C) Departing said property line, S 7 degrees-48'-45"E, 55.40 feet to the
point of beginning; thence,
1) N 38 degrees-28'-38"E, 476.59 feet to a point of nontangency;
thence,
2) Southeasterly, along a curve to the right having a radius of 360.00
feet through a central angle of 16 degrees-55'-38", an arc distance
of 106.36 feet; thence
3) S 51 degrees-07'-50"E, 188.34 feet to a point of curvature;
thence,
4) South and southwesterly on a curve to the right having a radius of
40.00 feet through a central angle of 90 degrees-00'-00", an arc
distance of 62.83 feet; thence,
5) S 38 degrees-52'-10"W, 51.43 feet to a point of
D-1
<PAGE> 71
curvature; thence,
6) Southwesterly, on a curve to the right having a radius of 328.57
feet through a central angle of 34 degrees-09'-59", an arc distance
of 195.93 feet; thence
7) S 38 degrees-28'-38"W, 15.35 feet; thence,
8) S 73 degrees-55'-33"W, 16.49 feet; thence,
9) S 83 degrees-28'-38"W, 262.43 feet; thence,
10) N 51 degrees-31'-22"W, 79.53 feet to the point or place of
beginning.
Containing 127,537 square feet (2.93 acres).
D-2
<PAGE> 72
[SURVEY OF SUBDIVISION OF LINCOLN HARBOR]
<PAGE> 73
Exhibit "E"
Landlord's Work
E-1
<PAGE> 74
PAINE WEBBER
- --------------------------------------------------------------------------------
LINCOLN HARBOR FEASIBILITY STUDY
DATA CENTER
- --------------------------------------------------------------------------------
SKIDMORE, OWINGS & MERRILL
JAROS, BAUM & BOLLES
LEHRER / MCGOVERN
REVISED 31 OCTOBER 1985
REVISED 14 NOVEMBER 1985 BY HARTZ MOUNTAIN INDUSTRIES, INC.
<PAGE> 75
Qualifications for Data Center
Raised Flooring: 2' x 2' steel panels 24" high with high
pressure laminate finish, pedestals interconnected
with stringers, grounded. Severn Model 50 1000 lbs.
point load by Donn Corporation or approved equal.
2' x 2' cement filled steel panels 8" high
pedestals interconnected with stringers, grounded.
Severn Model 54 1000 lbs. point load by Donn
Corporation or approved equal. Carpet tiles are 18" x
18" 22oz. level loop clefin under 1KV antistatic
synthetic fiber or approved equal.
Vinyl Composition Tile: 12" x 12 " x 1/8" Kentile architectural
series or approved equal.
Ceilings: 2' x 2' suspended acoustical ceiling tile.
Armstrong minaboard fissure lay-in system or
approved equal.
Resin Membrane: Resin matrix traffic bearing waterproofing
membrane. Vulkin 350 - 351 2-part system by Memeco or
approved equal.
Partition Walls: Hartz has not included any partition walls
because the size or number of offices have not been
determined, however, PaineWebber can budget
partitions as follows.
A. 3 5/8" metal studs 2'o.c., 5/8" gypsum board both
sides 9'-0" high with two coats latex paint
@ $3.40/sq.ft.
B. 3 5/8" metal studs 2'o.c., 5/8" gypsum board both
sides 13' high with two coats latex paint
@ $3.75/sq.ft.
C. Aluminum framed glass partitions based on H.L.
Bryun series #200 9' A.F.F. @ 106/L.F.
<PAGE> 76
CONTENTS
I. PROJECT DESCRIPTION
II. SITE DEVELOPMENT
III. EXTERIOR ENCLOSURE
IV. INTERIOR
V. STRUCTURAL
VI. VERTICAL TRANSPORTATION
VII. MECHANICAL
VIII. PLUMBING
IX. FIRE PROTECTION
X. ELECTRICAL
XI. SCHEMATIC DESIGN
ALTERNATE 1
ALTERNATE 2
<PAGE> 77
I. PROJECT DESCRIPTION
A. The proposed Paine Webber Data Center is to be the renovated existing
Seatrain Building, in the Lincoln Harbor Development Weehawken, New
Jersey. The existing building consists of four floors, designated as
ground, Mezzanine, First and Second. The proposed renovation includes:
the replacement of the roofing, the removal of a section of the
mezzanine to accommodate new generators, as required by the Data
Center, and the elimination of the North Entrance. (Main Employee
Entrance to be from the south parking lot, the Visitor Entrance to be
from the east side of the building).
Also included are the following alternatives:
Alternate 1 - removal and required structural patching of the
existing skylight.
Alternate 2 - the repair of the existing skylight and the
increased structural loading of the mezzanine to accommodate
computer equipment.
The items excluded from the Landlord's obligation are: the computer
and telecommunications equipment as well as the Voice and Data
cabling.
In addition to the requirements described herein, the renovation of
the building and all related facilities shall be in conformance with
the most recent editions of all applicable codes, standards,
specifications and regulations.
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<PAGE> 78
II. SITE DEVELOPMENT
Information not included at this time.
- 2 -
<PAGE> 79
III. EXTERIOR ENCLOSURE
A. Glazing System: Double glazing along the perimeter on the first and
second floors in the computer room area. Glazing system to provide
thermal break at mullions and to prevent condensation at all times, as
well as maintain an RH of 50%.
B. Roofing: Remove existing roofing to the slab. Replace with new
insulated membrane roof, consisting of roofing aggregate ballast or
cast-in-place concrete over water pervious membrane over extruded
expanded polystyrene insulation having a "U" value of 0.08 BRU/sq.
ft./degree F. or better, over a fluid-applied membrane waterproofing.
C. Wall Louvers: Continuous type, stormproof, of extruded aluminum
sections with either hardcoat anodized finish or resinous ("Kynar
coated of selected color, to match glazing enframement. Louvers to
have bird screens and insulated blank-off panels. Louvers to be added
to the west facade on both the ground and mezzanine floors at the
generator area.
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<PAGE> 80
IV. INTERIOR
A. Main Entrance and Visitor Lobbies
1. Floors: To be determined
2. Walls: To be determined
3. Ceilings: Gypsum wallboard
4. Lighting: Recessed incandescent.
B. Typical Floor Elevator Lobbies
1. Floors: Steel troweled concrete sealed for dustproofing.
With carpet tile
2. Walls: Vinyl wallcovering.
3. Ceilings: Gypsum wallboard.
4. Lighting: Incandescent.
C. General Office Area
1. Floors: Access floor consisting of 2' x 2' cement filled steel
panels 8" high pedestals interconnected with stringers, grounded.
Provide high quality modular carpet tiles of anti-static
synthetic fiber.
2. Column Enclosures: 5/8" gypsum wallboard attached to metal
furring secured to the underside of construction above, painted
as required. Fire rated as required.
3. Walls: Metal stud and gypsum wallboard partitions to underside of
construction above. Painted finish with resilient wall base.
Aluminum framed glass partition system with baked on paint finish
with flush wood doors maximum 9'-0" high, for perimeter office
walls parallel to the exterior wall.
Perimeter Walls: Remove existing indication units and enclosures.
Install new convectors and architectural convector enclosures.
4. Ceiling: Fully accessible, 2' x 2' acoustical tile.
5. Lighting: Recessed parabolic fluorescent fixtures - size to be
determined.
6. Window Treatment: Perimeter windows with 1" slat venetian blinds.
- 4 -
<PAGE> 81
D. Computer Area
1. Floors: Access floor consisting of 2' x 2' steel panels 24" h.
with high pressure laminate finish, pedestals interconnected with
stringers, grounded.
2. Column Enclosures: 5/8" gypsum wallboard attached to meet furring
secured to the underside of construction above, painted as
required. Fire rated as required.
3. Walls: Same as C.3, in addition.
Partitions to extend from slab to underside of structure at
perimeter of halon zones or perimeter of controlled environment.
Partitions separating humidity controlled areas from
non-controlled areas to receive blanket insulation with foil
vapor barrier. Curtain wall at these levels is to receive 22
gauge galvanized steel vapor barriers in lieu of typical foil.
4. Ceiling: Fully accessible 2' x 2' mineral fiber acoustical tile.
Alternate: For Alternate 1 - (Computer Area on 2nd floor).
Provide a resin matrix traffic bearing waterproofing membrane for
penthouse space above computer area.
5. Lighting: Same as C.5.
E. Equipment Area
1. Floors: Steel troweled concrete, sealed for dustproofing, vinyl
composition tile finish.
2. Walls: Concrete masonry unit or metal stud and gypsum board
partitions to underside of construction above. Heavy duty painted
finish. Epoxy paint in wet areas.
3. Ceilings: Gypsum wall board or mineral fiber acoustical tile.
4. Lighting: Strip fluorescent fixtures, suspended or surface
mounted.
F. Doors, Frames and Hardware
1. Doors: Flush, hollow metal, 1-3/4" thick, 18-gauge at interior,
16-gauge galvanized at exterior, ceiling high, width as required,
factory prime, field painted, labeled at rated walls and
partitions. Provide vision panel in all service vestibule doors.
2. Frames: Welded hollow metal, 16-gauge at interior, 14-gauge
galvanized at exterior size as required, factory prime, field
painted, labeled at rated walls and partitions.
- 5 -
<PAGE> 82
3. Hardware: Mortise locksets with lever handles, ball bearing
hinges and parallel arm closers; polished stainless steel finish.
G. Telephone and Electric Closets
1. Floors: Access floors consisting of 2' x 2' steel panels with
high pressure laminate finish at the same height as the
surrounding floor.
H. Security
Security provisions including, but not limited to: electronic hardware
connected to life safety system and/or building security such as
contact switches, electric locks, electric strike release, electric
hold-open devices, cameras, card readers and intercoms connected to a
central security station - location to be determined.
This item is vague and has not been priced and is not the obligation
of Hartz.
- 6 -
<PAGE> 83
V. STRUCTURAL
A. Structural Evaluation: The primary structural system is composed of a
reinforced concrete flat slab first floor and upper floors framed in
structural steel rolled sections. The recent additions of a mezzanine
between the ground floor and first floor and on infill slab below the
skylight are framed in steel open web bar joists.
The first floor slab was designed for a superimposed live load of 100
psf. Although flat slab construction is extremely difficult to modify
after it is cast, i.e. reinforce for additional loading capacity or
add significant vertical penetrations, it is expected that this floor
could be a serviceable floor for data center applications.
The upper floors were evidently designed for a superimposed loading of
50 psf live load plus 20 psf partition allowance - the code minimum
loading for office occupancy. This loading is generally low for a data
center application. The floor framing (and columns, if required) could
be locally reinforced for specific loading conditions and/or equipment
could be placed within the constraints of the system. Flexibility
through the life of the building would be restricted unless there was
a general reinforcement of the floor to approximately 100 psf.
The areas which have been recently added are also evidently designed
for the 50+20 psf loading. These floors will be extremely difficult to
reinforce and use for occupancy other than general office.
Penthouse floor framing is designed for 200 psf which is generally
appropriate for a mechanical penthouse.
B. Structural recommendation: Specifics to be determined pending analysis
of existing structures.
- 7 -
<PAGE> 84
VI. VERTICAL TRANSPORTATION
A. Existing Elevators: Cabs to be renovated, finishes to be determined.
Primary use to be for passengers, occasional service use.
B. Additional Elevator: Study to be done to determine need for additional
passenger elevator.
- 8 -
<PAGE> 85
VII. HEATING, VENTILATING & AIR CONDITIONING
A. Refrigeration Plant:
1. Provide two (2) 225 TR cooling/300 TR heating heat recovery
machines. Carrier "HR" machines as std. In addition, provide
two (2) 500 TR hermetic straight cooling machines. Initial total
cooling load required is 1000 TRS & ultimately is 1400 TRS.
2. Provide three (3) chilled water pumps at 450 gpm each vs. 120' of
head with 25 HP motors each; one pump is a stand-by. Provide
three (3) additional chilled water pumps at 1000 gpm each vs.
120' of head with 60 HP motors each; one pump is a stand-by.
3. Provide three (3) condenser water pumps at 675 gpm each vs. 140'
of head with 50 HP motors each; one pump is a stand-by. Provide
three (3) additional condenser water pumps at 1500 gpm each vs.
140' of head with 100 HP motors each; one pump is a stand-by.
4. Provide three (3) secondary chilled water pumps at 1150 gpm each
vs. 120' of head with 60 HP motors each; one pump is a stand-by.
5. Provide a plate & frame heat exchanger for secondary chilled
water and condenser water free cooling. Secondary chilled water
sized for 2300 gpm., 60 degrees F ENT. H2O with 50 degrees F
LVG H2O and condenser water flow of 3000 gpm with 48 degree F
ENT. H2O and 56 degrees LVG. H2O.
6. Provide four (4) Marley as standard. Series 8900 NC-11 cooling
tower cells. Each cell size 8916. Towers to be provided with
stainless steel basins and sumps and non-combustible fill. All
cells to be winterized. Motor horsepowers are 40 HP each. Motors
to be two-speed, reversing type.
B. Computer Room Packaged Air Conditioning Units
1. For each computer floor (floors 1 & 2) provide (35) units per
floor (total of 70). Piping distribution for these floors shall
be sized for future units. Future growth will require (52) units
per floor (total of 104). Each computer floor unit shall be
Liebert as std. "Deluxe System/3" chilled water units. Each unit
shall be FH248C, 120,000 BTUH sensible @ 72 degrees db, 45% RH
room. Units to be provided with electric humidification & no
reheat.
- 9 -
<PAGE> 86
2. For the UPS, 5kv switchgear room, incoming and emergency
switchgear room, and the substation rooms provide a total of (19)
units initially for these rooms with the distribution piping
sized for (26) units ultimately. Each unit shall be Liebert as
std. "Deluxe System/3" chilled water unit, model No. UH248C.
Units shall not contain humidifiers, nor reheat.
C. Heating Plant & Distribution
1. Provide one (1) 100 BHP Scotch Marine type fire tube boiler to
serve as a stand-by or back-up to heat recovery machines. Boilers
shall be dual fuel fired (natural/gas No. 2 oil). Provide two (2)
circulation pumps sized at 375 gpm vs. 60' of head each with 15
HP motors.
2. Heat pump hot water shall be distributed to heat building via
convectors located at the sill of the windows on each floor.
Convectors shall be located around the entire perimeter of each
floor of the building. Convectors shall be two (2) rows high.
Allow .8 linear feet of convectors for each linear foot of
exterior wall. Convectors shall be copper tube aluminum fin
1-1/4" tube with 4-1/4 x 4-1/4" fin, 40 fins/per foot. Provide
architectural convector enclosures.
D. Air Conditioning Systems
1. Provide two (2) 100% outside ventilation systems for computer
rooms. One located at the east end of penthouse the other at the
west end. Systems shall provide conditioned air (cooled in
summer, tempered & humidified in winter) to the computer floors
(1st & 2nd floors). Systems shall be 5000 CFM each with 7-1/2 HP
motors. Each system shall be provided with a packaged electric
steam generator for humidification. Steam generators shall have a
capacity of 200 lbs/hr for each system.
2. Provide two (2) packaged air conditioning supply air systems to
serve the ground floor and mezzanine floor office and lobby
spaces. These supply air systems shall have associated return air
fans. Systems will be variable air volume type. Systems will be
35,000 CFM each. The supply fan motors will be 60 HP and the
return air fans will be 25 HP. The supply air and return air will
be ducted to the two (2) floors served via four (4) riser points
with duct takeoffs at each riser point at each floor served. The
return air fans for these floors will also be used as the halon
purge fans from the computer floors. The supply fans will also
serve as purge makeup to the computer floors. This will be
accomplished through a series of damper sequencing.
- 10 -
<PAGE> 87
E. Emergency Generator Ventilation System
1. Provide five (5) tubular centrifugal general exhaust fans hung
above the generators in the generator room on the ground floor.
Each fan will be sized for 125,000 CFM with a 50 HP motor. Sound
traps shall be provided on each fan discharge. Discharge will be
through the west facade. The intake ventilation air will also
enter through the west facade (low) through a plenum, ALD's and
sound traps. Note: The entire west elevation at the present
ground floor and mezzanine floor is required to be louvered for
ventilation air intake & discharge.
F. Fuel Oil System
1. Provide a system of fuel oil storage and distribution for the
emergency generator plant. Provide two (2) buried fiberglass fuel
oil storage tanks of 25,000 gallons capacity each. Fuel oil
storage will provide for two days operation at full load based
on ultimate generator plant capacity of six (6) engines running
at 1,400 kw. each (8,400 kw. total).
G. Automatic Temperature Controls:
1. The building control system shall be, in general, a pneumatic
system. Building automation system shall be an electronic
microprocessor based system employing direct digital control
technology. Each main air handling system and each water system
shall be provided with a separate DDC cabinet.
2. System shall be able to start and stop all equipment remotely and
monitor and reset from a remote location air system supply air
temperatures, outside air temperatures, fan discharge
temperature, return air temperatures, supply and return
temperatures of all water systems with reset of supply water
temperatures. In addition to points required for the operations
building allow five hundred (500) points for data center.
3. System shall provide alarms for all off-normal conditions and
status of remotely controlled motors by either pressure or flow
switches.
4. System graphics shall be provided for each system.
5. System shall remotely control each supply air and each return air
automatic damper in the duct taps at each floor from a central
location both for part load operation and smoke control.
- 11 -
<PAGE> 88
6. Provide a duplicate operations console (color CRT, alarm printer,
logging printer, etc.) at data center in addition to that
required at operations center.
H. Demolition
1. Remove all existing heating ventilating equipment, piping and
ductwork.
- 12 -
<PAGE> 89
VIII. PLUMBING
A. Demolish existing plumbing associated with toilet rooms on the 1st
and 2nd floors.
B. Provide new plumbing fixtures on 1st and 2nd floors and connect to
existing plumbing piping. Provide the following number of fixtures.
MEN WOMEN
- --------------------------------------------------------------------------------
1. 1st Fl. 1-SS 1-DF 1-WC 1-UR 1-LAV 2-WC 1-LAV
2. 2nd Fl. 1-SS 1-DF 1-WC 1-UR 1-LAV 2-WC 1-LAV
C. Plumbing fixtures shall be:
1. WC - water closets, American Standard "AFWALL" 2477.016,
vitreous china siphon jet, elongated quiet action wall hung,
with Sloan Royal No 11DYC "Continental", complete with carrier
and seat.
2. UR - Urinals, American Standard "Trimbrook" 6560.015, vitreous
china siphon jet wall hung urinal with Sloan Royal 186-11YC
quiet action flush valve, complete with carrier.
3. LAV - Lavatories, American Standard "Roxalyn 0194.076, 8 inch
center 20" x 18" vitreous china lavatory with 2248.516-BR
6313-02 chrome plated brass lever handles, complete with aerator
on spout, supplies and carrier.
4. SS - Slop sink, American Standard "Akron" 7696.016, 24" x 20"
cast iron acid resisting enameled service sink with 3" standard
trap, wall hanger and 8344.111 exposed wall mounted faucet.
5. DF - Drinking Fountain, Elkay electric water cooler, barrier
free, Model ERHP-2-8, wall hung stainless steel fountain
complete with mounting box.
D. Materials
1. Waste and vent piping shall be service weight cast iron no-hub,
with no-hub fittings.
2. Water piping shall be copper type "L" with 95-5 solder joint
sweat end fittings. Insulate all water piping with 1/2 inch
fiberglass insulation.
3. Provide valves as required and match existing.
- 13 -
<PAGE> 90
XI. FIRE PROTECTION
A. The building will be fully sprinkled other than the electric
switchgear room, elevator machine rooms, UPS and battery rooms.
Computer room protection shall be as described herein.
B. All sprinkler systems will be hydraulically calculated. In general,
spaces will be light hazard, calculated to .10 GPM/sq. ft. over 1500
sq. ft. Ordinary hazard areas such as storage will be calculated to
.16 GPM/sq.ft. over 1500 sq. ft.
C. The sprinkler systems will be extended from the existing 6 inch
sprinkler main at the ground floor level. The supply to each system
will be provided with a shut-off valve (with tamper switch), paddle
water flow detector, drain valve and sight glass connecting to a drain
riser.
D. All sprinkler control valves and alarms will be supervised and will
annunciate at the fire control panel.
E. The UPS rooms and battery rooms will be protected by total flooding
Halon 1301 fire suppression systems. Provide two complete separate
systems; one for each UPS room and its associated battery room. Each
smoke detection system will be "cross-zoned" with four detection zones
per system.
The Halon system shall be a main-reserve central storage type, and
will be piped to nozzles in the area.
F. Provide the following individual fire protection systems for the 1st
and 2nd floor computer rooms:
1. Base System Provide a "fire cycle" on-off type sprinkler system
as manufactured by the Viking Corp. The system will be complete
with control panel, valve trim panel, special water control
valve, thermal detectors, fire cycle cable, batteries and air
compressor panel.
The system will be a recycling type, which automatically shuts
the water off when the fire has been extinguished. The system
will sense a fire condition through a thermal detection system
which causes the special water control valve to open or close.
The detection system will re-open the control valve if the fire
rekindles. The piping system will use air-pressure (1-1/2 - 2
PSI) to monitor the piping.
Provide a total flooding Halon 1301 fire suppression system for
the computer room underfloor area. Provide a "cross-zoned"
detection system in the underfloor and a single zone on the
ceiling. Operation of the ceiling detectors will transmit an
alarm only. Operation of the underfloor "cross-zoned" detectors
will cause discharge of the Halon system.
- 14 -
<PAGE> 91
The Halon system shall be a "single shot" central storage type
and will be piped to nozzles in the underfloor area.
a. Alternate No. 1: Provide a "fire cycle" on-off sprinkler
system same as base scheme.
Provide a total flooding Halon 1301 fire supression system
for the computer room and underfloor area. Provide
cross-zoned detection on the ceiling and the underfloor area
(four zones). Operation of the underfloor detection system
will cause discharge into the underfloor only. Operation of
the ceiling detection system will cause discharge of Halon
into the room and underfloor.
The Halon System shall be a "single-shot", central storage
type and piped separately to the ceiling and underfloor
nozzles.
b. Alternate No. 2: Provide a total flooding Halon 1301 system
for the computer room and underfloor area. Provide
cross-zoned detection system as alternate no. 1.
The Halon system shall be a main-reserve, central storage
type piped the same as alternate no. 1. The reserve shall be
connected and will be of same capacity as main.
G. Halon Systems
1. All Halon 1301 systems will be complete with a central control
panel, graphic annunciator panel for ceiling and underfloor
detectors, emergency standby batteries, ionization type smoke
detectors, alarm bells, horns, and lights, interfacing relays for
HVAC and computer power shut down, manual release stations,
conduit and wires, Halon storage containers and piping, complete
and ready for operation. System will provide a 6% concentration.
2. Each system shall be capable of signaling an alarm prior to the
development of visible smoke due to a fire condition. The system
will provide audible and visual annunciation at the central
control panel and throughout the protected area. The system will
be provided with timed-delayed abort switches and discharge delay
timers. The entire system shall be electrically supervised.
3. The entire detection and Halon 1301 systems shall be provided
under the responsibility of one contract.
4. Halon 1301/smoke detection equipment shall be Fenwal,
Pyrotronics, Ansul or Kidde.
5. Provide Halon for the various schemes in the following amounts:
- 15 -
<PAGE> 92
HALON 1301 QUALITY REQUIREMENTS
<TABLE>
<CAPTION>
COMPUTER ROOMS AREA FT(2) VOL FT.(3) LBS. HALON REQ. 5%
- -------------- ---------- ---------- ------------------
<S> <C> <C> <C>
Base Scheme
1st fl. Computer Room U/F 32,800 65,600 1,640
2nd fl. Computer Room U/F 32,800 65,600 1,640
Alternate No. 1
1st fl. Computer Room 295,200 7,380
1st fl. Computer Room U/F 65,600 1,640
2nd fl. Computer Room 32,800 295,000 1,640
2nd fl. Computer Room U/F 65,600 7,380
Alternate No. 2
1st fl. Computer Room 7380 MAIN + 7380 RES
1st fl. Computer Room U/F 1640 + 1640
2nd fl. Computer Room 7380 + 7380
2nd fl Computer Room U/F 1640 + 1640
UPS & Battery Rm. #1 2500 30,000 750 MAIN + 750 RES
UPS & Battery Rm. #2 2500 30,000 750 MAIN + 750 RES
</TABLE>
- 16 -
<PAGE> 93
H. Piping Systems:
1. Fire Standpipe Piping: Black Steel, Schedule 40 pipe, ASTM
A120-73 or ASTM A53-73.
2. Sprinkler Piping:
a. One Inch to Three Inch: Black steel, Schedule 40 pipe, ASTM
A120-73 or ASTM A53-73.
b. Four Inch to Six Inch: Black steel, ASTM A120-72a or ASTM
A53-72a, thin wall pipe, with minimum wall thickness .188
inch.
3. Fittings for Fire Standpipe System: Screwed, standard weight cast
iron fittings, UL approved for fire service.
4. Fittings for Sprinkler Systems:
a. One Inch to Three Inch: Screwed, standard weight cast iron
fitting, UL approved for fire service.
b. Four Inch to Six Inch: Mechanical groove couplings (complete
with housing, gasket, nuts and bolts), Victaulic Standard
Style 77, with grooves rolled on the pipe by an approved
groove rolling machine.
5. Victaulic couplings (Standard Style 77) may be used in lieu of
iron fittings.
6. Halon 1301 Piping: Black steel, Schedule 40 pipe, ASTM A53-73.
7. Fittings for Halon 1301 Piping: Malleable iron, 300 pounds, ASTM
A197.
8. Alarm Devices: All alarm panels, gongs or other alarm receiving
devices and all inter Connecting electrical wiring will be
furnished under the Specifications of other Trades, except Halon
system alarms, wiring and panels, which shall be provided by this
Contractor. Provide all switches directly connected to equipment
provided by this Trade, required for the transmission of alarm
impulses. All water control valves shall be provided with pamper
switches.
17
<PAGE> 94
9. Valves: All water control valves within the building shall be
wedge gate valves with painted iron wheel handles, shall have
gland followers in stuffing boxes, constructed so that they may
be repacked while open and under pressure. All valves shall have
the name of the manufacturer and working pressure cast or stamped
thereon. All valves shall be UL approved.
Provide valves as follows:
a. Gate Valves Material W.W.P.
----------- -------- ------
Flanged OS&Y IBBM 175
Screwed (drains, etc.) Bronze 175
b. Check Valves
------------
Flanged IBBM 175
Screwed (drains, etc.) Bronze 200
10. Sprinkler Heads: Provide automatic sprinkler heads of finish as
approved by the Architect. Sprinkler heads in finished areas
shall be cover plate flush type sprinkler heads, Reliable Model
G1 (Concealer), color as selected by the Architect; all other
sprinkler heads shall be Reliable Model G automatic water spray
heads, or as approved.
- 18 -
<PAGE> 95
X. Electrical
A. Estimated Demand Load - Data Center
1. Initial - 4300 KW/5060 KVA
2. Ultimate - 6210 KW/7305 KVA
B. Incoming Normal Service - Data Center: 2-4160V, 1200A feeders
from PSE & G
C. Estimated Emergency Loads
1. Initial: 4300 KW Data Center
1990 KW Office Building
----
Total: 6290 KW
2. Ultimate: 6200 KW Data Center
3225 KW Office Building
----
Total: 9425 KW
D. Emergency Generators/Diesel
1. Initial: 5 @ 1400 KW - 4160V output/.8 pf
2. Ultimate: 7 @ 1400 KW - 4160V output/.8 pf
E. 5 KV Switchgear/Input & Generator Output: Electrically operated
draw-out air circuit breakers for service input, generator
output, and paralelling and load transfer per following single
line diagram. Lineup to include generator control cubicles with
automatic start up synchronizing and paralelling equipment,
metering, reverse current relays, etc. Load shedding shall be
accomplished via the energy management portion of the building
automation system. See diagram on following page.
- 19 -
<PAGE> 96
GENERATOR SWITCHGEAR SCHEMATIC
[CHART]
- 20 -
<PAGE> 97
F. 5 KV Switchgear/Building Distribution: Electrically operated draw-out
air circuit breakers with load break air interrupter isolation
switches for mains and tie per the following schematic.
[CHART]
- 21 -
<PAGE> 98
G. Unit Substations: Primary 4160 fused air interrupter selector switch
with dry type transformer (forced air cooled) 460/265 V secondary with
insulated case circuit breakers with solid state trip units and ground
fault protection on mains, ties and distribution protective devices.
See following schematic.
[CHART]
- 22 -
<PAGE> 99
H. Static UPS Systems: Two static UPS systems at 460 volt, 60 Hz. Each
initially sized at 800 KW redundant (3-400 KW modules) expandable to
1200 KW redundant (4-400 KW modules). Each module to be connected to
its own string of lead calcium batteries through a separate battery
disconnect. Batteries to be sized for 15 minutes. Each UPS system
shall be supported by its own switchboard lineup containing module
input and output breakers, static bypass, UPS & system isolation
breakers and maintenance bypass breakers with an output distribution
switchboard section. Each system to contain system control cabinet as
well as remote monitoring panel in computer room.
I. Computer Room Electric Service: 265/460 V feeders to be extended from
UPS distribution switchboards to distribution panels in electric
closets contiguous to data processing area. Distribution panels to
have 225A-3P shunt trip breakers feeding local floor power
distribution units with integral isolation transformer to 120/208 V, 3
phase, 4 wire, and associated secondary panelboards (2 to 3 section).
14-150 KVA PDU's will initially be required with an ultimate of 20
PDU's. Local floor A/C units will be fed from 460 volt panelboards in
same electric closets as PPU distribution panelboards.
- 23 -
<PAGE> 100
IX. SCHEMATIC DESIGN
- 24 -
<PAGE> 101
[SURVEY OF LINCOLN HARBOR FEASIBILITY STUDY - GROUND FLOOR]
ALTERNATE 1
<PAGE> 102
[SURVEY OF LINCOLN HARBOR FEASIBILITY STUDY - MEZZANINE]
ALTERNATE 1
<PAGE> 103
[SURVEY OF LINCOLN HARBOR FEASIBILITY STUDY - 1ST FLOOR]
ALTERNATE 1
<PAGE> 104
[SURVEY OF LINCOLN HARBOR FEASIBILITY STUDY - 2ND FLOOR]
ALTERNATE 1
<PAGE> 105
[SURVEY OF LINCOLN HARBOR FEASIBILITY STUDY - BUILDING SECTION]
ALTERNATE 1
<PAGE> 106
[SURVEY OF LINCOLN HARBOR FEASIBILITY STUDY - GROUND FLOOR]
ALTERNATE 2
<PAGE> 107
[SURVEY OF LINCOLN HARBOR FEASIBILITY STUDY - MEZZANINE]
ALTERNATE 2
<PAGE> 108
[SURVEY OF LINCOLN HARBOR FEASIBILITY STUDY - 1ST FLOOR]
ALTERNATE 2
<PAGE> 109
[SURVEY OF LINCOLN HARBOR FEASIBILITY STUDY - 2ND FLOOR]
ALTERNATE 2
<PAGE> 110
[SURVEY OF LINCOLN HARBOR FEASIBILITY STUDY - BUILDING SECTION]
ALTERNATE 2
<PAGE> 111
BUDGETARY COSTS OF PAINE WEBBER DATA CENTER
140,000 Square Feet
All Tenant Work Based on 1986 Prices
<TABLE>
<CAPTION>
ITEM UPGRADE COST
- ---- ------- ----
<S> <C> <C>
Floors (alternate scheme #2) $ 766,800
Ceilings (alternate scheme #2 111,210
Window treatment (alternate scheme #2) 6,750
Halon (base) 352,000
Alternate #1 (add) $ 403,000
Alternate #2 (add) 764,000
Electrical (including credit
for ops. gen. 26,000) 5,339,422
HVAC: to maintain an all 2,310,000
electric building; reuse electric
boilers, perimeter radiation &
heat pump units in non-computer
areas. Balance of building will
comply with JB-B specs.
140,000 sq. ft. @ $16.50
HVAC: as per JB-B outline
and specified design
add $1.39/sq. ft. (add) 194,600
Resin Membrane at penthouse (add) 25,605
Fire protection 135,000
----------
Total $9,021,182
by 140,000 sq. ft./SQUARE FOOT COST $ 64.43
</TABLE>
NOTES:
1. If existing HVAC system is used, credit will be given for not wiring
new equipment.
2. If existing 2' x 4' standard lighting fixtures for lower two floors
are used, credit for new parabolics will be given.
3. If alternate layout scheme #1 is used, the up-charge will be $22,000
for floors, ceilings and window treatment.
4. Grounding of access flooring follows operations specification.
- 25 -
<PAGE> 112
Exhibit "F"
Loan Terms
PRINCIPAL AMOUNT: $75,000,000
TERM: Minimum 17 years 6 months from
Commencement Date
AMORTIZATION
SCHEDULE: 11.979 constant
INTEREST RATE: 11.25% or less per annum
SECURITY: Senior Leasehold Mortgage,
subordinated fee, no personal
liability
F-1
<PAGE> 113
Exhibit "G"
Operating Expense
Tenant is the sole tenant of the Building and Land and is thereby
solely responsible for its operations thereon. In addition, Tenant shall pay the
Operating Expenses (as such term is defined in the Ground Lease) attributable to
the premises demised thereunder.
G-1
<PAGE> 114
Exhibit "H"
Plans and Specifications
The Plans and Specifications for Landlord's renovation of the Data
Processing Center are contained in the Exhibit entitled Landlord's Work. In
addition to the Plans and Specifications for Landlord's Work, such Exhibit
includes items in excess thereof, which items are identified as budgeted
amounts, which amounts are based upon the price as of the date hereof, and which
prices are used for estimating purposes only.
In the event Tenant elects to have those budgeted items of Tenant's
Work performed by the Landlord, Tenant shall reimburse Landlord in such amount
for that specific work, increased by such increases, if any, as may occur in
construction or labor costs.
The replacement of the roof required in Sections I and III has been
completed. The Section I removal of mezzanine is no longer required as the
generators are being housed without the Building.
H-1
<PAGE> 115
Exhibit "I"
Tenant's Work
Tenant's Work shall consist of that work performed by Tenant in
addition to Landlord's Work to finish the interior of the shell of the Building
to Tenant's requirements.
Within the Landlord's Work Exhibit are items in excess of Landlord's
Work obligation which items are identified as budgeted amounts, which amounts
are based upon the 1986 price and which prices are used for estimating purposes
only.
In the event Tenant elects to have those budgeted items of Tenant's
Work performed by the Landlord, Tenant shall reimburse Landlord in such amount
for that specific work, increased by such increases, if any, as may occur in
construction or labor costs.
I-1
<PAGE> 116
Exhibit "J"
Lincoln Harbor Project
J-1
<PAGE> 117
[SURVEY OF LINCOLN HARBOR PROJECT]
<PAGE> 118
Exhibit "K-1"
Subordination, Non-Disturbance
and Attornment Agreement
THIS AGREEMENT, made as of the ____ day of ____________, 19__, by and
between ___________, a ____________ corporation having an office at
_________________ (the "Mortgagee"), and PAINEWEBBER, INCORPORATED having an
office at 1285 Avenue of the Americas, New York, New York 10019 (the "Space
Tenant").
WITNESSETH:
WHEREAS, the Mortgagee is the owner and holder of a Promissory Note,
dated of even date herewith, in the amount of $______, by HARTZ-PW LIMITED
PARTNERSHIP (the "Landlord"), payable to the Mortgagee (the "Note"), which Note
is secured by a Mortgage, dated of even date herewith, between the Landlord, as
mortgagor, and the Mortgagee, as mortgagee (the "Mortgagee"), covering the Land-
lord's right, title and interest in the Building and any other improvements
located on the Land, as such terms are defined in the Agreement of Lease (the
"Ground Lease"), dated __________, 1986, between Fee Owner, as landlord, and the
Landlord, as tenant, and the leasehold estate created thereby (the "Leasehold
Estate") in the land, located in the Lincoln Harbor Project, in Weehawken, New
Jersey, as such land is more particularly described in Exhibit A annexed hereto
and made a part hereof (said Land, Building, improvements and such other
property being hereinafter collectively referred to as the "Premises"), and
pursuant to which Mortgage Hartz Mountain Industries, Inc. ("Fee Owner")
executed the same for purposes of subordination of its fee interest in the Land
to the Mortgagee; and
WHEREAS, the Space Tenant has entered into a lease (the "Space Lease")
with the Landlord, dated as of __________, 1986, covering a portion of the
Premises (the "Demised Premises"); and
WHEREAS, the parties hereto desire to provide inter alia for the
non-disturbance of the Space Tenant by the Mortgagee.
K-1-1
<PAGE> 119
NOW THEREFORE, in consideration of the covenants and agreements
contained herein, and intending to be legally bound thereby, the Mortgagee and
the Space Tenant hereby covenant and agree as follows:
11. The Space Tenant covenants and agrees that the Space Lease shall at
all times be subject and subordinate in each and every respect to the Mortgage
and the lien thereof and to all renewals, extensions, supplements, amendments,
modifications, consolidations and replacements of such Mortgage, with the same
force and effect as if the Mortgage had been executed and delivered prior to the
execution and delivery of the Space Lease and without regard to the order of
priority of recording of the Mortgage and the Space Lease or any Memorandum of
the Space Lease.
12. Mortgagee expressly agrees that no subsequent modification of the
Mortgage shall adversely affect in any material respect any of Space Tenant's
rights under the Space Lease, materially increase Space Tenant's obligations
under the Space Lease or materially diminish Landlord's obligations under the
Space Lease.
13. The Space Tenant and Mortgagee agree that if any act or omission of
Landlord would give Space Tenant the right, immediately or after lapse of a
period of time or after notice or after both, to cancel or terminate the Space
Lease, or which Space Tenant claims gives it the right, immediately or after
lapse of a period of time or after notice or after both, to cancel or terminate
the Space Lease, or to claim a partial or total eviction, Space Tenant shall not
exercise such right (a) until and unless it has given written notice of such act
or omission to Mortgagee and any successor or assign whose name and address
shall previously have been furnished to Space Tenant, and (b) until a thirty
(30) day period for remedying such act or omission shall have elapsed following
the giving of such notice and following the time when Mortgagee shall have
become entitled under the Mortgage to remedy the same or such longer period as
may be reasonably required if such condition is not susceptible to remedy within
such thirty (30) day period provided Mortgagee commences and diligently pursues
such remedy (which reasonable period shall in no event be less than the period
to which Landlord would be entitled under the Space Lease or otherwise, after
similar notice, to effect such remedy).
K-1-2
<PAGE> 120
The Space Tenant and Mortgagee further agree that in the event of any
default on the part of the Landlord, arising out of or accruing under the
Mortgage, whereby the Mortgage might be accelerated, terminated or foreclosed by
the Mortgagee, by reason of any such default or defaults, the Mortgagee will
given written notice thereof to the Space Tenant at the address set forth
herein, or its successor or assigns whose name and address previously shall have
been furnished to the Mortgagee in writing, and after the time when the Landlord
shall have become entitled under the Mortgage to cure such defaults, grant to
the Space Tenant a reasonable time (in no event to exceed ninety (90) days, for
all defaults other than payment of principal or interest on the Mortgage, for
which the time period shall be limited to ten (10) business days), which shall
be not less than the period of time granted to the Landlord by the terms of the
Mortgage, after the giving of such notice by the Mortgagee to the Space Tenant
to cure or to undertake the elimination of such defaults, provided that after
receipt of such notice, Space Tenant shall with due diligence give the Mortgagee
notice of intention to remedy such act or omission, and to the extent possible
and reasonably reasonable shall commence and continue to remedy such act or
omission, it being expressly understood that such right on the part of the Space
Tenant to cure any such default or defaults shall not be deemed to create any
obligation on the Space Tenant's part to cure or to undertake the elimination of
any such default or defaults.
14. As long as no default under the Space Lease exists which is
continuing beyond the expiration of any applicable grace period, which would
entitle the Landlord to terminate the Space Lease or dispossess the Space Tenant
thereunder as of the date Mortgagee files a lis pendens in, or otherwise
commences, a foreclosure action or any time thereafter, the Mortgagee shall not
name the Space Tenant as a party defendant to any action for foreclosure or
other enforcement thereof, nor shall the Space Lease be terminated by the
Mortgagee in connection with or by reason of foreclosure or other proceedings
for the enforcement of the Mortgage or by reason of a transfer of the Landlord's
interest under the Space Lease or under the Ground Lease or the Fee Owner's
interest in the Land pursuant to an assignment in lieu of foreclosure, or
otherwise, and any sale, or assignment pursuant thereto shall be subject to the
Space Lease nor shall the Space Tenant's use or possession of the Demised
K-1-3
<PAGE> 121
Premises be interfered with by the Mortgagee or any such assignee or purchaser,
except that the person acquiring the interest of the Landlord or Fee Owner as a
result of any such action or proceeding and such person's successors and assigns
(any of the foregoing being hereinafter referred to as the "Successor") shall
not be (a) subject to any credits, offsets, defenses or claims, not expressly
provided for in the Space Lease, which the Space Tenant might have against any
prior landlord, (b) bound by any previous modification or amendment of the Space
Lease or by any prepayment of more than one month's Fixed Rent or Additional
Charges (as such terms are defined in the Space Lease), unless such modification
or prepayment shall have been made with the Mortgagee's prior written consent,
or (c) liable for any act or omission of any prior landlord which constitutes a
default under the Space Lease, provided, however, Successor shall be liable for
any such default or defaults which are continuing beyond the time where the
interest of the Landlord under the Space Lease has been transferred to the
Successor.
15. If the interest of the Landlord under the Space Lease or under the
Ground Lease or the interest of Fee Owner in the Land shall be transferred to
the Mortgagee by reason of foreclosure or other proceedings for enforcement of
the Mortgage or pursuant to any assignment in lieu of foreclosure, or otherwise,
the Space Lease shall not terminate but shall continue in full force and effect
as, or as if it were, a direct lease between the Successor, or its designee and
Space Tenant, whereby the Space Tenant shall be bound to the Successor, and,
except as provided in this Agreement, the Successor shall be bound to the Space
Tenant, under all of the terms, covenants and conditions of the Space Lease for
the balance of the term thereof remaining, and the Space Tenant does hereby
agree to attorn to the Successor, including the Mortgagee if it be the
Successor, as its landlord, to affirm its obligations under the Space Lease and
does agree to make payments of all sums due under the Space Lease to the
Successor. Space Tenant shall promptly execute and deliver any instrument that
Mortgagee may reasonably request to evidence such attornment.
16. If and to the extent that the Space Lease or any provision of law
shall entitle the Space Tenant to notice of any mortgage, the Space Tenant
acknowledges and agrees that this Agreement shall constitute said notice to the
Space Tenant of the existence of the Mortgage.
K-1-4
<PAGE> 122
17. This Agreement may not be modified except by an agreement in
writing signed by the parties hereto or their respective successors in interest.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto, their respective heirs, representatives, successors and assigns.
18. Nothing contained in this Agreement shall in any way impair or
affect the lien created by the Mortgage, except as specifically set forth
herein.
19. The Space Tenant agrees that this Agreement satisfies any condition
or requirement in the Space Lease relating to the granting of a non-disturbance
agreement. The Space Tenant and Mortgagee agree that Mortgagee shall be deemed a
"Superior Mortgagee" as such term is defined in the Space Lease, subject however
to the terms and provisions of this Agreement. The Space Tenant further agrees
that in the event there is any inconsistency between the terms and provisions
hereof and the terms and provisions of the Space Lease dealing with
non-disturbance by the Mortgagee, the terms and provisions hereof shall be
controlling.
The Mortgagee agrees that this Agreement satisfies any condition or
requirement in the Mortgage (or mortgage commitment) relating to the granting of
a subordination agreement and attornment agreement. The Mortgagee further agrees
that in the event there is any inconsistency between the terms and provisions
hereof and the terms and provisions of the Space Lease dealing with
subordination and attornment by the Space Tenant, the terms and provisions
hereof shall be controlling.
20. The Space Tenant acknowledges that it has notice that the Space
Lease and the rent and all other sums due thereunder have been assigned to the
Mortgagee as part of the security for the note secured by the Mortgage.
21. All notices, demands or requests made pursuant to, under, or by
virtue of this Agreement must be in writing and mailed to the party to whom the
notice, demand or request is being made by certified or registered mail, return
receipt requested, at its address set forth above. Any party may change the
place that notices and demands are to be sent by written notice delivered in
accordance with this Agreement.
K-1-5
<PAGE> 123
22. This Agreement shall be governed by the laws of the State of New
Jersey. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Agreement or the application of such term to any person or
circumstances other than those as to which it is invalid or unenforceable shall
not be affected thereby, and each term of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
23. Each of the parties hereto agrees to execute and deliver, upon the
request of the other, such documents and instruments (in recordable form, if
requested) as may be necessary or appropriate to fully implement or to further
evidence the understandings and agreements contained in this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
Mortgagee:
By: ,
------------------------
Space Tenant:
PAINEWEBBER INCORPORATED
By:
-------------------------
K-1-6
<PAGE> 124
[NOTARY PAGE]
K-1-7
<PAGE> 125
EXHIBIT A
Land
K-1-8
<PAGE> 126
Exhibit "K-2"
Subordination, Non-Disturbance
and Attornment Agreement
THIS AGREEMENT, made as of the ____ day of ______________, 1986, by and
between __________, a __________ having an office at ________________ ("Superior
or Lessor"), and PAINEWEBBER INCORPORATED having an office at 1285 Avenue of the
Americas, New York, New York 10019 ("Space Tenant").
WITNESSETH:
WHEREAS, HARTZ MOUNTAIN INDUSTRIES, INC. ("Ground Lessor") is the owner
of the land (the "Land") described in Schedule "A" annexed hereto and made a
part hereof; and
WHEREAS, Ground Lessor has entered into a ground lease (the "Superior
Lease"), dated as of _____________, whereby Ground Lessor demised and leased, as
ground lessor, all of the Land to Superior Lessor; and
WHEREAS, Superior Lessor has become the landlord under the entered
ground lease (the "Ground Lease"), dated as of __________, 1986, whereby Ground
Lessor demised and leased, all of the Land to HARTZ-PW LIMITED PARTNERSHIP
("Ground Lessee"); and
WHEREAS, Space Tenant has entered into a lease (the "Space Lease") with
Ground Lessee, dated as of __________, 1986, covering a portion of the space in
the building known as the [Data Processing Center] (the "Demised Premises"),
as more fully described in such Space Lease; and
WHEREAS, the parties hereto desire to provide inter alia for the
non-disturbance of Space Tenant by Superior Lessor.
NOW THEREFORE, in consideration of the covenants and agreements
contained herein, and intending to be legally bound thereby, Superior Lessor and
Space Tenant hereby covenant and agree as follows:
K-2-1
<PAGE> 127
1. Space Tenant covenants and agrees that the Space Lease shall at all
times be subject and subordinate in each and every respect to the Ground Lease
and to all renewals, extensions, supplements, amendments, modifications,
consolidations and replacements of such Ground Lease, with the same force and
effect as if the Ground Lease had been executed and delivered prior to the
execution and delivery of the Space Lease and without regard to the order of
priority of recording of the Ground Lease and the Space Lease or any Memorandum
of the Space Lease.
2. Space Tenant and Superior Lessor agree that if any act or omission
of Ground Lessee would give Space Tenant the right, immediately or after lapse
of a period of time or after notice or after both, to cancel or terminate the
Space Lease, or which Space Tenant claims gives it the right, immediately or
after lapse of a period of time or after notice or after both, to cancel or
terminate the Space Lease, or to claim a partial or total eviction, Space Tenant
shall not exercise such right (a) until and unless it has given written notice
of such act or omission to Ground Lessee and Superior Lessor whose name and
address shall previously have been furnished to Space Tenant, and (b) until a
thirty (30) day period for remedying such act or omission shall have elapsed
following the giving of such notice and following the time when Superior Lessor
shall have become entitled under the Ground Lease to remedy the same or such
longer period as may be reasonably required if such condition is not susceptible
to remedy within such thirty (30) day period provided Superior Lessor commences
and diligently pursues such remedy (which reasonable period shall in no event be
less than the period to which Ground Lessee would be entitled under the Space
Lease or otherwise, after similar notice, to effect such remedy).
3. As long as no default under the Space Lease exists which is
continuing beyond the expiration of any applicable grace period, which would
entitle Ground Lessee to terminate the Space Lease or dispossess Space Tenant
thereunder, Superior Lessor shall not name Space Tenant as a party defendant or
otherwise in any suit, action or proceeding brought to enforce any rights
granted to Superior Lessor under its Ground Lease, and Superior Lessor will not
terminate the Space Lease or take any action to recover the premises demised to
Space Tenant or affect or disturb Space Tenant's possession or rights under the
Space Lease.
K-2-2
<PAGE> 128
4. If Superior Lessor shall enter into and become lawfully possessed of
the Demised Premises and shall succeed to the rights of Ground Lessee under the
Space Lease by reason of the termination of the Ground Lease or otherwise, and
if Space Tenant is not then in default under the Space Lease beyond the time
permitted therein to cure such default, then (a) the Space Lease shall not
terminate, (b) Space Tenant shall attorn to Superior Lessor, and recognize it as
its landlord, such attornment to be upon the then executory terms and conditions
of the Space Lease, and (c) Superior Lessor shall accept such attornment and
recognize Space Tenant as Superior Lessor's lessee under the Space Lease. Upon
such attornment and recognition, the Space Lease shall continue in full force
and effect as, or as if it were, a direct lease between Superior Lessor and
Space Tenant, upon all of the then executory terms, conditions and covenants as
set forth in the Space Lease and which shall be applicable after such
attornment, except that Superior Lessor shall not be (i) liable for any previous
act or omission of Ground Lessee which constitutes a default under the Space
Lease; (ii) subject to any offset or defenses not expressly provided for in the
Space Lease which Space Tenant might have against Ground Lessee; (iii) bound by
any prepayment of more than one month's [Fixed Rent] or [Additional Charges] (as
such terms are defined in the Space Lease); and (d) bound by any amendment or
modification of the Space Lease made without Superior Lessor's prior written
consent.
5. This Agreement may not be modified except by an agreement in writing
signed by the parties hereto or their respective successors in interest. This
Agreement shall inure to the benefit of and be binding upon the parties hereto,
their respective heirs, representatives, successors and assigns.
6. Space Tenant and Superior Lessor agree that this Agreement satisfies
any condition or requirement in the Space Lease relating to the granting of a
non-disturbance agreement. Space Tenant and-Superior Lessor agree that Superior
Lessor shall be deemed a "Superior Lessor" as such term is defined in the Space
Lease, subject however to the terms and provisions of this Agreement. Space
Tenant and Superior Lessor further agree that in the event there is any
inconsistency between the terms and provisions hereof and the terms and
provisions of the Space Lease dealing with non-disturbance by Supe-
K-2-3
<PAGE> 129
rior Lessor, the terms and provisions hereof shall be controlling.
7. All notices, demands or requests made pursuant to, under, or by
virtue of this Agreement must be in writing and mailed to the party to whom the
notice, demand or request is being made by certified or registered mail, return
receipt requested, at its address set forth above. Any party may change the
place that notices and demands are to be sent by written notice delivered in
accordance with this Agreement.
8. This Agreement shall be governed by the laws of the State of New
Jersey. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the remainder
of this Agreement or the application of such term to any person or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
9. Each of the parties hereto agrees to execute and deliver, upon the
request of the other, such documents and instruments (in recordable form, if
requested) as may be necessary or appropriate to fully implement or to further
evidence the understandings and agreements contained in this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
Superior Lessor:
By:______________________
Space Tenant:
PAINEWEBBER INCORPORATED
By:______________________
K-2-4
<PAGE> 130
[ACKNOWLEDGEMENTS]
K-2-5
<PAGE> 131
Schedule "A"
Land
K-2-6
<PAGE> 132
Exhibit "L"
Non-Disturbance
and Attornment Agreement
THIS AGREEMENT, dated as of the ____ day of ___________, 19__, between
HARTZ-PW LIMITED PARTNERSHIP, a New Jersey limited partnership, having an office
at 400 Plaza Drive, Post Office Box 1411, Secaucus, New Jersey 07094
("Landlord"), and __________, a __________ having an office at __________
("Subtenant").
WITNESSETH:
WHEREAS, Landlord has entered into an Agreement of Lease, dated as of
the ____ day of __________, 1986 (the "Space Lease"), with PAINEWEBBER
INCORPORATED (the "Space Tenant") pursuant to which Landlord leased and demised
to Space Tenant a portion of the space in the building known as the [Data
Processing Center] (the "Demised Premises"), as more fully described in such
Space Lease;
WHEREAS, Space Tenant has entered into an Agreement of Sublease (the
"Sublease"), dated as of the ____ day of __________, 19__, pursuant to which
Space Tenant subleased and demised to Subtenant [the Demised Premises or a
portion thereof], as more fully described in Exhibit "A" annexed hereto and made
a part hereof; and
WHEREAS, the parties hereto desire to provide inter alia for the
non-disturbance of Subtenant by Landlord.
NOW, THEREFORE, the parties hereto agree as follows:
1. So long as the Sublease is in full force and effect, and no default
of Subtenant exists nor has any event occurred which with the passage of time or
notice would entitle Space Tenant to terminate the Sublease or dispossess
Subtenant, Landlord will not name or join Subtenant as a party defendant or
otherwise in any suit, action or proceeding brought to enforce any rights
granted to Landlord under the Space Lease or to terminate such Space Lease, and
the Landlord will not terminate the Sublease or take any action to recover
possession of the
L-1
<PAGE> 133
premises demised to Subtenant or affect or disturb Subtenant's possession or
rights under the Sublease.
2. If Landlord or its designee shall enter into and become lawfully
possessed of the Demised Premises and shall succeed to the rights of Space
Tenant under the Space Lease by reason of the termination.of the Space Lease or
otherwise, and if Subtenant is not then in default under the Sublease beyond the
time permitted therein to cure such default, then (a) the Sublease shall not
terminate, (b) Subtenant shall attorn to Landlord or its designee, and recognize
it as its landlord, such attornment to be upon the then executory terms and
conditions of the Sublease, and (c) Landlord or its designee shall accept such
attornment and recognize Subtenant as the Landlord's lessee under the Sublease.
Upon such attornment and recognition, the Sublease shall continue in full force
and effect as, or as if it were, a direct lease between the Landlord or its
designee and Subtenant, upon all of the then executory terms, conditions and
covenants as set forth in the Sublease and which shall be applicable after such
attornment, except that Landlord shall not be (i) liable for any previous act or
omission of Space Tenant which constitutes a default under the Sublease; (ii)
subject to any offset or defenses not expressly provided for in the Sublease
which the Subtenant might have against Space Tenant; (iii) bound by any
prepayment of more than one month's [Fixed Rent] or [Additional Charges] (as
such terms are defined in the Sublease); and (d) bound by any amendment or
modification of the Sublease made without Landlord's prior written consent.
3. The terms of this Agreement shall bind and inure to the benefit of
the parties hereto, and their respective heirs, successors and assigns.
4. All notices and other communications hereunder shall be in writing
and shall be hand delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed (a) if to Landlord at 400 Plaza
Drive, Post Office Box 1411, Secaucus, New Jersey 07094, Attention: General
Counsel, with a copy to Horowitz, Bross, Sinins & Imperial, P.A., 1180 Raymond
Boulevard, Newark, New Jersey 07102, Attention: Irwin Horowitz, Esq. or at such
other address as Landlord shall have furnished to Subtenant in writing, or (b)
if to Subtenant, at _________________________________________
L-2
<PAGE> 134
______________ Attention : ____________, or at such other address as Subtenant
shall have furnished to Landlord in writing.
5. This Agreement shall be governed by the laws of the State of New
Jersey. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Agreement or the application of such term to any person or
circumstances other than those as to which it is invalid or unenforceable shall
not be affected thereby, and each term of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
6. This Agreement may not be discharged or modified orally or in any
manner other than by an agreement in writing specifically referring to this
Agreement and signed by the party or parties to be charged thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HARTZ-PW LIMITED PARTNERSHIP
By: Hartz Mountain Industries,
Inc.
By: ___________________________
[SUBTENANT]
By: ___________________________
L-3
<PAGE> 135
[NOTARY PUBLIC PAGE]
L-4
<PAGE> 136
Exhibit "A"
Demised Premises
L-5
<PAGE> 1
Exhibit 10.39
LEASE BETWEEN
HARTZ-PW HOTEL LIMITED PARTNERSHIP,
as Landlord
and
PAINEWEBBER INCORPORATED
as Tenant
Premises:
Hotel/Office Building
Bldg. B
LINCOLN HARBOR PROJECT
<PAGE> 2
INDEX
-----
ARTICLE PAGE
- ------- ----
1. Definitions ......................................... 1
2. Demise and Term ..................................... 7
3. Rent ................................................ 8
4. Use of Building ..................................... 9
5. Preparation of Building ............................. 10
6. Tax and Operating Expense Payments .................. 12
7. Common Areas ........................................ 16
8. Labor Harmony ....................................... 17
9. Subordination ....................................... 17
10. Quiet Enjoyment ..................................... 20
11. Assignment, Subletting and Mortgaging ............... 20
12. Compliance with Laws ................................ 24
13. Insurance and Indemnity ............................. 25
14. Rules and Regulations ............................... 30
15. Alterations ......................................... 31
16. Landlord's and Tenant's Property .................... 33
17. Repairs and Maintenance ............................. 34
18. Electric Energy ..................................... 35
19. Heat, Ventilation & Air Conditioning ................ 36
20. Other Services: Service Interruption ............... 36
21. Access, Changes and Name ............................ 36
22. Mechanic's Liens and Other Liens .................... 37
23. Non-Liability and Indemnification ................... 37
24. Damage or Destruction ............................... 38
25. Eminent Domain ...................................... 43
26. Surrender ........................................... 46
27. Conditions of Limitation ............................ 46
28. Re-Entry by Landlord ................................ 48
29. Damages ............................................. 49
30. Affirmative Waivers ................................. 52
31. No Waivers .......................................... 52
32. Curing Tenant's Defaults ............................ 53
33. Broker .............................................. 53
34. Notices ............................................. 54
35. Estoppel Certificates ............................... 54
36. Arbitration ......................................... 55
37. Memorandum of Lease ................................. 55
38. Miscellaneous ....................................... 56
39. Extension of Term ................................... 60
40. Determination of Fair Market Rent ................... 62
i
<PAGE> 3
Exhibits
- --------
Exhibit "A" Description of the Building
Exhibit "B" Demised Premises
Exhibit "C" Fixed Rent
Exhibit "D" Floor Space
Exhibit "E" Land
Exhibit "F" Landlord's Work
Exhibit "G" Loan Terms
Exhibit "H" Operating Expenses
Exhibit "I" Plans and Specifications
Exhibit "J" Tenant's Work
Exhibit "K" Lincoln Harbor Project
Exhibit "L" Parking Plan
Exhibit "M-1" Form of Superior Mortgage Subordina-
tion, Nondisturbance and Attornment
Agreement
Exhibit "M-2" Form of Ground Lessor Superior Lessor
Subordination, Nondisturbance and
Attornment Agreement
Exhibit "N" Form of Ground Lessor Nondisturbance
Agreement
Exhibit "O" Cleaning Standards
ii
<PAGE> 4
Lease, dated April 14, 1986 between HARTZ-PW HOTEL LIMITED PARTNERSHIP,
a New Jersey limited Partnership, having an office at 400 Plaza Drive, Post
Office Box 1411, Secaucus, New Jersey 07094 and PAINEWEBBER INCORPORATED, a
Delaware corporation having an office at 1285 Avenue of the Americas, New York,
New York 10019.
ARTICLE 1 - DEFINITIONS
1.01 As used in this Lease (including in all Exhibits and any Riders
attached hereto, all of which shall be deemed to be Part of this Lease) the
following words and phrases shall have the meanings indicated:
A. Additional Charges: All amounts that become payable by Tenant to
Landlord hereunder other than the Fixed Rent.
B. Architect: Kenneth Carl Bonte, or as Landlord may designate, subject
to Tenant's approval, which approval shall not be unreasonably withheld or
delayed.
C. Architect's Certificate: The certificate to be issued by Architect
either (i) if Landlord is not designated by Tenant to perform Tenant's Work,
that Landlord's Work has been completed in accordance with the Plans and
Specifications, to the extent necessary so that Tenant may commence Tenant's
Work, or (ii) if Landlord is designated by Tenant to perform Tenant's Work, that
the Building and the Demised Premises have been Substantially Completed in
accordance with the Plans and Specifications.
D. Broker: Joseph Hilton & Associates Incorporated.
E. Building: The building to be located on the Land as more
particularly described on the plan attached hereto as Exhibit "A" and made a
Part hereof.
F. Calendar Year: Any twelve-month period during the term of this Lease
commencing on a January 1.
G. Commencement Date: The earlier of (a) (i) if Landlord is not
designated by Tenant to perform Tenant's Work, six (6) months from the
completion of the core and shell of the Building to the extent necessary so that
Tenant may commence Tenant's Work, together with the
<PAGE> 5
delivery of Architect's Certificate, or (ii) if Landlord is designated to
perform Tenant's Work, the date on which Landlord Substantially Completes
Tenant's Work and delivers the Demised Premises to Tenant, provided, however,
that in the case of (i) or (ii) above, the Commencement Date shall not occur
prior to the thirtieth (30th) day after delivery of the Commencement Notice, nor
earlier than January 1, 1999, (b) the date Tenant, or anyone claiming under or
through Tenant, first occupies the Demised Premises or any part thereof and is
open for business, provided that in such event, the Commencement Date shall be
deemed to have occurred only for the floors of the Demised Premises actually so
occupied and provided further that if Tenant shall occupy any part of the
Demised Premises and shall be open for business prior to January 1, 1989, the
Commencement Date shall not be deemed to have occurred until January 1, 1989,
provided that Tenant shall occupy the Demised Premises on all of the terms and
conditions of this Lease and Tenant shall pay as rent hereunder an amount equal
to the product of fifty cents (50cts) and the Floor Space per month as well as
all Additional changes incurred pursuant to the provisions hereof for every
month or portion thereof commencing on the date Tenant shall so occupy the
Demised Premises or any portion thereof and be open for business and terminating
on the day prior to the Commencement Date, or (c) the date upon which the
Commencement Date would have occurred under (a) above, but for delays caused by
the Tenant.
H. Commencement Notice: Thirty (30) days prior written notice from
Landlord to Tenant (i) if Landlord is not designated by Tenant to perform
Tenant's Work, of the date on which Landlord's Work shall be completed to the
extent necessary so that Tenant may commence Tenant's Work, or (ii) if Landlord
is designated by Tenant to perform Tenant's Work, of the date on which the
Building and the Demised Premises shall be Substantially Completed.
I. Common Areas: All areas, spaces and improvements in the Building
(other than the Demised Premises) and/or on the Land, which Landlord makes
available from time to time for the common use and benefit of the tenants and
occupants of the Building, including, without limitation, lobbies, hallways (but
not the lobby (it being understood that a portion of the hotel lobby may be used
in connection with the office portion of the Build-
2
<PAGE> 6
ing and, accordingly, such common portion shall be part of the Common Areas) or
hallways of the hotel portion of the Building), and planted areas, if any.
J. Demised Premises: As defined on Exhibit "B" annexed hereto and made
a part hereof.
K. Expiration Date: The date that is the day before the twenty-fifth
(25th) anniversary of the latest to occur of (i) the Commencement Date, or (ii)
the Commencement Date (as such term is defined in the Data Processing Lease,
dated of even date herewith, between Hartz-PW Limited Partnership, as landlord,
and Tenant as tenant (the "Data Processing Lease")) of the Data Processing
Lease, or (iii) the Commencement Date (as such term is defined in the Office
Lease) of the Office Lease, if the later to occur of such dates is the first day
of a month, or the twenty-fifth (25th) anniversary of the last day of the month
in which the later to occur of such dates is not the first day of a month.
However, if the Term is extended by the Tenant's effective exercise of any
Renewal Option, the "Expiration Date" shall be changed to the last day of the
applicable Renewal Term. For the purpose of this definition, the earlier
termination of this Lease shall not affect the "Expiration Date."
L. Fixed Rent: As set forth on the Rent Schedule on Exhibit "C" annexed
hereto and made a part hereof as redetermined pursuant to Section 39.02 hereof.
M. Fixed Rent Commencement Date: The date(s) which is the first
anniversary of the Commencement Date (or Dates) subject to adjustment as
provided in Section 5.05 hereof.
N. Floor Space: 141,669, as the same may be increased or decreased
pursuant to Section 38.13 hereof, and as more particularly set forth on Exhibit
"D" annexed hereto and made a part hereof.
O. Ground Lease: The Agreement of Lease, dated of even date herewith,
between Ground Lessor, as landlord, and Landlord, as tenant, pursuant to which
Ground Lessor, leased the Land to Landlord.
P. Ground Lessor: Hartz Mountain Industries, Inc. ("Hartz"), its
successors and assigns.
3
<PAGE> 7
Q. Insurance Requirements: Rules, regulations, orders and other
requirements of the applicable board of underwriters and/or the applicable fire
insurance rating organization and/or any other similar body performing the same
or similar functions and having jurisdiction or cognizance over the Land and
Building, whether now or hereafter in force.
R. Land: The land described on Exhibit "E" annexed hereto and made a
part hereof.
S. Landlord: On the date as of which this Lease is made, shall mean
Hartz-PW Hotel Limited Partnership, a New Jersey limited partnership, having an
address at 400 Plaza Drive, Secaucus, New Jersey 07094, but thereafter
"Landlord" shall mean only the ground lessee under the Ground Lease or if the
Ground Lease shall have ceased to exist, the fee owner of the Land, or if there
shall exist another Superior Lease or Leases, the tenant under the Superior
Lease immediately prior in estate to this Lease.
T. Landlord's Work: The materials and work to be furnished, installed
and performed by Landlord at its expense in accordance with the provisions of
Exhibit "F" annexed hereto and made a part hereof in accordance with the Plans
and Specifications.
U. Legal Requirements: Laws and ordinances of all federal, state and
local governments, and rules, regulations, orders and directives of all
departments, subdivisions, bureaus, agencies or offices thereof, and of any
other governmental authorities having jurisdiction over the Land and Building.
V. Mortgage: The mortgage creating a lien on the leasehold estate
created by the Ground Lease, to be entered into pursuant to a loan commitment
substantially on the terms set forth in the schedule annexed hereto as Exhibit
"G" and made a part hereof, and any replacement, extension, modification or
amendment thereto.
W. Operating Expenses: An amount equal to the costs and expenses for
the items set forth on Exhibit "H" annexed hereto and made a part hereof.
X. Permitted Uses: General and executive office use and all uses
incidental to securities trading
4
<PAGE> 8
and land sales (including without limitation, retail securities trading and
sales) including, without limitation, operation of trading floors and trading
support systems.
Y. Person: A natural person or persons, a partnership, a corporation,
or any other form of business or legal association or entity.
Z. Plans and Specifications: The schematics annexed hereto as Exhibit
"I" and made a part hereof which have been approved by Tenant and all plans and
specifications developed for the Building, which shall be subject to Tenant's
prior written approval, which approval shall not be unreasonably withheld or
delayed.
AA. Project Common Areas: All areas, spaces and improvements in the
Lincoln Harbor Project (other than those located on the Land) which are made
available from time to time for the common use and benefit of the tenants and
occupants or the Lincoln Harbor Project, including, without limitation,
non-exclusive parking areas, roads, walkways, sidewalks and landscapes and
planted areas, if any.
BB. Real Estate Taxes: The real estate taxes, assessments and special
assessments imposed upon the Demised Premises by any federal, state, municipal
or other governments or governmental bodies or authorities. If at any time
during the Term the methods of taxation prevailing on the date hereof shall be
altered so that in lieu of, or as an addition to or as a substitute for, the
whole or any part of such real estate taxes, assessments and special assessments
now imposed on real estate there shall be levied, assessed or imposed on
Landlord specifically in substitution for any of the foregoing Real Estate Taxes
(a) a tax, assessment, levy, imposition, license fee or charge wholly or
partially as a capital levy or otherwise on the rents received therefrom, or (b)
any other such additional or substitute tax, assessment, levy, imposition or
charge, then all such taxes, assessments, levies, impositions, fees or charges
or the part thereof so measured or based shall be deemed to be included within
the term "Real Estate Taxes" for the purposes hereof, calculated as if
Landlord's only asset were the leasehold estate created by the Ground Lease.
CC. Renewal Options: Shall have the meaning set forth in Section 39.01
hereof.
5
<PAGE> 9
DD. Renewal Terms: Shall have the meaning set forth in Section 39.01
hereof.
EE. Rent: The Fixed Rent and the Additional Charges.
FF. Rules and Regulations: The reasonable rules and regulations that
may be promulgated by Landlord from time to time as to the office portion of the
Building, as may be reasonably changed by Landlord from time to time.
GG. Substantially Completed: Substantially Completed or terms of
similar import shall mean the completion of construction, and the issuance of a
temporary certificate of occupancy therefore, except for minor details,
designated or punchlists delivered to Tenant, of construction, decoration and
mechanical adjustment, the non-completion of which will not materially interfere
with the performance of Tenant's Work or Tenant's use and occupancy of the
Demised Premises for Tenant's normal business purposes, and the completion of
which is expected to occur within sixty (60) days after such Substantial
Completion.
HH. Successor Landlord: Shall have the meaning set forth in Section
9.03.
II. Superior Lease: Any ground or underlying lease of the Land or the
Building.
JJ. Superior Lessor: The lessor of a Superior Lease or its successor in
interest, at the time referred to.
KK. Superior Mortgage: Any mortgage, including the Mortgage, which may
hereafter affect the Land, the estate created under the Ground Lease or by any
other Superior Lease, or the Building and all renewals, extensions, supplements,
amendments, modifications, consolidations, and replacements thereof or thereto,
substitutions therefore, and advances made thereunder.
LL. Superior Mortgagee: The mortgagee of a Superior Mortgage at the
time referred to, sometimes herein referred to as a Mortgagee.
6
<PAGE> 10
MM. Tenant: On the date of which this Lease is made shall mean
PaineWebber, Inc., but thereafter, "Tenant" shall mean only the tenant under
this Lease at the time in question; provided, however, that the foregoing shall
not be deemed to relieve PaineWebber, Inc. of any liability in the event of an
assignment of its interest in this Lease except in accordance with the
provisions of Section 11.04(b) hereof.
NN. Tenant's Fraction: 44.86%, as the same may be decreased pursuant to
Section 38.12 hereof.
OO. Tenant's Property: Shall have the meaning set forth in Section
16.02.
PP. Tenant's Work: The facilities, materials and work which may be
undertaken by or for the account of Tenant (other than the Landlord's Work) to
equip, decorate and furnish the Demised Premises for Tenant's initial occupancy
in accordance with the provisions of Exhibit "J" annexed hereto and made a part
hereof.
QQ. Term: The period commencing on the Commencement Date and ending at
11:59 P.M. of the Expiration Date unless otherwise terminated in accordance with
the provisions hereof.
RR. Unavoidable Delays: A delay arising from or as a result of a
strike, lockout, or labor difficulty, explosion, sabotage, accident, riot or
civil commotion, act of war, fire or other catastrophe, Legal Requirement or an
act of the other party and any cause beyond the reasonable control of that
party, provided that the party asserting such Unavoidable Delay has exercised
its best efforts to minimize such delay. The party asserting such delay,
promptly upon becoming aware of such Unavoidable Delay, shall give written
notice of such Unavoidable Delay to the other party.
ARTICLE 2 - DEMISE AND TERM
2.01 Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, the Demised Premises, for the Term. Promptly following the
Commencement Date, the parties hereto shall enter into an agreement in form and
substance reasonably satisfactory to Landlord and Tenant setting forth the
Commencement Date.
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ARTICLE 3 - RENT
3.01 Tenant shall pay the Fixed Rent in equal monthly installments in
advance on the first day of each and every calendar month beginning on the Fixed
Rent Commencement Date. If the Fixed Rent Commencement Date occurs on a day
other than the first day of a calendar month, the Fixed Rent for such partial
calendar month shall be prorated on a per diem basis and paid on the Fixed Rent
Commencement Date.
3.02 The Rent shall be paid in lawful money of the United States to
Landlord by wire Transfer of immediately available funds to a bank which is a
member of the New York Clearing House Association, or by check to such other
place, as Landlord shall designate by notice to Tenant. Tenant shall pay the
Rent promptly when due and without any abatement, deduction or setoff for any
reason whatsoever, except as may be expressly provided in this Lease. In case of
payment by check, tenant shall assume the risk of lateness or failure of
delivery of the mails, and no lateness or failure of the mails will excuse
Tenant from its obligation to have made the payment in question when required
under this Lease.
3.03 No payment by Tenant or receipt or acceptance by Landlord of a
lesser amount than the correct Rent shall be deemed to be other than a payment
on account, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment deemed an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance or pursue any other remedy in this Lease or at law
provided.
3.04 If Tenant is in arrears in payments of Rent, Tenant waives
Tenant's right, if any, to designate the items to which any payments made by
Tenant are to be credited, and Landlord may apply any payments made by Tenant to
such items as Landlord sees fit, irrespective of and notwithstanding any
designation or request by Tenant as to the items to which any such payments
shall be credited.
3.05 If Tenant shall fail to pay any installment of Fixed Rent within
five (5) days or any other item of Rent within twenty (20) days after the date
when such payment is due and Landlord shall have delivered a bill
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for the same (which delivery may be by invoice and shall not be required to
comply with the requirements for copies of notices specified in Article 34
hereof), then, any such payment shall bear interest calculated from the due date
to the date such payment is received by Landlord at a rate equal to two (2)
percentage points in excess of 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") (the "Late Payment Rate").
3.06 It is the intention of the parties that the Fixed Rent payable
under this Lease shall be net to Landlord, so that this Lease shall yield to
Landlord the Fixed Rent specified herein during the Term of this Lease, and that
all costs, expenses and obligations of every kind and nature whatsoever relating
to the Demised Premises shall be paid by Tenant, other than liens placed on the
Demised Premises by Landlord, or claims against Landlord for Landlord's
negligence or default under the terms of this Lease (nothing herein shall be
construed as affecting the provisions of any insurance carried by Landlord,
Tenant, subtenant or assign with respect to the Demised Premises, including fire
and hazard insurance, liability insurance and an other insurance).
ARTICLE 4 - USE OF BUILDING
4.01 Tenant shall use and occupy the Demised Premises only for the
Permitted Uses, and any other lawful purpose in keeping with the character of
the Building and the Lincoln Harbor Project (as defined on Exhibit "K", annexed
hereto and made a part hereof), and Tenant shall not use or permit or suffer the
use of the Demised Premises or any part thereof for any illegal or hazardous
purpose.
4.02 On or before the Commencement Date, Landlord shall obtain a
certificate of occupancy for the Building. Each other governmental license or
permit required for the proper and lawful conduct of Tenant's business in the
Demised Premises or any part thereof, shall be duly procured either by Tenant if
Tenant shall perform Tenant's Work, or by Landlord if Landlord shall perform
Tenant's Work, and thereafter Tenant shall maintain such license or permit and
submit the same to Landlord for inspection. Tenant shall at all times comply
with the terms and conditions of each such license or
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permit. Tenant shall not at any time use or occupy, or suffer or permit anyone
to use or occupy the Demised Premises, or do or permit anything on the Demised
Premises in any manner which (a) violates the certificate of occupancy for the
Demised Premises; (b) causes injury to the Building, including the structure,
roof or building Systems thereof, (c) constitutes a violation of the Legal
Requirements or Insurance Requirements; (d) impairs the character, reputation or
appearance of the Building as a first-class office building; or (e) interferes
with the right of quiet enjoyment of tenants or occupants of the Land or
adjacent premises.
ARTICLE 5 - PREPARATION OF BUILDING
5.01 The Building shall be Substantially Completed and prepared for
Tenant's Work in the manner described in, and subject to the provisions of,
Exhibit "F" annexed hereto, on or before July 1, 1988 and Substantially
Completed on or before August 1, 1988, in either event provided that Tenant
shall deliver to Landlord plans and specifications for the core and shell of the
Building on or before December 15, 1986. Such date for Substantial Completion of
the Building shall be postponed one day for each day beyond December 15, 1986 on
which Tenant does not deliver such plans and specifications. Tenant promptly
shall enter the Demised Premises on the later to occur of the delivery of the
Architect's Certificate or the date which is thirty (30) days after receipt of
the Commencement Notice. Landlord shall, from time to time, upon request of
Tenant advise Tenant of the progress of Landlord's Work and the estimated date
that Tenant may commence or cause to be commenced Tenant's Work. Except as
expressly provided to the contrary in this Lease, the commencement by Tenant of
the Tenant's Work shall be evidence that the Demised Premises were in good and
satisfactory condition at the time Tenant's Work was undertaken except as to (i)
any defects in the Demised Premises which were not known or reasonably
discoverable by Tenant by observation or an inspection ("Latent Defects"), (ii)
any items of work performed by Landlord of which Tenant gives Landlord notice
within one hundred twenty (120) days after the Commencement Date, and (iii)
portions of the work performed by Landlord not completed, because under good
construction scheduling practice such work should be done after completion of
still incompleted finishing or other work to be done by or on behalf of Tenant.
Landlord shall complete all such items of work
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not so completed within sixty (60) days after the date of Substantial
Completion. Landlord, its agents, servants, employees and contractors shall have
the right to enter the Demised Premises to complete or repair any such
unfinished items and Latent Defects upon reasonable prior notice to Tenant.
Landlord shall warrant all construction and equipment delivered in or with
Landlord's Work for a period of one (1) year from the Commencement Date.
Landlord covenants that the warranty obtained with respect to the roof shall be
for a minimum of ten (10) years from completion of the roof in accordance with
the Plans and Specifications.
5.02 If the Substantial Completion of the Landlord's Work shall be
delayed due to (a) any act or omission of Tenant or any of its employees, agents
or contractors [including, without limitation, (i) any delays due to changes in
or additions to the Landlord's Work made at the request of Tenant or (ii) any
delays by Tenant in the submission of plans, drawings, specifications or other
information or in approving any working drawings or estimates or in giving any
authorizations or approval(s)], or (b) any additional time needed for the
completion of the Landlord's Work by the inclusion in the Landlord's Work of any
extra work required of Landlord by Tenant, then Landlord's Work in connection
with the Demised Premises shall be deemed Substantially Complete on the date
it would have been Substantially Complete but for such delay(s). Landlord
covenants that the warranty with respect to the roof shall be for a minimum of
ten (10) years from completion of the roof in accordance with the Plans and
Specifications. Landlord promptly and contemporaneously shall notify Tenant of
any delay in completion claimed to be caused by any of the items enumerated in
sub-section (a) above.
5.03 Landlord reserves the right, at any time and from time to time, to
increase, reduce or change the number, type, size, location, nature and use of
any other improvements on the Land, including without limitation, the right to
move and/or remove same, provided same shall not block or unreasonably interfere
with Tenant's means of ingress or egress to and from the Building. Landlord
shall insure that in connection with the development of the Lincoln Harbor
Project, Ground Lessor shall not deviate materially from the approved site plan
without Ten- ant's prior consent, which consent shall not be unreasonably
withheld or delayed, and provided further that Ten-
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ant may thereupon request a recalculation of Operating Expenses in accordance
with Section 38.10 hereof.
5.04 The interior finish of the Demised Premises is the responsibility
of Tenant as Tenant's Work. Landlord shall provide an allowance ("Tenant's
Fund") equal to the product of Twenty-Four Dollars ($24) and the Floor Space.
5.05 At Tenant's request from time to time, but not more frequently
than once each month, Landlord shall disburse within fifteen (15) days of
verification portions of the Tenant Fund to Tenant in an amount equal to the
product of Twenty-Four Dollars ($24) and the percentage of completion of
Tenant's Work, as certified by Architect or the architect employed by Tenant in
connection with Tenant's Work and verified or objected to by Architect within
fifteen (15) days of receipt thereof (it being agreed that if Architect shall
fail to respond within such fifteen (15) day period, such certification shall be
deemed to have been verified). Landlord shall be permitted to bid upon the
Tenant's Work. Tenant shall be responsible (through a construction manager if
Tenant so desires to employ such at its own expense) for all Tenant Work. In the
event Landlord shall be awarded the bid, Landlord shall complete the Tenant Work
of the Building within four (4) months of the completion of the shell of the
Building; predicated upon Landlord receiving Tenant's request for proposal on or
before February 1, 1988 and Landlord starting the Tenant Work in the tenth
(10th) month of the Building shell construction. This shall provide six (6)
months total elasped time for Tenant s Work. In the event another contractor is
awarded the bid, Landlord shall fully cooperate with such contractor to assist
its timely completion of Tenant's Work and such contractor shall utilize
employees and subcontractors who shall not cause union labor conflicts.
ARTICLE 6 - TAX AND OPERATING EXPENSE PAYMENTS
6.01 On or before the Commencement Date, Landlord shall use its best
efforts to obtain from the City of Weehawken, a separate tax lot and zoning lot
number for the Building. Commencing on the Commencement Date and provided that
Landlord shall have obtained a separate tax lot number for the Building, Tenant
shall pay to Landlord an amount equal to Tenant's Fraction of the Real Estate
Taxes for any year during the Term five (5) busi-
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ness days before any delinquency fee would be imposed upon the payment of the
same. If Landlord shall not have obtained a separate tax lot number for the
Building on or before the Commencement Date, then, commencing on the
Commencement Date, Tenant shall pay to Landlord an amount equal to Tenant's
Proportionate Share (hereinafter defined) of the Real Estate Taxes for the tax
lot of which the Land forms a part not later than five (5) business days before
any delinquency fee would be imposed upon the payment of the same, until such
time as Landlord shall have obtained such separate tax lot number; but in no
event shall Tenant's payment for Real Estate Taxes be more than that amount
which Tenant would have paid if the Building were a separate tax lot. Tenant's
"Proportionate Share" shall mean Tenant's Fraction of the sum of (x) the tax
attributable to the Building and other improvements located on the Land, as may
be separately assessed or as shown on the Tax Assessor's notes, and (y) 2.12% of
the tax attributable to the tax lot of which the Land forms a part. Landlord
agrees that, throughout the Term, the Building will constitute a separate tax
lot, separate and apart from other real property. In determining the amount of
Real Estate Taxes for the partial calendar years in which the Term shall
commence or expire, Real Estate Taxes payable in such calendar year shall be
apportioned for that portion of the Tax Year (hereinafter defined) occurring
within the calendar year and Real Estate Taxes for such calendar year shall be
prorated for the number of days in such calendar year occurring subsequent to
the Commencement Date or prior to the Expiration Date, as the case may be. "Tax
Year" shall mean the period January 1 through December 31 (or such other period
as hereafter may be duly adopted by the City of Weehawken as its fiscal year for
Real Estate Tax purposes), any portion of which occurs during the Term. Tenant
shall have the right to institute, and in good faith prosecute, tax certiorari
proceedings with respect to the Building and the Land. In the event of the
institution of such proceedings, such proceedings shall be at Tenant's sole cost
and expense and Landlord shall cooperate fully with Tenant in connection with
any such proceedings.
6.02(a) Not less than ninety (90) days prior to the Commencement Date,
Landlord shall deliver to Tenant a statement estimating the Operating Expenses
for the partial calendar year commencing on the Commencement Date and Tenant
shall pay to Landlord on the first day of each
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month during the first partial calendar year of the Term an amount equal to such
estimated Operating Expenses divided by the number of months or partial months
in such partial calendar year. On or before March 1 of each calendar year or
partial calendar year subsequent to the first partial calendar year during the
Term, Landlord shall furnish Tenant with an operating statement (the "Operating
Statement") in reasonable detail setting forth the actual Operating Expenses for
the preceding calendar year. If such Operating Statement shall show that the
actual Operating Expenses for the preceding calendar year were in excess of
those estimated by Landlord and previously paid by Tenant, then within thirty
(30) days after receipt of such actual Operating Statement, Tenant shall remit
to Landlord any such deficiency. If such Operating Statement shall show that
Tenant shall have paid amounts in excess of the actual Operating Expenses, then
Landlord shall remit to Tenant, together with such Operating Statement, a check
in the amount equal to such excess payments.
(b) In addition, in each Operating Statement, Landlord may set
forth any estimated increases in Operating Expenses for the then current
calendar year, provided, however, that in no event shall Landlord's estimate
exceed an amount equal to the sum of the actual Operating Expenses for the
preceding calendar year and an amount equal to such actual Operating Expenses
multiplied by the percentage increase in 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 (1967 =
100), or any successor index thereto, appropriately adjusted (the "CPI"). If the
CPI ceases to be published, and there is no successor thereto, such other index
as Landlord or Tenant shall agree upon in writing shall be substituted for the
CPI. If Landlord or Tenant are unable to agree as to such substituted index,
such matter shall be submitted to the American Arbitration Association or any
successor organization for determination in accordance with the regulations and
procedures thereof then obtaining for commercial arbitration. After receipt of
such Operating Statement, Tenant shall pay to Landlord a sum equal to 1/12th of
the amount shown on such statement multiplied by the number of months of the
Term in said calendar year preceding the demand, less the amount (if any) paid
by Tenant prior to such demand pursuant hereto for such months, and thereafter,
commencing with
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the month in which the demand is made in continuing thereafter for each month of
the Term until the rendition of a new Operating Statement, 1/12th of the amount
shown on such Operating Statement.
6.03 Each such statement given by Landlord pursuant to Section 6.02
shall be conclusive and binding upon Tenant unless within ninety (90) days after
the receipt of the Operating Statement provided for above Tenant shall notify
Landlord that it disputes the correctness of the statement, specifying, to the
extent the information is available, the particular respects in which the
statement is claimed to be incorrect. If such notice is sent, Tenant and its
accountants may examine Landlord's books and records relating to the Operating
Expenses to determine the accuracy of the Operating Statement. If after such
examination, Tenant still disputes such Operating Statement, either party may
refer the decision of the issues raised to one of the so-called "big-eight"
public accounting firms, mutually satisfactory to Landlord and Tenant, or if
Landlord and Tenant shall be unable to agree, then the firm to which the dispute
shall be referred shall be chosen as follows: Landlord and Tenant shall each be
permitted to exclude one of such firms from the pool of acceptable firms; the
firm to whom such decision shall be referred shall then be chosen by lot from
the pool of remaining firms, and if the firm chosen by lot shall refuse to
serve, a substitute firm shall be chosen by lot. The firm so chosen may, in its
discretion, retain one or more consultants to assist in the resolution of the
dispute referred to it. The decision of such accountants, absent manifest error,
shall be conclusively binding upon the parties. The fees and expenses (including
the fees of such consultants) involved in such decisions shall be borne by the
unsuccessful party (and if both parties are partially successful, the
accountants shall apportion the fees and expenses between the parties based on
the degree of success of each party). If such dispute is ultimately determined
in Tenant's favor (either by agreement between Landlord or Tenant or by decision
of the accountants), Landlord promptly after such determination shall pay to
Tenant any amount overpaid by Tenant. Pending the determination of such dispute
by agreement or arbitration as aforesaid, Tenant shall, within ten (10) days
after receipt of such statement, pay the Additional Charges in accordance with
Landlord's statement, without prejudice to Tenant's position.
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ARTICLE 7 - COMMON AREAS
7.01 Subject to the provisions of Section 5.03, Landlord will operate,
manage, equip, light, repair and maintain, or cause to be operated, managed,
equipped, lighted, repaired and maintained, the Common Areas for their intended
purposes and will enforce the Reciprocal Construction Operation and Easement
Agreement, between Ground Lessor and the Township of Weehawken. Landlord
reserves the right, at any time and from time to time, to construct within the
Common Areas kiosks, fountains, aquariums, planters, pools and sculptures, and
to install vending machines, telephone booths, benches and the like provided
same shall not block or interfere with Tenant's means of ingress or egress to
and from the Building.
7.02 Tenant and its subtenants and their respective officers,
employees, agents, customers and invitees, shall have the non-exclusive right,
in common with Landlord and all others to whom such right may have been or may
hereafter be granted, but subject to the Rules and Regulations, if any, to use
the Common Areas. Landlord reserves the right, at any time and from time to
time, to close temporarily all or any portions of the Common Areas (provided
that such closure does not unreasonably interfere with Tenant's business at the
Demised Premises, except in cases of emergency) when in Landlord's reasonable
judgment any such closing is necessary or to (a) permit Hartz or its successors
or assigns or designees to make repairs or changes or to effect construction
within the Lincoln Harbor Project; (b) prevent the acquisition of public rights
in such areas; or (c) to protect or preserve natural persons or property.
Landlord may do such other acts in and to the Common Areas as in its reasonable
judgment may be desirable to improve or maintain same, provided, however that
Landlord shall not change the standard of maintenance of the Common Areas
without Tenant's approval, which approval shall not be unreasonably withheld or
delayed. In all such events, Landlord's Work shall be commenced and prosecuted
diligently and with as little interference as possible with Tenant's use of the
Demised Premises.
7.03 Tenant agrees that it, any subtenant or licensee and their
respective officers, employees, contractors and agents will park their
automobiles and other vehicles only where and as permitted by Landlord. Tenant
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will, if and when so requested by Landlord, furnish Landlord with the license
numbers of any vehicles of Tenant, any subtenant or licensee and their
respective officers, employees and agents. Tenant shall be furnished with the
non-exclusive use of one (1) unreserved parking space for every 690 square feet
of Floor Space in the Demised Premises, of which spaces, at Tenant's request,
five percent (5%) shall be reserved for exclusive executive parking, as shown on
the parking plan annexed hereto as Exhibit "L" and made a part hereof. Tenant
shall have access to all such spaces twenty-four (24) hours a day, throughout
the Term. Landlord shall maintain or cause to be maintained all such parking in
a manner reasonably satisfactory to Tenant.
ARTICLE 8 - LABOR HARMONY
8.01 Tenant shall not exercise its rights under Article 15 or any other
provision of this Lease in a manner which would violate Landlord's union
contracts or create any work stoppage, picketing labor disruption or dispute or
any interference with the business of Landlord.
ARTICLE 9 - SUBORDINATION
9.01 Provided that (a) a Superior Mortgagee shall execute and deliver
to Tenant an agreement, in recordable form, substantially in the form attached
hereto and made a part hereof as Exhibit "M-1", to the effect that, provided no
event of default has occurred and is continuing hereunder, such Superior
Mortgagee will not name or join Tenant as a party defendant or otherwise in any
suit, action or proceeding to enforce any rights granted to such Superior
Mortgagee under its Superior Mortgage, and to the further effect that if there
shall be a foreclosure of its Superior Mortgage, that the Superior Mortgagee
will not make Tenant a party defendant to such foreclosure, evict Tenant,
disturb Tenant's possession under this Lease, or terminate or disturb Tenant's
leasehold estate or rights hereunder, or (b) a Superior Lessor shall execute and
deliver to Tenant an agreement, in recordable form, substantially in the form
annexed hereto as Exhibit "M-2", to the effect that, provided no Event of
Default shall have occurred and is continuing hereunder, such Superior Lessor
will not name or join Tenant as a party defendant or otherwise in any suit,
action or proceeding to enforce any rights granted to
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such Lessor under its Superior Lease, and to the further effect that if its
Superior Lease shall terminate or be terminated for any reason, such Superior
Lessor will recognize Tenant as the direct tenant of such Superior Lessor on the
same terms and conditions as are contained in this Lease, (any such agreement,
or any agreement of similar import from a Superior Mortgagee or Superior Lessor,
as the case may be, being hereinafter called a "Nondisturbance Agreement"), this
Lease shall be subject and subordinate to such Superior Mortgage or to such
Superior Lease in respect of which a Nondisturbance Agreement shall have been
delivered, and to all renewals, extensions, supplements, amendments,
modifications, consolidations and replacements of such Superior Mortgage or
Superior Lease or any substitutions therefor, and advances made thereunder. The
provisions of this Section 9.01 shall be self-operative and no further
instrument of subordination shall be required upon delivery of such
Nondisturbance Agreement, however, in confirmation of such subordination, Tenant
shall promptly execute, acknowledge and deliver an instrument of evidencing such
subordination; and if Tenant fails to execute, acknowledge or deliver any such
instruments within thirty (30) days after request therefor, Tenant hereby
irrevocably constitutes and appoints Landlord as Tenant's attorney-in-fact,
coupled with an interest, to execute and deliver any such instruments for and on
behalf of Tenant.
9.02 If any act or omission of Landlord would give Tenant the right,
immediately or after lapse of a period of time, to cancel or terminate this
Lease, or to claim a partial or total eviction, Tenant shall not exercise such
right until and unless (a) it has given written notice of such act or omission
to Landlord and each Superior Mortgagee and each Superior Lessor whose name and
address shall previously have been furnished to Tenant, and (b) such act or
omission shall not have been remedied within thirty (30) days following the
giving of such notice and following the time when such Superior Mortgagee or
Superior Lessor shall have become entitled under such Superior Mortgage or
Superior Lease, as the case may be, to remedy the same (or such longer period as
may be reasonably required if such condition is not susceptible to remedy within
such thirty (30) day period provided such Superior Lessor or Superior Mortgagee
commences and diligently pursues such remedy, which reasonable period shall in
no event be less than the period to which the
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Landlord would be entitled under this Lease or otherwise, after similar notice,
to effect such remedy).
9.03 If any Superior Lessor or Superior Mortgagee shall succeed to the
rights of Landlord under this Lease, whether through possession or foreclosure
action or delivery of a new lease or deed, then at the request of such party so
succeeding to Landlord's rights ("Successor Landlord") and upon such Successor
Landlord's written agreement to accept Tenant's attornment, Tenant shall attorn
to and recognize such Successor Landlord as Tenant's landlord under this Lease
and shall promptly execute and deliver any instrument that such Successor
Landlord may reasonably request to evidence such attornment provided that such
Successor Landlord shall then be entitled to possession of the Demised Premises
and shall have either agreed to assume the obligations of Landlord hereunder or
shall have entered into a Nondisturbance Agreement with Tenant. Upon such
attornment this Lease shall continue in full force and effect as a direct lease
between the Successor Landlord and Tenant upon all of the terms, conditions and
covenants as are set forth in this Lease except that the Successor Landlord
(unless such Successor Landlord is an affiliated entity of Landlord) shall not
(a) be liable for any previous act or omission of Landlord under this Lease
unless the same shall be continuing; (b) be subject to any offset, not expressly
provided for in this Lease, which theretofore shall have accrued to Tenant
against Landlord; or (c) be bound by any previous modification of this Lease or
by any previous prepayment of more than one month's Fixed Rent or Additional
Charges, unless such modification or prepayment shall have been expressly
approved in writing by the Superior Lessor of the Superior Lease or the
Mortgagee of the Superior Mortgage through or by reason of which the Successor
Landlord shall have succeeded to the rights of Landlord under this Lease.
9.04 If any then present or prospective Superior Mortgagee shall
require any modifications of this Lease, Tenant shall promptly execute and
deliver to Landlord such instruments effecting such modification(s) as Landlord
shall request, provided that such modification(s) do not adversely affect in any
material respect any of Tenant's rights under this Lease, materially increase
Tenant's obligations under this Lease or materially diminish Landlord's
obligations under this Lease.
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ARTICLE 10 - QUIET ENJOYMENT
10.01 So long as no Event of Default shall have occurred and be
continuing, Tenant shall peaceably and quietly have, hold and enjoy the Demised
Premises without hindrance, ejection or molestation by Landlord or any person
lawfully claiming through or under Landlord, subject, nevertheless, to the
provisions of this Lease and the Ground Lease.
ARTICLE 11 - ASSIGNMENT, SUBLETTING AND MORTGAGING
11.01 Tenant shall have the absolute right, at any time, without
Landlord's consent, to (a) assign or otherwise transfer this Lease, or offer or
advertise to do so, and (b) sublet the Demised Premises or any part thereof, or
offer or advertise to do so, or allow the same to be used, occupied or utilized
by anyone other than Tenant, or (c) mortgage, pledge, encumber or otherwise
hypothecate this Lease in any manner whatsoever.
11.02(a) Notwithstanding anything contained in Section 11.01 hereof,
prior to the earlier to occur of either the fifth anniversary of the
Commencement Date and the date on which the improvements to be constructed in
the Lincoln Harbor Project, as more particularly set forth on Exhibit "K"
annexed hereto and made a part hereof, shall be 90% leased, Tenant may not
assign its interest in this Lease or sublet all or any portion of the Demised
Premises, provided, however, that Tenant shall have the right during such
period, without Landlord's prior consent, to sublet a portion or portions of the
Demised Premises not to exceed 75,000 square feet of floor space in the
aggregate (such amount to be reduced, foot for foot, by an amount equal to the
area sublet by Tenant pursuant to a similar provision in any other lease of
which Tenant is tenant in the Lincoln Harbor Project) which amount Tenant agrees
is fair and reasonable.
(b) Notwithstanding the foregoing, however, the provisions of
clause (a) of this Section 11.02 shall not be deemed to apply to (x) any
assignment of Tenant's interest in this Lease to an Affiliate (hereinafter
defined) or to any assignment, whether by operation of law or otherwise, to a
company which is Tenant's successor-in-interest either by merger or
consolidation, or to any assignment to a purchaser of all or substantially all
of Tenant's assets, or (y) any subleasing of all or
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any portion of the Demised Premises to an Affiliate unless the primary purpose
of any such transaction is to transfer the estate created by this Lease in
violation of Section 11.02(a) hereof. For purposes hereof, "Affiliate" shall be
deemed to mean a corporation or other entity which shall (1) control, (2) be
under the control of, or (3) shall be under common control with, Tenant (the
term "control" as used herein shall be deemed to mean ownership of more than 5%
of the voting stock of a corporation on a fully diluted basis, if such
corporation is publicly traded, or more than 50% of the voting stock of a
privately held corporation, or other majority equity and control interest, if
not a corporation.
11.03 If this Lease is assigned, Landlord may collect rent from the
assignee. If the Demised Premises or any part thereof are sublet or used or
occupied by anybody other than Tenant, Landlord may, after default by Tenant,
and expiration of Tenant's time to cure such default, collect rent from the
subtenant or occupant. In either event, Landlord may apply the net amount
collected to the Rent, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver of any of the provisions of this Article 11,
or the acceptance of the assignee or subtenant as occupant or a release of
Tenant from the performance by Tenant of Tenant's obligations under this Lease.
11.04(a) Any assignment or transfer shall be made only if, and shall
not be effective until, the assignee shall execute, acknowledge and deliver to
Landlord an agreement in form and substance satisfactory to Landlord whereby the
assignee shall assume Tenant's obligations under this Lease and whereby the
assignee shall agree that all of the provisions in this Article 11 shall,
notwithstanding such assignment or transfer, continue to be binding upon it in
respect to all future assignments and transfers. Notwithstanding any assignment
or transfer, whether or not in violation of the provisions of this Lease, and
notwithstanding the acceptance of Rent by Landlord from an assignee, transferee,
or any other party, the original Tenant and any other person(s) who at any time
was or were Tenant shall remain fully liable for the payment of the Rent and for
Tenant's other obligations under this Lease unless, in the event of such
permitted assignment or transfer, Landlord releases Tenant from its obligations
under this Lease as provided in Section 11.04(b) of this Lease.
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(b) In the event Tenant assigns its interest in this Lease,
Landlord agrees, subject to the prior consent of any Superior Mortgagee, to
release Tenant from its obligations under this Lease provided all of the
following conditions are met:
(i) Such Permitted assignee has a net worth at least
equal to $250,000,000, as the same shall be increased or decreased on each
anniversary of the Commencement Date commencing on the fifth (5th)
anniversary of the Commencement Date by an amount equal to the product of
$250,000,000 and seventy-five percent (75%) of the percentage increase or
decrease in the CPI for the immediately preceding twelve (12) month period,
provided, however, that in no event shall the same be decreased to be less
than $250,000,000; and
(ii) Such permitted assignee is a well known business
entity of high repute having a standing in the business community, in
Landlord's reasonable judgment, at least equivalent to PaineWebber, Inc.;
and
(iii) Such permitted assignee executes an agreement in
substance and form reasonably satisfactory to Landlord whereby such
assignee assumes all of Tenant's obligations under this Lease.
11.05 Promptly after request therefor by Tenant, Landlord shall enter
into a Nondisturbance Agreement with any permitted subtenant of Tenant occupying
one or more full floors of the Demised Premises, substantially in the form
annexed hereto as Exhibit "N".
11.06 The liability of the original named Tenant and any other
Person(s) who at any time was or were Tenant for Tenant's obligations under this
Lease shall not be discharged, released or impaired by any agreement or
stipulation made by Landlord extending the time of, or modifying any of the
obligations of, this Lease, or by any waiver or failure of Landlord to enforce
any of the obligations of this Lease.
11.07 The listing of any name other than that of Tenant, whether on the
doors of the Building, the
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Building directory or otherwise, shall not operate to vest any right or interest
in this Lease or in the Building, nor shall it be deemed to be the consent of
Landlord to any assignment or transfer of this Lease or to any sublease of the
Building or to the use or occupancy thereof by others.
11.08 Without limiting any of the provisions of Article 27, if pursuant
to the Federal Bankruptcy Code (or any similar law hereafter enacted having the
same general purpose), Tenant assigns this Lease, adequate assurance of future
performance by an assignee expressly permitted under such Code shall be deemed
to mean the deposit of cash security in an amount equal to the sum of one (1)
year's Fixed Rent plus an amount equal to the Additional Charges for the
Calendar Year preceding the year in which such assignment is intended to become
effective, which deposit shall be held by Landlord for the balance of the Term,
without interest, as security for the full performance of all of Tenant's
obligations under this Lease, that if Tenant defaults in the full and prompt
payment and performance of any of its obligations under this Lease, including,
without limitation, the payment of Rent, Landlord may use, apply or retain the
whole or any part of the security so deposited to the extent required for the
payment of any Rent or any other sums as to which such tenant is in default or
for any sum which Landlord may expend or may be required to expend by reason of
Tenant's default in respect of any of such Tenant's obligations under this
Lease, including, without limitation, any damages or deficiency in the reletting
of the Demised Premises, whether such damages or deficiency accrue before or
after summary proceedings or other reentry by Landlord. If Landlord shall so
sue, apply or retain the whole or any part of the security, Tenant shall upon
demand immediately deposit with landlord a sum equal to the amount so used,
applied and retained, as security as aforesaid. If Tenant shall fully and
faithfully pay and perform all of Tenant's obligations under this Lease, the
security or any balance thereof to which such tenant is entitled shall be
returned or paid over to such tenant after the date on which this Lease shall
expire or sooner end or terminate, and after delivery to Landlord of entire
possession of the Demised Premises. In the event of any sale or leasing of the
Building or leasing of Demised Premises, Landlord shall have the right to
transfer the security to which Tenant is entitled to the vendee or lessee and
Landlord shall thereupon
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be released by such tenant from all liability for the return or payment thereof;
Tenant shall look solely to the new landlord for the return or payment of the
same; and the provisions hereof shall apply to every transfer or assignment made
of the same to a new landlord. Tenant shall not assign or encumber or attempt to
assign or encumber the monies deposited herein as security, and bound by any
such assignment, encumbrance, attempted assignment or attempted encumbrance.
ARTICLE 12 - COMPLIANCE WITH LAWS
12.01 Tenant shall comply with all Legal Requirements which shall, in
respect of the Demised Premises or the use and occupation thereof, or the
abatement of any nuisance in, on or about the Demised Premises, impose any
violation, order or duty on Landlord or Tenant; and Tenant shall pay all the
cost, expenses, fines, penalties and damages which may be imposed upon Landlord
or any Superior Lessor by reason of or arising out of Tenant's failure to fully
and promptly comply with and observe the provisions of this Section 12.01.
However, Tenant need not comply with any such law or requirement of any public
authority so long as Tenant shall be contesting the validity thereof, or the
applicability thereof to the Demised Premises, in accordance with Section 12.02.
Landlord shall be in full compliance with any Legal Requirements applicable to
Landlord's Work on or before the Commencement Date, and the obligation of Tenant
to comply with any Legal Requirement as set forth immediately above shall not
arise with respect to any such Legal Requirement with which Landlord is not in
compliance as of the Commencement Date, until such time as non-compliance shall
have been cured by Landlord.
12.02 Tenant may contest, by appropriate proceedings prosecuted
diligently and in good faith, the validity, or applicability to the Demised
Premises, of any Legal Requirement, provided that (a) Landlord shall not be
subject to criminal penalty or to prosecution for a crime and neither the
Demised Premises nor any part thereof shall be subject to being condemned or
vacated, by reason of non-compliance or otherwise by reason of such contest; (b)
before the commencement of such contest, Tenant shall furnish to Landlord either
(i) the bond of a surety company satisfactory to Landlord, which bond shall be,
as to its provisions and form, satisfactory to Landlord, and shall be in an
amount at least
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equal to 125% of the cost of such compliance (as estimated by a reputable
contractor designated by Landlord) and shall indemnify Landlord against the cost
thereof and against all liability for damages, interest, penalties and expenses
(including reasonable attorneys' fees and expenses), resulting from or incurred
in connection with such contest or noncompliance, or (ii) other security in
place of such bond satisfactory to Landlord; (c) Tenant shall keep Landlord
advised as to the status of such proceedings. Notwithstanding anything herein to
the contrary, the provisions of (b) above shall not apply during such time as
PaineWebber, Inc. remains obligated for Tenant's obligations under this Lease.
Without limiting the application of the above, Landlord shall be deemed subject
to prosecution for a crime if Landlord, or its managing agent, or any officer,
director, partner, shareholder or employee of Landlord or its managing agent, as
an individual, is charged with a crime of any kind or degree whatsoever, whether
by service of a summons or otherwise, unless such charge is withdrawn before
Landlord or its managing agent, or such officer, director, partner, shareholder
or employee of Landlord or its managing agent (as the case may be) is required
to plead or answer thereto.
ARTICLE 13 - INSURANCE AND INDEMNITY
13.01(a) Tenant shall at all times during the term hereof maintain or
cause to be maintained business interruption insurance with a rent insurance
endorsement payable to Landlord, covering a period of at least twelve (12)
months. Landlord shall obtain and keep in full force and effect insurance
against loss or damage by fire and other casualty to the Building, including any
item of Tenant's Work, as may be insurable under then available standard forms
of "all risk" insurance policies, in an amount equal to 100% of the replacement
value thereof (and Tenant shall pay Tenant's Fraction of the cost thereof in
accordance with Exhibit "H" annexed hereto and made a part hereof). Tenant shall
notify Landlord of the completion of any Tenant's Work and of the costs thereof,
and shall maintain adequate records with respect to such Tenant's Work to
facilitate the adjustment of any insurance claims with respect thereto. Tenant
shall cooperate with Landlord and Landlord's insurance companies in the
adjustment of any claims for any damage to the Building or to such Tenant's
Work. On or prior to the Commencement Date, Landlord shall deliver to Tenant
appropriate
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certificates of insurance, including evidence of waivers of subrogation required
pursuant to Section 13.05 hereof, required to be carried by Landlord pursuant to
this Article 13. Evidence of each renewal or replacement of a policy shall be so
delivered by Landlord to Tenant at least ten days prior to the expiration of
such policy. Any certificates so deposited by Landlord with Tenant shall
indicate whether the insurance required by this Article 13 is affected under a
blanket insurance policy and, if so, shall certify to the aggregate amount of
such blanket insurance policy and to the fact that there are no sublimits which
derogate from the coverage required by this Article.
13.02 Tenant also shall maintain the following insurance: (a)
comprehensive general public liability insurance in respect of the Demised
Premises and the conduct and operation of business therein, with Landlord as an
additional named insured, and at Landlord's request with any Superior Lessors as
additional named insured(s), with limits of not less than $3,000,000 for bodily
injury or death to any one person and $5,000,000 for bodily injury or death to
any number of persons in any one occurrence, and $500,000 for property damage,
including water damage and sprinkler leakage legal liability, and (b) any other
insurance required for compliance with the Insurance Requirements. Tenant shall
also obtain and keep in full force and effect a policy of insurance against loss
or damage by fire, and such other risks and hazards (including burglary and
theft) as are insurable under then available standard forms of "all risk"
insurance policies, to Tenant's Property, for one hundred percent (100%) of the
replacement value thereof or for such lesser amount as will avoid co-insurance
(including an "agreed amount" endorsement), protecting Landlord, Landlord's
agents, any Superior Mortgagee, any Superior Lessor and Tenant as insured, as
their interest may appear; provided, however, that no such additional insured
party shall be entitled to adjust, or participate in the adjustment of, any loss
or receive any proceeds under any such insurance policy, and the policies may so
provide. Tenant shall deliver to Landlord and any additional named insured(s)
certificates for such fully paid-for policies at least ten (10) days before the
Commencement Date. Tenant shall procure and pay for renewals of such insurance
from time to time before the expiration thereof, and Tenant shall deliver to
Landlord and any additional insured(s) certificates therefor at least 30 days
before
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the expiration of any existing policy. All such policies shall be issued by
companies of recognized responsibility licensed to do business in New Jersey,
and all such policies shall contain a provision whereby the same cannot be
cancelled unless Landlord and any additional insured(s) are given at least 20
days' prior written notice of such cancellation.
13.03 Tenant shall not do, permit or suffer to be done any act, matter,
thing or failure to act in respect of the Demised Premises or use or occupy the
Demised Premises or conduct or operate Tenant's business in any manner
objectionable to any insurance company or companies whereby the fire insurance
or any other insurance then in effect in respect to the Land and Building or any
part thereof shall become void or suspended or whereby any premiums in respect
of insurance maintained by Landlord shall be higher than those which would
normally have been in effect for the occupancy contemplated under the Permitted
Uses. In case of a breach of the provisions of this Section 13.03, in addition
to all other rights and remedies of Landlord hereunder, Tenant shall (a)
indemnify Landlord and the Superior Lessors and hold Landlord and the Superior
Lessors harmless from and against any loss which would have been covered by
insurance which shall have become void or suspended because of such breach by
Tenant and (b) pay to Landlord any and all increases of premiums on any
insurance, including, without limitation, rent insurance, resulting from any
such breach.
13.04(a) Tenant shall indemnify and hold harmless Landlord and all
Superior Lessors and its and their respective partners, joint venturers,
directors, officers, agents, servants and employees from and against any and all
claims arising from or in connection with (a) Tenant's conduct or management of
the Demised Premises or of any business therein, or any work or thing whatsoever
done, or any condition created (other than by Landlord) in the Demised Premises
during the Term or during the period of time, if any, prior to the Commencement
Date that Tenant may have been given access to the Demised Premises, except to
the extent due to Landlord's wrongful acts or gross negligence; (b) any act,
omission or negligence of Tenant or any of its subtenants or licensees or its or
their partners, joint ventures, directors, officers, agent, employees or
contractors; (c) any accident, injury or damage whatever (except to the extent
caused by
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Landlord's acts or negligence) occurring in the Demised Premises or the Common
Areas; and (d) any breach or default by Tenant in the full and prompt payment
and performance of Tenant's obligations under this Lease; together with all
costs, expenses and obligations under this Lease; together with all costs,
expenses and liabilities incurred in or in connection with each such claim or
action or proceeding brought thereon, including, without limitation, all
attorneys' fees and expenses. In case any action or proceeding is brought
against Landlord and/or any Superior Lessor and/or its or their partners, joint
venturers, directors, officers, agents and/or employees by reason of any such
claim, Tenant, upon notice from Landlord or such Superior Lessor, shall resist
and defend such action or proceeding by counsel reasonably satisfactory to
Landlord. Counsel appointed by the insurance company insuring the Building shall
be deemed satisfactory to Landlord.
(b) Landlord shall indemnify and hold harmless Tenant and its
directors, officers, agents, servants and employees from and against any and all
claims arising from or in connection with (a) Landlord's conduct or management
of the Building or any business therein, or other work or thing whatsoever done,
or any condition created (other than by Tenant), in the Building during the Term
or during the period of time, if any, prior to the Commencement Date that Tenant
may have been given access to the Demised Premises, to the extent due to
Landlord's willful acts or gross negligence; (b) any act, omission or negligence
of Landlord or its agents or their partners, joint ventures, directors,
officers, agents, employees or contractors; (c) any accident, injury or damage
whatever (except to the extent caused by Tenant's acts or negligence) occurring
in the Building and (d) any breach or default by Landlord in the prompt payment
and performance of Landlord's obligations under this Lease; together with all
costs, expenses and liabilities incurred in or in connection with each such
claim or action or proceeding brought thereon, including, without limitation,
all attorneys' fees and expenses. In case any action or proceeding is brought
against Tenant and/or its directors, officers, agents and/or employees by reason
of any such claim, Landlord, upon notice from Tenant, shall resist and defend
such action or proceeding by counsel reasonably satisfactory to Tenant. Counsel
appointed by the insurance company insuring the Building shall be deemed
satisfactory to Tenant.
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13.05 The parties hereto shall procure an appropriate clause in, or
endorsement on, any fire or extended coverage insurance covering the Demised
Premises, the Building and personal property, fixtures and equipment located
thereon or therein, pursuant to which the insurance companies waive subrogation
or consent to a waiver of right of recovery, or an express agreement that the
applicable insurance policy shall not be invalidated if the insured waives, or
has waived before the casualty, the right of recovery, or an express agreement
that the applicable insurance policy shall not be invalidated if the insured
waives, or has waived before the casualty, the right of recovery against any
party responsible for a casualty covered by such policy, and having obtained
such clauses or endorsements or agreements of waiver of subrogation or consent
to a waiver of right of recovery, the parties agree that they will not make any
claim against or seek to recover from the other or anyone acting or claiming
under or through the other or any of their respective officers, directors,
shareholders, partners, employees, agents or contractors, for any loss or damage
to its property or the property of others resulting from fire or other hazards
covered by such fire and extended coverage insurance, 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 or recovery. 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 or if
such clause may not be obtained, even with the payment of an additional premium,
then (in either event) such party shall so notify the first party and the first
party's agreement not to make any claim or seek recover shall not be effective
thereafter. If either party shall be unable to obtain the inclusion of such
clause even with the payment of an additional premium, then such party shall
attempt to name the other party as an additional insured (but not a loss payee)
under the policy. If the payment of an additional premium is required for naming
the other party as an additional insured (but not a loss payee), each party
shall advise the other of the amount of any such additional premium and the
other party at its own
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election may, but shall not be obligated to, pay the same. If such other party
shall not elect to pay such additional premium, 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 or if it shall not be possible to
have the other party named as an additional insured (but not loss payee), even
with the payment of an additional premium, then (in either event) such party
shall so notify the first party and the first party's agreement to name the
other party as an additional insured shall be satisfied. If either party shall
fail to have fire or extended coverage insurance in effect as required pursuant
to this Article 13, the agreement not to make any claim or seek recovery
contained in the first sentence of this Section 13.05 shall be in full force and
effect to the same extent as if such required insurance (containing the required
waiver of subrogation clause, endorsement or agreement) were in effect.
ARTICLE 14 - RULES AND REGULATIONS
14.01 Tenant and its employees and agents shall faithfully observe and
comply with the Rules and Regulations and such reasonable changes therein
(whether by modification, elimination or addition) as Landlord at any time or
times hereafter may make and communicate to Tenant, which in Landlord's
reasonable judgment, shall be necessary for the reputation, safety, care or
appearance of the Land and Building, or the preservation of good order therein,
or the operation or maintenance of the Building or its equipment and fixtures,
or the Common Areas, and which do not unreasonably affect the conduct of
Tenant's business in the Building; provided, however, that in case of any
conflict or inconsistency between the provisions of this Lease and any of the
Rules and Regulations, the provisions of this Lease shall control. Nothing in
this Lease contained shall be construed to impose upon Landlord any duty or
obligation to enforce the Rules and Regulations against any other tenant or any
employees or agents of any other Tenant, and Landlord shall not be liable to
Tenant for violation of the Rules and Regulations by any other tenant or its
employees, agents, invitees or licensees, provided, however, Landlord shall not
enforce any Rule or Regulation against Tenant which Landlord shall not then be
enforcing against all other office tenants in the Building, in the case of the
Common Areas. If Tenant disputes the reasonableness of any additional
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Rule or Regulation hereafter adopted by Landlord, the dispute shall be
determined by arbitration in the City of Newark in accordance with the rules and
regulations then obtaining of the American Arbitration Association or its
successor. Any such determination shall be final and binding upon the parties
hereto, whether or not a judgment shall be entered in any court.
ARTICLE 15 - ALTERATIONS
15.01 Tenant shall not make any structural alterations or additions to
the Demised Premises which would adversely affect the structural integrity of
the Building, or change the exterior color or architectural treatment of the
Building, or which would otherwise impair the value of the Building without on
each occasion first obtaining the prior written consent of Landlord, it being
acknowledged that Landlord's consent shall not be required for any other
alterations or additions. Tenant shall submit to Landlord plans and
specifications for such work at the time landlord's consent is sought. Tenant
shall pay to Landlord upon demand the reasonable cost and expense of Landlord
for any action of Landlord in excess of (a) reviewing said plans and
specifications and (b) inspecting the alterations to determine whether the same
are being performed in accordance with the approved plans and specifications and
all Legal Requirements and Insurance Requirements including without limitation,
the fees of any architect or engineer employed by Landlord for such purpose.
Before proceeding with any permitted alteration which will cost more than
$350,000 (exclusive of the costs of decorating work and items constituting
Tenant's Property), as estimated by a reputable contractor designated by
Landlord, Tenant shall obtain and deliver to Landlord either (i) a performance
bond and a labor and materials payment bond (issued by a corporate surety
licensed to do business in New Jersey), each in an amount equal to 125% of such
estimated cost and in form satisfactory to Landlord, or (ii) such other security
as shall be satisfactory to Landlord. Notwithstanding anything herein to the
contrary, the provisions of the immediately preceding sentence shall not apply
during such time as PaineWebber, Inc. remains liable for Tenant's obligations
under this Lease. Tenant shall fully and promptly comply with and observe the
Rules and Regulations then in force in respect of the making of such
alterations. Any review or approval by Landlord of any plans and/or
specifications with respect to any such
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alterations is solely for Landlord's benefit, and without any representation or
warranty whatsoever to Tenant in respect to the adequacy, correctness or
efficiency thereof or otherwise.
15.02 Tenant shall obtain all necessary governmental permits and
certificates for the commencement and prosecution of alterations and for final
approval thereof upon completion, and shall cause alterations to be performed in
compliance therewith all applicable Legal Requirements and Insurance
Requirements. Alterations shall be diligently performed in a good and
workmanlike manner, using new materials and equipment at least equal in quality
and class to the better of the original installations of the Building.
Alterations requiring Landlord's consent shall be performed by contractors
licensed in the State of New Jersey (if applicable), whose use shall not
invalidate any warrants applicable to the Building or its Systems, and which
contractors are either employed in connection with the performance of Landlord's
Work or Tenant's Work or are reputable and skilled in their respective trades.
Alterations shall be made in such a manner as not to unreasonably interfere with
or delay and as not to impose any additional expense upon Landlord in the
maintenance, repair or operation of the Building; and if any such additional
expense shall be incurred by Landlord as a result of Tenant's making of any
alterations, Tenant shall pay any such additional expense upon demand.
Throughout the making of alterations, Tenant shall carry, or cause to be
carried, workmen's compensation insurance in statutory limits and general
liability insurance, with completed operation endorsement, for any occurrence in
or about the Building, under which Landlord and its managing agent and any
Superior Lessor whose name and address shall previously have been furnished to
Tenant shall be named as parties insured, in such limits as landlord may
reasonably require, with issuers reasonably satisfactory to Landlord. Tenant
shall furnish Landlord with reasonably satisfactory evidence that such insurance
is in effect at or before the commencement of alterations and, on request, at
reasonable intervals thereafter during the making of alterations.
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ARTICLE 16 - LANDLORD'S AND TENANT'S PROPERTY
16.01 All fixtures, equipment, improvements and appurtenances attached
to or built into the Demised Premises at the commencement of or during the Term
at the expense of Tenant (exclusive of the items to which Tenant's Fund has been
applied) shall be deemed to be the property of Tenant.
16.02 All movable partitions, business and trade fixtures, machinery
and equipment, communications equipment and office equipment, whether or not
attached to or built into the Building, which are installed in the Demised
Premises by or for the account of Tenant and can be removed without structural
damage to the Building and all furniture, furnishings, and other personal
property owned by Tenant and located in the Demised Premises (collectively,
"Tenant's Property") shall be and shall remain the property of Tenant and may be
removed by Tenant at any time during the Term; provided that if any of the
Tenant's Property is removed, Tenant shall repair or pay the cost of repairing
any damage to the Building or the Common Areas resulting from the installation
and/or removal thereof. Any equipment or other property for which Landlord shall
have granted any allowance or credit to Tenant shall not be deemed to have been
installed by or for the account of Tenant without expense to Landlord, shall not
be considered as the Tenant's Property and shall be deemed the property of
Landlord.
16.03 At or before the Expiration Date or the date of any earlier
termination of this Lease, or within fifteen (15) days after such an earlier
termination date, Tenant shall surrender the Demised Premises broom clean,
vacant and in good condition, reasonable wear and tear and damage by casualty,
excepted. Tenant may remove any alterations and fixtures and shall remove any
alterations or fixtures which are not usual or customary for general office use
and which would materially impair the reletting of the Demised Premises for
general office use. Tenant shall repair any structural damage to the Demised
Premises, the Building and the Common Areas and the Project Common Areas
resulting from any installation and/or removal of the Tenant's Property. Any
items of the Tenant's Property which shall remain at the Demised Premises after
the Expiration Date or after a period of fifteen (15) days following an earlier
termination date, may, at the option of Landlord, be deemed to have been
abandoned
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and in such case such items may be retained by Landlord as its property or
disposed of by Landlord, without accountability, in such manner as Landlord
shall determine at Tenant's Expense.
ARTICLE 17 - REPAIRS AND MAINTENANCE
17.01 Tenant shall, throughout the Term, take good care of the Demised
Premises, the fixtures and appurtenances therein.
Tenant shall be responsible for the cost and expense of all
non-structural repairs (or replacements, if required), ordinary and
extraordinary, in and to the Demised Premises (including the Building systems),
the need for which arises out of (a) the performance or existence of the
Tenant's Work or alterations, (b) the installation, use or operation of the
Tenant's Property in the Demised Premises, (c) the moving of the Tenant's
Property in or out of the Building, or (d) the act, omission, misuse or neglect
of Tenant or any of its subtenants or its or their employees, agents,
contractors, or invitees. Tenant shall promptly replace all scratched, damaged
or broken doors and glass in or about the Demised Premises and shall be
responsible for all repairs, maintenance and replacement of wall and floor
coverings in the Demised Premises and for the repair and maintenance of all
sanitary and electrical fixtures and equipment therein. Tenant shall promptly
make all repairs in or to the Demised Premises for which Tenant is responsible,
provided that any repairs to the mechanical, electrical, plumbing, heating,
ventilating or air conditioning systems of the Building shall only be made by
contractors approved by Landlord in accordance with Section 15.02 hereof. Any
other repairs in or to the Building and the facilities and systems thereof for
which Tenant is responsible shall be performed by Landlord at Tenant's expense;
but Landlord may, at its option, before commencing any such work or at any time
thereafter, during such time as PaineWebber, Inc. is no longer liable for Ten-
ant's obligations under this Lease, require Tenant to furnish to Landlord such
security, in form (including, without limitation, a bond issued by a corporate
surety licensed to do business in New Jersey) and amount, as Landlord shall deem
necessary to assure the payment for such work by Tenant.
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17.02 Landlord shall be responsible for the maintenance, repair and
replacement of the structure of the Building and the roof of the Building and
for the maintenance of the Common Areas, all which shall be maintained in
accordance with standards reasonably satisfactory to Landlord and Tenant. To the
extent that Landlord shall fail to maintain the structure of the Building, the
roof or such Common Areas, Tenant shall have the right to perform any such
maintenance work on behalf of the Landlord and Landlord, promptly after receipt
of demand therefor from Tenant, shall reimburse Tenant for any expenses incurred
by Tenant on behalf of Landlord for such maintenance, together with interest
thereon at the Late Payment Rate, calculated from the date of expenditure by
Tenant through the date of repayment by Landlord.
17.03 Except as otherwise expressly provided in this Lease, Landlord
shall have no liability to Tenant, nor shall Tenant's covenants and obligations
under this Lease be reduced or abated in any manner whatsoever, by reason of any
inconvenience, annoyance, interruption or injury to business arising from
Landlord's doing any repairs, maintenance or changes which Landlord is required
or permitted by this Lease, or required by Law, to make in or to any portion of
the Building.
ARTICLE 18 - ELECTRIC ENERGY
18.01 Tenant shall purchase the electric energy required by it in the
Demised Premises at its own expense on a direct-metered basis from the public
utility servicing the Building, and Landlord shall permit the rises, conduits
and feeders in the Building, to the extent available, suitable and safely
capable, to be used for the purpose of transmitting such electrical energy
through the Building. Landlord shall not be liable for any failure, inadequacy
or defect in the character or supply of electric current furnished to the
Building except for actual damage suffered by Tenant by reason of any such
failure, inadequacy or defect caused by the negligence or willful acts of
Landlord.
18.02 Tenant's use of electric energy in the Demised Premises shall not
at any time exceed the capacity of any of the electrical conductors and
equipment in or otherwise serving the Building. Any additional risers or other
equipment required by Tenant at any time during
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the Term shall be provided by Landlord and the actual cost thereof shall be paid
by Tenant to Landlord on demand.
ARTICLE 19 - HEAT, VENTILATION AND AIR CONDITIONING
Landlord shall, at Tenant's sole cost and expense, subject to any
guaranties or warranties made by Ground Lessor pursuant to the Guarantee,
maintain and operate the heating, ventilating and air-conditioning systems
("HVAC") serving the Demised Premises, and shall furnish HVAC in the Demised
Premises as Tenant may require.
ARTICLE 20 - OTHER SERVICES: SERVICE INTERRUPTION
20.01 Landlord shall cause the exterior of the windows of the Building
and the Common Areas to be cleaned in accordance with the standards set forth in
Exhibit "Q" annexed hereto and made a part hereof.
20.02 Landlord shall, at Tenants' sole cost and expense, cause water to
be supplied to the Demised Premises and Tenant shall pay for such as shown on
the public utility meters therefore.
ARTICLE 21 - ACCESS, CHANGES AND NAME
21.01 Landlord and its agents shall have the right, with as little
interference of Tenant's business as possible, to enter and/or pass through the
Demised Premises upon reasonable notice and at reasonable times (a) to examine
the Demised Premises and to show them to actual and prospective Superior
Lessors, Superior Mortgagees, or prospective purchasers of the Building, and (b)
to make such repairs, alterations, additions and improvements in or to the
Building and/or its facilities and equipment as Landlord is required or desires
to make. Landlord shall be allowed to take all materials into and upon the
Demised Premises that may be required in connection therewith, without any
liability to Tenant and without any reduction of Tenant's obligations hereunder.
The right of Landlord and Landlord's agent to enter into the Demised Premises
shall not include any area of the Demised Premises designated on written notice
to Landlord as a "security area" unless a representative of Tenant shall be
present, which representative Tenant agrees to have present at the Demised
Premises upon reasonable
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advance oral notice by Landlord, provided, however, that in the event of any
emergency, Landlord shall have the right to enter into any such security area
without being accompanied by such representative of Tenant but shall be
accompanied by a police officer, fireman or other public official. During the
period of eighteen (18) months prior to the Expiration Date, Landlord and its
agents may exhibit the Demised Premises to prospective tenants.
21.02 During such time as PaineWebber, Inc. or an affiliated entity is
the Tenant, Tenant may name the Building any name associated with PaineWebber,
Inc. or its Affiliates, as the same may change from time to time as the result
of mergers or consolidations or otherwise.
ARTICLE 22 - MECHANICS' LIENS AND OTHER LIENS
Nothing contained in this Lease shall be deemed, construed or
interpreted to imply any consent or agreement on the part of Landlord to subject
Landlord's interest or estate to any liability under the mechanic's or other
lien law. If any mechanic's or other lien or any notice of intention to file a
lien is filed against the Land, or any part thereof, for any work, labor,
service or materials claimed to have been performed or furnished for or on
behalf of Tenant or anyone holding any part of the Demised Premises through or
under Tenant, Tenant shall cause the same to be cancelled and discharged of
record by payment, bond or order of a court of competent jurisdiction within
fifteen (15) days after notice by Landlord to Tenant.
ARTICLE 23 - NON-LIABILITY AND INDEMNIFICATION
23.01 In addition to the provisions of Article 13 of this Lease, except
as set forth in the Guarantees, dated of even date herewith, by Ground Lessor
for the benefit of Tenant (collectively, the "Guarantees"), neither Landlord nor
any partner, joint venturer, director, officer, agent, servant or employee of
Landlord shall be liable to Tenant for any loss, injury or damage to Tenant or
to any other Person, or to its or their property, irrespective of the cause of
such injury, damage or loss, except to the extent caused by or resulting from
the negligence of Landlord, its agents, servants or employees in the operating
or maintenance of the Land or Building. Further, neither Landlord nor any
partner, joint ventur-
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er, director, officer, agent, servant or employee of Landlord shall be liable
(a) for any such damage caused by other tenants or Persons in, upon or about the
Land or Building, or caused by operations in construction of any private, public
or quasi-public work; or (b) even if negligent, for consequential damages
arising out of any loss of use of the Demised Premises or any equipment or
facilities therein by Tenant or any Person claiming through or under Tenant.
23.02 Notwithstanding any provision to the contrary, except as set
forth in the Guarantees, Tenant shall look solely to the estate and property of
Landlord in and to the Land and Building (or the proceeds received by Landlord
on a sale of such estate and property net of bona fide liens and expenses. In
the event of any claim against Landlord arising out of or in connection with
this Lease, the relationship of Landlord and Tenant or Tenant's use of the
Building, the Demised Premises, the Common Areas or the Project Common Areas,
Tenant, (and its successor and assigns) agrees that the liability of Landlord
arising out of or in connection with this Lease, the relationship of Landlord
and Tenant or Tenant's use of the Building, the Demised Premises, the Common
Areas or the Project Common Areas shall be limited to such estate and property
of Landlord (or sale proceeds net of bona fide liens and expenses). No other
properties or assets of Landlord or any partner, joint venturer, director,
officer, agent, servant or employee of Landlord shall be subject to levy,
execution or other enforcement procedures for the satisfaction of any judgment
(or other judicial process) or for the satisfaction of any other remedy of
Tenant arising out of, or in connection with, this Lease, the relationship of
Landlord and Tenant or Tenant's use of the Building, the Demised Premises, the
Common Areas or the Project Common Areas. If Tenant shall acquire a lien on or
interest in any other properties or assets by judgment or otherwise, Tenant
shall promptly release such lien on or interest in such other properties and
assets by executing, acknowledging and delivering to Landlord an instrument to
that effect prepared by Landlord's attorneys.
ARTICLE 24 - DAMAGE OR DESTRUCTION
24.01 If the Building shall be partially or totally damaged or
destroyed by fire or other casualty (and if this Lease shall not be terminated
as in this
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Article 24 hereinafter provided), Landlord shall repair the damage and restore
and rebuild the Building (except for the Tenant's Property) in accordance with
the Plans and Specifications, together with such changes as may be approved by
Tenant, with reasonable dispatch after notice to it of the damage or destruction
and the collection of the insurance proceeds attributable to such damage.
24.02 Subject to the provisions of Section 24.05, if all or part of the
Demised Premises shall be damaged or destroyed or rendered completely or
partially untenantable on account of fire or other casualty, the Rent shall not
be abated or reduced, as the case may be, to the extent of payments pursuant to
Tenants' business interruption insurance allocable to rental and, subsequent to
the exhaustion of payments thereunder, the Rent shall be abated or reduced, as
the case may be, in proportion to the untenantable area of the Demised Premises
for the period from the date of the damage or destruction to the date the damage
to the Demised Premises shall be substantially repaired; provided, however,
should Tenant reoccupy a portion of the Demised Premises during the period the
repair or restoration work is taking place and prior to the date that the
Demised Premises is substantially repaired or made tenantable the Rent allocable
to such reoccupied portion, shall be payable by Tenant from the date of such
occupancy.
24.03 (a) the Demised Premises shall be totally damaged or destroyed by
fire or other casualty, or (b) the Building shall be so damaged or destroyed by
fire or other casualty that its repair or restoration requires the expenditure,
as estimated by a reputable contractor or architect designated by Landlord and
approved by Tenant, which approval shall not be unreasonably withheld, of more
than twenty percent (20%) of the full insurable value of the Building
immediately prior to the casualty, and, in either event, an engineer selected by
Landlord and approved by Tenant, which approval shall not be unreasonably
withheld or delayed, shall reasonably estimate that there will be less than two
(2) years remaining in the Term (including all Renewal Terms for which Tenant
has validly exercised the applicable Renewal Option) upon completion of
restoration of the Building, then in either such case Landlord or Tenant may
terminate this Lease by giving the other notice to such effect within ninety
(90) days after the date of the fire or other casualty. Notwithstanding anything
contained in this Lease to the
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contrary, if there shall occur such a casualty at such time as there shall be
estimated to be less than two years remaining in the Term of this Lease after
completion of restoration but prior to the time that pursuant to the provisions
of Article 39 hereof Tenant shall have the right to exercise any Renewal Option,
then, prior to Landlord terminating this Lease, Tenant shall have the right to
exercise any such Renewal Option otherwise in accordance with the provisions of
Article 39 hereof. If either party shall elect to so terminate this Lease, the
Term shall expire upon the tenth (10th) day after such notice is given and
Tenant shall vacate the Demised Premises and surrender the same to Landlord in
accordance with the provisions of this Lease. Upon the termination of this Lease
in accordance with this Section 24.03, Tenant's liability for Rent thereafter
due and payable shall cease and any prepaid portion of Rent for any period after
such date shall be refunded by Landlord to Tenant.
24.04 Except as provided for in Section 24.08 of this Lease, Tenant
shall not be entitled to terminate this Lease and no damages, compensation or
claim shall be payable by Landlord for inconvenience, loss of business or
annoyance arising from any repair or restoration of any portion of the Demised
Premises pursuant to this Article 24. Landlord shall use its best efforts to
make such repair or restoration promptly and in such manner as to not
unreasonably interfere with Tenant's use and occupancy of the Demised Premises,
but Landlord shall not be required to do such repair or restoration work on an
overtime basis unless fully reimbursed by Tenant.
24.05 Notwithstanding any of the foregoing provisions of this Article
24, if by reason of some act or omission on the part of Tenant or any of its
subtenants or its or their partners, directors, officers, servants, employees,
agents or contractors, either (a) Landlord or any Superior Lessor or any
Superior Mortgagee shall be unable to collect all of the insurance proceeds
(including, without limitation, rent insurance proceeds) applicable to damage or
destruction of the Building by fire or other casualty, or (b) the Demised
Premises shall be damaged or destroyed or rendered completely or partially
untenantable on account of fire or other casualty, then, without prejudice to
any other remedies which may be available against Tenant, there shall be no
abatement or reduction of the Rent. Further, nothing contained in
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this Article 24 shall relieve Tenant from any liability that may exist as a
result of any damage or destruction by fire or other casualty.
24.06 Landlord will not carry insurance of any kind on the Tenant's
Property, and, except as provided by law or by reason of Landlord's breach of
any of its obligations hereunder, shall not be obligated to repair any damage or
to replace the Tenant's Property.
24.07 The provisions of this Article 24 shall be deemed an express
agreement governing any case of damage or destruction of the Building by fire or
other casualty, and any law providing for such a contingency in the absence of
an express agreement, now or hereafter in force, shall have no application in
such case.
24.08 Anything contained in this Article 24 to the contrary
notwithstanding, within thirty (30) days after Landlord has notice of any damage
that materially impairs Tenant's ability to conduct its business in the Demised
Premises, Landlord shall deliver to Tenant a statement prepared by a reputable
contractor approved by Tenant, which approval shall not be unreasonably withheld
or delayed, setting forth such contractor's estimate as to the time required to
repair such damage and the assumptions regarding the use of labor (including
overtime labor, if applicable) and construction methods considered in arriving
at such estimate. If the estimated time period exceeds twelve (12) months from
the date of such damage or if such estimate is not delivered to Tenant as
required, Tenant may elect to terminate this Lease by notice to Landlord not
later than thirty (30) days following receipt of such statement or, if no
statement is delivered, not later than thirty (30) days after the date such
statement was to have been delivered. If Tenant makes such election, the Term
shall expire upon the thirtieth (30th) day after notice of such election is
given by Tenant and Tenant shall vacate the Demised Premises and surrender the
same to Landlord in accordance with the provisions of this Lease. If Tenant
shall not have elected to terminate this Lease pursuant to this Article 24 (or
is not entitled to terminate this Lease pursuant to this Article 24) and such
repairs are (i) not commenced by Landlord within sixty (60) days after the date
Landlord has notice of such damage, (ii) not prosecuted substantially on the
basis specified in the contractor's estimate referred to in this paragraph so
that the re-
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pairs cannot be Substantially Completed within the estimated time period (unless
Landlord agrees to take such other measures required to Substantially Complete
such repairs within such period), or (iii) not Substantially Completed by
Landlord within twelve (12) months after the date Landlord has such notice,
subject to Unavoidable Delays, but in no event later than fifteen (15) months
after Landlord has such notice, Tenant may elect to terminate this Lease by
notice to Landlord not later than fifteen (15) days following the expiration of
either of the periods specified in clauses (i) and (iii) above or fifteen (15)
days notice if Landlord shall not be prosecuting such repairs as required by
clause (ii) hereof. Notwithstanding the foregoing, if at any time Tenant
believes that Landlord shall not be diligently prosecuting such repairs and
shall so notify Landlord, Tenant shall have the right to seek injunctive relief.
If Tenant makes such election, the Term of this Lease shall expire upon the
thirtieth (30th) day after notice of such election is given by Tenant and Tenant
shall vacate the Demised Premises and surrender the same to Landlord in
accordance with the provisions of this Lease. Upon the termination of this Lease
under the conditions provided in this Section, Tenant's liability for Rent
thereafter due and payable shall cease and any prepaid portion of Rent for any
period after such date shall be refunded by Landlord to Tenant. Landlord shall
advise Tenant of any Unavoidable Delays the Landlord shall have incurred in
connection with any such repair, promptly after the same shall have occurred and
the length thereof.
24.09 If, at any time during the Term, the Building shall be so damaged
or destroyed by fire or other casualty that its repair or restoration requires
the expenditure, as estimated by a reputable contractor or architect designated
by Landlord and approved by Tenant, which approval shall not be unreasonably
withheld, of more than twenty-five percent (25%) of the full insurable value of
the Building immediately prior to the casualty and there shall be insufficient
insurance proceeds available to Landlord to pay for the estimated cost of repair
and restoration, then Landlord may terminate this Lease, whether or not Tenant
shall have elected to terminate this Lease pursuant to Section 24.08 hereof, by
giving Tenant notice to such effect within sixty (60) days after the date of the
fire or other casualty. If Landlord shall elect to so terminate this Lease, the
Term shall expire upon the tenth (10th) day after such notice
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is given and Tenant shall vacate the Demised Premises and surrender the same to
Landlord in accordance with the provisions of this Lease. Upon the termination
of this Lease in accordance with this Section 24.09, Tenant's liability for Rent
thereafter due and payable shall cease and any prepaid portion of Rent for any
period after such date shall be refunded by Landlord to Tenant.
24.10 Notwithstanding anything contained in this Lease to the contrary,
if pursuant to the provisions of the Office Center Lease, dated of even date
herewith, between Hartz-PW Limited Partnership, as landlord and Tenant, as
tenant, (the "Office Lease") the tenant thereunder shall have the right to, and
shall, terminate the Office Lease in connection with a casualty and such tenant
shall be Tenant or an affiliate of Tenant, then Tenant, at Tenant's sole option,
shall also have the right to terminate this Lease simultaneously with the
termination of the Office Lease. If Tenant shall make such election, the Term of
this Lease shall expire on the date specified in such notice of election, which
date shall be not less than six (6) months nor more than eighteen (18) months
from the date of such notice, and Tenant shall vacate the Demised Premises and
surrender the same to Landlord in accordance with the provisions hereof. Upon
the termination of this Lease hereunder, Tenant's liability for Rent thereafter
due and payable shall cease and any prepaid portion of Rent for any period after
such date shall be refunded by Landlord to Tenant.
ARTICLE 25 - EMINENT DOMAIN
25.01 If the whole of the Demised Premises shall be taken by any public
or quasi-public authority under the power of condemnation, eminent domain or
expropriation, or in the event of conveyance of the whole of the Demised
Premises in lieu thereof, this Lease shall terminate as of the day possession
shall be taken by such authority. If fifteen percent (15%) or less of the Floor
Space of the Demised Premises shall be so taken or conveyed, this Lease shall
terminate only in respect of the part so taken or conveyed as of the day
possession shall be taken by such authority. If more than fifteen percent (15%)
of the Floor Space of the Demised Premises shall be so taken or conveyed, this
Lease shall terminate only in respect of the part so taken or conveyed as of the
day possession shall be taken by such authority, but either party shall have the
right to terminate this Lease upon
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notice given to the other party within thirty (30) days after taking such
possession. If so much of the parking facilities shall be so taken or conveyed
that the number of parking spaces necessary, for the continued operation of the
Demised Premises shall not be available, Tenant may, by notice to Landlord,
terminate this Lease as of the day possession shall be taken. If this Lease
shall continue in effect as to any portion of the Demised Premises not so taken
or conveyed, the Rent shall be reduced in the proportion which the area of the
part of the Demised Premises so acquired or condemned bears to the total area
of the Demised Premises immediately prior to such acquisition or condemnation.
Except as specifically provided herein, in the event of any such taking or
conveyance there shall be no reduction in Rent. If this Lease shall be
terminated in accordance with the provisions of this Section 25.01, this Lease
and the Term shall come to an end and expire as of the date of the taking, with
the same effect as if such date were the Expiration Date, and the Rent shall be
apportioned as of the date of such termination and any prepaid portion of Rent
for any period after such date shall be refunded by Landlord to Tenant. If this
Lease shall continue in effect, Landlord shall, at its expense, but shall be
obligated only to the extent of the net award or other compensation (after
deducting all expenses in connection with obtaining same) available to Landlord
for the improvements taken or conveyed (excluding any award or other
compensation for land or for the unexpired portion of the term of any Superior
Lease), make all necessary alterations so as to constitute the remaining Demised
Premises a complete architectural and tenantable unit, except for the Tenant's
Property, and Tenant shall make all alterations or replacements to the Tenant's
Property and decorations in the Demised Premises. All awards and compensation
for any taking or conveyance, whether for the whole or a part of the Land or
Building, the Demised Premises or otherwise, shall be property of Landlord, and
Tenant hereby assigns to Landlord all of Tenant's right, title and interest in
and to any and all such awards and compensation. Tenant shall be entitled to
claim, prove and receive in the condemnation proceeding such award or
compensation as may be allowed for the Tenant's Property, Tenant's trade
fixtures and for loss of business, goodwill, moving and depreciation or injury
to and cost of removal of the Tenant's Property, to the extent such award or
compensation shall be made by the condemning authority in addition to, and shall
not result in a re-
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duction of, the award or compensation made by it to Landlord.
25.02 If the temporary use or occupancy of all or any part of the
Demised Premises shall be taken during the Term, Tenant shall be entitled,
except as hereinafter set forth, to receive that portion of the award or payment
for such taking which represents compensation for the use and occupancy of the
Demised Premises, for the taking of the Tenant's Property and for moving
expenses, and Landlord shall be entitled to receive that portion which
represents reimbursement for the cost of restoration of the Demised Premises.
This Lease shall be and remain unaffected by such taking and Tenant shall
continue responsible for all of its obligations hereunder insofar as such
obligations are not affected by such taking and shall continue to pay the Rent
in full when due. If the period of temporary use or occupancy shall extend
beyond the Expiration Date, that part of the award or payment which represents
compensation for the use and occupancy of the Demised Premises (or a part
thereof) shall be divided between Landlord and Tenant so that Tenant shall
receive (except as otherwise provided below) so much thereof as represents
compensation for the period up to and including the Expiration Date and Landlord
shall receive so much thereof as represents compensation for the period after
the Expiration Date.
25.03 In the event the premises leased pursuant to the Office Lease are
taken or such portions of said facilities are taken resulting in a termination
of the Office Lease or the Office Lease shall be terminated as a result of a
taking of the premises leased pursuant to the Data Processing Lease, and the
tenant under the Office Lease shall be Tenant or an affiliate of Tenant then
Tenant, at Tenant's option, shall have the right to terminate this Lease on the
date specified in such notice of election, which date shall be not less than six
(6) months nor more than eighteen (18) months from the date of such notice;
provided, however, that Tenant shall have the right to continue its occupancy of
the Demised Premises subject to the terms of this Lease on a month-to-month
basis (not to exceed twelve (12) months) until suitable moving arrangements are
made.
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ARTICLE 26 - SURRENDER
26.01 On the Expiration Date, or upon any earlier termination of this
Lease, or upon any re-entry by Landlord upon the Demised Premises, Tenant shall
quit and surrender the Demised Premises to Landlord "broom-clean" and in good
order, condition and repair, except for ordinary wear and tear and such damage
or destruction as Landlord is required to repair or restore under this Lease,
and Tenant shall remove any item of Tenant's Property therefrom required
pursuant to this Lease.
26.02 If Tenant remains in possession of the Demised Premises after the
expiration of the Term, Tenant shall be deemed to be occupying the Demised
Premises as a tenant from month to month subject to all of the provisions of
this Lease, except that the monthly Fixed Rent shall be twice the Fixed Rent in
effect during the last month of the Term.
26.03 No act or thing done by Landlord or its agents shall be deemed an
acceptance of a surrender of the Demised Premises, and no agreement to accept
such surrender shall be valid unless in writing and signed by Landlord.
ARTICLE 27 - CONDITIONS OF LIMITATION
27.01 This Lease is subject to the limitation that whenever Tenant (a)
shall make an assignment for the benefit of creditors, or (b) shall commence a
voluntary case or have entered against it an order for relief under any chapter
of the Federal Bankruptcy Code (Title II of the United States Code) or any
similar order or decree under any federal or state law, now in existence, or
hereafter enacted having the same general purpose, and such order or decree
shall have not been stayed or vacated within 30 days after entry, or (c) shall
cause, suffer, permit or consent to the appointment of a receiver, trustee,
administrator, conservator, sequestrator, liquidator or similar official in any
federal, state or foreign judicial or non-judicial proceeding, to hold,
administer and/or liquidate all or substantially all of its assets, and such
appointment shall not have been revoked, terminated, stayed or vacated and such
official discharged of his duties within 30 days of his appointment then
Landlord, at any time after the occurrence of any such event, may give Tenant a
notice of intention to end
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the Term at the expiration of five (5) days from the date of service of such
notice of intention, and upon the expiration of said five (5) period, whether or
not the Term shall theretofore have commenced, this Lease shall terminate with
the same effect as if that day were the Expiration Date of this Lease, but
Tenant shall remain liable for damages as provided in Article 29.
27.02 This Lease is subject to the further limitations (collectively,
"Events of Default") that: (a) if Tenant shall default in the payment of any
installment of Fixed Rent, and such default shall continue for five (5) days
after invoice for same by Landlord or for five (5) days after notice of such
default, whichever is shorter, or (b) if Tenant shall, whether by action or
inaction, be in default of any of its obligations under this Lease (other than a
default in the payment of Fixed Rent) and such default shall continue and not be
remedied within thirty (30) days after Landlord shall have given to Tenant a
notice specifying the same, or, in the case of a default which cannot with due
diligence be cured within a period of thirty (30) days and the continuance of
which for the period required for cure will not subject Landlord or any Superior
Lessor or prosecution for a crime (as more particularly described in the last
sentence of Section 12.02) or termination of any Superior Lease or foreclosure
of any Superior Mortgage, if Tenant shall not, (i) within said thirty (30) day
period advise Landlord of Tenant's intention to take all steps necessary to
remedy such default, (ii) duly commence within said thirty (30) day period, and
thereafter diligently prosecute to completion all steps necessary to remedy the
default, and (iii) complete such remedy within a reasonable time after the date
of said notice by Landlord, (c) if Tenant shall abandon the Demised Premises, or
(d) if there shall be any default by Tenant (or any person which, directly or
indirectly, controls, is controlled by, or is under common control with Tenant)
under any other lease with Landlord (or any person which, directly or
indirectly, controls is controlled by, or is under common control with Landlord)
which shall not be remedied within the applicable grace period, if any, provided
therefor under such other lease, then in any of said cases Landlord may give to
Tenant a notice of intention to end the Term at the expiration of five (5) days
from the date of the service of such notice of intention, and upon the
expiration of said five (5) days, whether or not the Term shall theretofore have
commenced this Lease
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shall terminate with the same effect as if that day were the expiration date of
this Lease, but Tenant shall remain liable for damages as provided in Article
29.
ARTICLE 28 - RE-ENTRY BY LANDLORD
28.01 If this Lease shall terminate as provided in Article 27, Landlord
or Landlord's agents and employees may immediately or at any time thereafter
re-enter the Demised Premises, or any part thereof, either by summary dispossess
proceedings or by any suitable action or proceeding at law, or otherwise,
without being liable to indictment, prosecution or damages therefor, and may
repossess the same, and may remove any Person therefrom, to the end that
Landlord may have, hold and enjoy the Demised Premises. The word "re-enter", as
used herein, is not restricted to its technical legal meaning. If this Lease is
terminated under the provisions of Article 27, or if Landlord shall re-enter the
Demised Premises under the provisions of this Article 28, or in the event of the
termination of this Lease, or of re-entry, by or under any summary dispossess or
other proceedings or action or any provision of law by reason of default
hereunder on the part of Tenant, Tenant shall thereupon pay to Landlord the Rent
payable up to the time of such termination of this Lease, or of such recovery of
possession of the Demised Premises by Landlord, as the case may be, and shall
also pay to Landlord damages as provided in Article 29.
28.02 In the event of a breach by Tenant of any of its obligations
under this Lease, Landlord shall also have the right of injunction. The special
remedies to which Landlord may resort hereunder are cumulative and are not
intended to be exclusive of any other remedies to which Landlord may lawfully be
entitled at any time and Landlord may invoke any remedy allowed at law or in
equity as if specific remedies were not provided for herein.
28.03 If this Lease shall terminate under the provisions of Article 27,
or if Landlord shall re-enter the Demised Premises under the provisions of this
Article 28, or in the event of the termination of this Lease, or of re-entry, by
or under any summary dispossess or other proceeding or action or any provision
of law by reason of default hereunder on the part of Tenant, Landlord shall be
entitled to retain all monies, if any, paid by Tenant to Landlord, whether as
advance Rent, security or other-
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wise, but such monies shall be credited by Landlord against any Rent due from
Tenant at the time of such termination or re-entry or, at Landlord's option,
against any damages payable by Tenant under Article 29 or pursuant to law.
ARTICLE 29 - DAMAGES
29.01 If this Lease is terminated under the provisions of Article 27,
or if Landlord shall re-enter the Demised Premises under the provisions of
Article 28, or in the event of the termination of this Lease, or of re-entry, by
or under any summary dispossess or other proceeding or action or any provision
of law by reason of default hereunder on the part of Tenant, Tenant shall pay to
Landlord as damages, at the election of Landlord, either:
(a) a sum which at the time of such termination of this Lease or
at the time of any such re-entry by Landlord, as the case may be,
represents the then value of the excess, if any, of (i) the aggregate
amount of the Rent which would have been payable by Tenant (conclusively
presuming the average monthly Additional Charges payable for the year, or
if less than 365 days have then elapsed since the Commencement Date, the
partial year, immediately preceding such termination of re-entry) for the
period commencing with such earlier termination of this Lease or the date
of any such re-entry, as the case may be, and ending with the Expiration
Date, over (ii) the aggregate rental value of the Demised Premises for the
same period, which amounts shall be discounted to present worth at a rate
equal to nine percent (9%) per annum; or
(b) sums equal to the Fixed Rent and the Additional Charges which
would have been payable by Tenant had this Lease not so terminated, or had
Landlord not so re-entered the Demised Premises, payable upon the due dates
therefor specified herein following such termination or such re-entry and
until the Expiration Date, provided, however, that if Landlord shall relet
the Demised Premises during said period, Landlord shall credit Tenant with
the
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net rents received by Landlord from such reletting, such net rents to be
determined by first deducting from the gross rents as and when received by
Landlord from such reletting the expenses incurred or paid by Landlord in
terminating this Lease or in re-entering the Demised Premises and in
securing possession thereof, as well as the expenses of reletting,
including, without limitation, altering and preparing the Demised Premises
for new tenants, brokers' commissions, legal fees, and all other expenses
properly chargeable against the Demised Premises and the rental therefrom,
it being understood that any such reletting may be for a period shorter or
longer than the period ending on the Expiration Date; but in no event shall
Tenant be entitled to receive any excess of such net rents over the sums
payable by Tenant to Landlord hereunder, nor shall Tenant be entitled in
any suit for the collection of damages pursuant to this subdivision (b) to
a credit in respect of any rents from a reletting, except to the extent
that such net rents are actually received by Landlord. If the Demised
Premises or any part thereof should be relet in combination with other
space, then proper apportionment on a square foot basis shall be made of
the rent received from such reletting and of the expenses of reletting.
If the Demised Premises or any part thereof be relet by Landlord before
presentation of proof of such damages to any court, commission or tribunal, the
amount of rent reserved upon such reletting shall, prima facie, be the fair and
reasonable rental value for the Demised Premises, or part thereof, so relet
during the term of the reletting. Landlord shall not be liable in any way
whatsoever for its failure or refusal to relet the Demised Premises or any part
thereof, or if the Demised Premises or any part thereof are relet, for its
failure to collect the rent under such reletting, and no such refusal or failure
to relet or failure to collect rent shall release or affect Tenant's liability
for damages or otherwise under this Lease.
29.02 Suit or suits for the recovery of such damages or, any
installments thereof, may be brought by Landlord at any time and from time to
time at its elec-
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tion, and nothing contained herein shall be deemed to require Landlord to
postpone suit until the date when the Term would have expired if it had not been
so terminated under the provisions of Article 27, or under any provision of law,
or had Landlord not re-entered the Demised Premises. Nothing herein contained
shall be construed to limit or preclude recovery by Landlord against Tenant of
any sums or damages to which, in addition to the damages particularly provided
above, Landlord may lawfully be entitled by reason of any default hereunder on
the part of Tenant. Nothing herein contained shall be construed to limit or
prejudice the right of Landlord to prove for and obtain as damages by reason of
the termination of this Lease or re-entry on the Demised Premises for the
default of Tenant under this Lease an amount equal to the maximum allowed by any
statute or rule of law in effect at the time when, the governing the proceedings
in which, such damages are to be proved whether or not such amount be greater
than, equal to, or less than any of the sums referred to in Section 29.01.
29.03 In addition, if this Lease is terminated under the provisions of
Article 27, or if Landlord shall re-enter the Demised Premises under the
provisions of Article 28, Tenant covenants that: (a) the Demised Premises then
shall be in the same condition as that in which Tenant has agreed to surrender
the same to Landlord at the Expiration Date; (b) Tenant shall have performed
prior to any such termination any obligation of Tenant contained in this Lease
for the making of any alteration or for restoring or rebuilding the Demised
Premises, or any part thereof; and (c) for the breach of any covenant of Tenant
set forth above in this Section 29.03, Landlord shall be entitled immediately,
without notice or other action by Landlord, to recover, and Tenant shall pay, as
and for liquidated damages therefor, the cost of performing such covenant (as
estimated by an independent contractor selected by Landlord).
29.04 In addition to any other remedies Landlord may have under this
Lease, and without reducing or adversely affecting any of Landlord's rights and
remedies under this Article 29, if any Rent or damages payable hereunder by
Tenant to Landlord are not paid within five (5) days after demand therefor, the
same shall bear interest at the Late Payment Rate from the due date thereof
until paid, and the amounts of such interest shall be Additional Charges
hereunder.
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ARTICLE 30 - AFFIRMATIVE WAIVERS
30.01 Tenant, on behalf of itself and any and all persons claiming
through or under Tenant, does hereby waive and surrender all right and privilege
which it, they or any of them might have under or by reason of any any present
or future law, to redeem the Demised Premises or to have a continuance of this
Lease after being dispossessed or ejected from the Demised Premises by process
of law or under the terms of this Lease or after the termination of this Lease
as provided in this Lease.
30.02 Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim brought by either against the other on any matter
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, and Tenant's use or occupancy of the
Demised Premises and use of the Common Areas, including, without limitation, any
claim of injury or damage, and any emergency and other statutory remedy with
respect thereto. Tenant shall not interpose any counterclaim of any kind in any
action or proceeding commenced by Landlord to recover possession of the Demised
Premises (unless failure to do so would constitute a waiver thereof) nor attempt
to remove such action or proceeding to the law division of the Superior Court of
New Jersey.
ARTICLE 31 - NO WAIVERS
The failure of either party to insist in any one or more instances upon
the strict performance of any one or more of the obligations of this Lease, or
to exercise any election herein contained, shall not be construed as a waiver or
relinquishment for the future of the performance of such one or more obligations
of this Lease or of the right to exercise such election, but the same shall
continue and remain in full force and effect with respect to any subsequent
breach, act or omission. The receipt by Landlord of Fixed Rent or Additional
Charges with knowledge of breach by Tenant of any obligation of this Lease shall
not be deemed a waiver of such breach.
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ARTICLE 32 - CURING TENANT'S DEFAULTS
If Tenant shall default in the performance of any of Tenant's
obligations under this Lease, Landlord, without thereby waiving such default,
may (but shall not be obligated to) perform the same for the account and at the
expense of Tenant, without notice in a case of emergency, and in any other case
only if such default continues after the expiration of thirty (30) days from the
date Landlord gives Tenant notice of the default. Bills for any expenses
incurred by Landlord in connection with any such performance by it for the
account of Tenant, and bills for all costs, expenses and disbursements of every
kind and nature whatsoever, including reasonable attorneys' fees and expenses,
involved in collecting or endeavoring to collect the Rent or any part thereof or
enforcing or endeavoring to enforce any rights against Tenant or Tenant's
obligations hereunder, under or in connection with this Lease or pursuant to
law, including any such cost, expense and disbursement involved in instituting
and prosecuting summary proceedings or in recovering possession of the Demised
Premises after default by Tenant or upon the expiration of the Term or sooner
termination of this Lease, and interest on all sums advanced by Landlord under
this Article at the Late Payment Rate, may be sent to Landlord to Tenant
monthly, or immediately, at Landlord's option, and such among shall be due and
payable in accordance with the terms of such bills.
ARTICLE 33 - BROKER
Landlord and Tenant each represent to the other that no broker except
the Broker was instrumental in bringing about or consummating this Lease and
that it had no conversations or negotiations with any broker except the Broker
concerning the leasing of the Demised Premises. Each party agrees to indemnify
and hold harmless the other against and from any claims for any brokerage
commissions and all costs, expenses and liabilities in connection therewith,
including, without limitation, attorneys' fees and expenses, arising out of any
conversations or negotiations had by the indemnifying party with any broker
other than the Broker. Landlord shall pay any brokerage commissions due the
Broker pursuant to a separate agreement between Landlord and the Broker.
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ARTICLE 34 - NOTICES
Any notice, statement, demand, consent, approval or other communication
required or permitted to be given, rendered or made by either party to the
other, pursuant to this Lease or pursuant to any applicable Legal Requirement,
shall be in writing and shall be deemed to have been properly given, rendered or
made only if hand delivered or sent by United States registered or certified
mail, return receipt requested, addressed to the other party at the address
hereinabove set forth (except that after the Commencement Date, Tenant's
address, unless Tenant shall give notice to the contrary, shall be the Building)
as to Landlord, to the attention of General Counsel with a copy to the attention
of President and to Horowitz, Bross, Sinins and Imperial, 1180 Raymond
Boulevard, Newark, New Jersey 07102-4172, Attention: Irwin A. Horowitz, Esq.,
and as to Tenant, to the attention of Facilities Department-Vice President, with
a copy to Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, New
York 10022, Attention: Benjamin F. Needell, Esq., and shall be deemed to have
been given, rendered or made on the day after the day so delivered or mailed,
unless mailed outside the State of New Jersey in which case it shall be deemed
to have been given, rendered or made on the third business day after the day so
mailed. Either party may, by notice as aforesaid, designate a different address
or addresses for notices, statements, demands, consents, approvals or other
communications intended for it.
ARTICLE 35 - ESTOPPEL CERTIFICATES
Each party shall, at any time and from time to time, as requested by
the other party, upon not less than ten (10) days' prior notice, execute and
deliver to the requesting party a statement certifying that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force and effect as modified and stating the
modifications), certifying the dates to which the Fixed Rent and Additional
Charges have been paid, stating whether or not, to the best knowledge of the
party giving the statement, the requesting party is in default in performance of
any of its obligations under this Lease, and, if so, specifying each such
default of which the party giving the statement shall have knowledge, and
stating whether or not, to the best knowledge of the party giving the statement,
any
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event has occurred which with the giving of notice of passage of time, or both,
would constitute such a default of the requesting party, and, if so, specifying
each such event; any such statement delivered pursuant hereto shall be deemed a
representation and warranty to be relied upon by the party requesting the
certificate and by others with whom such party may be dealing, regardless of
independent investigation. Each party also shall include in any such statement
such other information concerning this Lease as the other party may reasonably
request.
ARTICLE 36 - ARBITRATION
Landlord or Tenant may at any time request arbitration, of any matter
in dispute. The party requesting arbitration shall do so by giving notice to
that effect to the other party, specifying in said notice the nature of the
dispute, and said dispute shall be determined in Newark, New Jersey, by a single
arbitrator, in accordance with the rules then obtaining of the American
Arbitration Association (or any organization which is the successor thereto).
The award in such arbitration may be enforced on the application of either party
by the order or judgment of a court of competent jurisdiction. The fees and
expenses of any arbitration shall be borne by the parties equally, but each
party shall bear the expense of its own attorneys and experts and the additional
expenses of presenting its own proof.
ARTICLE 37 - MEMORANDUM OF LEASE
This Lease shall not be recorded, however, at the request of either
party, Landlord and Tenant shall promptly execute, acknowledge and deliver to
the other party (i) a memorandum of lease in respect of this Lease sufficient
for recording, and (ii) after each of the Commencement Date, the Fixed Rent
Commencement Date, and any Renewal Term Commencement Date, either an agreement
or a restated memorandum (if a memorandum shall have been executed or recorded
as provided immediately above) stating the Commencement Date, Fixed Rent
Commencement Date or any Renewal Term Commencement Date, as the case may be,
each sufficient for recording. Failure by either party to request or to execute,
acknowledge or deliver any such memorandum or agreement, however, shall not
affect the determination of the Commencement Date, the Fixed Rent Commencement
Date or any Renewal Term Commencement Date, as the case may be. Such memorandum
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shall not be deemed to change or otherwise affect any of the obligations or
provisions of this Lease. Whichever party records such memorandum of Lease shall
pay all recording costs and expenses, including any taxes that are due upon such
recording.
ARTICLE 38 - MISCELLANEOUS
38.01 Tenant expressly acknowledges and agrees that Landlord has not
made and is not making, and Tenant, in executing and delivering this Lease, is
not relying upon, any warranties, representations, promises or statements,
except to the extent that the same are expressly set forth in this Lease or in
any other written agreement(s) which may be made between the parties
concurrently with the execution and delivery of this Lease. All understandings
and agreements heretofore had between the parties are merged in this Lease and
any other written agreement(s) made concurrently herewith, which alone fully and
completely express the agreement of the parties and which are entered into after
full investigation. Neither party has relied upon any statement or
representation not embodied in this Lease or in any other written agreement(s)
made concurrently herewith.
38.02 No agreement shall be effective to change, modify, waive,
release, discharge, terminate or effect an abandonment of this Lease, in whole
or in part, unless such agreement is in writing, refers expressly to this Lease
and is signed by Landlord and Tenant.
38.03 If Tenant shall at any time request Landlord to sublet or let the
Demised Premises for Tenant's account, Landlord or its agent is authorized to
receive keys for such purposes without releasing Tenant from any of its
obligations under this Lease, and Tenant hereby releases Landlord of any
liability for loss or damage to any of the Tenant's Property in connection with
such subletting or letting.
38.04 Except as otherwise expressly provided in this Lease, the
obligations under this Lease shall bind and benefit the successors and assigns
of the parties hereto with the same effect as if mentioned in each instance
where a party is named or referred to; provided, however, that the provisions of
this Section 38.04 shall not be construed as modifying the conditions of
limitation contained in Article 27.
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38.05 Except for Tenant's obligations to pay Rent, the time for
Landlord or Tenant, as the case may be, to perform any of their respective
obligations hereunder shall be extended if and to the extent that the
performance thereof shall be prevented due to any Unavoidable Delays. Except as
expressly provided to the contrary, the obligations of Tenant hereunder shall
not be affected, impaired or excused, nor shall Landlord have any liability
whatsoever to Tenant, (a) because Landlord is unable to fulfill, or is delayed
in fulfilling, any of its obligations under this Lease due to any of the matters
set forth in the first sentence of this Section 38.05, or (b) because of any
failure or defect in the supply, quality or character of electricity, water or
any other utility or service furnished to the Demised Premises for any reason
beyond Landlord's reasonable control.
38.06 Any liability for payments or reimbursement of payments hereunder
(including, without limitation, Additional Charges) shall survive the expiration
of the Term or earlier termination of this Lease.
38.07 Tenant shall give prompt notice to Landlord of (a) any occurrence
in or about the Demised Premises for which Landlord might be liable, (b) any
fire or other casualty in the Demised Premises, (c) any damage to or defect in
the Demised Premises, including the fixtures and equipment thereof, for the
repair of which Landlord might be responsible, and (d) any damage to or defect
in any part of the Demised Premises, sanitary, electrical, heating, ventilating,
air conditioning, elevator or other systems located in passing through the
Demised Premises or any part thereof.
38.08 This Lease shall be governed by and construed in accordance with
the laws of the State of New Jersey. If any provision of this Lease shall, be
invalid or unenforceable, the remainder of this Lease shall not be affected and
shall be enforced to the extent permitted by law. The table of contents,
captions, headings and titles in this Lease are solely for convenience of
reference and shall not affect its interpretation. If any words or phrases in
this Lease shall have been stricken out or otherwise eliminated, whether or not
any other words or phrases have been added, this Lease shall be construed as if
the words or phrases so stricken out or otherwise eliminated were never included
in this Lease and no implication or inference shall be drawn from the
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fact that said words or phrases were so stricken out or otherwise eliminated.
Each covenant, agreement, obligation or other provision of this Lease on
Tenant's part to be performed, shall be deemed and construed as a separate and
independent covenant of Tenant, not dependent on any other provision of this
Lease. All terms and words used in this Lease, regardless of the number or
gender in which they are used, shall be deemed to include any other number and
any other gender as the context may require.
38.09 Within thirty (30) days of each anniversary date of this Lease,
annually Tenant shall furnish to Landlord a copy of its then current audited
financial statement (or form 10-K) which shall not be distributed without the
prior authorization of Tenant.
38.10 At any time after the Commencement Date, but prior to the Fixed
Rent Commencement Date, Tenant shall have the right to request a recalculation
of Floor Space and Tenant's Fraction. In addition, at any time during the Term,
Tenant shall have the right to request a redetermination of Operating Expenses
because of a claimed increase in the floor space of improvements constructed in
the Lincoln Harbor Project, or because of a redetermination of Floor Space
pursuant to this Section, the Floor Space shall be less than 141,669. If Tenant
shall make any such request, then the Architect and an architect appointed by
Tenant shall remeasure the floors of the Demised Premises or the floor space of
the improvements in the Lincoln Harbor Project, as the case may be,in accordance
with the standards set forth on Exhibit "D" annexed hereto and made a part
hereof. If Architect and the architect appointed by Tenant shall agree, the
Floor Space, Tenant's Fraction or the Operating Expenses, as the case may be, as
determined by such architects shall be conclusive and binding upon the parties.
If the Architect and the architect appointed by Tenant shall be unable to agree
as to the Floor Space, Tenant's Fraction, or the Operating Expenses, as the case
may be, then such architects shall select a third architect (or if such
architects shall be unable to agree upon such third architect, the same shall be
selected by the American Arbitration Association or successor organization) and
such third architect shall select either the Floor Space, Tenant's Fraction or
the Operating Expenses, as the case may be, as calculated by the Architect or
the Floor Space, Tenant's Fraction or the Operating Expenses, as the case may
be, as calculated by the architect appointed
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by Tenant. In no event, however, may either the Floor Space, Tenant's Fraction
or the Operating Expenses be increased from the amounts set forth herein. Such
finding shall be conclusive and binding upon the parties.
38.11 Notwithstanding anything contained in this Lease to the contrary,
if pursuant to Section 38.12 of the Office Lease, the tenant thereunder shall
elect to cancel the Office Lease, then Tenant shall have the option to cancel
this Lease and the Term by giving thirty (30) days' notice to Landlord of such
cancellation no later than the tenth (10th) day after such date. Upon the giving
of such notice, this Lease and the Term shall expire and come to an end as of
the expiration of such thirty (30) day period provided that Landlord shall not
have delivered such premises to Tenant during such period, and Landlord and
Tenant shall be released and discharged of and from all liabilities under the
provisions of this Lease as of the date of such Termination.
In addition, if for any reason other than Tenants' fault, the
Commencement Date shall not have occurred on or before July 1, 1989, as to which
date time shall be of the essence, then, in addition to any other remedies set
forth in this Lease, Tenant shall have the option to cancel this Lease and the
Term by giving thirty (30) days' notice to Landlord of such cancellation no
later than the fifteenth (15th) day after such date. Upon the giving of such
notice, this Lease and the Term shall expire and come to an end as of the
expiration of such thirty (30) day period provided that the Commencement Date
shall not have occurred during such period, and Landlord and Tenant shall be
released from all liabilities under the provisions of this Lease as of the date
of such termination. In addition, if for any reason other than Landlord's or
Tenant's fault, the Commencement Date shall not have occurred on or before
February 1, 1990, then, on the later to occur of February 1, 1990, and the date
on which construction on the Building and the Demised Premises shall have
experienced Unavoidable Delays equal to twelve (12) months in the aggregate,
Landlord and Tenant each shall have the option to cancel this Lease and the Term
by giving thirty (30) days' notice of such cancellation to the other party. Upon
the giving of such notice, this Lease and the Term shall expire and come to an
end as of the expiration of such thirty (30) day period, and Landlord and Tenant
shall be
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released from all liabilities under the provisions of this Lease as of the date
of such Termination.
38.12 Tenant acknowledges that pursuant to the provisions of the
Agreement of Limited Partnership, dated of even date herewith, of Landlord,
Tenant, as limited partner thereunder, has pledged its partnership interest
thereunder to secure its obligations hereunder for a period of five years from
the Fixed Rent Commencement Date.
38.13 Notwithstanding anything contained herein to the contrary, Tenant
shall have the right, by written notice given to Landlord at any time prior to
October 14, 1986, to increase or decrease the Floor Space of the Demised
Premises by an amount, in the case of an increase, not to exceed the remaining
portion of the office space in the Building, and in the case of a decrease, by
any amount, including all the Floor Space, resulting in a termination of this
Lease. Within ten (10) business days after the giving of such notice (except in
the case of a decrease resulting in a termination of this Lease), the parties
hereto shall enter into an amendment to this Lease (and to any memorandum of
lease recorded in connection herewith), setting forth the amended Floor Space,
Tenant's Fraction and Tenant's Proportionate Share, if applicable.
ARTICLE 39 - EXTENSION OF TERM
39.01 Tenant shall have the option (the "Renewal Option") to extend the
Term for two (2) additional periods of ten (10) years each (the "Renewal
Terms"), shall (i) commence on the original Expiration Date and end on the date
preceding the tenth (10th) anniversary of the original Expiration Date (the
"First Renewal Term"), and (ii) commence on the date immediately succeeding the
last day of the First Renewal Term and end on the date preceding the twentieth
(20th) anniversary of the original Expiration Date (the "Second Renewal Term")
provided that (a) this Lease shall not have been previously terminated and (b)
no material Event of Default shall have occurred and be continuing as of the
date Tenant shall give the Renewal Notice (hereinafter defined). Each Renewal
Option may be exercised with respect to the entire Demised Premises only and
shall be exercisable by Tenant delivering to Landlord written notice (the "Renew
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al Notice") of Tenant's election to exercise the applicable Renewal Option at
least nine (9) months prior to the original Expiration Date with respect to the
First Renewal Term, and at lease nine (9) months prior to the tenth (10th)
anniversary of the Commencement Date with respect to the Second Renewal Term.
Upon the giving of the Renewal Notice with respect to the Second Renewal Term,
Tenant shall have no further option or right to extend the Term. If Tenant
exercises a Renewal Option, the Renewal Term with respect to which Tenant shall
exercise the Renewal Option shall be on the same terms, covenants, and
conditions as those contained in this Lease, except (i) the Fixed Rent payable
for the Demised Premises during each Renewal Term shall be determined as
provided in Section 39.03 hereof, and (ii) the provisions of Section 39.01
hereof with respect to Tenant's right to renew the Term of this Lease shall not
be applicable during the Second Renewal Term. It is expressly understood that
during the First Renewal Term that Tenant shall have the right as set forth in
Section 39.01 only with respect to the Second Renewal Term, that during the
Second Renewal Term Tenant shall have no further right to renew this Lease.
39.02 If Tenant exercises the Renewal Option applicable to the First
Renewal Term or the Second Renewal Term, as the case may be, the Fixed Rent for
the Demised Premises shall be an amount equal to the Fair Market Rent
(hereinafter defined), determined in accordance with Article 40 hereof, for the
Demised Premises.
39.03 If, for any reason whatsoever, the Fair Market Rent shall not
have been determined pursuant to Article 40 hereof by the commencement of the
First Renewal Term or Second Renewal Term, as the case may be, the Tenant shall
pay to Landlord in monthly installments until such determination, on account of
the Fixed Rent, an amount equal to the Fixed Rent in effect on the date
immediately prior to commencement of the First Renewal Term or Second Renewal
Term, as the case may be. Following the final determination of Fair Market Rent,
a reconciliation shall be made as follows: if the monthly installments of Fixed
Rent determined pursuant to this Article 39 are more than the amounts Tenant had
paid therefor, Tenant shall pay to Landlord within ten (10) days of such
determination the amount of such underpayment of Fixed Rent due.
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ARTICLE 40 - DETERMINATION OF FAIR MARKET RENT
40.01 For purposes of this Lease the term "Fair Market Rent" shall mean
the annual fair market rental value of the Demised Premises determined as if the
Demised Premises were available in the then rental market for comparable office
space in the northern New Jersey area on the terms of this Lease and assuming
that Landlord has had a reasonable time to locate a tenant who rents with the
knowledge of the uses permitted pursuant to this Lease, and that neither
Landlord nor the prospective tenant is under any compulsion to rent, and taking
into account: (i) tenant is required to pay the Operating Expenses; (ii) the
remaining Term of this Lease and any remaining Renewal Term, as well as the
portion of the Term then elapsed; (iii) the fact that the tenant is a major
tenant; (iv) the fact that Landlord will not be obligated to perform any work in
the Demised Premises to prepare the same for Tenant's occupancy or to contribute
or to loan any money on account thereof whether in the form of rent, credit,
cash or otherwise.
40.02 The Fair Market Rent shall be determined on the basis set forth
in Section 40.01 of this Article and with the assumption that the tenant need
not perform any work in order to occupy the Demised Premises for the conduct of
business.
40.03 Landlord shall give Tenant written notice (the "Rent Notice")
setting forth Landlord's determination of the Fair Market Rent (the "Landlord's
Determination"). Such notice will be sent not later than forty-five (45) days
after receipt by Landlord of each of the Renewal Notices.
40.04 Tenant shall give Landlord written notice ("Tenant's Notice"),
within forty-five (45) days after Tenant's receipt of the Rent Notice, as to
whether Tenant accepts or disputes Landlord's Determination or any portion
thereof. If Tenant in Tenant's Notice accepts Landlord's Determination, or if
Tenant fails or refuses to give Tenant's Notice as aforesaid, Tenant shall be
deemed to have accepted Landlord's Determination. If Tenant in Tenant's Notice
disputes any portion of Landlord's Determination, Tenant shall deliver to
Landlord together with Tenant's Notice, Tenant's determination of the Fair
Market Rent of the portion of the Demised Premises for which Tenant disputes
Landlord's
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Determination (the "Tenant's Determination"); simultaneously therewith Tenant
shall notify Landlord of an individual ("Tenant's Advisor") selected by Tenant
to act on its behalf for the purposes of this Article 40.
40.05 Landlord shall give Tenant written notice ("Landlord's Notice")
within ten (10) business days of after Landlord's receipt of Tenant's
Determination, as to whether Landlord accepts or disputes Tenant's
Determination. If Landlord in Landlord's Notice accepts Tenant's Determination
or if Landlord fails or refuses to give Landlord's Notice as aforesaid, Landlord
shall be deemed to have accepted Tenant's Determination. If Landlord in
Landlord's Notice disputes Tenant's Determination, Landlord shall in such Notice
advise Tenant of the name of an individual ("Landlord's Advisor") selected by
Landlord to act on its behalf for the purposes of this Article 40. If within
twenty (20) days after Tenant's receipt of Landlord's Notice, Landlord's Advisor
and Tenant's Advisor shall mutually agree upon the determination ("Mutual
Determination") of the Fair Market Rent, their determination shall be final and
binding upon the parties. If Landlord's Advisor and Tenant's Advisor shall be
unable to reach a Mutual Determination within said twenty (20) day period, both
of the advisors shall jointly select an independent real estate appraiser (the
"Appraiser") whose fee shall be borne equally by Landlord and Tenant. In the
event that Landlord's Advisor and Tenant's Advisor shall be unable to jointly
agree on the designation of the Appraiser within five (5) 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 to designate the Appraiser
in accordance the rules, regulations and/or procedures of the American
Arbitration Association or successor organization then obtaining with respect to
real estate valuation disputes.
40.06 The Appraiser shall proceed to determine the Fair Market Rent in
accordance herewith. The two determinations of the Advisors and the Appraiser
which are closest shall then be averaged and such averaged amount 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
Article 40, including the expenses and fees of any Advisor selected by it in
accordance with the provisions of this Article 40. The Appraiser appointed
pursu-
63
<PAGE> 67
ant to this Article 40 shall be a real estate appraiser with at least ten (10)
years experience in the leasing of office space in, and valuation, of properties
which are similar in character to the Building, a member of the American
Institute of Appraisers of the National Association Real Estate Boards or
successor organization and a member of the Society of Real Estate Appraiser or
its successor organization. Neither the Appraiser nor the Advisors shall have
the power to add to, modify or change any of the provisions of this Lease.
40.07 If the Fair Market Rent shall be finally determined to be in
excess of five percent (5%) greater than Tenants' Determination, then Tenant,
within ten (10) days after receipt of the final determination may notify
Landlord of its election not to renew the Term, in which event, Tenant shall be
deemed not to have exercised the applicable Renewal Option and this Lease and
the Term shall expire as if such applicable Renewal Option had not been
exercised.
40.08 It is expressly understood that any determination of the Fair
Market Rent pursuant to this Article 40 shall be based upon the criteria stated
herein.
40.09 Anything herein to the contrary notwithstanding, the Fair Market
Rent shall not be less than the Fixed Rent payable immediately prior to the
commencement of the Renewal Term in question.
64
<PAGE> 68
40.10 After final determination has been made of Fair Market Rent for
any purpose of this Lease, the parties shall execute and deliver to each other
an instrument setting forth the amount thereof and the amount of Fixed Rent
payable as a result of such determination; provided, however, that failure to
execute such supplementary agreement shall not affect the determination of Fixed
Rent.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease
as of the day and year first above written.
Landlord:
HARTZ-PW HOTEL LIMITED
PARTNERSHIP
By: Hartz Mountain
Industries, Inc.,
general partner
By: /s/ Stephen M. Kelty,
----------------------------
Stephen M. Kelty,
Vice President
Tenant:
PAINEWEBBER INCORPORATED
By: /s/ Rodger Parker,
---------------------------------
Rodger Parker,
Senior Vice President
65
<PAGE> 69
Exhibit "A"
Description of the Building
The proposed Tower II Building is to be located at Lincoln Harbor,
Weehawken, New Jersey. The 11 story building will consist of lobbies and retail
(42,300+ square feet) on the grade and mezzanine levels. A hotel (121,700+
square feet) on the second thru fifth floors and office space on the sixth thru
eleventh floors. The gross square footage of office space is 273,500+ including
penthouse, lobby, and a portion of the atrium lobby.
The core mechanical design (HVAC, electric, plumbing, and sprinklers)
is designed to meet the build out standards in this specification. Any
modification to the base mechanicals will be at tenant's expense.
A-1
<PAGE> 70
Exhibit "B"
Demised Premises
Floors 6, 7 and 8
B-1
<PAGE> 71
Exhibit "C"
Fixed Rent
(a) Commencing on the Fixed Rent Commencement Date: $11.97 for years 1-4,
$13.47 for years 5-9, $16.47 for years 10-14, or $20.47 for years 15-19.
(b) Commencing on the twentieth anniversary of the Commencement Date and
terminating on the original Expiration Date, the Fixed Rent shall be an
amount equal to the lesser of (x) the Fair Market Rent, determined in
accordance with Article 40 hereof and (y) the product of the Floor Space
and Forty-Two and 45/100 Dollars. ($42.45), but in no event less than the
Fixed Rent payable during the twentieth (20th) year of the term.
C-1
<PAGE> 72
Exhibit "D"
Floor Space
As to a demised premises, the sum of the floor area stated in square
feet bounded by the exterior faces of the exterior walls, or by the exterior or
common areas face of any wall between the premises and any portion of the common
areas, or by the center line of any wall between the premises and space leased
or available to be leased to another tenant or occupant. Any reference to floor
space of a building shall mean the floor area of all levels or stories of such
building, excluding any roof, except such portion thereof as is permanently
enclosed, and including any interior basement level or mezzanine area not
occupied or used by a tenant on a continuing or repetitive basis, and any
mechanical room, enclosed or interior truck dock, interior common areas, and
areas used by a landlord for storage, for housing meters and/or other equipment
or for other purposes. Any reference to the floor space is intended to refer to
floor space of the entire area in question irrespective of the person(s) who may
be the owner(s) of all or any part thereof.
The anticipated Floor Space of the Demised Premises is estimated to be
141,669.
D-1
<PAGE> 73
Exhibit "E"
HOTEL/OFFICE
Land
BLOCK 34C LOT 4.04
TOWNSHIP OF WEEHAWKEN
HUDSON COUNTY, NEW JERSEY
Commencing at a point in the easterly line of Park Avenue, said point
being N 21 degrees-21'-30"E, 1129.16 feet along the same from its intersection
with the northerly line of 15th Street, all as shown on a map entitled
"Subdivision of Properties of Hartz Mountain Industries, Inc.," and prepared by
Assolina & Feury Engineering Company, dated March 14, 1986, revised to March 14,
1986, and running; thence,
A) N 21 degrees-21'-30" E, along said property line 86.70 feet to a point on
curve; thence,
B) Northeasterly, along the property line on a curve to the left having a
radius of 1093.01 and a radial bearing of N 14 degrees-11'-23" W through a
central angle of 25 degrees-01'-56", for an arc distance of 477.53 feet;
thence,
C) Along said property line, N 38 degrees-30'-00" E, 550.05 feet; thence,
D) Departing said property line, S 50 degrees-33'-12" E, 86.23 feet to a
point; thence,
E) N 38 degrees-52'-10" E, 383.37 feet to a point of curvature; thence,
F) Northeasterly, on a curve to the right having a radius of 40 feet through a
central angle of 90 degrees-00'-00" for an arc distance of 62.83 feet;
thence,
G) S 51 degrees-07'-50" E, 156.00 feet to a point; thence,
H) S 38 degrees-52'-10" W, 35.00 feet to the point of beginning; thence,
E-1
<PAGE> 74
1) S 51 degrees-07'-50" E, 101.00 feet; thence,
2) N 38 degrees-52'-10" E, 121.00 feet; thence
3) S 51 degrees-07'-50" E, 124.00 feet; thence,
4) S 38 degrees-52'-10" W, 122.13 feet; thence,
5) S 8 degrees-06'-20" E, 41.04 feet; thence,
6) S 38 degrees-52'-10" W, 91.74 feet; thence,
7) S 85 degrees-50'-40" W, 41.04 feet; thence,
8) S 38 degrees-52'-10" W, 102.13 feet; thence,
9) N 51 degrees-07'-50" W, 225.00 feet; thence,
10) N 38 degrees-52'-10" E, 251.00 feet to the point of beginning.
Containing 75,071 square feet (1.72 acres).
E-2
<PAGE> 75
[SURVEY OF LINCOLN HARBOR]
E-3
<PAGE> 76
Exhibit "F"
Landlord's Work
F-1
<PAGE> 77
EXHIBIT "F"
HARTZ MOUNTAIN INDUSTRIES, INC.
LINCOLN HARBOR TOWER II
HOTEL/OFFICE BUILDING
March 17, 1986
<PAGE> 78
PROJECT DESCRIPTION
The proposed Tower II Building is to be located at Lincoln Harbor,
Weehawken, New Jersey. The 11 story building will consist of lobbies & retail on
the grade and mezzanine levels. A hotel on the second thru fifth floors and
office space on the sixth thru eleventh floors. The gross square footage of
office space is 269,500+ including penthouse, lobby, and a portion of the atrium
lobby.
The core mechanical design (HVAC, electric, plumbing, & sprinklers) is
designed to meet the build out standards in this specification. Any modification
to the base mechanicals will be at tenant's expense.
In addition to the requirements described herein, the construction of
the building and all related facilities shall be in conformance with the most
recent editions of all applicable codes, standards, specifications, and
regulations.
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<PAGE> 79
SITE DEVELOPMENT (Same as Paine Webber Operations Building)
A. Site Preparation: Sufficient fill will be brought into the site so that all
occupied first floor elevation will be at +11.0 feet. This is above the 100 year
flood level.
1. All utilities, which will be underground, will be brought to the building
site.
2. All major supporting roads on the site will be constructed to insure
adequate access and traffic circulation, to include a bridge over railroad
right of way.
B. Building Foundations: Foundation will be supported by end bearing piles which
will be driven to bedrock. Piles will be concrete filled, steel casing, rated at
100 tons. Concrete pile caps will complete the foundation.
C. Parking: Decked parking will be provided at one (1) space for 690 sq. ft.
D. Landscaping: The area to the east of the new office building will be
developed into a large plaza leading to Harbor Boulevard.
1. All areas around building will be heavily landscaped.
- 2 -
<PAGE> 80
STRUCTURAL: (Same as Paine Webber Operations Building)
A. Structural System Description: The primary structural system for the building
shall be concrete flat plate design for the hotel floors and structural steel
rolled members with composite deck and concrete slab and steel columns for the
office floors above.
B. Structural Loadings:
1. Live Loads
Typical Floor 100 psf
Roof per Code (incl.
(boca snow drift)
Print Center 200 psf minimum
(subject to ventilation)
of equipment)
Live Load reduction per code on floor girders, columns and foundations
only.
2. Lateral Loads
Structural Frame per Code
Cladding 30 psf minimum
C. Structural Materials:
1. Structural Steel A - 36 or A - 527,
gr. 50
2. Concrete for a 4000 psf. min.
- 3 -
<PAGE> 81
EXTERIOR ENCLOSURE (Same as Paine Webber Operations Building)
A. Vertical Walls Above Grade: Wall system shall be based upon two distinct
lines of defense against water and air infiltration.
1. Wall system shall resist positive and negative loads of 35 psf.
2. Glazing System: Facade glass to be insulating type with CPA
certification. All glass thickness and heat treatment to sustain wind
loads and to resist temperature stress breakage. Limit breakage to
certification per 1,000. Fixed aluminum frames with continuous PVC
thermal break with either hardcoat anodized finish or resinous ("Kynar")
coated of selected color. Provide a glazing system utilizing neoprene
gaskets and a pressure plate system designed using the pressure equalized
rain screen principle.
3. Insulation: Rigid insulation with vapor barrier which will achieve a
total wall "R" value of 12.5 minimum installed.
4. Water Control: Control is at lime coincident with head of windows at
each level to anticipate water infiltration potential at sealant points.
Weep system incorporated at glazing enframement. There will be a
continuous vapor barrier between internal and external spaces.
5. Mock-Up and Testing: Cladding material, anchorage, glazing enframement,
glass, sealant and flashing systems will be tested for air infiltration,
water penetration, and structural performance. Extent of mock-ups will be
shown on drawing.
6. Roofing: The roofing is to be designed for controlled flow drainage.
Provide a complete insulated membrane (IRMA) roofing system; consisting of
steel framing with metal decking, covered with 5/8" type x gypsum board. A
three ply build up roof consisting of fiberglass felts to be applied over
gypsum board covered by styrofoam F. M. brand insulation with a "U" value
of 0.08 BTU sq. ft. Deg F. and stone ballast.
- 4 -
<PAGE> 82
C. Parking Structure: Requirements to be determined.
D. Moisture Protection: Provide the following systems as required in
conjunction with other assemblies as follows:
1. Waterproofing: Provide fluid applied two-part urethane rubber
waterproofing (Gates) with protection board as specified by the
manufacturer.
2. Damproofing: Provide a cold applied asphalt based damproofing to all
exterior foundations not requiring waterproofing. Provide asphalt
protection board.
3. Elevator Pit Waterproofing: Capillary waterproofing (Vandex).
4. Sealants: Provide two component urethane sealant (Tremco/Dymeric) for
all building seals other than structural glazing.
5. Flashing: ASTM A167, Tpe 304, deal soft fully annealed, 0.015 in. unless
greater thickness required.
6. Roof Accessories: Premanufactured products best suited for intended use.
Provide stainless steel fabrications.
7. Insulation:
a. Fire Safing: Thermafiber Safing US Gypsum
b. Insulation: Rigid fiberglass board insulation with reinforced foil
vapor barrier facing on each side. Thickness as required for "U" value
required.
- 5 -
<PAGE> 83
INTERIOR - BASE BUILDING: (Same standards as Paine Webber Operation
Building)
A. Entrance Lobby:
1. Floors: Granite. (costing no more than $15.00 per sq. ft.) 3 cm. min.
set in a full mortar bed (see sample)
2. Walls: Granite adhesive applied (see sample)
3. Ceilings: Portland cement plaster on suspended metal lath.
4. Lighting: Recessed incandescent.
B. Typical Floor Elevator Lobbies:
1. Floors: Carpet (allowance $2.00 per sq. ft.)
2. Walls: Vinyl (allowance $1.50 per sq. ft.)
3. Ceilings: Gypsum wallboard.
4. Lighting: Recessed incandescent.
C. General Effects Area:
1. Floors: Steel troweled concrete, sealed for dustproofing.
D. Toilets and Vestibules:
1. Floors: 1" x 1" ceramic mosaic tile with sanitary cove base, of color to
be selected, set onto waterproof membrane.
- 6 -
<PAGE> 84
2. Walls: All walls with 2" x 2" ceramic tile, of color to be selected, set
on moisture resistant gypsum wallboard with organic adhesive, extending to
ceiling.
a. Shaft Walls: Cavity walls with 2 hr. fire-rating, minimum STC of 47
db., consisting of 1" shaft wall liner panel, C-H studs 24" o.c., and
two layers 1/2" gypsum wallboard.
b. Fire-rates Walls: 2 hr. fire-rating and minimum STC of 48 db.,
consisting of two layers 5/8" gypsum wallboard on each side of metal
studs spaced 24" o.c., painted.
c. Non-Fire-rated Walls: One layer 5/8" gypsum wallboard on each side of
metal studs (with insulation to underside of construction, STC 45 db.)
3. Ceilings: Suspended 5/8" thick gypsum wallboard with required metal
access panels, painted with enamel.
4. Lighting: Recessed parabolic fluorescent fixtures.
5. Doors, Frames, Hardware:
a. Doors: Flush seamless hollow metal 1-3/4" thick, 16 ga., full height,
width as required, factory primed, field painted, and labeled as
fire-rated walls and partitions.
b. Frames: Welded hollow metal, 16 ga., size as required, factory
primed, field painted, and labeled at pre-rated walls and partitions.
c. Hardware: Mortise locksets with lever handles, ball
bearing hinges and parallel arm closeures; polished stainless steel
finish.
6. Toilet Partitions: Ceiling hung flush metal type with baked enamel
finish and vandalproof hardware.
7. Toilet Accessories: Stainless steel units with No. 4 satin finish,
including combination towel dispenser and disposal, napkin dispenser and
disposal, tissue dispenser, soap dispenser, grab bars, mirrors and shelves.
Provide 1/4" thick mirrors complying with F5 DD-G-451 type 1 class 1
quality 9.
8. Lavatory Countertops: "Corian" on marble grade plywood with back and
side splashes with miscellaneous metal framing.
- 7 -
<PAGE> 85
E. Stairs:
1. Stairs and Landings: Cement filled steel pan, surfaces hardened and
sealed. Underside and other exposed metal surfaces finish painted.
2. Railings, Guards: 1-1/2" diameter steel tube, finish painted.
3. Walls: Continuous metal stud and gypsum board partitions for full height
of stair enclosure. Painted finish.
4. Ceilings: Exposed construction, painted.
5. Lighting: Strip fluorescent fixtures, surface mounted.
F. Doors and Frames, Hardware.
1. Doors: Flush, hollow metal, 1-3/4" thick, 18-gauge at interior, 16-gauge
galvanized at exterior, ceiling high, width as required, factory prime,
field painted, labeled at rated walls and partitions. Provide
vision panel in all service vestibule doors.
2. Frames: Welded hollow metal, 16-gauge at interior, 14-gauge galvanized
at exterior, size as required, factory prime, field painted, labeled at
rated walls and partitions.
3. Hardware: Same as Dbc.
G. Electrical and Telephone Closets:
1. Shaft Walls: Cavity walls with 2 hr. fire-rating and minimum STC of
47db. consisting of 1" shaft wall liner panel, C-H studs at 24" o.c. and
two layers 1/2" gypsum wallboard on room side, painted. Spacing of studs to
be doubled at blind shaft condimones.
- 8 -
<PAGE> 86
H. Parking Area:
1. Floor: All floors above occupied areas to be waterproofed.
I. Interior Masonry Walls: Concrete masonry units complying with ASTM C90,
Grade N-1 and ASTM C145, Grade N-1, maximum density of 95 lbs.
Provide portland-cement-lime mortar complying with ASTM C270, Type N.
J. Miscellaneous Metals: Shop primed A36 steel, rolled sections. Sizes and
shapes best suited for intended use and capable of sustained imposed loads.
K. Rough Carpentry: Provide rough carpentry as required for use with other
work. Provide fire - resistance treated wood for all interior locations.
L. Ornamental Metals: ASM A167, Type 3C2 and 304 stainless steel, No.
6 mirror finish. Thickness is required to provide flat surfaces free from
distortion.
M. Paint: First line quality, alkyd enamel of PPG. Glidden or Benjamin Moore.
Provide enamel finish.
- 9 -
<PAGE> 87
VERTICAL TRANSPORTATION
A. Materials & Equipment
1. Elevators serving the office floors of the building will consist of (5)
4000 lb. passenger elevators operating at 350 F.P.M. with 48" wide center
opening doors.
2. The elevators will be designed to provide a five minute handling
capacity of 14% of the population at an interval of 27.1 seconds.
3. Passenger elevators shall be based on Westinghouse Epoch Supervisory
Control System, center opening doors, and traffic sentinel door controls
(or equal).
4. One service elevator with a 6000 lb. capacity will be installed.
- 10 -
<PAGE> 88
Plumbing:
A. Sanitary System: Provide a complete system of sanitary services, including
toilet facilities, fixtures, drains, vents, water, etc., including all
connections to the work services.
1. Provide a complete plumbing system with mens and ladies facilities on
each floor to handle the total population of the Tenant. A minimum of 7
flush valve fixtures and 4 lavatories shall be provided on each floor for
each sex. Toilet facilities shall be so located that no point on the floor
is more than 200 feet from a Toilet room. Provisions shall be made in each
toilet for the physically handicapped. Four drinking fountains shall be
provided per floor.
2. Provide 4 wet stacks consisting of soil vent, cold water and hot water
to facilitate future Tenant installations.
3. All branch water connections shall include a stop valve for maintenance
purposes.
B. Hot and Cold Water Piping System:
1. Provide a system of hot and cold water piping, as required, for plumbing
fixtures, interior and exterior hose bibbs, water coolers, etc. The hot
water system shall include a central heating plant utilizing the most
efficient energy source available. Submit for Paine Webber approval an
economic analysis for the various fuel sources considered. Provide
circulation pumps and piping to assure prompt availability of water at a
minimum of 110 degrees F. The cold water system shall include pumps,
tanks and valves as required to supply water to fixtures at a minimum of
25 psig and a maximum of 85 psig.
-11 -
<PAGE> 89
2. Provide for flushing and sterilization as required by code of all
domestic water piping.
C. Sanitary Drains and Vents: Provide a system of drains and vents to convey
sanitary wastes from the building to the sewer system.
D. Storm Drainage: Provide a system of drains and piping to convey the storm
water from the building to a point of disposal on the site.
- 12 -
<PAGE> 90
E. Plumbing Fixtures:
1. Plumbing fixtures specified are as manufactured by Kohler or American
Standard, or the equal may be furnished at Paine Webber's option.
2. Flush valves specified are as manufactured by Sloan. The U type flush
valves as manufactured by Delaney may be furnished at the
Contractor's option.
3. Carriers as manufactured by Zurn, J.R. Smith or Wade shall be
furnished.
4. All exposed metal parts and fittings on plumbing fixtures shall be
chrome plated unless otherwise called for.
5. Provide stop valves on hot and cold water lines at all plumbing
fixtures.
F. Water Closets:
1. Vitreous china, wall hung, siphon jet action, elongated bow 1-1/2
inch top spud for chrome plated exposed flush valve metal oscillating
handle 1 inch screwdriver angle stop valve, flush connection, coupling
for 1-1/2 inch top spud wall and spud flanges. White seat, with
extended back for elongated bowl, open front, no cover, stainless
steel check hinge.
2. Horizontal or vertical carrier with short foot. Use neopore gaskets
and bolt carrier to floor. Mount closet with the rim inches above
floor.
3. Equipment manufacturers and model numbers are as follows:
Bowl Afwall
Flush Valve 110
Seat Chilton 5326.114, units
G. Lavatories: Vitreous china, front overflow, antisplash rim, cast-in soap
dish American Standard "Roxalyn" pattern in 20 size. Fittings to be
American Standard "heritage" 2131 combination supply and drain fitting
with aerator spout. Drain plug with integral perforated grid and 1-1/2
inch tailpiece. Provide 3/8 inch chrome plated supply stop valves
R-2624-1 with screwdriver stop and escutcheons.
H. Drinking Fountains: Remote, wall recessed cooler, completely automatic with
precooler, tank, cooling coil, hermetic condensing unit, insulated cooling
system, serving stainless steel wall mounted fountains. A minimum of one
dual level fountain for handicapped shall be provided per floor.
- 13 -
<PAGE> 91
I. Materials:
Service Materials
------- ---------
Underground water and site Cement lined ductile iron
fire protection
Underground gas and air Welded wrapped black steel
Site storm drainage 12 inches and below - PVC or
concrete pipe
14 inches and above - reinforced
concrete
Site sanitary Cast iron or PVC
Underslab sanitary Cast iron or PVC
Above slab sanitary Cast iron
Plumbing vents Cast iron
J. Insulation: Insulate pipes and other surfaces inside the building as
follows:
1. Hot water pipes.
2. Cold water pipes.
3. Horizontal storm pipes over concreted areas including leader to roof
drain.
- 14 -
<PAGE> 92
Fire Protection
A. Provide a full standpipe and sprinkler system in accordance with applicable
NFPA Standards. Sprinkler system shall be hydraulically designed to deliver .1
gpm/sq. ft. in offices areas and appropriate densities in ordinary hazard areas.
Sufficient heads shall be allowed for partitioning. Standpipe system shall
include pumps and valves as required, but hose may be eliminated if permitted by
the authorities.
Hartz will, as part of its "base building" provide for system in the core of
the building. Distribution into floors will be part of tenant allowance.
- 15 -
<PAGE> 93
ELECTRICAL Electrical Design of the office portion of the
building is based on the following criteria. The
core work will stop at the riser panels on the
individual floors and sized to meet the following
specifications.
SCOPE The work to be furnished shall consist of the
furnishing of all labor, materials, equipment, and
appliances for the complete execution of all
electrical work indicated on the plans and/or
called for in this specification as required by
the site conditions for the proposed building, in
accordance with all rules and regulations of the
municipality and all other authorities having
jurisdiction including National Electric Code.
The scope of the work to be performed shall
include but not be limited to the following:
1. Temporary power and power provisions.
2. Installation of Distribution Switch Board and
Accessories.
3. Excavation, trenching and backfilling.
4. Installation of underground duct bank system
for primary services, and Telephone Co.
provisions.
5. Conduit and wiring for lighting and power
distribution systems.
6. Installation of all control devices and
accessories for all equipment furnished under
other divisions of these specifications.
- 16 -
<PAGE> 94
Office Building
Scope 7. Distribution equipment, panelboards, and
(Continued) feeders.
8. Distribution transformers, and accessories.
9. Lighting fixtures, lamps and installation.
10. Lighting, receptacle and power panelboards.
11. Metering provisions and equipment.
12. Misc. step-down transformers.
13. Connections to all motorized equipment and
accessories furnished by other trades.
14. Lighting standards.
15. Concrete work.
16. Devices and accessories.
17. Wire mold and wireways.
Materials and All materials, devices, appliances and
Workmanship specialties, when in multiple use, shall be
of a single manufacture to simplify spares
and repairs.
Whenever specified, or called for, the
Contractor shall furnish the following:
guarantees of durability operating capacity,
manufacturer's certified drawings, test
certificates, performance curves, etc. This
shall also include manufacturer's supervised
installation of equipment, adjustments, or
any other special service that may be
required.
Main Distribution Furnish and install where indicated, series I
Switchboards building type switchboards. Switchboards
shall consist of a completely enclosed,
self-supporting metal structure of the
required number of formed and welded vertical
panel sections, incorporation circuit
breakers, switches and other associated
equipment as indicated on the plans. All
fastenings between vertical panel sections
shall be bolted.
Lighting - Receptacle Furnish and install
and Power Panels automatic circuit break type panelboards. The
panelboards shall be of the dead-front type
and shall be in accordance with Underwriters'
Laboratories, Inc., "Standard for
Panelboards" and
- 17 -
<PAGE> 95
Office Building
Lighting-Receptacle "Standard for Cabinets and Boxes" and shall be
and Power Panels so labeled. Where panelboards are to be used as
service entrance equipment, they shall be so
labeled.
Lighting Fixtures Provide all lighting fixtures and lamps required
and Lamps for a complete installation. Fixtures shall be
mounted individually or continuous as indicated
and shall be suitable for type of mounting
shown.
Lighting circuits shall be connected to switches
and panels as indicated. Where the unbalance on
any one light panel exceeds 10 percent, this
Contractor shall rearrange the circuits to
attain an unbalance of 10 percent or less.
Provide lamps in each fixture of size and type
as called for in schedule on drawings. Lamps
shall be as manufactured by Westinghouse, G.E.
or Sylvania. All fluorescent lamps shall be cool
white, unless noted otherwise. All mercury vapor
lamps shall be delux white.
All fixtures shall be U.L. approved and shall
contain all labels.
Parking Lot and In accordance with the drawings, furnish and
Exterior Lighting install all exterior pole standards, flood
lights, bases, grounding, brackets, supports and
miscellaneous components complete with required
luminaries, feeder runs and all connections to
accommodate exterior lighting throughout.
Disconnect Switches Where required by code and as noted on drawings,
provide and install all disconnect switches to
disconnect all circuit wiring to all motor or
miscellaneous motorized units.
Fire Alarm and The Owner shall furnish, install and place in
Detection System operating condition an electronically operated,
(if required by Code) closed circuit fire alarm system as described
herein and as per local codes. All units of the
alarm system shall be listed by Underwriters
Laboratories, Inc. for fire alarm use, and the
control panel shall bear the UL label. The
system shall be installed in accordance with
requirements of the National Electric Code and
in compliance with applicable provisions of
Standard #72 published by the National Fire
Protection Assoc.
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<PAGE> 96
Office Building
Telephone and Conduit Furnish and install conduit for underground
telephone service from exterior of building to
telephone equipment room.
Furnish black painted 1" plywood mounting board
in telephone equipment room.
SPECIFICALLY EXCLUDED:
Telephone service
Telephone equipment
All telephone wiring within the building
including but not limited to wiring, shielded
cable, conduit telephone floor and wall outlets,
and any other equipment required for public or
private telephone system.
Equipment Furnished by The Electrical Contractor shall provide all
Others labor and material required for all equipment
furnished by others or as indicated on the
drawings. The Electrical Contractor shall be
fully responsible for a complete electrical
system left in operating order. This work shall
include but not be limited to the following
principal items of work:
1. HVAC equipment.
2. Plumbing equipment including starters,
aquastats, solenoid valves, etc.
3. Miscellaneous motor starters, thermostats,
and accessories.
4. In general - special owners equipment and
misc. areas where solid connections are
required.
5. Miscellaneous vending equipment.
6. Electrical contractor shall furnish and
install all connections to starters and
equipment furnished by all trades and or
the Owners.
Emergency and Exit
Lighting Units Furnish and install all 12 volt - D. C.
emergency lighting units as manufactured by the
Dual-Lite Company, Lightalarm Co., or approved
equal. Unit shall contain Underwriters Labels.
Wiring for Elevators Provide all power and control wiring to
facilitate the elevator installation, all in
accordance with manufacturers detail drawings
and diagrams. Provide all required disconnect
switches, pit lights, shaft outlets, control and
lighting circuits, and all wire.
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<PAGE> 97
Office Building
Wiring for Elevators conduit, etc. as required for the complete
(Continued) installation.
Service and Metering Provide two 4" schedule 40 PVA-conduits from the
Utility Company pole to the transformer pad.
Primary feeder will be installed and connected
by the Utility Company. The conduit riser on the
pole and transformer pad to be galvanized rigid
steel.
General Lighting and General office lighting shall be 75 F.C. using
Convenience Receptacles commercial recessed 2' x 4' fluorescent
fixtures.
Allowance to be 1 per 80 square feet of net
office area.
Hallways shall contain maximum 20 F.C.
fluorescent fixtures.
Lobby lighting shall be as designed and directed
to the Owner.
All fluorescent fixture lamps shall be as
manufactured by G.E., Sylvania, or Westinghouse
equal.
One (1) 110 volt duplex receptacle on standard
Circuiting allowed shall be for each 100 sf
of floor area.
SPECIFICALLY EXCLUDED
FORM ELECTRICAL WORK Music systems
Intercom systems
Specific tenants equipment electrical
requirements for computer room or other
specialty equipment.
HEATING, VENTILATING, AND
AIR CONDITIONING Design for the office space is based on the
following criteria. The core work stops at the
vertical risers ready for horizontal
distribution on the floors.
Design Conditions Summer Outside 95 degrees F.D.B. 76 degrees F.W.B.
Summer Inside 78 degrees F.D.B.+2 F 50 percent R.H.+5
Winter Outside 13 degrees F. 15 MPH wind
Winter Inside 72 degrees F.D.B.
Zoning Each area having different heat gain
characteristics caused by exposure i.e. North,
East, West, South and corners will be zoned.
Interior zones based on approximately one (1)
per 3000 sq.ft. with one (1) office per 250
sq.ft. Equipment, machine placement, people
density may be separately zoned and
independently temperature-controlled during the
heating and cooling cycle.
Human Occupancy Cooling Design: 250 BTU sensible heat and 200
latent heat per person using 1
person per 200 sq. ft.
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<PAGE> 98
Office Building
Air Quantities Primary air to be based upon a 20-22 degree
temperature difference. A supply air limit of 3
degrees F. of heat pickup is to be transferred
from the supply duct work to the surrounding
ambient.
Ventilation air quantities.
Electric Loads Based upon actual installed wattage of ceiling
lights or a maximum of 3 1/2 watts per sq. ft.
for all office areas including 1/2 watt per sq.
ft. for outlets.
Design of Ductwork Size according to static regain method as
derived from data in ASHRAE Guide.
Grilles, Registers, and Supply grilles or registers face velocities
Ceiling Outlets limited to 800 FPM, supply grilles to be
equipped with volume control.
Return air grilles or registers; face velocity
limit to 600 FPM.
Ceiling diffusers shall be perforated face type.
Ceiling diffuser neck velocities limited to 800
FPM equipped with control grids and selected for
NC 45 maximum.
Office Areas The basic engineering concept of HVAC for use in
this building incorporates the latest
technological information available, to provide
a system which will be most economical to
maintain, both from the usage of energy as well
as the life of the equipment installed.
The envelope system of heating, using hot water
baseboard, together with a variable air volume
cooling system provides the most versatile and
most comfortable environment for this climate.
The primary heating of the building is provided
along the perimeter areas of the building, using
hot water baseboard heating which is continually
modulated in temperature with the outdoor
temperature.
The air system which provides ventilation and
cooling is a variable air volume system so that
just the right amount of air is provided for
minimum ventilation re-
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<PAGE> 99
Office Building
Office Areas quirements and minimum cooling requirements to
(Continued) maintain the space temperatures.
The air conditioning, heating and ventilating
system will be designed and installed to conform
to local codes, ordinances, as well as the BOCA
Code.
The system will consist of chilled water air
conditioning units with associated duct work to
provide adequate air distribution to all parts
of the building. All duct work will be installed
in accordance with SMACNA and ASHRAE.
Cafeteria, computer rooms, special use areas,
special exhaust requirements, etc. can be
provided with individual controls, but are not
included in base building.
Fresh air will be provided through the air
conditioning units to provide filtered and
tempered fresh air during the operation of
system.
All toilets and janitor's closets will be
exhausted by fans, using excess air from the air
conditioning systems.
During occupied periods, fans in the air
handling units will run constantly. The
operation of all equipment will be completely
automatic to maintain the temperature of the
building based upon the requirements for heating
or cooling.
All refrigeration piping will be Type L copper
tubing with brazed joints.
All hot water piping will be schedule 40 black
steel cast fittings, or copper tubing.
Exhaust Ventilation Lunch rooms and conference room to be exhausted
with manual switches.
General Mechanical Building heating system shall consist of a
Notes boiler system sized for 120% of the building
heating loss.
Entire ceiling void to be used as a return air
renew.
Office system is to be set for economy winter
cycle below 55 degrees with the ability to use
100% outside air for cooling by modulating fresh
air, return and release.
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<PAGE> 100
Office Building
General Mechanical All equipment shall be installed properly
Notes isolated from building structures to prevent
noise and vibration.
Elevation of thermostat to be 5'0" above floor
or in return air slots of light fixtures.
Control system to be proportioning type. Except
limit control being two (2) position.
Refrigeration units shall be of centrifugal
electric drive type with fire proof water tower
with capacity for unloading each compressor.
All refrigeration lines are to be sized with
manufacturer's recommendations.
Static pressure controller shall be provided for
fans equipped with variable volume inlet vanes.
Control panels where applicable shall be
provided with indicating pilot lights for
operation of fans condensing units, boilers,
and pumps showing on or off mode. Supply air
temperature, return air temperature, mixed air
temperature and outside air temperature.
All chilled water piping is to be insulated with
3'4 molded fiberglass pipe insulation with
vapor barrier hot water as required by BOAC.
- 23 -
<PAGE> 101
Exhibit "G"
Loan Terms
PRINCIPAL AMOUNT: Up to $87 per square foot of
Floor Space
SECURITY: Senior leasehold mortgage, subordinated fee, no
personal liability
G-1
<PAGE> 102
Exhibit "H"
Operating Expenses
Operating Expenses: The sum of the following: (a) The operating cost
and expense (whether or not within the contemplation of the parties) for the
repair, maintenance, and operation of the Common Areas, of the Building and
Land, as set forth in detail below; and (b) the Operating Expenses (as such term
is defined in the Ground Lease of the Land upon which this Building is located,
dated of even date herewith) attributable to the Demised Premises thereunder
through the RCOEA. Operating Expenses shall mean the operating costs specified
in Category A hereof to the extent that such costs are properly allocable to the
operation, repair and maintenance of the Common Areas of the Building and Land
during the year, it being understood that, notwithstanding anything to the
contrary contained herein:
(i) any cost allocable to the items specified in Category B hereof
shall be excluded from Operating Expenses; and
(ii) the Operating Expense for each year shall, if the Building shall
not have been ninety-five percent (95%) occupied by tenants
during such year, be calculated as though the Building had been
ninety-five percent (95%) occupied by tenants during such year
(in no event, however, shall Tenant be required to pay in excess
of Landlord's actual cost).
Items Included in Building and Land Common Area Operating Expense
("Category A"):
1. Labor costs (as hereinafter defined) for the services of the
following classes of employees of Landlord for the portion of
their time reasonably devoted to performing services required in
connection with the operation, repair and maintenance of the
Common Areas of the Building and Land;
(i) the property manager, his
H-1
<PAGE> 103
assistants and the clerical staff attached to the Building superintendent's
office; provided, however, that such expenses with regard to a property
manager and his staff shall not be included within Operating Expenses in
the event Landlord engages a managing agent;
(ii) elevator operators;
(iii) window cleaners, miscellaneous handymen, and cleaning
services for the Common Areas;
(iv) cleaners and janitors employed in the Building for the
performance of services with respect to the exterior or interior of the
Common Areas of the Building and Land or the sidewalks adjoining the
Building;
(v) watchmen, caretakers and persons engaged in patrolling and
protecting the Common Areas of the Building and Land; and
(vi) carpenters, engineers, firemen, mechanics, electricians and
plumbers engaged in the operation, repair and maintenance of any part of
the Common Areas of the Building and Land, and the heating, air
conditioning, ventilating ("HVAC") plumbing, electrical and elevator
systems of the Common Areas of the Building and Land.
2. the cost of tools, equipment, materials and supplies used in the
operation, repair and maintenance of the Common Areas of the Building;
3. amounts charged to Landlord by independent contractors for services,
materials, and supplies furnished in connection with the operation, repair,
maintenance and cleaning of any part of the Common Areas of the Building and
Land excluding such work or service performed for a tenant, and the HVAC,
plumbing, electrical and elevator systems of the Common Areas of the Building;
4. premiums for casualty, including fire (with extended coverage) and
public liability insurance maintained by Landlord in respect of the Common
Areas, the Building and the Land;
H-2
<PAGE> 104
5. charges (including applicable taxes) for utilities (except utilities
for the use of any tenant) required in the operation of the Common Areas of the
Building and Land;
6. water charges and sewer rents of the Common Areas of the Building;
7. the cost of painting or otherwise decorating any part of any Floor
Space in the Common Areas of the Building, but such cost shall not include any
painting, repainting, decorating cost incurred in connection with the
occupancy of any tenant;
8. the cost of furnishing HVAC services during business hours on
business days to the Common Areas of the Building;
9. the management fees paid to a third party managing the Building
which are not in excess of the then prevailing rates for management fee of other
first-class office facilities in Hudson County;
10. reasonable legal, accounting and other professional fees with
respect to operation of the Building, except insofar as related to the
financing, refinancing, construction on, or sale of the Land and/or Building;
and
11. if no managing agent is employed four percent (4%) of the resulting
total (excluding those items contemplated in (i) and 9.) of all of the foregoing
items for Landlord's office administration and overhead.
Operating Expense shall be "net" only, and for that purpose shall be
reduced by the amounts of any reimbursement or credit in respect of any
Operating Expense received by Landlord.
"Labor Costs" shall mean all expense incurred by Landlord which shall
be directly related to employment of personnel, including amounts incurred for
wages, salaries and other compensation for services, payroll, social security,
unemployment and other similar taxes, workmen's compensation insurance,
disability benefits, pensions, hospitalization, retirement plans and group
insurance, uniforms and working clothes and the cleaning thereof,
H-3
<PAGE> 105
and expenses imposed on Landlord pursuant to any collective bargaining
agreement.
Notwithstanding anything to the contrary contained in this Lease these
items are excluded from Building Operating Expense ("Category B"):
1. the cost of any electric current furnished to the Demised Premises
or to other leased or leasable portions of the Building;
2. the cost of any work or service performed for or facilities
furnished by any tenant or by Landlord pursuant to an agreement with any such
tenant (including Tenant) at such tenant's cost either directly or through rent,
including without limitation, the cost of tenant installations and decorations
incurred in connection with preparing space for new tenants;
3. the cost of installing, operating and maintaining any special
facilities, such as broadcasting facilities or luncheon, athletic or
recreational club;
4. Landlord's costs in respect of officers and executives of Landlord;
however, the property manager shall not be deemed such an officer or executive;
5. the cost of any insurance premium to the extent that Landlord is
entitled to be reimbursed therefor by any tenant in the Building;
6. the cost of any work or service performed for or facilities
furnished to any tenant of the Building (other than Tenant);
7. the cost of any items for which Landlord is reimbursed through the
proceeds of insurance or otherwise compensated or has the right to be
compensated by any tenant (including Tenant) of the Building;
8. the cost of any tools, equipment, materials and supplies, repairs,
alterations, additions, charges, replacements and other items which under
generally accepted accounting principles are or should be properly classified as
capital expenditures except for the portion of the useful life thereof that
falls within such year;
H-4
<PAGE> 106
9. any costs directly or indirectly incurred in furnishing overtime
HVAC or overtime use of elevators or other services to Tenant or any other
tenant of the Building;
10. depreciation of the Building or interest or amortization expense
with respect to the Building Mortgage;
11. any costs allocable to activities relating to the solicitation or
entering into of leases of space in the Building or in connection with the
collection of money under such lease or the enforcement of same;
12. any monies whatsoever owed by another tenant of the Building to
Landlord;
13. leasing commissions;
14. franchise or income taxes imposed upon Landlord;
15. ground rent;
16. financing costs; and
17. legal fees incurred in connection with the negotiation of, or
disputes arising out of, any space lease in the Building.
H-5
<PAGE> 107
Exhibit "I"
Plans and Specifications
The Plans and Specifications for Landlord's work are contained in the
Exhibit entitled Landlord's Work. In addition to the Plans and Specifications
for Landlord's Work, such Exhibit includes items in excess thereof, which items
are identified as budgeted amounts, which amounts are based upon and price as of
the date hereof, and which prices are used for estimating purposes only.
In the event Tenant elects to have those budgeted items of Tenant's
Work performed by the Landlord, Tenant shall reimburse Landlord in such amount
for that specific work, increased by such increases, if any, as may occur in
construction or labor costs.
I-1
<PAGE> 108
Exhibit "J"
Tenant's Work
Tenant's Work shall consist of the work performed by Tenant in addition
to Landlord's Work to finish the interior of the shell of the Building to
Tenant's requirements.
Within the Landlord's Work Exhibit are items in excess of Landlord's
Work obligation which items are identified as budgeted amounts, which amounts
are based upon the 1986 price and which prices are used for estimating purposes
only.
In the event Tenant elects to have those budgeted items of Tenant's
Work performed by the Landlord, Tenant shall reimburse Landlord in such amount
for that specific work, increased by such increases, if any, as may occur in
construction or labor costs.
J-1
<PAGE> 109
Exhibit "K"
Lincoln Harbor Project
K-1
<PAGE> 110
[SURVEY OF LINCOLN HARBOR PROJECT]
<PAGE> 111
Exhibit "L"
Parking Plan
The parking shall be located on the parking decks constituting a portion of the
premises based pursuant to the Office Lease.
L-1
<PAGE> 112
Exhibit "M-1"
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made as of the ____ day of ___________, 198__, by and
between ___________ , a ________ corporation having an office at
________________ (the "Mortgagee"), and PAINEWEBBER INCORPORATED having an
office at 1285 Avenue of the Americas, New York, New York 10019 (the "Space
Tenant").
WITNESSETH :
WHEREAS, the Mortgagee is the owner and holder of a Promissory Note,
dated of even date herewith, in the amount of $______ by HARTZ-PW HOTEL LIMITED
PARTNERSHIP (the "Landlord"), payable to the Mortgagee (the "Note"), which Note
is secured by a Mortgage, dated of even date herewith, between the Landlord, as
mortgagor, and the Mortgagee, as mortgagee (the "Mortgagee"), covering the
Landlord's right, title and interest in the Building and any other improvements
located on the Land, as such terms are defined in the Agreement of Lease (the
"Ground Lease"), dated __________ , 1986, between Fee Owner, as landlord, and
the Landlord, as tenant, and the leasehold estate created thereby (the
"Leasehold Estate") in the land, located in the Lincoln Harbor Project, in
Weehawken, New Jersey, as such land is more particularly described in Exhibit
A annexed hereto and made a part hereof (said Land, Building, improvements and
such other property being hereinafter collectively referred to as the
"Premises"), and pursuant to which Mortgage Hartz Mountain Industries, Inc.
("Fee_Owner") executed the same for purposes of subordination of its fee
interest in the Land to the Mortgagee; and
WHEREAS, the Space Tenant has entered into a lease (the "Space Lease")
with the Landlord, dated as of ___________ , 1986, covering a portion of the
Premises (the "Demised Premises"); and
M-1-1
<PAGE> 113
WHEREAS, the parties hereto desire to provide inter alia for the
non-disturbance of the Space Tenant by the Mortgagee.
NOW THEREFORE, in consideration of the covenants and agreements
contained herein, and intending to be legally bound thereby, the Mortgagee and
the Space Tenant hereby covenant and agree as follows:
1. The Space Tenant covenants and agrees that the Space Lease shall at
all times be subject and subordinate in each and every respect to the Mortgage
and the lien thereof and to all renewals, extensions, supplements, amendments,
modifications, consolidations and replacements of such Mortgage, with the same
force and effect as if the Mortgage had been executed and delivered prior to the
execution and delivery of the Space Lease and without regard to the order of
priority of recording of the Mortgage and the Space Lease or any Memorandum of
the Space Lease.
2. Mortgagee expressly agrees that no subsequent modification of the
Mortgage shall adversely affect in any material respect any of Space Tenant's
rights under the Space Lease, materially increase Space Tenant's obligations
under the Space Lease or materially diminish Landlord's obligations under the
Space Lease.
3. The Space Tenant and Mortgagee agree that if any act or omission of
Landlord would give Space Tenant the right, immediately or after lapse of a
period of time or after notice or after both, to cancel or terminate the Space
Lease, or which Space Tenant claims gives it the right, immediately or after
lapse of a period of time or after notice or after both, to cancel or terminate
the Space Lease, or to claim a partial or total eviction, Space Tenant shall not
exercise such right (a) until and unless it has given written notice of such act
or omission to Mortgagee and any successor or assign whose name and address
shall previously have been furnished to Space Tenant, and (b) until a thirty
(30) day period for remedying such act or omission shall have elapsed following
the giving of such notice and following the time when Mortgagee shall have
become entitled under the Mortgage to remedy the same or such longer period as
may be reasonably required if such condition is not susceptible to remedy within
such thirty (30) day period provided Mortgagee commences and diligently pursues
such
M-1-2
<PAGE> 114
remedy (which reasonable period shall in no event be less than the period to
which Landlord would be entitled under the Space Lease or otherwise, after
similar notice, to effect such remedy).
The Space Tenant and Mortgagee further agree that in the event of any
default on the part of the Landlord, arising out of or accruing under the
Mortgage, whereby the Mortgage might be accelerated, terminated or foreclosed by
the Mortgagee, by reason of any such default or defaults, the Mortgagee will
given written notice thereof to the Space Tenant at the address set forth
herein, or its successor or assigns whose name and address previously shall have
been furnished to the Mortgagee in writing, and after the time when the Landlord
shall have become entitled under the Mortgage to cure such defaults, grant to
the Space Tenant a reasonable time (in no event to exceed ninety (90) days, for
all defaults other than payment of principal or interest on the Mortgage, for
which the time period shall be limited to ten (10) business days), which shall
be not less than the period of time granted to the Landlord by the terms of the
Mortgage, after the giving of such notice by the Mortgagee to the Space Tenant
to cure or to undertake the elimination of such defaults, provided that after
receipt of such notice, Space Tenant shall with due diligence give the Mortgagee
notice of intention to remedy such act or omission, and to the extent possible
and reasonably reasonable shall commence and continue to remedy such act or
omission, it being expressly understood that such right on the part of the Space
Tenant to cure any such default or defaults shall not be deemed to create any
obligation on the Space Tenant's part to cure or to undertake the elimination of
any such default or defaults.
4. As long as no default under the Space Lease exists which is
continuing beyond the expiration of any applicable grace period, which would
entitle the Landlord to terminate the Space Lease or dispossess the Space Tenant
thereunder as of the date Mortgagee files a lis pendens in, or otherwise
commences, a foreclosure action or any time thereafter, the Mortgagee shall not
name the Space Tenant as a party defendant to any action for foreclosure or
other enforcement thereof, nor shall the Space Lease be terminated by the
Mortgagee in connection with or by reason of foreclosure or other proceedings
for the enforcement of the Mortgage or by reason of a transfer of the Landlord's
interest under the Space Lease or under
M-1-3
<PAGE> 115
the Ground Lease or the Fee Owner's interest in the Land pursuant to an
assignment in lieu of foreclosure, or otherwise, and any sale, or assignment
pursuant thereto shall be subject to the Space Lease nor shall the Space Tenant
S use or Possession of the Demised Premises be interfered with by the Mortgagee
or any such assignee or purchaser, except that the person acquiring the interest
of the Landlord or Fee Owner as a result of any such action or proceeding and
such person's successors and assigns (any of the foregoing being hereinafter
referred to as the "Successor") shall not be (a) subject to any credits,
offsets, defenses or claims, not expressly provided for in the Space Lease,
which the Space Tenant might have against any prior landlord, (b) bound by any
previous modification or amendment of the Space Lease or by any prepayment of
more than one month's Fixed Rent or Additional Charges (as such terms are
defined in the Space Lease), unless such modification or prepayment shall have
been made with the Mortgagee's prior written consent, or (c) liable for any act
or omission of any prior landlord which constitutes a default under the Space
Lease, provided, however, Successor shall be liable for any such default or
defaults which are continuing beyond the time where the interest of the Landlord
under the Space Lease has been transferred to the Successor.
5. If the interest of the Landlord under the Space Lease or under the
Ground Lease or the interest of Fee Owner in the Land shall be transferred to
the Mortgagee by reason of foreclosure or other proceedings for enforcement of
the Mortgage or pursuant to any assignment in lieu of foreclosure, or otherwise,
the Space Lease shall not terminate but shall continue in full force and effect
as, or as if it were, a direct lease between the Successor, or its designee and
Space Tenant, whereby the Space Tenant shall be bound to the Successor, and,
except as provided in this Agreement, the Successor shall be bound to the Space
Tenant, under all of the terms, covenants and condition. of the Space Lease for
the balance of the term thereof remaining, and the Space Tenant does hereby
agree to attorn to the Successor, including the Mortgagee if it be the
Successor, as its landlord, to affirm its obligations under the Space Lease and
does agree to make payments of all sums due under the Space Lease to the
Successor. Space Tenant shall promptly execute and deliver any instrument that
Mortgagee may reasonably request to evidence such attornment.
M-1-4
<PAGE> 116
6. If and to the extent that the Space Lease or any provision of law
shall entitle the Space Tenant to notice of any mortgage, the Space Tenant
acknowledges and agrees that this Agreement shall constitute said notice to the
Space Tenant of the existence of the Mortgage.
7. This Agreement may not be modified except by an agreement in writing
signed by the parties hereto or their respective successors in interest. This
Agreement shall inure to the benefit of and be binding upon the parties hereto,
their respective heirs, representatives, successors and assigns.
8. Nothing contained in this Agreement shall in any way impair or
affect the lien created by the Mortgage, except as specifically set forth
herein.
9. The Space Tenant agrees that this Agreement satisfies any condition
or requirement in the Space Lease relating to the granting of a non-disturbance
agreement. The Space Tenant and Mortgagee agree that Mortgagee shall be deemed a
"Superior Mortgagee" as such term is defined in the Space Lease, subject however
to the terms and provisions of this Agreement. The Space Tenant further agrees
that in the event there is any inconsistency between the terms and provisions
hereof and the terms and provisions of the Space Lease dealing with
non-disturbance by the Mortgagee, the terms and provisions hereof shall be
controlling.
The Mortgagee agrees that this Agreement satisfies any condition or
requirement in the Mortgage (or mortgage commitment) relating to the granting of
a subordination agreement and attornment agreement. The Mortgagee further agrees
that in the event there is any inconsistency between the terms and provisions
hereof and the terms and provisions of the Space Lease dealing with
subordination and attornment by the Space Tenant, the terms and provisions
hereof shall be controlling.
10. The Space Tenant acknowledges that it has notice that the Space
Lease and the rent and all other sums due thereunder have been assigned to the
Mortgagee as part of the security for the note secured by the Mortgage.
11. All notices, demands or requests made pursuant to, under, or by
virtue of this Agreement must
M-1-5
<PAGE> 117
be in writing and mailed to the party to whom the notice, demand or request is
being made by certified or registered mail, return receipt requested, at its
address set forth above. Any party may change the place that notices and demands
are to be sent by written notice delivered in accordance with this Agreement.
12. This Agreement shall be governed by the laws of the State of New
Jersey. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the remainder
of this Agreement or the application of such term to any person or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
13. Each of the parties hereto agrees to execute and deliver, upon the
request of the other, such documents and instruments (in recordable form, if
requested) as may be necessary or appropriate to fully implement or to further
evidence the understandings and agreements contained in this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
Mortgagee:
By: ________________________
Space Tenant:
PAINEWEBBER INCORPORATED
By: _______________________
M-1-6
<PAGE> 118
[NOTARY PAGE]
M-1-7
<PAGE> 119
EXHIBIT A
Land
M-1-8
<PAGE> 120
Exhibit "M-2"
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made as of the ___ day of ___________, 1986, by and
between ___________, a ________________ having an office at ______________
("Superior Lessor"), and PAINEWEBBER INCORPORATED having an office at 1285
Avenue of the Americas, New York, New York 10019 ("Space Tenant").
WITNESSETH:
WHEREAS, HARTZ MOUNTAIN INDUSTRIES, INC. ("Ground Lessor") is the owner
of the land (the "Land") described in Schedule "A" annexed hereto and made a
part hereof; and
WHEREAS, Ground Lessor has entered into a ground lease (the "Superior
Lease"), dated as of __________ , whereby Ground Lessor demised and leased, as
ground lessor, all of the Land to Superior Lessor; and
WHEREAS, Superior Lessor has become the landlord under the entered
ground lease (the "Ground Lease"), dated as of __________, 1986, whereby Ground
Lessor demised and leased, all of the Land to HARTZ-PW HOTEL LIMITED
PARTNERSHIP ("Ground Lessee"); and
WHEREAS, Space Tenant has entered into a lease (the "Space Lease") with
Ground Lessee, dated as of ___________, 1986, covering a portion of the space in
the building known as the [Hotel/Office Building] (the "Demised Premises"), as
more fully described in such Space Lease; and
WHEREAS, the parties hereto desire to provide inter alia for the
non-disturbance of Space Tenant by Superior Lessor.
NOW THEREFORE, in consideration of the covenants and agreements
contained herein, and intending to
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be legally bound thereby, Superior Lessor and Space Tenant hereby covenant and
agree as follows:
1. Space Tenant covenants and agrees that the Space Lease shall at all
times be subject and subordinate in each and every respect to the Ground Lease
and to all renewals, extensions, supplements, amendments, modifications,
consolidations and replacements of such Ground Lease, with the same force and
effect as if the Ground Lease had been executed and delivered prior to the
execution and delivery of the Space Lease and without regard to the order of
priority of recording of the Ground Lease and the Space Lease or any Memorandum
of the Space Lease.
2. Space Tenant and Superior Lessor agree that if any act or omission
of Ground Lessee would give Space Tenant the right, immediately or after lapse
of a period of time or after notice or after both, to cancel or terminate the
Space Lease, or which Space Tenant claims gives it the right, immediately or
after lapse of a period of time or after notice or after both, to cancel or
terminate the Space Lease, or to claim a partial or total eviction, Space Tenant
shall not exercise such right (a) until and unless it has given written notice
of such act or omission to Ground Lessee and Superior Lessor whose name and
address shall previously have been furnished to Space Tenant, and (b) until a
thirty (30) day period for remedying such act or omission shall have elapsed
following the giving of such notice and following the time when Superior Lessor
shall have become entitled under the Ground Lease to remedy the same or such
longer period as may be reasonably required if such condition is not susceptible
to remedy within such thirty (30) day period provided Superior Lessor commences
and diligently pursues such remedy (which reasonable period shall in no event be
less than the period to which Ground Lessee would be entitled under the Space
Lease or otherwise, after similar notice, to effect such remedy).
3. As long as no default under the Space Lease exists which is
continuing beyond the expiration of any applicable grace period, which would
entitle Ground Lessee to terminate the Space Lease or dispossess Space Tenant
thereunder, Superior Lessor shall not name Space Tenant as a party defendant or
otherwise in any suit, action or proceeding brought to enforce any rights
granted to Superior Lessor under its Ground Lease, and Superior Lessor will not
terminate the Space Lease or take any
M-2-2
<PAGE> 122
action to recover the premises demised to Space Tenant or affect or disturb
Space Tenant's possession or rights under the Space Lease.
4. If Superior Lessor shall enter into and become lawfully possessed of
the Demised Premises and shall succeed to the rights of Ground Lessee under the
Space Lease by reason of the termination of the Ground Lease or otherwise, and
if Space Tenant is not then in default under the Space Lease beyond the time
permitted therein to cure such default, then (a) the Space Lease shall not
terminate, (b) Space Tenant shall attorn to Superior Lessor, and recognize it as
its landlord, such attornment to be upon the then executory terms and conditions
of the Space Lease, and (c) Superior Lessor shall accept such attornment and
recognize Space Tenant as Superior Lessor's lessee under the Space Lease. Upon
such attornment and recognition, the Space Lease shall continue in full force
and effect as, or as if it were, a direct lease between Superior Lessor and
Space Tenant, upon all of the then executory terms, conditions and covenants as
set forth in the Space Lease and which shall be applicable after such
attornment, except that Superior Lessor shall not be (i) liable for any previous
act or omission of Ground Lessee which constitutes a default under the Space
Lease; (ii) subject to any offset or defenses not expressly provided for in the
Space Lease which Space Tenant might have against Ground Lessee; (iii) bound by
any prepayment of more than one month's [Fixed Rent] or [Additional Charges] (as
such terms are defined in the Space Lease); and (d) bound by any amendment or
modification of the Space Lease made without Superior Lessor's prior written
consent.
5. This Agreement may not be modified except by an agreement in writing
signed by the parties hereto or their respective successors in interest. This
Agreement shall inure to the benefit of and be binding upon the parties hereto,
their respective heirs, representatives, successors and assigns.
6. Space Tenant and Superior Lessor agree that this Agreement satisfies
any condition or requirement in the Space Lease relating to the granting of a
non-disturbance agreement. Space Tenant and Superior Lessor agree that Superior
Lessor shall be deemed a "Superior Lessor" as such term is defined in the Space
Lease, subject however to the terms and provisions of this Agree-
M-2-3
<PAGE> 123
ment. Space Tenant and Superior Lessor further agree that in the event there is
any inconsistency between the terms and provisions hereof and the terms and
provisions of the Space Lease dealing with non-disturbance by Superior Lessor,
the terms and provisions hereof shall be controlling.
7. All notices, demands or requests made pursuant to, under, or by
virtue of this Agreement must be in writing and mailed to the party to whom the
notice, demand or request is being made by certified or registered mail, return
receipt requested, at its address set forth above. Any party may change the
place that notices and demands are to be sent by written notice delivered in
accordance with this Agreement.
8. This Agreement shall be governed by the laws of the State of New
Jersey. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Agreement or the application of such term to any person or
circumstances other than those as to which it is invalid or unenforceable shall
not be affected thereby, and each term of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
9. Each of the parties hereto agrees to execute and deliver, upon the
request of the other, such documents and instruments (in recordable form, if
requested) as may be necessary or appropriate to fully implement or to further
evidence the understandings and agreements contained in this Agreement.
IN WITNESS WHEREOF, the parties hereto have hereunto caused this
Agreement to be duly executed as of the day and year first above written.
Superior Lessor:
By:_______________________
Space Tenant:
PAINEWEBBER INCORPORATED
By: ______________________
M-2-4
<PAGE> 124
[ACKNOWLEDGEMENTS]
M-2-5
<PAGE> 125
Schedule "A"
Land
M-2-6
<PAGE> 126
Exhibit "N"
NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, dated as of the ___ day of ___________, 198_, between
HARTZ:-PW HOTEL LIMITED PARTNERSHIP, a New Jersey limited partnership, having an
office at 400 Plaza Drive, Post Office Box 1411, Secaucus, New Jersey 07094
("Landlord"), and __________, a ___________ having an office at ___________
("Subtenant").
WITNESSETH:
WHEREAS, Landlord has entered into an Agreement of lease, dated as of
the ___ day of ______________, 1986, (the "Space Lease"), with PAINEWEBBER
INCORPORATED (the "Space Tenant") pursuant to which Landlord leased and demised
to Space Tenant a portion of the space in the building known as the
[Hotel/Office Building] (the "Demised Premises") as more fully described in such
Space Lease;
WHEREAS, Space Tenant has entered into an Agreement of Sublease (the
"Sublease"), dated as of the _____ day of ___________, 19 , pursuant to which
Space Tenant subleased and demised to Subtenant [the Demised Premises or a
portion thereof] , as more fully described in Exhibit "A" annexed hereto and
made a part hereof; and
WHEREAS, the parties hereto desire to provide inter alia for the
non-disturbance of Subtenant by Ground Lessor.
NOW, THEREFORE, the parties hereto agree as follows:
1. So long as the Sublease is in full force and effect, and no default
of Subtenant exists nor has any event occurred which with the passage of time or
notice would entitle Space Tenant to terminate the Sublease or dispossess
Subtenant, Landlord will not name or join Subtenant as a party defendant or
otherwise in any suit, action or proceeding brought to enforce any rights
granted to Landlord under the Space Lease or to terminate
N-1
<PAGE> 127
such Space Lease, and the Landlord will not terminate the Sublease or take any
action to recover Possession of the premises demised to Subtenant or affect or
disturb Subtenant's possession or rights under the Sublease.
2. If Landlord or its designee shall enter into and become lawfully
possessed of the Demised Premises and shall succeed to the rights of Space
Tenant under the Space Lease by reason of the termination of the Space Lease or
otherwise, and if Subtenant is not then in default under the Sublease beyond the
time permitted therein to cure such default, then (a) the Sublease shall not
terminate, (b) Subtenant shall attorn to Landlord or its designee, and recognize
it as its landlord, such attornment to be upon the then executory terms and
conditions of the Sublease, and (c) Landlord or its designee shall accept such
attornment and recognize Subtenant as the Landlord lessee under the Sublease.
Upon such attornment and recognition, the Sublease shall continue in full
force and effect as, or as if it were, a direct lease between the Landlord or
its designee and Subtenant, upon all of the then executory terms, conditions and
covenants as set forth in the Sublease and which shall be applicable after such
attornment, except that Landlord shall not be (i) liable for any previous act or
omission of Space Tenant which constitutes a default under the Sublease; (ii)
subject to any offset or defenses not expressly provided for in the Sublease
which the Subtenant might have against Space Tenant; (iii) bound by any
Prepayment of more than one month's [Fixed Rent] or [Additional Charges] (as
such terms are defined in the Sublease); and (d) bound by any amendment or
modification of the Sublease made without Landlord's prior written consent.
3. The terms of this Agreement shall bind and inure to the benefit of
the parties hereto, and their respective heirs, successors and assigns.
4. All notices and other communications hereunder shall be in writing
and shall be hand delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed (a) if to Landlord at 400 Plaza
Drive, Post Office Box 1411, Secaucus, New Jersey 07094, Attention: General
Counsel, with a copy to Horowitz, Bross, Sinins & Imperial, P.A., 1180 Raymond
Boulevard, Newark, New Jersey 07102, Attention: Irwin Horowitz, Esq., or at such
other address as Landlord
N-2
<PAGE> 128
shall have furnished to Subtenant in writing, or (b) if to Subtenant, at
________________________________________ ____________ Attention: ___________, or
at such other address as Subtenant shall have furnished to Landlord in writing.
5. This Agreement shall be governed by the laws of the State of New
Jersey. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the
remainder of this Agreement or the application of such term to any person or
circumstances other than those as to which it is invalid or unenforceable shall
not be affected thereby, and each term of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
6. This Agreement may not be discharged or modified orally or in any
manner other than by an agreement in writing specifically referring to this
Agreement and signed by the party or parties to be charged thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HARTZ-PW HOTEL LIMITED
PARTNERSHIP
By: Hartz Mountain Industries, Inc.
By: ___________________________
[SUBTENANT]
By: _______________________________
N-3
<PAGE> 129
[NOTARY PUBLIC PAGE]
N-4
<PAGE> 130
EXHIBIT "A"
Demised Premises
N-5
<PAGE> 131
Exhibit "O"
Cleaning Standards
NIGHTLY ENTRANCE LOBBY AREAS
Sweep and wash flooring including spray buffing.
Wash all rubber mats.
Clean all cigarette urns and replace sand and water as necessary.
Vacuum floors, dust and rub down walls, metalwork and saddles in all
elevator cabs.
NIGHTLY FOR GENERAL CLEANING
Thoroughly vacuum all carpeted areas moving light furniture.
Wash all stairways.
MONTHLY HIGH DUSTING
Dust all pictures, frames, charts and other wall hangings not reached in
nightly cleaning.
Dust all vertical surfaces such as walls, partitions, doors, brick,
louvers, not reached in nightly cleaning.
Dust all window frames.
Machine scrub all ceramic tile floors.
Thoroughly wash and polish all wall tile and stalls in toilet areas.
Dust and wash down lobby walls.
OTHER SPECIAL CHORES NOT DESCRIBED IN NIGHTLY, WEEKLY OR MONTHLY CLEANING
SERVICES
Window washing will be performed TWO times per year.
O-1
<PAGE> 1
Exhibit 10.40
AGREEMENT OF LIMITED PARTNERSHIP OF
HARTZ-PW LIMITED PARTNERSHIP
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I FORMATION
1.01 Formation ......................................... 2
1.02 Name .............................................. 2
1.03 Place of Business ................................. 2
1.04 Term .............................................. 3
ARTICLE II DEFINITIONS ....................................... 3
ARTICLE III PURPOSE AND BUSINESS
3.01 Business .......................................... 16
3.02 Authorized Activities ............................. 17
ARTICLE IV PARTNERSHIP INTERESTS AND CAPITAL
4.01 General Partner ................................... 19
4.02 Limited Partner ................................... 20
4.03 Loans and Capital Contributions to the
Partnership by the Partners ..................... 21
4.04 Default by General Partner ........................ 25
4.05 Interest .......................................... 30
4.06 Capital Account ................................... 30
4.07 Withdrawal of Capital Contributions ............... 30
4.08 Restoration of Negative Capital
Accounts ........................................ 30
ARTICLE V PROFITS, LOSSES AND DISTRIBUTIONS
5.01 Determination of Profits and Losses ............... 31
5.02 Allocation of Profits and Losses .................. 31
5.03 Profits and Losses from Capital
Transactions .................................... 35
5.04 Distribution of Net Operating
Revenues ........................................ 39
5.05 Distribution of Proceeds of Capital
Transactions other than in
Liquidation ..................................... 40
5.06 Partnership Adjustments ........................... 41
5.07 Allocation to Transferred Interests ............... 42
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VI RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER
6.01 Management ........................................... 42
6.02 Authority ............................................ 43
6.03 Limitations on the General
Partner ............................................ 44
6.04 Additional Limitations ............................... 49
6.05 Business with Affiliates ............................. 49
6.06 Liability for Acts and Omissions ..................... 50
6.07 Other Activities ..................................... 51
6.08 Classification as a Partnership ...................... 52
6.09 Net Worth of General Partner ......................... 52
6.10 Management ........................................... 53
ARTICLE VII WITHDRAWAL OF GENERAL PARTNER
7.01 Assignment or Withdrawal by
General Partner ..................................... 53
7.02 Involuntary Withdrawal of a General
Partner ............................................. 53
7.03 Obligation of a Prior General Partner ................ 54
7.04 Remaining General Partner ............................ 54
7.05 Removal of General Partner ........................... 55
7.06 Successor General Partner ............................ 57
7.07 Additional Limitation on
Transferability ..................................... 58
7.08 Permitted Assignments by
the General Partner ................................ 58
ARTICLE VIII RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
8.01 Management of the Partnership ........................ 60
8.02 Limitation on Liability .............................. 61
8.03 Power of Attorney .................................... 61
8.04 Admission of Additional Partners ..................... 64
ARTICLE IX TRANSFER OF LIMITED PARTNERSHIP INTERESTS
9.01 No Unpermitted Transfers ............................. 65
9.02 Assignment by Limited Partner ........................ 65
9.03 Substitute Limited Partner ........................... 66
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
9.04 Involuntary Withdrawal by Limited
Partner ............................................ 68
9.05 Additional Limitation on
Transferability .................................... 68
ARTICLE X DISSOLUTION AND LIQUIDATION
10.01 Dissolution ......................................... 66
10.02 Liquidation of Partnership Assets ................... 69
ARTICLE XI RECONSTITUTION
11.01 Reconstitution ...................................... 71
11.02 Continuation of Business ............................ 72
ARTICLE XII ACCOUNTING AND REPORTS
12.01 Books and Records ................................... 72
12.02 Annual Tax Returns .................................. 73
12.03 Reports to Partners ................................. 74
12.04 Partnership Funds ................................... 75
ARTICLE XIII AMENDMENTS AND MEETINGS
13.01 Amendment Procedure ................................. 76
13.02 Meetings and Voting ................................. 76
ARTICLE XIV MISCELLANEOUS
14.01 Title to Partnership Property ....................... 77
14.02 Validity ............................................ 77
14.03 Applicable Law ...................................... 78
14.04 Binding Agreement ................................... 78
14.05 Waiver of Action for Partition ...................... 78
14.06 Headings ............................................ 78
14.07 Terminology ......................................... 78
14.08 Right of First Offer ................................ 79
14.09 General Partner Representations ..................... 85
14.10 Counterparts ........................................ 89
14.11 Entire Agreement .................................... 90
14.12 Arbitration ......................................... 90
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
14.13 Security Interest in Limited
Partner's Interest ................................. 90
14.14 Financing, Transfer of Land ......................... 91
14.15 Use of Certain Capital Proceeds
by the Limited Partner ............................. 92
14.16 Limited Partner Representations ..................... 94
</TABLE>
Exhibit "A-1" Description of Data Processing Center Land
Exhibit "A-2" Description of Office Center Land
Exhibit "B" Terms of Commitment
Exhibit "C" Easements
Exhibit "D" Contracts
Exhibit "E" Taxes
iv
<PAGE> 6
AGREEMENT OF LIMITED PARTNERSHIP OF
HARTZ-PW LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP is made as of the 14th day of
April, 1986, between HARTZ MOUNTAIN INDUSTRIES, INC., a New York corporation
(the "General Partner"), as general partner, and PAINE WEBBER, INC., a Delaware
corporation (the "Limited Partner"), as limited partner. The Limited Partner and
the General Partner may be referred to herein individually as a "Partner" and
collectively as the "Partners."
WITNESSETH:
WHEREAS, the parties hereto desire to form a limited partnership (the
"Partnership") for the purpose of entering into the Ground Leases and of
acquiring and/or constructing the Improvements, certain of which Improvements
and the Land leased pursuant to the Ground Leases are currently owned by the
General Partner, and for the purposes hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto hereby form the Partnership pursuant to the laws
of the State of New Jersey, upon the following terms and conditions:
<PAGE> 7
ARTICLE I
FORMATION
1.01 Formation. The Partnership is being formed as a limited
partnership under the laws of the State of New Jersey. Upon execution of this
Agreement by all parties, the General Partner and the Limited Partner shall
execute a certificate of limited partnership of the Partnership to reflect the
provisions of this Agreement, and all such other certificates and documents
conforming thereto, and shall do all such filing, recording, and publishing, and
the General Partner shall take all other necessary action, required by law to
perfect and maintain the Partnership as a limited partnership under the Act or
under the laws of all other jurisdictions in which the Partnership may elect to
conduct business.
1.02 Name. The name of the Partnership shall be "HARTZ-PW LIMITED
PARTNERSHIP", which name may be changed by the General Partner after Notice to
the Partners.
1.03 Place of Business. The principal office and place of business of
the Partnership shall be located at 400 Plaza Drive, P.O. Box 1411, Secaucus,
New Jersey 07094. The General Partner may change the location of the
Partnership's principal office and may establish such
2
<PAGE> 8
additional offices of the Partnership as it may from time to time determine
after Notice to the Partners.
1.04 Term. The Partnership shall continue in full force and effect
until December 31, 2086, unless sooner dissolved in accordance with the
provisions of this Agreement.
ARTICLE II
DEFINITIONS
The following terms have the definitions hereinafter indicated whenever
used in this Agreement with initial capital letters:
2.01 Act: The Revised New Jersey Uniform Limited Partnership Act,
N.J.S.A. 42: 2A-1 et. seq. as it may be amended from time to time.
2.02 Affiliate: When used with reference to a specific Person, a Person
who (i) directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, the specified Person; (ii) is a
partner of the specified Person; (iii) owns or controls ten percent (10%) or
more of the outstanding voting securities of the specified Person; or, (iv) is
an entity in which the specified Person is a partner.
3
<PAGE> 9
2.03 Agreement: This Agreement of Limited Partnership, as it may be
amended from time to time.
2.04 Bankruptcy: For purposes of this Agreement the institution by a
referenced Person of a voluntary case in bankruptcy, or the voluntary taking
advantage by a referenced Person of any bankruptcy or insolvency law, or the
adjudication of such Person as bankrupt or insolvent, or the filing by such
Person of any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, or the filing by
such Person of any answer admitting (or the failure by such Person to make a
required responsive pleading to) the material allegations of a petition filed
against such Person in any such proceeding or the seeking or consenting to or
acquiescence in the judicial appointment of any trustee, fiscal agent, receiver
or liquidator of such Person or of all or any substantial part of its properties
or the taking of any action looking to its dissolution or liquidation, or if,
within ninety (90) days after the commencement of an involuntary case or action
against such Person seeking any bankruptcy, reorganization, arrangement,
composition, readjustment, liquidation, dissolution
4
<PAGE> 10
or similar relief under any present or future statute, law or regulation, the
failure of such case or action to have been dismissed or all orders in
proceedings thereunder affecting the operations or the business of such Person
stayed, or if the stay of any such order or proceeding thereafter shall be set
aside, or if, within ninety (90) days after the judicial appointment without the
consent or acquiescence of such Person of any trustee, fiscal agent, receiver or
liquidator of such Person or of all or any substantial part of its properties,
such appointment shall not have been vacated, such insolvency being deemed to
occur when such Person shall make a general assignment for the benefit of
creditors or shall admit in writing that its assets are insufficient to pay its
liabilities as they come due.
2.05 Budget: On or before the thirtieth (30th) day after the
commencement date of each Fiscal Year, the General Partner shall submit to the
Limited Partner a budget for such Fiscal Year for the operation of the business
of the Partnership.
2.06 Capital Account: The account maintained by the Partnership for
each Partner which, as of any given date, reflects its Capital Contributions
paid to the Partnership, (i) increased to reflect its distribu-
5
<PAGE> 11
tive share of Partnership income and gain (or item thereof), including income
exempt from tax, for each Fiscal Year (or fraction thereof), and (ii) decreased
to reflect its distributive share of Partnership losses and deductions for each
Fiscal Year (or fraction thereof) and the amount of cash or the fair market
value of property distributed by the Partnership to it and its distributive
share of expenses of the Partnership described in Section 705(a)(2)(B) of the
Code. In addition, Capital Accounts shall be adjusted to take account of any
other items which give rise to Capital Account adjustments under the regulations
issued pursuant to Section 704 of the Code, as finally adopted. Notwithstanding
the foregoing, amounts paid to Paine Webber pursuant to the Lease Acquisition
Agreement and the Transportation and Completion Agreement will be paid to Paine
Webber in its capacity as tenant, not in its capacity as Limited Partner, and
thus, payment of such amounts will not affect the Capital Account of the Limited
Partner.
2.07 Capital Contribution: The total amount of money or the fair market
value of other property contributed by each Partner to the Partnership
pursuant to the terms of this Agreement, including the Capital Con-
6
<PAGE> 12
tributions made by any predecessor holders(s) of the Interest of such Partner.
2.08 Capital Proceeds: The aggregate of (i) the net cash proceeds
resulting from any condemnation of the Properties (and not used to repair or
restore the Properties or applied by the holder of the First Mortgage or of any
other mortgage or deed of trust affecting the Properties to the reduction of the
principal amount thereof), (ii) the net cash proceeds resulting from the
settlement of any title, fire or extended coverage insurance claim (and not used
to repair or restore the Properties or applied by the holder of the First
Mortgage or any other mortgage of deed of trust affecting the Properties, to the
reduction of the principal amount thereof), (iii) the net cash proceeds from the
sale of all or a portion of the Properties, (iv) the net cash proceeds actually
received by the Partnership from the refinancing of any mortgage or deed of
trust affecting the Properties, including the First Mortgage (and not applied to
the reduction of the Partnership's liabilities, used to pay the expenses of the
Partnership in connection with such refinancing, to repair or improve the
Properties or set aside by the General Partner to create or maintain reasonable
reserves for improvements to the Properties),
7
<PAGE> 13
and (v) any reserves previously set aside from Capital Proceeds which are deemed
available for distribution by the General Partner or Liquidator.
2.09 Capital Transaction: Any event giving rise to Capital Proceeds.
2.10 Code: The Internal Revenue Code of 1954, as amended from time to
time, and any successor statute.
2.11 Commitment: A loan commitment on the terms set forth on Exhibit
"B" annexed hereto and made a part hereof.
2.12 Commencement Date: Shall have the meaning set forth in the
Office Lease.
2.13 Consent: Either the written consent of a Person, or the
affirmative vote of such Person at a meeting duly called and held pursuant to
this Agreement, as the case may be, to do the act or thing for which the Consent
is solicited, or the act of granting such Consent, as the context may require.
2.14 Data Center Lease: The lease, dated of even date herewith, between
the Partnership, as landlord, and the Limited Partner, as tenant, pursuant to
which the Partnership subleased the property known as the Data Processing Center
to the Limited Partner.
8
<PAGE> 14
2.15 Deficit Capital Contributions: Shall have the meaning set forth in
Section 4.03 hereof.
2.16 Easements: The easements more particularly described in Exhibit
"C" annexed hereto and made a part hereof.
2.17 First Mortgage: The first mortgage, to be entered into pursuant to
the Commitment, affecting the Properties, and any modification, extension or
replacement thereof.
2.18 Fiscal Year: The taxable year of the Partnership, which shall be
the calendar year.
2.19 General Partner: Hartz Mountain Industries, Inc. and any and all
other Persons who become successor General Partner in accordance with the provi-
sions of the Agreement.
2.20 Ground Leases: The two Ground Leases, dated of even date herewith,
between the General Partner, as landlord, and the Partnership, as tenant,
pursuant to which the General Partner leased to the Partnership the Land and the
Easements.
2.21 Hartz Lease: The Lease, dated of even date herewith, between the
Partnership, as Landlord, and the General Partner, as tenant, pursuant to which
the
9
<PAGE> 15
Partnership subleased a portion of the Building known as the Paine Webber
Building to the General Partner.
2.22 Improvements: The 604,528 square foot office and print center
building and parking therefor and skywalk to be constructed, and the data center
building to be purchased and renovated, on the Land.
2.23 Interest: The ownership interest of a Partner in the Partnership
at any particular time, including the right of such Partner to any and all
benefits to which such Partner may be entitled as provided in this Agreement
and, to the extent not inconsistent with this Agreement, in the Act, together
with the obligations of such Partner to comply with all the terms and provisions
of this Agreement and of the Act, which ownership Interest for voting and
certain other purposes of this Agreement shall, absent proof to the contrary, be
as set forth in Article IV of this Agreement.
2.24 IRS: The Internal Revenue Service, an agency of the United States
Government.
2.25 Land: The land more particularly described in Exhibits "A-1" (on
which is constructed the Data Processing Center) and "A-2" (on which is
constructed the Paine Webber Building) annexed hereto and made a part hereof.
10
<PAGE> 16
2.26 Lease Acquisition Agreement: The Lease Acquisition Agreement,
dated of even date herewith, among the Partnership, Paine Webber, Inc. and Hartz
Mountain Industries, Inc.
2.27 Leasehold Estate: The leasehold estates created by the Ground
Leases.
2.28 Leases: The Office Lease and the Data Center Lease, collectively.
2.29 Limited Partner(s): The Limited Partner, and any and all Persons
who become a Substitute Limited Partner in accordance with the provisions of
this Agreement.
2.30 Liquidator: The General Partner or, if there is no General Partner
at the time in question, a Person designated by the Limited Partner to act as
Liquidator, or if the Limited Partner does not designate a Person to act as
Liquidator, such other Person who may be appointed in accordance with applicable
law, who shall be responsible for taking all action necessary or appropriate to
wind up the affairs of, and distribute the assets of, the Partnership upon its
dissolution.
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2.31 MAI Appraiser: Shall have the meaning set forth in Section 14.08
hereof.
2.32 Net Operating Revenues: For any period, Operating Revenues, less
Operating Expenses.
2.33 Notice: A writing containing the information required by this
Agreement to be communicated to a Person and personally delivered to such Person
or sent by registered or certified mail, postage prepaid, return receipt
requested, to such Person at the last known address of such Person as shown on
the books of the Partnership, the date of personal delivery, registry or
certification, as the case may be, being deemed the effective date of such
Notice.
2.34 Office Lease: The Lease, dated of even date herewith, between the
Partnership, as landlord, and the Limited Partner, as tenant, pursuant to which
the Partnership leased a portion of the Paine Webber Building to the Limited
Partner.
2.35 Operating Deficits: For any period, any shortfall in the Operating
Revenues over the Operating Expenses.
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2.36 Operating Deficit Loan: Shall have the meaning set forth in
Section 4.03 hereof.
2.37 Operating Expenses: For any period, all costs and expenses
(including capital expenditures) of operation and management of the Partnership
and the Properties, including, without limitation, any rent due pursuant to the
Ground Leases determined on an accrual basis and any reasonable operating
reserves set aside by the General Partner, but excluding any debt service on the
First Mortgage or any other financing and any payments required to be made by
the Partnership pursuant to the Lease Acquisition Agreement and the
Transportation and Completion Agreement.
2.38 Operating Revenues: For any period, the sum of (i) all receipts of
the Partnership determined on an accrual basis, excluding Capital Proceeds and
Capital Contributions, (ii) the net proceeds of any insurance, other than title
or fire and extended coverage insurance, and (iii) any reserves previously set
aside from Operating Revenues which are deemed available by the General Partner.
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2.39 Partner(s): The General Partner, the Limited Partner, any
Substitute Limited Partner and any Special Limited Partner.
2.40 Partnership: Shall have the meaning set forth in the first WHEREAS
clause of this Agreement, as said limited partnership may from time to time be
constituted.
2.41 Partnership Accountants: Any firm of certified public accountants
reasonably satisfactory to the Partners.
2.42 Partnership Assets: All property and assets, whether real or
personal, tangible or intangible, at any time owned by the Partnership or in
which the Partnership shall have all interest, including, without limitation,
the Ground Leases and the Improvements.
2.43 Person: Any individual, partnership, corporation, trust or other
entity.
2.44 Prime Rate: The rate of interest publically announced from time to
time by Citibank, N.A., or its successors, 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").
2.45 Properties: The estates created by the Ground Leases, together
with the Improvements.
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2.46 Purchase Option Agreement: Collectively, the two Purchase Option
Agreements, dated of even date herewith, between the General Partner and the
Limited Partner.
2.47 Purchase Price: Shall have the meaning set forth in Section 14.08
hereof.
2.48 Receiving Partner: Shall have the meaning set forth in Section
14.08 hereof.
2.49 Sending Notice: Shall have the meaning set forth in Section 14.08
hereof.
2.50 Sending Partner: Shall have the meaning set forth in Section 14.08
hereof.
2.51 Special Limited Partner: Shall have the meaning set forth in
Section 7.05 hereof.
2.52 Substitute Limited Partner(s): Any Person admitted to the
Partnership as a Limited Partner pursuant to Section 9.03 hereof.
2.53 Successor Limited Partnership: A limited partnership which shall
continue the business of the Partnership following its dissolution and
reconstitution in accordance with the provisions of Article XI.
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2.54 Title Commitment: Shall have the meaning set forth in Section
14.09 hereof.
2.55 Transfer: Shall have the meaning set forth in Section 7.01 hereof.
2.56 Transportation and Completion Agreement: The Transportation and
Completion Agreement, dated of even date herewith, between the Partnership and
Paine Webber, Inc.
ARTICLE III
PURPOSE AND BUSINESS
3.01 Business. The principal purpose and character of the business of
the Partnership shall be to acquire, own, construct, renovate, hold for capital
appreciation and finance the Properties, to cause the General Partner to
complete construction and renovation of the Improvements, to manage, rent and
otherwise operate the Properties, to sell, exchange, dispose of, lease, mortgage
and otherwise encumber all or any part of the Properties, to incur indebtedness,
whether secured or unsecured, for any of the foregoing purposes, and to engage
in any other kind of lawful activity for profit related to the foregoing.
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3.02 Authorized Activities. In carrying out the purposes of this
Partnership, but subject to all other provisions of this Agreement and
applicable law, the Partnership is empowered and authorized to:
(A) lease, hold and operate the Properties and any other real or
personal property which may be necessary, convenient or incidental to the
accomplishment of the purposes of the Partnership and, in appropriate
circumstances, to sell, transfer or otherwise dispose of the Properties;
(B) construct, renovate, operate, maintain, finance, improve, own,
sell, convey, assign, mortgage or lease any real estate and any personal
property necessary, convenient or incidental to the accomplishment of the
purposes of the Partnership;
(C) borrow money and issue evidences of indebtedness in
furtherance of the Partnership business, and to secure the same by mortgage,
pledge or other lien on any assets of the Partnership; provided that such
evidence of indebtedness and documents securing the same, if any, shall
effectively provide in substance and legal effect that the Limited Partner shall
not have any personal liability for the payment of such indebtedness beyond its
Interest,
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(D) enter into, perform and carry out contracts of any kind,
including contracts with Affiliates of the General Partner pursuant to Section
6.04, necessary or incidental to the accomplishment of the purposes of the
Partnership;
(E) bring and defend actions at law or in equity or arbitration;
(F) purchase, cancel or otherwise retire or dispose of the
Interest of any Partner pursuant to the express provisions of this Agreement;
(G) execute and deliver all documents for the sale of Interests;
(H) prepay, in whole or in part, refinance, recast, increase,
reduce, modify, or extend mortgages (including, without limitation, the First
Mortgage) affecting the Properties, and in connection therewith to execute any
extensions, renewals or modifications of any mortgage or deed of trust on the
Properties;
(I) sell, exchange, dispose of or refinance mortgages (including,
without limitation, the First Mortgage) on all or part of the Partnership
property;
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(J) make interim investments in government obligations, insured
obligations, bank time deposits, commercial paper, tax-exempt investments, money
market funds, certificates of deposit and banker's acceptances; and
(K) engage in any kind of lawful activity, and perform and carry
out contracts of any kind, necessary or advisable in connection with the
accomplishment of the purposes of the Partnership.
ARTICLE IV
PARTNERSHIP INTERESTS AND CAPITAL
4.01 General Partner:
(A) The address of the General Partner is 400 Plaza Drive, P.O.
Box 1411, Secaucus, New Jersey 07094.
(B) The General Partner previously has contributed to the
Partnership in cash an initial Capital Contribution of $666.67. As of the date
hereof, the Capital Account of the General Partner is equal to $666.67.
(C) The General Partner shall be obligated to make the Operating
Deficit Loans or Deficit Capital Contributions to the Partnership as set forth
in, and when required pursuant to, Section 4.03 hereof and to
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make such additional Capital Contributions as are necessary to make the payments
under the Lease Acquisition Agreement and the Transportation and Completion
Agreement and any amounts required in order to complete the Improvements in
accordance with the provisions of the Ground Leases and the Leases, but may not
make any other additional Capital Contributions to the Partnership.
(D) The General Partner shall fund any and all costs and expenses
of the Properties from the date hereof through the day prior to the Fixed Rent
Commencement Date (as such term is defined in the Office Lease) to the extent
required by reason of the Partnership having insufficient funds for such
purpose.
(E) Nothing contained in this Agreement shall be deemed to create
any third party beneficiary status, or grant any rights to any Capital
Contributions, to any party or Person who is not a Partner.
4.02 Limited Partner.
(A) The address of the Limited Partner is 1285 Avenue of the
Americas, New York, New York 10019.
(B) The Limited Partner has contributed to the Partnership in cash
an initial Capital Contribution of $333.33. As of the date hereof, the Capital
Account of the Limited Partner is equal to $333.33.
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(C) The Limited Partner may make the Limited Partner Loan or
Additional Capital Contributions as set forth in Section 4.03 hereof but shall
not be required to make any additional loans or Capital Contributions to the
Partnership.
(D) Nothing contained in this Agreement shall be deemed to create
any third party beneficiary status, or grant any rights to any Capital
Contributions, to any party or Person who is not a Partner.
4.03 Loans and Capital Contributions to the Partnership by the
Partners.
(A) Upon the occurrence of Operating Deficits or if the Net
Operating Revenues shall be insufficient to pay all debt service on any loan,
secured or unsecured, including without limitation, the First Mortgage,
affecting the Properties or the Partnership, for any reason other than the
failure of the tenant under the Leases to make any payments required thereunder,
including, without limitation, a failure to make any such payments in connection
with bankruptcy proceedings and whether or not the trustee in bankruptcy shall
disaffirm either of the Leases, the General Partner shall be obligated, from
time to time, at its option either (x) to lend (collectively, the "Operating
Deficit Loan") to the
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Partnership such funds, (y) to make Capital Contributions (the "Deficit Capital
Contributions") of such funds, or (z) cause the Partnership to borrow such funds
pursuant to Section 4.03(C) hereof, as may be necessary to fund such Operating
Deficits and debt service on the First Mortgage and other financing, upon the
terms and conditions hereinafter set forth; provided, however, that if such
Operating Deficits shall arise by reason of a required capital expenditure, the
General Partner shall use its best efforts to cause the Partnership to borrow
such funds prior to making any Operating Deficit Loan or Deficit Capital
Contribution. Notwithstanding the foregoing, however, the General Partner may
make neither an Operating Deficit Loan nor make Deficit Capital Contributions
nor cause the Partnership to borrow funds in connection with Operating Deficits
to the extent the same shall arise by reason of failure of the tenant under the
Hartz Lease to make any payment required thereunder. Subsequent to the
twenty-fifth (25th) anniversary of the Commencement Date (as such term is
defined in Office Lease), the General Partner shall have the right, but not the
obligation, to make Operating Deficit Loans and Deficit Capital Contributions.
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(B) The Operating Deficit Loan shall bear interest at a rate equal
to that charged under the First Mortgage, compounded annually. The Operating
Deficit Loan, as well as interest thereon, shall be repayable in accordance with
the provisions of Sections 5.04 and 5.05 hereof. The Deficit Capital
Contributions shall be repaid, together with an amount in the nature of interest
calculated at a rate equal to that charged under the First Mortgage, compounded
annually, in accordance with the provisions of Sections 5.04 and 5.05 hereof.
(C) Notwithstanding anything contained in Paragraph (B) hereof,
the General Partner shall have the option, in lieu of funding the Operating
Deficit Loan or making the Deficit Capital Contributions, of borrowing, or
causing the Partnership to borrow the funds necessary to fund Operating Deficits
or such debt service, and to secure any such loans with the Properties or any
other assets of the Partnership.
(D) Notwithstanding the foregoing and provided that the applicable
Operating Deficit Loan or Deficit Capital Contribution shall not have been made
or the funds committed, in writing, by a third party, the Limited Partner shall
have the right, but not the obligation, upon ten (10) days' written notice to
the General
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Partner, from time to time, to lend (collectively, the "Limited Partner Loan")
or to make an additional Capital Contribution ("Additional Capital
Contribution") to the Partnership of its proportionate share of such funds as
may be necessary to fund any such Operating Deficits or such debt service (it
being understood that the General Partner shall be under no obligation to notify
the Limited Partner prior to the General Partner making any Operating Deficit
Loans or Deficit Capital Contributions or obtaining funds from a third party in
the event of an emergency or due date requirement). The General Partner may
dispute the existence of any Operating Deficits claimed by the Limited Partner
pursuant to Section 14.12 hereof. The Limited Partner Loan shall bear interest
at a rate equal to that charged under the First Mortgage, compounded annually.
The Limited Partner Loan, as well as interest thereon, shall be repayable in
accordance with the provisions of Sections 5.04 and 5.05 hereof. The Additional
Capital Contributions shall be repaid, together with an amount in the nature of
interest calculated at a rate equal to that charged under the First Mortgage,
compounded annually, in accordance with the provisions of Sections 5.04 and 5.05
hereof.
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(E) Notwithstanding anything contained herein, none of the
Partners shall have any personal liability for the repayment of the Limited
Partner Loan or the Operating Deficit Loan nor shall the General Partner have
any personal liability beyond its Interest for failure to make any Operating
Deficit Loan or Deficit Capital Contribution.
4.04 Default by General Partner.
(A) In the event the General Partner shall fail (i) to make the
Operating Deficit Loan or the Deficit Capital Contributions to the Partnership
or to cause the Partnership to borrow the required funds for any reason other
than the fact that the Operating Deficits shall have arisen by reason of the
failure of the tenant under the Leases to make any payments required thereunder,
including, without limitation, a failure to make any such payments in connection
with bankruptcy proceedings and whether or not the trustee in bankruptcy shall
disaffirm either of the Leases, or (ii) to make the Capital Contributions
required pursuant to Section 4.01(C) hereof, and such default continues for
twenty (20) days after notice from the Limited Partner (or such shorter period
of time as is reasonably required to protect Partnership Assets), in addition to
the remedies
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provided in Paragraph (B) of this Section 4.04 or otherwise at law, the Limited
Partner shall have the right, at its option, to fund the Operating Deficit Loan
or such Capital Contributions by either:
(i) causing there to be lent to the Partnership by any
person, firm or corporation, all or any part of the necessary amounts, which
loan shall bear interest at a rate equal to two percentage points in excess of
the then Prime Rate, shall be non-recourse and shall be secured by the General
Partner's Interest and interest in the Operating Deficit Loan and the Deficit
Capital Contributions (the principal and interest of such loan to be repaid out
of the first distributions or payments to be paid to the General Partner
pursuant to this Agreement); or
(ii) to lend to the Partnership all or any part of such
funds, which loan shall bear interest at a rate equal to two percentage points
in excess of the then Prime Rate, shall be non-recourse and shall be secured by
the General Partner's Interest and interest in the Operating Deficit Loan and
the Deficit Capital Contributions (the principal and interest of such loan to be
repaid out of the first distributions or payments to be paid to the General
Partner pursuant to this Agreement).
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(B) If the Limited Partner shall elect to lend to the Partnership
all or any part of such funds, and such funds shall, in the aggregate (whether
pursuant to one or more advances) exceed $150,000, as the same shall be
increased (but not decreased) on each anniversary of the date hereof by an
amount equal to the product of $150,000 and the percentage increase in 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 (1967 = 100), or any successor index thereto,
appropriately adjusted (the "CPI") for the preceding twelve (12) calendar
months, then, in addition to the remedies provided for in Paragraphs (A) and
(B), the percentage Interest of the General Partner and/or any Special Limited
Partner to whom the General Partner may have transferred any portion of its
Interest (it being agreed that the Limited Partner, in its sole discretion, may
elect whether the General Partner's or the Special Limited Partners' Interest
shall be diluted and in what proportion, except that as to any Special Limited
Partners, all such Partners' Interests shall be diluted on a pro rata basis) in
the Partnership automatically will be deemed to be decreased and the percentage
Interest in the
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Partnership of the Limited Partner automatically will be deemed to be increased
by that number of percentage points equal in amount to one (1) percentage point
for every $150,000 (as the same shall be increased (but not decreased) by an
amount equal to the product of $150,000 and the percentage increase (but not
decrease) in the CPI from the date hereof to the date of dilution) (including
such initial $150,000, as increased).
(C) The General Partner hereby pledges and grants to the
Partnership a security interest in its Interest, as security for its obligations
to fund the Operating Deficit Loan or to contribute Deficit Capital
Contributions or to cause the Partnership to borrow the required funds, to make
any Capital Contributions necessary to make the payments required pursuant to
the Lease Acquisition Agreement or the Transportation and Completion Agreement
or to fund all construction costs of the Improvements required to be constructed
by the Partnership as landlord under the Leases and, through the day prior to
the twenty-fifth (25th) anniversary of the Commencement Date (as such term is
defined in the Office Lease), as security for the obligations of the tenant
under the Hartz Lease, and agrees that the Partnership shall have, in addition
to the rights provided for here-
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in, all of the rights and remedies of a secured party under the New Jersey
Uniform Commercial Code, other than the right to obtain a deficiency judgment in
connection therewith, in respect to its Interest in the event of the failure of
the General Partner to comply with its obligations as provided in this Section
4.04 or the obligations of the Tenant under the Hartz Lease.
(D) If, pursuant to Section 4.03(A) hereof, the General Partner is
obligated to make an Operating Deficit Loan or a Deficit Capital Contribution
and failed to do so and, if the General Partner shall fail to execute any and
all documents, including without limitation, loan agreements, promissory notes,
and transfer and sale documents which the Limited Partner reasonably deems
necessary to implement the rights and remedies set forth in this Section 4.04
for ten (10) days after request therefor by the Limited Partner, the General
Partner hereby appoints the Limited Partner its attorney-in-fact for the purpose
of executing any and all such documents. Such power of attorney granted herein
shall be deemed to be coupled with an interest, and such power of attorney
shall, to the extent permitted by law, survive the death, disability,
incompetency, withdrawal, removal, or Bankruptcy of the General Partner.
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4.05 Interest. Except as specifically herein provided, interest earned
on Partnership funds shall inure to the benefit of the Partnership. The Partners
shall not receive interest on their Capital Contributions.
4.06 Capital Account. The Partnership shall maintain a Capital Account
for each Partner as described in Section 2.06 hereof.
4.07 Withdrawal of Capital Contributions. Except as otherwise provided
in this Agreement or by law, (i) no Partner shall have the right to withdraw or
reduce its Capital Contributions, or to demand and receive property other than
cash from the Partnership in return for its Capital Contributions and (ii) any
return of Capital Contributions to the Limited Partner shall be solely from
Partnership assets, and the General Partner shall not be personally liable for
any such return.
4.08 Restoration of Negative Capital Accounts. At no time during the
term of the Partnership or upon the dissolution and liquidation of the
Partnership shall a Partner with a negative balance in his Capital Account have
any obligation to the Partnership or to any other Partner to restore such
negative balance, except in respect of any negative balance resulting from
withdrawal
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of capital or a distribution in contravention of this Agreement.
ARTICLE V
PROFITS, LOSSES AND DISTRIBUTIONS
5.01 Determination of Profits and Losses.
All profits and losses of the Partnership shall be determined by the
Partnership Accountants in accordance with the accrual method of accounting for
Federal income tax purposes, subject to appropriate adjustments resulting from
any election pursuant to Section 5.06 hereof .
5.02 Allocation of Profits and Losses from Operations.
(A) Losses. (i) Subject to Section 5.02(C), losses of the
Partnership incurred prior to the Fixed Rent Commencement Date other than Losses
arising from Capital Transactions, shall be allocated as follows:
a) Deductions for non-cash losses shall be allocated 66 2/3%
to the General Partner and 33 1/3% to the Limited Partner; and
b) Losses (calculated by excluding deductions for non-cash
losses) shall be allocated 100% to the General Partner.
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(ii) Subject to Section 5.02(C), Losses of the
Partnership incurred on or after the Fixed Rent Commencement Date, other than
Losses arising from Capital Transactions, shall be allocated 66 2/3 to the
General Partner and 33 1/3 to the Limited Partner.
(B) Profits. Subject to Section 5.02(C), profits, other than
profits arising from Capital Transactions, shall be allocated, after making all
distributions pursuant to Sections 5.04 and 5.05 for the taxable year, as
follows:
(i) first, to the General Partner and the Limited
Partner, respectively, an amount equal to the excess of (a) the aggregate of all
amounts distributed to such Partner pursuant to Section 5.04(A) or 5.05(A)(2)
for all taxable years (other than interest on Operating Deficit Loans or Limited
Partner Loans) over (b) the sum of (1) all amounts previously allocated to such
Partner pursuant to this Section 5.02(B)(i), Section 5.03(A)(ii), or Section
5.02(D) and (2) the difference between the total amount of such loans and the
amount allocated to such Partner pursuant to Section 5.02(C)(ii) with respect to
such loans;
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(ii) second, to the General Partner and the Limited
Partner, respectively, an amount equal to the excess of (a) the aggregate of all
amounts distributed to such Partner pursuant to Section 5.04(B) or 5.05(A)(3)
for all taxable years (other than amounts in the nature of interest on Deficit
Capital Contributions or Additional Capital Contributions) over (b) the sum of
(1) all amounts previously allocated to such Partner pursuant to this Section
5.02(B)(ii), Section 5.03(A)(ii), or Section 5.02(D) and (2), the difference
between the total amount of such capital contributions and the amount allocated
to such Partner pursuant to Section 5.02(C)(ii) with respect to such capital
contributions;
(iii) thereafter, 66 2/3% to the General Partner and 33
1/3% to the Limited Partner.
(C) Special Allocations. Notwithstanding Sections 5.02(A)
and 5.02(B),
(i) any deductions or losses attributable to payments
made under the Lease Acquisition Agreement or the Transportation and Completion
Agreement shall be allocated to the General Partner; and
(ii) to the extent that any Operating Deficit Loan,
Limited Partner Loan, Deficit Capital Contribution or Additional Capital
Contribution is made
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by reason of a partnership cash expenditure with respect to which the
Partnership is entitled to a deduction, such deduction shall be allocated to the
Partner making such Operating Deficit Loan, Limited Partner Loan, Deficit
Capital Contribution or Additional Capital Contribution.
(D) Anything to the contrary in this Article V
notwithstanding, losses shall not be allocated to a Partner who has a negative
Capital Account balance when any other Partner has a positive Capital Account
balance, but shall first be allocated to Partners who have positive Capital
Account balances. In addition, notwithstanding any other provision of Section
5.02 or 5.03, if at any time the sum of the deficit capital account balances of
the partners should exceed the partnership's minimum gain (as defined in Prop.
Reg. Section 1.704-1(b)(4)(iv), as proposed March 9, 1983), an amount of
income or gains equal to such excess shall first be allocated to such Partners,
in proportion to their respective shares of such excess.
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5.03 Profits and Losses from Capital Transactions.
(A) All net gains of the Partnership, as determined for Federal
income tax purposes for the Fiscal Year, in connection with a Capital
Transaction, shall be allocated among the Partners (after giving effect to all
charges and credits for the then current Fiscal Year pursuant to Section 5.02
above, all distributions for such Fiscal Year pursuant to Section 5.04, and all
charges, credits and distributions attributable to transactions which occurred
earlier than the transaction pursuant to which the gain is being allocated,
pursuant to Sections 5.01, 5.02, 5.03, 5.04 or 5.05, but not including any
distributions pursuant to Section 5.05 with respect to the transaction pursuant
to which the gain is then being allocated or any charges, credits, and
distributions attributable to transactions which occurred subsequent to the
transaction pursuant to which the gain is being allocated) as follows and in the
following order of priority:
(i) first, if the Capital Account of any Partner or Partners
has a negative balance, such gain shall be allocated to any such Partner or
Partners whose Capital Account has a negative balance in propor-
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tion to such negative balances, until the balance of each such Partner's Capital
Account is equal to zero;
(ii) second, gain shall be allocated to the General Partner
and the Limited Partner, respectively, until the positive balance in each
Partner's Capital Account is equal to the sum of the amounts distributed during
that Fiscal Year, or available for distribution as of the end of that Fiscal
Year to such Partner pursuant to Section 5.05(A)(2) and 5.05(A)(3) (other than
interest on Operating Deficit Loans or Limited Partner Loans, and other than
amounts in the nature of interest on Deficit Capital Contributions and
Additional Capital Contributions) by reason of the Capital Transaction pursuant
to which gain is being allocated;
(iii) third, gain shall be allocated to the General Partner
and the Limited Partner, respectively, until the ratio of (a) the amount, if
any, by which the General Partner's Capital Account balance exceeds the amount
distributed during that Fiscal Year, or available for distribution as of the end
of that Fiscal Year to it pursuant to Sections 5.05(A)(2) and 5.05(A)(3) (other
than interest on Operating Deficit Loans, and other than amounts in the nature
of interest on Deficit Capital Contributions), to (b) the amount, if
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any, by which the Limited Partner's Capital Account balance exceeds the amount
distributed during that Fiscal Year, or available for distribution as of the end
of that Fiscal Year to it pursuant to Sections 5.05(A)(2) and 5.05(A)(3) (other
than interest on Limited Partner Loans, and other than amounts in the nature of
interest on Additional Capital Contributions), is 2 to 1; and
(iv) thereafter, the balance shall be allocated 66 2/3% to
the General Partner and 33 1/3% to the Limited Partner.
(B) Any loss incurred by the Partnership, as determined for
Federal income tax purposes, in connection with a Capital Transaction, shall be
allocated among the Partners (after giving effect to all charges and credits for
the then current Fiscal Year pursuant to Section 5.02 above, all distributions
for such Fiscal Year pursuant to Sections 5.04 or 5.05, and all prior charges,
credits and distributions, if any, during such Fiscal Year pursuant to Sections
5.01, 5.02, 5.03 or 5.04, but not including any charges and credits with respect
to the transaction pursuant to which the loss is then being allocated or any
charges, credits, and distributions which occurred subsequent to the transaction
pursuant to which the loss is being allocated, but in-
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cluding the distributions resulting from such transaction) as follows and in the
following order of priority:
(i) first, if the Capital Account of any Partner or Partners
has a positive balance, such loss shall be allocated to the Capital Account of
any such Partner or Partners whose Capital Account has a positive balance to
make the ratio of the positive Capital Accounts of the General Partner and the
Limited Partner to the sum of the Capital Accounts of the Partners 66 2/3% and
33 1/3% respectively;
(ii) thereafter, the balance of such loss shall be allocated
66 2/3% to the General Partner and 33 1/3% to the Limited Partner.
(C) In the event that any gain realized upon a sale of the
Property is characterized as ordinary income as a result of the recapture of
cost recovery or depreciation deductions attributable to the Property, such
ordinary income shall be allocated among the Partners in accordance with the
percentages that the aggregate cost recovery or depreciation deductions were
allocated. Notwithstanding the foregoing, in no event shall a Partner be
allocated such ordinary income in excess of the gain allocated and to be
allocated to that Partner pursuant to Section 5.03(A) hereof.
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5.04 Distribution of Net Operating Revenues. Eighty-five percent (85%)
of Net Operating Revenues, after payment of debt service on the First Mortgage
or any other financing affecting the Property or the Partnership, shall be
distributed quarterly, in accordance with the Budget, within thirty (30) days
after the end of each quarter of each Fiscal Year by the General Partner, in the
following manner and order of priority:
(A) first, to pay any accrued and unpaid interest on the principal, and
the outstanding principal balance, of the Operating Deficit Loan and the Limited
Partner Loan, on a pari passu basis;
(B) second, to pay any accrued and unpaid amount in the nature of
interest on and the outstanding principal balance of any Deficit Capital
Contributions or Additional Capital Contributions, on a pari passu basis; and
(C) third, the balance, if any, shall be distributed 66 2/3% to the
General Partner and 33 1/3% to the Limited Partner.
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Such quarterly payments shall be adjusted annually, within ninety (90)
days after the end of each Fiscal Year, and excess amounts, if any, shall be
credited against future required payments; underpayments will be paid at the
time of such adjustment.
5.05 Distribution of Proceeds of Capital Transactions other than in
Liquidation.
(A) Capital Proceeds (other than in liquidation) shall be distributed
as follows and in the following order of priority:
(1) first, to the repayment of the First Mortgage or any other mortgage
or deed of trust or interim financing affecting the Property, if required
thereunder, including principal, interest and any fees or penalties incurred in
connection therewith;
(2) second, to the repayment of the outstanding principal balance of
the Operating Deficit Loan and the Limited Partner Loan, on a pari passu basis,
including any interest accrued thereon; and
(3) third, to the General Partner and the Limited Partner,
respectively, an amount equal to the excess of any Deficit Capital Contributions
or Additional Capital Contributions, including any amount in the nature of
interest accrued thereon, as the case may be, over the
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amount previously distributed pursuant to this Section 5.05(A)(3) or Section
5.04(B), in proportion to such excesses; and
(4) thereafter, the balance, if any, shall be paid 66 2/3% to the
General Partner and 33 1/3% to the Limited Partner.
(B) Notwithstanding anything contained herein, any proceeds secured by
the First Mortgage and actually received by the Partnership in excess of those
required in connection with payments under any construction agreement for the
construction of the Improvements shall be paid to the General Partner and deemed
to be payment for certain amounts previously advanced or contributed to the
Partnership in connection with the acquisition and construction of the
Improvements.
5.06 Partnership Adjustments. The Partnership shall elect to adjust the
basis of the Partnership property pursuant to the election provided for in
Section 754 of the Code. Any increase or decrease in the amount of any item of
income, gain, loss, deduction or credit attributable to an adjustment to the
basis of Partnership assets made pursuant to such election, and pursuant to the
corresponding provisions of applicable state and local income tax laws, shall be
charged or credited, as
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the case may be, to those Partners entitled thereto under such laws.
5.07 Allocations to Transferred Interests. Profits, gains, losses,
deductions and credits allocated to an Interest assigned or reissued during a
Fiscal Year shall be allocated to each Person who was the holder of such
Interest during such Fiscal Year, in proportion to the number of days that each
such holder was recognized as the owner of such Interest during such Fiscal Year
or by an interim closing of the books or in any other proportion permitted by
the Code and selected by the General Partner in accordance with this Agreement,
without regard to the results of Partnership operations or the date, amount or
recipient of any distributions which may have been made with respect to such
Interest. The effective date of any assignment shall be (i) in the case of a
voluntary assignment, the actual date the assignment is recorded on the books of
the Partnership, or (ii) in the case of involuntary assignment, the date of the
operative event.
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ARTICLE VI
RIGHTS AND OBLIGATIONS OF
THE GENERAL PARTNER
6.01 Management. Subject to and limited by the provisions of this
Agreement, the General Partner shall have full, exclusive and complete
authority, discretion, obligation and responsibility to make all decisions
affecting the business of the Partnership. The General Partner shall manage and
control the affairs of the Partnership to the best of its ability and shall use
its best efforts to carry out the business of the Partnership. The General
Partner shall devote to the Partnership such time as, in its discretion, may be
necessary for the proper performance of its duties hereunder.
The General Partner shall render to the Partnership such services as
are reasonably necessary for the management and conduct of the business of the
Partnership and shall be entitled to be reimbursed for out-of-pocket expenses
reasonably and necessarily incurred in connection with the performance of its
duties hereunder, including, without limitation, its acting as "Tax Matters"
Partner.
6.02 Authority. The General Partner shall have authority to bind the
Partnership, by execution of documents or otherwise, to any obligation not
inconsis-
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tent with the provisions of this Agreement. Except as otherwise provided in
Section 6.05, the General Partner may contract or otherwise deal with any Person
for the transaction of the business of the Partnership, which Person may, under
supervision of the General Partner, perform such acts or services for the
Partnership as the General Partners may approve.
6.03 Limitations on the General Partner.
A. The General Partner shall not have any authority to:
(i) perform any act in violation of any applicable law or
regulation thereunder, including applicable Federal and state securities laws;
(ii) perform any act in violation of the Act or this
Agreement;
(iii) consent to (a) any initial permanent mortgage financing
affecting the Properties other than on the terms and in the amount of the
Commitment, (b) any refinancing of the First Mortgage or other initial permanent
mortgage financing, (c) any attempted sale or actual sale of any of the
Properties except as specifically set forth herein or exercise of the
Partnership's rights under the Ground Leases to cancel the same except in
connection with a termination of the Leases by
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Paine Webber, Inc. pursuant to Section 38.12 of the Office Lease, (d) any
modification of the First Mortgage or such other initial permanent mortgage
financing, or (e) any sale or transfer of, or financing secured by, the fee
estate of the General Partner as landlord under the Ground Leases, if such
consent shall be required thereunder, without the prior Consent of the Limited
Partner, which Consent shall not be unreasonably withheld;
(iv) voluntarily file for Bankruptcy, unless the need for
the same shall arise by reason of the failure of the tenant under the Leases to
make any payments required thereunder, including, without limitation, a failure
to make any such payments in connection with bankruptcy proceedings and whether
or not the trustee in bankruptcy shall disaffirm either of the Leases; or
(v) perform any other act expressly requiring the Consent of
the Limited Partner under this Agreement without first obtaining such Consent.
B. Notwithstanding the provisions of clause A(iii)(a) of this Section
6.03, however, subsequent to the fifteenth (15th) anniversary of the
Commencement Date, the General Partner shall have the right to sell all or any
one of the Properties (but not any part thereof) (together with fee interest
therein), without the
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prior consent of the Limited Partner, provided that the proceeds of such sale,
when distributed to the Partners pursuant to Section 5.05 hereof, shall be
sufficient so that the Limited Partner shall receive an amount equal to the sum
of (x) the Limited Partner's full federal, state and local tax liability in
connection with such sale, and (y) an amount equal to the sum of the Limited
Partner's projected cash distribution of Net Operating Revenues and tax benefits
from the date of such sale to the twenty-fifth anniversary of the date hereof,
discounted to the then present value at the rate of 9% per annum. If there shall
be any dispute as to the value of the Limited Partner's projected tax benefits
or projected Net Operating Revenues, either party may refer the decision of the
issues raised to one of the so-called "big eight" public accounting firms,
mutually satisfactory to the Partners, or if the Partners shall be unable to
agree, then the firm to which the dispute shall be referred shall be chosen as
follows: the Partners shall each be permitted to exclude one of such firms from
the pool of acceptable firms; the firm to which such decision shall be referred
shall then be chosen by lot from the pool of remaining firms, and if the firm
chosen by lot shall refuse to serve, a substitute firm shall be chosen by lot.
The
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decision of such accountants shall be conclusively binding upon the Partners.
The fees and expenses involved in such a decision shall be borne by the
unsuccessful Partner (and if both Partners are partially unsuccessful, the
accountants shall apportion the fees and expenses between the parties based on
the degree of success of each Partner).
C. In addition, notwithstanding the provisions of clause A(iii)(b) of
this Section 6.03, if any such proposed refinancing shall be non-recourse,
unguaranteed (or if, in spite of the General Partner's best efforts, it is not
possible to obtain non-recourse and unguaranteed financing, recourse or
guaranteed financing) and on terms and at an interest rate which are
commercially reasonable for the type of property and the location thereof, if
the Limited Partner shall fail to approve the same, then the Limited Partner
shall be obligated to lend or to cause here to be lent to the Partnership by any
person, firm or corporation, including the Limited Partner, any amount not less
than the proposed refinancing on the same or better terms. If there shall be a
dispute as to whether the terms of the financing proposed by the Limited
Partners shall in fact be the same as or better than those of the financing
proposed by the Limited Part-
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ner, then, pending resolution of such dispute, the General Partner shall have
the authority, without the Limited Partner's Consent, to obtain any necessary
interim financing. The Limited Partner shall notify the General Partner of
whether it approves or disapproves of any such proposed refinancing within ten
(10) business days after notice thereof from the General Partner. Failure to
respond within such period shall be deemed to constitute approval by the Limited
Partner. In addition, if the Limited Partner shall fail to approve any proposed
refinancing required in connection with the repayment of any outstanding balance
of any loan on maturity or accelerated due date, then, provided that the General
Partner shall have notified the Limited Partner of the terms of the proposed
refinancing not less than one hundred eighty (180) days prior to the date on
which such prior loan shall be due, or such shorter period as may be reasonable
if such due date shall be accelerated by the Lender, the Limited Partner shall
be obligated to lend, or cause there to be lent, an amount sufficient to repay
such outstanding balance not less than one hundred twenty (120) days prior to
the date on which the same shall be due.
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6.04 Additional Limitations. The General Partner shall not be entitled
to:
(A) cause the Partnership to make loans to, or accept loans from
(other than on commercially reasonable terms), the General Partner or its
Affiliates; or
(B) accept rebates, subject to Section 6.05, or engage in any
reciprocal business arrangements which would violate this Section.
6.05 Business with Affiliates. Except as provided in Section 6.04
hereof, the General Partner may cause the Partnership to transact business with
any of its Affiliates for goods or services reasonably required in the conduct
of the Partnership's day-to-day business, provided that any such transaction
shall be effected only if:
(A) The Limited Partner shall have Consented to such transaction;
or
(B) The following conditions shall have been complied with:
(i) the transaction is on terms competitive with those that may
be obtained from unaffiliated Persons;
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(ii) any and all such transactions are disclosed to all Partners;
and
(iii) any goods or services provided by the General Partner or its
Affiliates to the Partnership shall be pursuant to a written contract which sets
forth the goods and services to be provided and the compensation to be paid, and
shall be terminable without cause or penalty upon sixty (60) days' Notice.
6.06 Liability for Acts and Omissions.
(A) The General Partner shall not be liable, responsible or
accountable in damages or otherwise to any of the Partners for any act or
omission performed or omitted in good faith on behalf of the Partnership and in
a manner reasonably believed to be within the scope of the authority granted by
this Agreement and in the best interests of the Partnership, but shall be so
liable, responsible or accountable for fraud, gross negligence, willful
misconduct or any material breach of its fiduciary duty with respect to such
acts or omissions.
(B) The General Partner shall be indemnified and held harmless by
the Partnership (but not any Partner) from and against any and all claims,
demands, liabilities, costs, damages and causes of action of any nature
whatsoever arising out of or incidental to the
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General Partner's management of the Partnership affairs, except where the
General Partner has committed fraud, gross negligence or willful misconduct.
The indemnification authorized by this Section 6.06 shall include,
without limitation, payment of:
(i) reasonable attorneys' fees or other expenses incurred in
connection with settlement or in any legal proceeding; and
(ii) the removal of any liens affecting any property of the
indemnitee.
The indemnification rights contained in this Section 6.06 shall be
cumulative of, and in addition to, any and all rights, remedies, and recourses
to which the General Partner shall be entitled, whether pursuant to the
provisions of this Agreement, at law, or in equity. Indemnifications hereunder
shall be made from Partnership Assets as an expense of the Partnership and no
general partner or limited partner(s) shall be personally liable to any
indemnitee.
6.07 Other Activities. Except as provided in Section 6.05 hereof, the
Partners and their Affiliates may engage in or possess an interest in other
business ventures of every nature and description for their own
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account, independently or with others, including, without limitation, real
estate business ventures, whether or not such other enterprises shall be in
competition with any activities of the Partnership; and neither the Partnership
nor the other Partners shall have any right by virtue of this Agreement in and
to such independent ventures or to the income or profits derived therefrom.
6.08 Classification as a Partnership. In conducting the operation of
the Partnership, the General Partner shall at no time engage in any conduct that
might cause the Partnership not to be classified for Federal income tax purposes
as a partnership but as an association taxable as a corporation.
6.09 Net Worth of General Partner. The General Partner hereby covenants
and agrees that it shall at all times have sufficient assets and net worth,
exclusive of its Interest, to permit the Partnership to be taxed as a
"partnership" and not as an association taxable as a corporation for Federal
income tax purposes under the provisions of the Code and the regulations
promulgated hereunder and in compliance with any requirements imposed by the
IRS.
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6.10 Management. The General Partner will exercise good faith in all
activities relating to the conduct of the business of the Partnership, and will
take no action with respect to the business or assets of the Partnership which
is not reasonably related to the achievement of the purposes of the Partnership.
ARTICLE VII
WITHDRAWAL OF GENERAL PARTNER
7.01 Assignment or Withdrawal by a General Partner. No general partner
of the Partnership may sell, transfer, assign or otherwise dispose of, or
pledge, hypothecate or otherwise encumber (collectively, "Transfer") its
Interest, in whole or in part, or withdraw from the Partnership, except as
permitted by this Article, Section 4.04(C) and Section 14.08 hereof.
7.02 Involuntary Withdrawal of a General Partner. In the event of the
involuntary withdrawal of a general partner due to death, disability,
Bankruptcy, dissolution or legal incapacity, such general partner shall
immediately cease to be a Partner and the Partnership shall purchase the
Interest of such Partner for an amount payable in cash equal to its fair market
value. For purposes of determining the fair market value under
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this Section, the provisions of Section 14.08 hereof shall apply.
7.03 Obligations of a Prior General Partner. If any general partner
withdraws or is removed from the Partnership under Sections 7.02 or 7.08 hereof
it shall remain liable for all obligations and liabilities incurred by it as a
general partner before the effective date of such event and shall be liable for
all damages and costs to the Partnership, the General Partner (and any new
general partner) and the Limited Partner (and any Substitute Limited Partner) as
a result of such sale, transfer, assignment, withdrawal or removal.
7.04 Remaining General Partner. Upon the death, disability, Bankruptcy,
dissolution, legal incapacity or removal of a general partner, the remaining
general partner, if any, (i) shall immediately give Notice to the Limited
Partner of such event, (ii) shall serve as the General Partner of the
Partnership, and (iii) shall continue the business of the Partnership. Upon the
death, disability, Bankruptcy, dissolution, legal incapacity or removal of the
sole remaining general partner, or the Transfer by the sole remaining general
partner of its Interest, a Person selected by the Limited Partner shall (i)
serve as the General Partner of the
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Partnership, and (ii) continue the business of the Partnership if the
Partnership is reconstituted under Article XII.
7.05 Removal of General Partner.
(A) The General Partner may be removed by the Limited Partner for
fraud, willful misconduct, gross negligence or material breach of fiduciary
duty.
(B) Upon receipt of Notice from the Limited Partner seeking the
removal of the General Partner pursuant to Section 7.05(A), and specifying the
cause for such removal, the General Partner shall have the right within 20
calendar days of the date of receipt of such Notice to cure the alleged default
or, if such breach cannot reasonably be cured in such period, to commence
efforts to cure and diligently prosecute such cure. Should such cure not be so
made or efforts commenced, then, unless the General Partner disputes such
removal and within the 20-day period provides Notice to the Limited Partner of
its intention to commence arbitration pursuant to Section 14.12 of this
Agreement, the General Partner shall immediately cease to be a general partner
and shall no longer have the powers and authorities conferred on it as general
partner as to the operation of the Partnership business and the General Part-
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ner's Interest shall be converted into that of a special limited partner
("Special Limited Partner") and shall be entitled to all profits, losses, gains,
distributions and other credits and charges to which the General Partner was
entitled under this Agreement, but shall not be entitled to vote with the
Limited Partner or the Substitute Limited Partner(s) upon any matter which
requires the consent or approval of the Limited Partner or the Substitute
Limited Partner(s) under this Agreement. Promptly after such conversion, the
Limited Partner shall file, or cause there to be filed, an amendment to the
Certificate of Limited Partnership of the Partnership, indicating such
conversion. The General Partner hereby makes, constitutes and appoints the
Limited Partner, and/or its authorized officers, agents, successors or assigns,
its true and lawful attorney-in-fact with full power and authority in its name,
place and stead to make, execute, sign, acknowledge, deliver, file and record
any such amendment. The General Partner shall remain liable for all liabilities
and obligations of the Partnership incurred or arising out of Partnership
operations during the time it was the General Partner, but shall be free from
liability in respect of obligations and liabilities incurred or arising out of
operations thereafter, unless
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the Partnership is dissolved as a consequence of the act of the General Partner
by law or by the provisions of this Agreement.
7.06 Successor General Partner. A Person shall be admitted as a general
partner only if the following terms and conditions are satisfied:
(A) the admission of such Person shall have been Consented to by
any other general partner(s) and by the Limited Partner;
(B) the Person shall have accepted and agreed to be bound by all
the terms and provisions of this Agreement by executing a counterpart thereof
and such other documents or instruments that may be required or appropriate in
order to effect the admission of such Person as a general partner;
(C) a certificate evidencing the admission of such Person as a
general partner shall have been filed for recordation;
(D) if the successor general partner is a corporation, it shall
have provided counsel for the Partnership with a certified copy of a resolution
of its Board of Directors authorizing it to become a general partner; and
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(E) except in connection with a transfer pursuant to Section 14.08
hereof, counsel for the Partnership shall have rendered an opinion that none of
the actions taken in connection with such transfer or admission will cause a
termination of the Partnership pursuant to Section 708 of the Code, which
opinion can be waived by the remaining general partner(s) and the Limited
Partner.
7.07 Additional Limitation on Transferability. Anything to the contrary
in this Agreement notwithstanding, except in connection with a transfer pursuant
to Section 14.08 hereof, no general partner may Transfer its Interest, in whole
or in part, if such Transfer will cause a termination of the Partnership
pursuant to Section 708 of the Code, and any Transfer in violation of the
provisions hereof shall be void.
7.08 Permitted Assignments by the General Partner. Notwithstanding
anything contained herein to the contrary, the General Partner shall have the
right, upon compliance with the provisions of Section 7.06(B)-(E) but subject
to the provisions of Section 7.07, to assign its entire Interest to an
Affiliate. In addition, the General Partner shall have the right, from time to
time, upon compliance with the provisions of Section
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7.06(B) and (E) and subject to the provisions of Sections 4.04(C) and 7.07, to
assign a portion or portions of its Interest, not to exceed 65 2/3% in the
aggregate, to Affiliates, to Leonard Stern, members of his immediate family or
trusts for the benefit of Leonard Stern or members of his immediate family, and
to charitable foundations established by Leonard Stern, provided, however, that
no such assignee shall be deemed to be a general partner but rather a Special
Limited Partner, and shall be entitled to all profits, losses, gains,
distributions and other credits and charges to which the General Partner was
entitled under this Agreement and which are allocable to the portion of the
Interest so transferred, but shall not be entitled to vote with the Limited
Partner or the Substitute Limited Partner(s) upon any matter which requires the
consent or approval of the Limited Partner or the Substitute Limited Partner(s)
under this Agreement and provided further that each such assignee shall consent
in writing to its Interest being pledged to secure the obligations of the
General Partner in accordance with Section 4.04(C) hereof. In addition, upon
compliance with the provisions of Section 7.06(B) and (E) and subject to the
provisions of Sections 4.04(C) and 7.07, in the event of the death of Leonard
Stern, the General
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Partner may transfer its entire Interest to the Estate of Leonard Stern (the
"Estate") in connection with the dissolution of the General Partner and the
transfer of its assets to the Estate, provided that the Estate shall have a net
worth not less than the General Partner's immediately prior to such transfer,
the Estate shall acknowledge all claims against, and obligations of the General
Partner, including, without limitation, the Guarantee, of even date hereof, by
the General Partner for the benefit of the Limited Partner, and the Estate shall
insure that there shall be a continuity of management of the Partnership and the
Properties.
Nothing contained herein shall be deemed to limit any rights the
General Partner may have to pledge its Interest, subject, however, to its prior
pledge pursuant to Section 4.04(C) hereof.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
8.01 Management of the Partnership. The limited Partner shall not take
part in the management or control of the business of the Partnership or transact
any business in the name of the Partnership. The Limited Partner shall not have
the power or authority to bind the Partnership or to sign any agreement or
document in the
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name of the Partnership. The Limited Partner shall not have any power or
authority with respect to the Partnership, except insofar as the Consent of the
Limited Partner shall be expressly required by this Agreement. The exercise of
any of the rights and powers of the Limited Partner pursuant to the terms of
this Agreement shall not be deemed taking part in the day-to-day affairs of the
Partnership or the exercise of control over Partnership affairs.
8.02 Limitation on Liability. The liability of the Limited Partner
shall be limited hereunder to its Interest as and when it is payable under the
provisions of this Agreement. The Limited Partner shall not have any other
liability to contribute money to the Partnership, nor shall the Limited Partner
be personally liable for any obligations of the Partnership. Nothing contained
in this paragraph is intended to alter the provisions of any applicable state
statutes regarding limitations on the liability of limited partners.
8.03 Power of Attorney.
(A) The Limited Partner hereby makes, constitutes and appoints the
General Partner, and/or its authorized officers, agents, successors or assigns,
its true and lawful attorney-in-fact with full power and
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authority in its name, place and stead to make, execute, sign, acknowledge,
deliver, file and record at the appropriate public offices such documents as may
be necessary or appropriate to carry out the provisions of this Agreement,
including the following with respect to the Partnership:
(i) the certificate of limited partnership of the Partnership, and
all certificates, other agreements and amendments thereto, which the General
Partner reasonably deems necessary to continue the Partnership as a Limited
Partnership in each jurisdiction in which the Partnership conducts business;
(ii) all instruments which the General Partner reasonably deems
necessary to effect any sales or transfers by, or the dissolution and
liquidation of, the Partnership or to reflect a change or modification of the
Partnership, all made in accordance with the terms of this Agreement; or
(iii) all such other instruments as may be reasonably deemed
necessary or desirable by the General Partner to carry out fully the provisions
of this Agreement in accordance with its terms, or to manage and operate the
Properties in the ordinary course of business (provided however, that nothing
herein contained shall be
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deemed to supersede any limitations specifically imposed on the General Partner
by any provision of this Agreement, including, without limitation, those
limitations which are contained in Sections 6.03 and 6.04 hereof).
(B) The foregoing power of attorney is hereby declared to be
irrevocable and coupled with an interest, and it shall survive the Bankruptcy,
legal disability, dissolution or cessation to exist as a legal entity of the
Limited Partner to the fullest extent permitted by law and extend to its heirs,
executors, personal representatives, successors and assigns, and the transfer or
assignment of all or any part of the Interest of such Partner; provided,
however, that if the Limited Partner transfers all or any part of its Interest,
the foregoing power of attorney of the transferor Limited Partner shall survive
such transfer only until such time as the transferee shall have been admitted to
the Partnership as a Substitute Limited Partner and all required documents and
instruments shall have been duly executed, filed and recorded to effect such
substitution.
(C) The power of attorney granted to the General Partner shall not
apply to Consent of the Limited Partner provided for in this Agreement unless
any specific time period set forth herein in connection with
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the granting or denying of such consent shall have expired.
(D) The Limited Partner further agrees to execute any and all
documents or instruments referred to in this Section 8.03 if the provisions of
the Act render ineffective the power of attorney granted hereunder.
8.04 Admission of Additional Partners. Except as provided in this
Agreement, no new partners may be admitted to the Partnership without the
Consent of all of the Partners. The admission of additional partners is further
subject to the condition that each such additional partner execute this
Agreement or an appropriate supplement hereto pursuant to which he agrees to be
bound by the terms and provisions hereof. The admission of an additional partner
pursuant hereto shall not be cause for dissolution of the Partnership.
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ARTICLE IX
TRANSFER OF LIMITED PARTNERSHIP INTERESTS
9.01 No Unpermitted Transfers. The Limited Partner may not sell,
assign, transfer or otherwise dispose of, or pledge, hypothecate or otherwise
encumber his Interest, or any part thereof, except as permitted in this Article
IX and Sections 14.08 and 14.13 hereof, and any transaction in violation of this
Article IX and Section 14.08 hereof shall be null and void as against the
Partnership, except as otherwise provided by law.
9.02 Assignment by Limited Partner.
(A) The Limited Partner may assign its Interest, in whole or in
part, by an executed and acknowledged written instrument only if all of the
following conditions are satisfied:
(i) the assignor and assignee file a notice of transfer with
the General Partner which contains the information reasonably required by the
General Partner; and
(ii) any reasonable costs of transfer shall have been paid
to the Partnership; and
(iii) the General Partner shall have Consented to the
assignment, which Consent may be granted or withheld in its sole discretion.
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(B) Any such assignment shall be recognized by the Partnership as
effective only on the first day of the calendar month following receipt by the
Partnership of such notice of the proposed assignment and satisfaction of the
aforementioned conditions.
(C) If an assignee of a Limited Partner does not become a
Substitute Limited Partner pursuant to Section 9.03, the Partnership shall not
recognize the assignment, and the assignee shall not have any rights to require
any information on account of the Partnership's business, inspect the
Partnership's books or vote on Partnership matters.
(D) Notwithstanding anything contained herein to the contrary,
upon compliance with the provisions of clauses (i) and (ii) of Paragraph (A) of
this Section, the Limited Partner, or any limited partner, or Special Limited
Partner, shall have the right to assign its Interest, in whole or in part, to an
Affiliate.
9.03 Substitute Limited Partner.
(A) An assignee of the whole or any portion of the Limited
Partner's Interest in accordance with Section 9.02 shall have the right to
become a Substitute Limited Partner in place of its assignor only if all of the
following conditions are satisfied:
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(i) the fully executed and acknowledged written instrument
of assignment which has been filed with the Partnership sets forth a statement
of the intention of the assignor that the assignee become a Substitute Limited
Partner in his place;
(ii) the assignee executes, adopts and acknowledges this
Agreement, and a certificate evidencing the admission of such Person as a
Substitute Limited Partner shall have been filed for recording;
(iii) any reasonable costs of transfer shall have been paid
to the Partnership;
(iv) the assignee meets the investment requirements which
may be established by the General Partner for investment in the Partnership; and
(v) the General Partner shall have Consented to the
substitution, which Consent may be granted or withheld in its sole discretion.
(B) The General Partner may elect to treat an assignee who has not
become a Substitute Limited Partner as a Substitute Limited Partner in the place
of its assignor.
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9.04 Involuntary Withdrawal by Limited Partner.
(A) Upon the Bankruptcy, dissolution or other cessation to exist
as a legal entity of the Limited Partner, at the election of the General
Partner, the Limited Partner shall immediately cease to be a Partner and the
Partnership shall purchase the Interest of the Limited Partner for an amount
payable in cash equal to its fair market value. For purposes of determining the
fair market value under this Section, the provisions of Section 14.08 hereof
shall apply.
(B) The Bankruptcy, dissolution or cessation to exist as a legal
entity of the Limited Partner shall not dissolve or terminate the Partnership.
9.05 Additional Limitation on Transferability. Anything to the contrary
in this Agreement notwithstanding, the Limited Partner may not Transfer its
interest, in whole or in part, if such Transfer will cause a termination of the
Partnership pursuant to Section 708 of the Code, and any Transfer in violation
of the provisions hereof shall be void.
ARTICLE X
DISSOLUTION AND LIQUIDATION
10.01 Dissolution. Unless sooner terminated in accordance with its
terms, the Partnership shall be
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dissolved upon the occurrence of any one of the following:
(A) an election to dissolve the Partnership is made by the General
Partner with the Consent of the Limited Partner;
(B) the sale, exchange or other disposition of all, or
substantially all, of Partnership Assets;
(C) subject to the provisions of Article VII, the death,
disability, Bankruptcy, dissolution, legal incapacity, removal or withdrawal of
the sole remaining general partner or the sale, transfer or assignment, pursuant
to Section 7.01 or 7.08 hereof, by the sole remaining general partner of its
Interest;
(D) the occurrence of the date set forth in Section 1.05;
(E) the tenant under the Leases shall elect pursuant to the
provisions of Section 38.12 of the Office Lease to terminate the Leases; or
(F) any other event causing dissolution of the Partnership under
the Act.
10.02 Liquidation of Partnership Assets. In the event of a dissolution
of the Partnership and the failure of the Partnership to be reconstituted under
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Article XI, the Partnership shall be terminated. Upon such termination, a full
accounting of the assets and liabilities shall be taken, the assets shall be
liquidated, and the Capital Proceeds thereof shall be applied as follows:
(a) All liabilities and obligations of the Partnership, other than
liabilities and obligations to the Partners as Partners under this
Agreement, shall be paid or provided for (whether by such reserve as the
Liquidator shall deem appropriate or otherwise);
(b) All liabilities and obligations of the Partnership to the
Partners shall be paid or provided for (whether by such reserve as the
Liquidator shall deem appropriate or otherwise) in the following order of
priority:
(i) to the repayment of the outstanding principal balance of the
Operating Deficit Loan, the Deficit Capital Contributions, the Limited Partner
Loan and the Additional Capital Contributions, on a pari passu basis, including
interest accrued thereon; and
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(c) After allocation of all income, gains and losses in accordance
with Article 5, to the Partners in accordance with the positive balances in
their Capital Accounts.
ARTICLE XI
RECONSTITUTION
11.01 Reconstitution. Notwithstanding any dissolution of the
Partnership under Section 10.01(C) or (F), the business of the Partnership shall
be continued with the Partnership property and the Partnership assets shall not
be liquidated and the Partnership automatically shall be reconstituted with the
remaining general partner or substituted general partner acting as the General
Partner.
If the Partnership is dissolved and no general partner is then serving
in accordance with the provisions of Article VII, a successor Person may be
admitted within ninety (90) days after a dissolution, effective as of the date
of dissolution, as general partner with the Consent of the Limited Partner and
upon the satisfaction of the terms and conditions set forth in Section 7.07
hereof. Upon the admission of such Person as a successor general partner,
without any further Consent or approval of any
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other Partner, the Partnership shall be reconstituted as a Successor Limited
Partnership.
11.02 Continuation of Business. The Successor Limited Partnership shall
continue the business of the Partnership with the Partnership property. The
Interests of the Partners in the Successor Limited Partnership shall be in
proportion to their Interests in the dissolved Partnership. Such Successor
Limited Partnership shall be governed by the terms and provisions of this
Agreement and references in this Agreement to the Partnership or to the Partners
or their rights and obligations shall be understood to comprehend such Successor
Limited Partnership and the Partners thereof and their rights and obligations.
ARTICLE XII
ACCOUNTING AND REPORTS
12.01 Books and Records. The General Partner shall maintain at the
office of the Partnership full and accurate books of the Partnership showing all
receipts and expenditures, assets and liabilities, profits and losses, and all
other books, records and information required by the Act or necessary for
recording the Partnership's business and affairs. The Partnership's books and
records shall be maintained in accordance with the
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accrual method of accounting. All Partners and their duly authorized
representatives shall have the right to inspect and copy at their expense any
and all of the Partnership's books and records, including books and records
necessary to enable a Partner to defend any tax audit or related proceeding,
during reasonable business hours, upon two (2) business days' Notice to the
General Partner.
12.02 Annual Tax Returns. The General Partner shall cause the
Partnership Accountants to prepare all tax returns required of the Partnership.
The General Partner shall be the "tax matters partner" of the Partnership, as
that term is defined in Section 6231(a)(7) of the Code. The General Partner
shall be responsible for the preparation of filing of any tax shelter
registration documents, if applicable, that may be required in Section 6111 of
the Code. Notwithstanding the foregoing, however, the General Partner agrees
that the first tax return filed after completion of the Improvements shall be
subject to review by the Limited Partner. The Limited Partner shall notify the
General Partner of any objections it may have thereto within fifteen (15)
business days after receipt of such return. If the Limited Partner and the
General Partner shall thereafter be unable to agree, such
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dispute shall be submitted to one of the so-called "big eight" accounting firms
for resolution in accordance with the provisions of Paragraph 4(c) of the Lease
Acquisition Agreement.
12.03 Reports to Partners. As soon as practicable after the end of each
Fiscal Year, the General Partners shall cause the Partnership Accountants to
furnish the Partners with reports containing at least the following information:
(A) By each March 15, as the same may be extended as a result of
an extension pursuant to clause (B) of this Section 12.03, IRS Form K-1, or any
similar form as may be required by the IRS, stating the Partner's distributive
share of income, gain, loss, deduction or credit for the previous Fiscal Year;
(B) By each April 15, as the same may be extended by the
Partnership pursuant to requests to extend the date on which it must file its
Federal income tax forms, an unaudited balance sheet and related statements of
income, cash flow and Partners' capital and changes in financial position
certified by an officer of the General Partner;
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(C) By each April 30:
(i) any information which the General Partner deems
relevant or is required by applicable law; and
(ii) a report of the activities of the Partnership during the
previous Fiscal Year;
(D) Within sixty (60) days after the end of each fiscal quarter,
(i) a summary, prepared by the General Partner, of all transactions during such
fiscal quarter between the Partnership and the General Partner or its
Affiliates, if any (including the nature of the transaction and the payments
involved and any other information which the General Partner reasonably deems
relevant or is required by applicable law), and (ii) an unaudited operating
statement for such fiscal quarter.
12.04 Partnership Funds. The General Partner shall have the
responsibility for the safe-keeping and use of all funds and assets of the
Partnership and the General Partner shall not employ such funds in any manner
except for the benefit of the Partnership. All funds of the Partnership not
otherwise invested shall be deposited in one or more accounts maintained in such
banking institutions as the General Partner shall determine.
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ARTICLE XIII
AMENDMENTS AND MEETINGS
13.01 Amendment Procedure. The amendment procedure is as follows:
(A) amendments to this Agreement may be proposed by the General
Partner or by the Limited Partner; and
(B) a proposed amendment will be adopted and effective only if it
receives the Consent of all the Partners.
In the event all Partners Consent to any of the above changes, an
amendment to this Agreement shall be executed and filed for recording in the
manner prescribed by the Act.
13.02 Meetings and Voting.
(A) Meetings of Partners may be called by the General Partner or
by the Limited Partner for informational purposes or for any purpose permitted
by this Agreement. The General Partner shall give all Partners Notice of the
purpose of such proposed meeting not less than fifteen (15) nor more than sixty
(60) days before the meeting. Meetings shall be held at a time and place
reasonably selected by the General Partner.
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(B) The General Partner may solicit required Consents of the
Limited Partner under this Agreement at a meeting held pursuant to Section
13.02(A) or by written ballot.
ARTICLE XIV
MISCELLANEOUS
14.01 Title to Partnership Property. All Partnership Assets shall be
deemed to be owned by the Partnership as an entity, and no Partner, individually
shall have any ownership interest in such property.
14.02 Validity. Each provision of this Agreement shall be considered
separate and, if for any reason, any provision(s) which is not essential to the
effectuation of the basic purposes of this Agreement is determined to be
invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall not impair the operation of or affect those provisions of
this Agreement which are otherwise valid, except that if the provisions of
Section 8.02 hereof shall be determined to be invalid, illegal or unenforceable,
this Agreement shall be deemed to be void and of no further force or effect.
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14.03 Applicable Law. This Agreement, and the application or
interpretation thereof, shall be governed exclusively by its terms and by the
laws of the State of New Jersey.
14.04 Binding Agreement. This Agreement and all terms, provisions and
conditions hereof shall be binding upon the parties hereto, and shall inure to
the benefit of the parties hereto and, except as otherwise provided herein, to
their respective heirs, executors, personal representatives, successors and
assigns.
14.05 Waiver of Action for Partition. Each of the parties hereto
irrevocably waives during the term of the Partnership any right that it may have
to maintain any action for partition with respect to any Partnership Assets.
14.06 Headings. All section headings in this Agreement are for
convenience of reference only and are not intended to qualify the meaning of any
section.
14.07 Terminology. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders, the singular shall include the plural, and vice versa, as the
context may require.
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14.08 Right of First Offer.
(A) Any Partner (the "Sending Partner"), at any time, may give
notice (the "Selling Notice") to the other Partners (the "Receiving Partners")
of its desire to sell its Partnership Interest. At any time within sixty (60)
days after receipt of the Selling Notice, the Receiving Partners each shall
either:
(i) elect, by notice to the Sending Partner, to purchase or
to cause its designee to purchase the Partnership Interest of the Sending
Partner; or
(ii) elect not to purchase or to cause its designee to
purchase the Partnership Interest of the Sending Partner.
(B) If one or more Receiving Partner shall elect to purchase the
Partnership Interest of the Sending Partner, then:
(i) the purchase price (the "Purchase Price") of such
interest shall be an amount equal to that which the Sending Partner would have
been entitled to receive if the Properties were sold at the Fair Market Value,
all liabilities of the Partnership, including non-recourse liabilities with
respect to the Properties were to be satisfied and the Partnership were to be
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dissolved and liquidated pursuant to the terms of Article X hereof;
(ii) the Purchase Price will be paid either in cash or, at
the election of any of the Receiving Partners, by delivery of a purchase money
note in the principal amount of the Purchase Price, which note will be secured
by either a collateral assignment of leases and rents or a second mortgage, and
which note shall have a term of three (3) years, prepayable in full at any time
without penalty and with interest only payable during such term, at a rate
computed and payable monthly on the basis of a fraction, the denominator of
which is 360 and the numerator of which is the number of days in the billing
period, equal to the Prime Rate in effect as of the first day of the month
preceding the month in which an installment of interest is due; and
(iii) the Sending Partner shall be removed immediately from
the Partnership and the Sending Partner shall not be entitled to receive any
distributions in connection therewith.
(C) Upon determination of the Fair Market Value, each Receiving
Partner shall have the option, to be exercised within ten (10) business days
after determination of the Fair Market Value, to rescind its
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election to purchase or to cause its designee to purchase the Partnership
Interest of the Sending Partner, in which event the provisions of Paragraph (D)
of this Section 14.08 shall be deemed to apply.
(D) If no Receiving Partner shall elect to purchase or to cause
its designee to purchase the Partnership Interest of the Sending Partner, or if
all Receiving Partners shall rescind their election to purchase or to cause
their designee to purchase the Partnership Interest of the Sending Partner,
then, upon compliance with the provisions of Sections 7.06(B)-(D) and
9.02(A)(i)-(ii) and subject to the provisions of Sections 7.07 and 9.05, as the
case may be, the Sending Partner may assign its entire Interest to a third party
for a purchase price, in the case of such a rescission, of not less than 95% of
the price which the Receiving Partners would have paid if they had not so
rescinded its election to purchase. In addition, in either event, if the Sending
Partner shall not have assigned its interest within six (6) months after the
Receiving Partners either shall have elected not to purchase or shall have
rescinded their election, then, prior to assigning its interest to a third
party, it shall once again offer its Interest to the Receiving Partners pursuant
to this Section 14.08.
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(E) If more than one Receiving Partner shall elect to purchase the
Sending Partner's Interest, then such Interest and the Purchase Price shall be
allocated among such Receiving Partners in the proportion that their Interests
bear to each other.
(F) For the purposes of this Section 14.08, "Fair Market Value"
shall be deemed to mean the amount which a willing buyer would pay and a willing
seller would accept, neither under a compulsion to buy or sell, as a purchase
price, in cash, for the Interest of the Sending Partner. If there shall be a
dispute between the Sending Partner and the Receiving Partners as to the fair
market value of the Interests of the Sending Partner, each shall select and
notify the other of the name and address of an appraiser who is a member of the
American Institute of Appraisers of the National Association of Real Estate
Boards (a "MAI Appraiser") (provided, however, that if there shall be more than
one limited partner, then the Limited Partner, acting in its sole discretion,
shall select an MAI Appraiser to act for all the limited partners). If one of
the parties shall fail to give Notice to the other party within five (5) days
thereafter, specifying the name and address of a MAI Appraiser designated by it,
then the appraiser chosen by
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the other party shall make the determination alone. If two appraisers have been
designated, each appraiser shall promptly, within fifteen (15) days after the
designation by each party, make a separate appraisal determining the then Fair
Market Value of the Interest of the Sending Partner, using the standard set
forth above, and each shall deliver to each other and both the parties a copy of
their appraisals, each of which shall include therein all factors considered in
reaching the fair market value of the Interest of the Sending Partner. Such two
appraisers shall meet twenty (20) days after receipt of each other's
determination, to confer with each other and to attempt to reach agreement on
the Fair Market Value of the Interest of the Sending Partner. If such appraisers
shall concur as to the determination of the Fair Market Value of the Interests,
such concurrence shall be final and binding upon the parties. If such appraisers
shall fail to concur, then they shall immediately designate a third MAI
Appraiser. If the two appraisers shall fail to agree upon the designation of
such third appraiser within five (5) days, then either party on behalf of both
may apply to the American Arbitration Association for the designation of such
third MAI Appraiser. The third appraiser shall conduct such hearings and
investigations as
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he may deem appropriate and shall, within ten (10) days after the date of his
designation determine the Fair Market Value of the Interest of the Sending
Partner, which determination in no event shall be higher than that of the
appraiser of the Sending Partner or lower than that of the appraiser of the
Receiving Partners. In making this determination, the third appraiser shall use
as a standard for determining Fair Market Value the standard set forth in this
Section 14.08. The two determinations closest to each other shall then be
averaged and such average shall be binding upon the parties. Each party shall
pay its own counsel fees and expenses, if any, in connection with any appraisal
under this Section, including the expenses and fees of any MAI Appraiser
selected by it in accordance with the provisions of this Section, and the
parties shall share equally all other expenses and fees of such appraisal. The
determination rendered in accordance with the provisions of this Section shall
be final and binding in fixing Fair Market Value. For purposes of this Section,
a MAI Appraiser shall be one who is independent, impartial and who shall have
had at least ten (10) years experience in valuations of properties of the
character and in the same general area as the Properties.
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14.09 General Partner Representations. The General Partner represents
and warrants to the Partnership that:
(A) General Partner is a corporation duly formed and validly
existing in good standing under the laws of the State of New York, and will be
duly registered or qualified to conduct business in each jurisdiction or place
in which the conduct of its business legally requires such registration or
qualification;
(B) The execution, delivery and performance of this Partnership
Agreement by the General Partner and the consummation of the transactions
contemplated hereby have been authorized by all requisite action by or with
respect to the General Partner, and this Partnership Agreement, when executed by
the General Partner, will constitute a valid and binding obligation of the
General Partner, enforceable against the General Partner in accordance with its
terms, subject to bankruptcy laws, and laws affecting creditors rights
severally;
(C) The General Partner is not in violation of its certificate of
incorporation or bylaws or in default in any material respect in the performance
of any material agreement to which the General Partner is a party or bound. The
execution, delivery and performance
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of this Partnership Agreement by the General Partner, and the fulfillment by the
General Partner of the terms herein set forth and the consummation by the
General Partner of the transactions herein contemplated, will not conflict with
or constitute a breach of, or default in a material way under, the certificate
of incorporation or bylaws of the General Partner, or any other material
agreement or instrument to which the General Partner is a party or bound, or any
law;
(D) The Land is properly zoned for the completion of the
Improvements, and the Improvements, as designed, will comply with all applicable
zoning, environmental and other governmental laws, regulations and ordinances;
(E) As of the date hereof, the Properties are not subject to any
contract, agreement or other instrument which will be binding upon the
Partnership, or otherwise affects the Properties, other than the Ground Leases,
the Leases, the Hartz Lease and the Reciprocal Construction Operation and
Easement Agreement, to be entered into substantially in the form of the draft
dated March 5, 1986, between the General Partner and the Township of Weehawken
and such other agreements as are set forth on the Title Insurance Commitment No.
819-055303,
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issued by Commonwealth Land Title Insurance Company (the "Title Commitment");
(F) Attached hereto as Exhibit "D" is a true and complete list of
all contracts, agreements and other instruments (including, without limitation,
all policies of insurance affecting the Properties), which the General Partner
has executed in connection with the Properties, other than any contracts or
subcontracts executed in connection with the construction of the Improvements;
the General Partner has performed all of its obligations under all of said
documents and no event of default exists under any of said documents, nor does
any event exist which, with the giving of notice, or passage of time, or both,
would constitute an event of default thereunder (or, with respect to policies of
insurance, cause the cancellation thereof); neither the execution and delivery
of this Agreement, nor the assignment of said documents to the Partnership will
cause any such event of default;
(G) There are no actions, claims, suits, proceedings or
investigations, either administrative or judicial, pending or affecting the
Properties;
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(H) The General Partner is the sole owner of the Land, free and
clear of all exceptions to title, except for those set forth in the Title
Commitment.
(I) The General Partner has received no notice of, and has no
knowledge of, any pending or contemplated condemnation of the Land or any part
thereof;
(J) No person or entity has any right or option to acquire the
Properties or any portion thereof;
(K) The General Partner has not received any notice of any
violations of any Federal, state, county or municipal law, ordinance, order,
regulation or requirement with respect to the Properties;
(L) At present, and at no time since the General Partner acquired
the Land, have hazardous substances or wastes within the meanings of the
Environmental Cleanup Responsibility Act (N.J.S.A. 13:1K-6 et seq.) and the
Spill Compensation and Control Act (N.J.S.A. 59:10-23.11 et seq.) or other toxic
or other hazardous material ("hazardous substances") been produced, refined,
treated, disposed of or discharged at the Land and the General Partner has no
knowledge that the Land was so used prior to the purchase of the Land. The
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General Partner has at all times during its ownership of the Land properly
disposed of all hazardous substances and wastes of any kind generated by the use
of the Land. The General Partner has not received any letter or other
communication, written or oral, from the New Jersey Department of Environmental
Protection relating to the presence of hazardous substances at the Land;
(M) There are no leases, subleases, licenses, franchises,
concessions or other occupancy agreements of any nature whatsoever, oral or
written, affecting the use or occupancy of any portion of the Properties and to
which the Partnership will be bound other than the Ground Leases, the Leases,
and the Hartz Lease; and
(N) The most currently available real estate taxes and assessments
for the Properties are set forth on Exhibit "E" annexed hereto, and all such
real estate taxes and assessments which are due and payable have been paid.
14.10 Counterparts. This Agreement may be executed in several
counterparts, and all so executed shall constitute one Agreement, binding on all
of the parties hereto, notwithstanding that all the parties are not signatories
to the original or the same counterpart.
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14.11 Entire Agreement. This Agreement contains the entire
understanding among the parties hereto and supersedes all prior written or oral
agreements among them respecting the within subject matter, unless otherwise
provided herein.
14.12 Arbitration. Any Partner may at any time request arbitration, of
any matter in dispute. The party requesting arbitration shall do so by giving
notice to that effect to the other party, specifying in said notice the nature
of the dispute, and said dispute shall be determined in Newark, New Jersey, by a
single arbitrator, in accordance with the rules then obtaining of the American
Arbitration Association (or any organization which is the successor thereto).
The award in such arbitration may be enforced on the application of either party
by the order or judgment of a court of competent jurisdiction. The fees and
expenses of any arbitration shall be borne by the parties equally, but each
party shall bear the expense of its own attorneys and experts and the additional
expenses of presenting its own proof.
14.13 Security Interest in Limited Partner's Interest. For a period of
five (5) years commencing on the Fixed Rent Commencement Date (as such term is
defined in the Leases) of each Lease, the Limited Partner hereby
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pledges and grants to the Partnership a security interest in its Interest, as
security for its obligations as tenant under the Leases (provided that it shall
not have been released from liability under the Leases prior to the expiration
of such five (5) year period), and agrees that the Partnership shall have all of
the rights and remedies of a secured party under the New Jersey Uniform
Commercial Code (including the right to obtain a deficiency judgment against the
Limited Partner) in respect to its Interest in the event of the failure of the
Limited Partner to comply with its obligations as tenant in accordance with the
provisions of the Leases. Subsequent to such five (5) year period (as the same
may be decreased pursuant hereto), the Limited Partner shall have the right to
pledge (such pledge shall not be deemed to affect any right the General Partner
may have to Consent to any assignment of the Limited Partner's Interest pursuant
to Section 9.02(A)(iii) hereof) its Interest to any third party.
14.14 Financing, Transfer of Land. In connection with any financing
secured by the Improvements or the Ground Leases, including, without limitation,
the First Mortgage, the General Partner shall have the obligation, upon request
by the Limited Partner, to subject
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its fee interest in the Land to any such secured financing, simultaneously with
the closing of any such financing. In addition, in connection with any sale or
transfer of any of the Properties, the Limited Partner shall have the
obligation, upon request by the General Partner, to exercise its option pursuant
to the Purchase Option Agreement to purchase up to a one-third interest in the
fee interest in the Land simultaneously with the closing of such sale or
transfer; provided, however, that in no event shall the Limited Partner be
required to expend in connection with such purchase an amount in excess of the
sums it will receive pursuant to Section 5.05 hereof as a result of such sale,
less all amounts required to pay the Limited Partner's full federal, state and
local tax liability in connection therewith, and provided further that if the
General Partner shall make such request, then, simultaneously with the closing
of such sale or transfer, the General Partner and the Limited Partner shall
transfer title to the fee to the purchaser or transferee.
14.15 Use of Certain Capital Proceeds by the Limited Partner.
Notwithstanding anything contained herein to the contrary, if at any time during
the term of this Agreement, and provided that the applicable Ground
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Lease shall be in effect the Limited Partner shall receive any funds pursuant to
Section 5.05 hereof, then, within thirty (30) days after receipt of such funds,
the Limited Partner shall use the same (less the amount of any Federal, state or
local taxes that may be due from the Limited Partner in connection therewith) to
purchase an interest in the fee (not to exceed a one-third interest in the
aggregate) in accordance with the applicable Purchase Option Agreement.
Thereafter, any amounts received by the Limited Partner as ground rent under the
applicable Ground Lease shall be paid to the General Partner, to be held in a
separate, interest-bearing escrow account and shall, together with any interest
earned thereon, within thirty (30) days after the end of each fiscal quarter, be
released from escrow by the General Partner and used by the Limited Partner
(less the amount of any Federal, state or local taxes that may be due from the
Limited Partner in connection therewith) to further purchase an interest in the
fee (not to exceed a one-third interest in the aggregate) in accordance with the
applicable Purchase Option Agreement. At such time as the Limited Partner shall
have acquired a one-third interest in the fee of either portion of the Land, any
funds received pursuant to Section 5.05 hereof or any
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ground rent received by the Limited Partners shall continue to be applied by the
Limited Partner in accordance with this Section pursuant to the other Purchase
Option Agreement. At such time as the Limited Partner shall have acquired a full
one-third or more (other than pursuant to the Default Option (as such term is
defined in the Purchase Option Agreements)) interest in the fee interest in the
applicable portion of the Land, at the election of the General Partner or the
Limited Partner, the applicable Ground Lease shall be terminated in accordance
with the provisions thereof and the applicable Land conveyed to the Partnership.
14.16 Limited Partner Representations. The Limited Partner represents
and warrants to the Partnership that:
(A) The Limited Partner is a corporation duly formed and validly
existing in good standing under the laws of the State of Delaware, and will be
duly registered or qualified to conduct business in each jurisdiction or place
in which the conduct of its business legally requires such registration or
qualification;
(B) The execution, delivery and performance of this Partnership
Agreement by the Limited Partner and the consummation of the transactions
contemplated
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hereby have been authorized by all requisite action by or with respect to the
Limited Partner, and this Partnership Agreement, when executed by the Limited
Partner, will constitute a valid and binding obligation of the Limited Partner,
enforceable against the Limited Partner in accordance with its terms, subject to
bankruptcy laws, and laws affecting creditors rights severally; and
(C) The Limited Partner is not in violation of its certificate of
incorporation or bylaws or in default in any material respect in the performance
of any material agreement to which the Limited Partner is a party or bound. The
execution, delivery and performance of this Partnership Agreement by the Limited
Partner, and the fulfillment by the Limited Partner of the terms herein set
forth and the consummation by the Limited Partner of the transactions herein
contemplated, will not conflict with or constitute a breach of, or default in a
material way under, the certificate of incorporation or bylaws. of the Limited
Partner, or any other material
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agreement or instrument to which the Limited Partner is a party or bound, or any
law.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
GENERAL PARTNER:
HARTZ MOUNTAIN INDUSTRIES, INC.
By: /s/ Stephen M. Kelty
-------------------------------------
Stephen M. Kelty, Vice President
LIMITED PARTNER:
PAINE WEBBER, INC.
By: /s/ Rodger Parker
-------------------------------------
Rodger Parker, Senior Vice President
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Exhibit "A-1"
Data Processing Center Land
PROPOSED BLOCK 34C LOT 4.02
TOWNSHIP OF WEEHAWKEN
HUDSON COUNTY, NEW JERSEY
Commencing at a point in the easterly line of Park Avenue, said point
being N 21 degrees-21'-30"E, 1129.16 feet along the same from its intersection
with the northerly line of 15th Street, all as shown on a map entitled
"Subdivision of Lincoln Harbor Block 34C Lots 4, 5-1, 5 and Block 36D Lot 6C,"
and prepared by Azzolina & Feury Engineering Company, dated February 26, 1986,
revised to March 19, 1986, and running; thence,
A) N 21 degrees-21'-30" E, 86.70 feet along said property line to a point
on curve; thence,
B) Northeasterly, along the property line on a curve to the left having a
radius of 1093.01 feet, said radial having a bearing of N 14
degrees-11'-23" W, through a central angle of 25 degrees-01'-56", an
arc distance of 477.53 feet; thence,
C) Departing said property line, S 7 degrees-48'-45" E, 55.40 feet to the
point of beginning; thence,
1) N 38 degrees-28'-38" E, 476.59 feet to a point of nontangency;
thence,
2) Southeasterly, along a curve to the right having a radius of
360.00 feet through a central angle of 16 degrees-55'-38", an arc
distance of 106.36 feet; thence
3) S 51 degrees-07'-50" E, 188.34 feet to a point of curvature;
thence,
4) South and southwesterly on a curve to the right having a radius of
40.00 feet through a central angle of 90 degrees-00'-00", an arc
distance of 62.83 feet; thence,
5) S 38 degrees-52'-10" W, 51.43 feet to a point of
<PAGE> 103
curvature; thence,
6) Southwesterly, on a curve to the right having a radius of 328.57
feet through a central angle of 34 degrees-09'-59", an arc
distance of 195.93 feet; thence
7) S 38 degrees-28'-38"W, 15.35 feet; thence,
8) S 73 degrees-55'-33"W, 16.49 feet; thence,
9) S 83 degrees-28'-38"W, 262.43 feet; thence,
10) N 51 degrees-31'-22" W, 79.53 feet to the point or place of
beginning.
Containing 127,537 square feet (2.93 acres).
A-1-2
<PAGE> 104
[SURVEY OF SUBDIVISION OF LINCOLN HARBOR]
<PAGE> 105
Exhibit "A-2"
Operations Center Land
Property Description
Commencing at a point in the easterly line of Park Avenue, said point
being N 21 degrees-21'-30" E, 1129.16 feet along the same from its intersection
with the northerly line of 15th Street, all as shown on a map entitled
"Subdivision of Properties of Hartz Mountain Industries, Inc.," and prepared by
Azzolina & Feury Engineering Company, dated February 27, 1986, revised to March
19, 1986, and running; thence,
A) N 21 degrees-21'-30" E, 86.70 feet along said property line to a point
on curve; thence,
B) Northeasterly, along the property line on a curve to the left having a
radius of 1093.01 and a radial bearing on N 14 degrees-11'-23" W
through a central angle of 25 degrees-01'-56" for an arc distance of
477.53 fee; thence,
C) Along said property line, N 38 degrees-30'-00" E, 550.05 feet; thence,
D) Departing from said property line, S 50 degrees-33'-12" E, 86,23 feet
to the point of beginning; thence,
1) N 38 degrees-52'-10" E, 383.37 feet to a point of curvature;
thence,
2) Northeasterly, on a curve to the right having a radius of 40 feet
through a central angle of 90 degrees-00'-00" for an arc distance
of 62.83 feet; thence
3) S 51 degrees-07'-50" E, 156.00 feet; thence,
4) S 38 degrees-52'-10" W, 286.00 feet; thence,
5) Along the outer face of the wall of Tower 1, S 51 degrees-07'-50"
E, 392.18 feet; thence
6) S 38 degrees-52'-10" W, 132.37 feet to a point of curvature;
thence,
A-2-1
<PAGE> 106
7) Southwesterly, on a curve to the right having a radius of 40 feet
through a central angle of 90 degrees-00'-00" for an arc distance
of 62.83 feet; thence,
8) 51 degrees-07'-50" W, 513.18 feet to a point of curvature; thence,
9) Northwesterly, on a curve to the right having a radius of 35 feet
through a central angle of 90 degrees-00'-00" for an arc distance
of 54.98 feet to the point or place of beginning.
Containing 156,420 square feet (3.59 acres).
A-2-2
<PAGE> 107
[SURVEY OF SUBDIVISION OF LINCOLN HARBOR]
<PAGE> 108
Exhibit "B"
Terms of Commitment
Principal Amount: $75,000,000
Term: Minimum of 17 years, 6
months from the Commence-
ment Date (as such term is
defined in the Data Center
Lease)
Amortization Schedule: 11.979 constant
Interest Rate: 11.25% or less per annum
Security: Senior leasehold mortgage
subordinated fee, no per-
sonal liability
B-1
<PAGE> 109
Exhibit "C"
Easements
The easements granted pursuant to the Reciprocal Easement and
Maintenance Agreement, dated of even date herewith, among the General Partner,
the Partnership and the Partnership
C-1
<PAGE> 110
Exhibit "D"
Contracts
<TABLE>
<CAPTION>
NAME OF DOCUMENT PARTIES DATE
- ---------------- ------- ----
<S> <C> <C>
Cover Note Insurance J.H. Minet & Co. Ltd and Hartz May 1, 1985
Binder Mountain Industries, Inc., et al.
Liability Insurance Firemen's Fund Insurance Company June 17, 1985
Policy and Hartz Mountain Industries,
Inc., et al.
Property Coverage The Aetna Casualty and Surety May 1, 1983
Insurance Policy Company and Hartz Mountain
Industries, Inc. et al.
</TABLE>
D-1
<PAGE> 111
Exhibit "E"
Taxes
E-1
<PAGE> 112
<TABLE>
<S> <C>
TOWNSHIP OF SECOND HALF 1985
WEEHAWKEN, N.J. TAX BILL FOR FIRST HALF 1986
- -----------------------------------------------------------------------------------------------------
DEDUCTIONS NET TOTAL
LAND IMPROVEMENTS EXEMPTION ASSESSED VALUE GROSS TAX ------------------ 1995 TAX
SR. CIT. VETERAN
- -----------------------------------------------------------------------------------------------------
3514,1001 1485,900 15,000,000 1021,500.00 1021,500.00
- -----------------------------------------------------------------------------------------------------
34.C E OF JCT RR BULKHEAD LESS 1ST HALF 572,625.00
4 73.09 ACRES AC 001320 PREVIOUSLY BILLED
---------------------------------
L5 BALANCE OF 1985 TAX
DISTRIBUTED TO 3rd & 448,875.00
4th QUARTER OF 1985
---------------------------------
---------------------------------
ESTIMATED TAX FOR
1st HALF OF 1985 DIS- 510,750.00
TRIBUTED TO 1st & 2nd
QUARTER OF 1986
---------------------------------
INSTRUCTIONS REVERSE SIDE
HARTZ MOUNTAIN INDUSTRIES INC
ONE HARMON PLAZA
SECAUCUS, NJ 07094
Your Municipal officials have no control over School or County Taxes
THIS IS HOW YOUR TAXES ARE DISTRIBUTED
- ----------------------------------------------------------------------------------------------------- TOWNSHIP OF WEEHAWKEN, N.J.
YOUR TAXES LOCAL LOCAL SCHOOL REFUSE HUDSON COUNTY 2nd QUARTER 1986
GOVERNMENT PAYABLE BY MAY 1, 1986
- -----------------------------------------------------------------------------------------------------
1021,500.00 402,000.00 319,950.00 42,000.00 257,550.00 B 34.C AC 001820
TAX RATE PER 1,000 L 4
ASSESSED VALUATION
68.10 26.800 21.330 2.800 17,170
TOTAL TAXES TO
BE RAISED
7,929,422.30 3,120,676 2,484,313 325,000 1,999,433 HARTZ MOUNTAIN
- ----------------------------------------------------------------------------------------------------- INDUSTRIES INC
- -------------------------------------------------- ------------------------------------------------- ---------------
3rd QUARTER TAX 4th QUARTER TAX 1st QUARTER TAX 2nd QUARTER TAX 2nd QUARTER TAX
PAYABLE BY AUG. 1st 1985 PAYABLE BY NOV. 1st 1985 PAYABLE BY FEB. 1st 1986 PAYABLE BY MAY 1st 1986 ---------------
255,375.00 -- PAY THIS
224,437.50 224,437.50 255,375.00 255,375.00 --------------- AMOUNT
- -------------------------------------------------- ------------------------------------------------- INTEREST
INTEREST INTEREST INTEREST INTEREST (59,587.50)
$195,787.50 ---------------
- -------------------------------------------------- ------------------------------------------------- TOTAL / / CHECK
TOTAL TOTAL TOTAL TOTAL 195,787.50 / / CASH
--------------- / / MONEY
- -------------------------------------------------- ------------------------------------------------- ORDER
COLLECTOR COLLECTOR COLLECTOR COLLECTOR
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 113
TOWNSHIP OF WEEHAWKEN
Collector of Taxes
400 Park Avenue
Interest Charge
8% 1st 1,500.00
1985 Added Tax 18% 1,500.00 & over
Tax Rate $68.10 per M After Nov. 1st 1985
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Added Assessment No. of Months Prorated Assessment Exemptions 1985 Rate Total Added Tax THIS AMOUNT IS DUE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$1,500,000. 7 $875,000. $68.10 $59,587.50 <------
per M NOV. 1, 1985
- ----------------------------------------------------------------------------------------------------------------------------
Assessed in Accordance with Account No. 1820AA Interest
CHAPTER 397 - LAWS OF 1941 -----------------------------
Total
-----------------------------
</TABLE>
Owner & Location
Block 34.C Hartz Mountain Ind., Inc.
Lot 4 East of Jct RR Bulkhead
Hartz Mountain Industries, Inc.
One Harmon Plaza
Secaucus, N.J. 07094
This Bill is in addition to
all other 1985 Tax Bills
Save This Bill
----------------------------------------------
/s/ A. GARRISON
----------------------------------------------
DATE PAID Rec. of Payment AMOUNT PAID
Record of Payment
<PAGE> 1
EXHIBIT 10.41
AGREEMENT OF LIMITED PARTNERSHIP OF
HARTZ-PW HOTEL LIMITED PARTNERSHIP
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE I FORMATION
1.01 Formation.............................................. 2
1.02 Name................................................... 2
1.03 Place of Business...................................... 2
1.04 Term................................................... 3
ARTICLE II DEFINITIONS............................................ 3
ARTICLE III PURPOSE AND BUSINESS
3.01 Business............................................... 16
3.02 Authorized Activities.................................. 16
ARTICLE IV PARTNERSHIP INTERESTS AND CAPITAL
4.01 General Partner........................................ 19
4.02 Limited Partner........................................ 20
4.03 Loans and Capital Contributions to the
Partnership by the Partners.......................... 21
4.04 Default by General Partner............................. 25
4.05 Interest............................................... 28
4.06 Capital Account........................................ 28
4.07 Withdrawal of Capital Contributions.................... 28
4.08 Restoration of Negative Capital
Accounts............................................. 29
ARTICLE V PROFITS, LOSSES AND DISTRIBUTIONS
5.01 Determination of Profits and Losses.................... 29
5.02 Allocation of Profits and Losses
from Operations...................................... 29
5.03 Profits and Losses from Capital
Transactions......................................... 33
5.04 Distribution of Net Operating
Revenues.............................................. 37
5.05 Distribution of Proceeds of Capital
Transactions other than in
Liquidation.......................................... 38
5.06 Partnership Adjustments................................ 39
5.07 Allocation to Transferred Interests.................... 40
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE VI RIGHTS AND OBLIGATIONS OF THE GENERAL
PARTNERS
6.01 Management............................................. 41
6.02 Authority.............................................. 41
6.03 Limitations on General Partner......................... 42
6.04 Additional Limitations................................. 47
6.05 Business with Affiliates............................... 47
6.06 Liability for Acts and Omissions....................... 48
6.07 Other Activities....................................... 50
6.08 Classification as a Partnership........................ 50
6.09 Net Worth of General Partner........................... 51
6.10 Management............................................. 51
ARTICLE VII WITHDRAWAL OF GENERAL PARTNER
7.01 Assignment or Withdrawal by
General Partner....................................... 51
7.02 Involuntary Withdrawal of a General
Partner............................................... 52
7.03 Obligations of a Prior General Partner................. 52
7.04 Remaining General Partner.............................. 52
7.05 Removal of General Partner............................. 53
7.06 Successor General Partner.............................. 55
7.07 Additional Limitation on
Transferability...................................... 56
7.08 Permitted Assignments by
the General Partner.................................. 56
ARTICLE VIII RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
8.01 Management of the Partnership.......................... 58
8.02 Limitation on Liability................................ 59
8.03 Power of Attorney...................................... 59
8.04 Admission of Additional Partners....................... 62
ARTICLE IX TRANSFER OF LIMITED PARTNERSHIP INTERESTS
9.01 No Unpermitted Transfers............................... 62
9.02 Assignment by Limited Partner.......................... 62
9.03 Substitute Limited Partner............................. 64
9.04 Involuntary Withdrawal by Limited
Partner.............................................. 65
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
9.05 Additional Limitation on
Transferability....................................... 66
ARTICLE X DISSOLUTION AND LIQUIDATION
10.01 Dissolution............................................ 66
10.02 Liquidation of Partnership Assets...................... 67
ARTICLE XI RECONSTITUTION
11.01 Reconstitution......................................... 69
11.02 Continuation of Business............................... 69
ARTICLE XII ACCOUNTING AND REPORTS
12.01 Books and Records...................................... 70
12.02 Annual Tax Returns..................................... 71
12.03 Reports to Partners.................................... 72
12.04 Partnership Funds...................................... 73
ARTICLE XIII AMENDMENTS AND MEETINGS
13.01 Amendment Procedure.................................... 74
13.02 Meetings and Voting.................................... 74
ARTICLE XIV MISCELLANEOUS
14.01 Title to Partnership Property.......................... 75
14.02 Validity............................................... 75
14.03 Applicable Law......................................... 76
14.04 Binding Agreement...................................... 76
14.05 Waiver of Action for Partition......................... 76
14.06 Headings............................................... 76
14.07 Terminology............................................ 76
14.08 Right of First Offer................................... 77
14.09 General Partner Representations........................ 83
14.10 Counterparts........................................... 87
14.11 Entire Agreement....................................... 88
14.12 Arbitration............................................ 88
14.13 Security Interest in Limited
Partner's Interest................................... 88
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
14.14 Transfer, Financing of Land............................ 90
14.15 Use of Certain Capital Proceeds
by the Limited Partner................................ 91
14.16 Limited Partner Representations........................ 92
</TABLE>
Exhibit "A" Description of Land
Exhibit "B" Terms of Commitment
Exhibit "C" Easements
Exhibit "D" Contracts
Exhibit "E" Taxes
iv
<PAGE> 6
AGREEMENT OF LIMITED PARTNERSHIP OF
HARTZ-PW HOTEL LIMITED PARTNERSHIP
THIS AGREEMENT OF LIMITED PARTNERSHIP is made as of the 14th day of
April, 1986, between HARTZ MOUNTAIN INDUSTRIES, INC., a New York corporation
(the "General Partner"), as general partner, and PAINEWEBBER INCORPORATED, a
Delaware corporation (the "Limited Partner"), as limited partner. The Limited
Partner and the General Partner may be referred to herein individually as a
"Partner" and collectively as the "Partners."
WITNESSETH:
WHEREAS, the parties hereto desire to form a limited partnership (the
"Partnership") for the purpose of entering into the Ground Lease and of
constructing the Improvements, which Land leased pursuant to the Ground Lease is
currently owned by the General Partner, and for the purposes hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto hereby form the Partnership pursuant to the laws
of the State of New Jersey, upon the following terms and conditions:
<PAGE> 7
ARTICLE I
FORMATION
1.01 Formation. The Partnership is being formed as a limited partnership
under the laws of the State of New Jersey. Upon execution of this Agreement by
all parties, the General Partner and the Limited Partner shall execute a
certificate of limited partnership of the Partnership to reflect the provisions
of this Agreement, and all such other certificates and documents conforming
thereto, and shall do all such filing, recording, and publishing, and the
General Partner shall take all other necessary action, required by law to
perfect and maintain the Partnership as a limited partnership under the Act or
under the laws of all other jurisdictions in which the Partnership may elect to
conduct business.
1.02 Name. The name of the Partnership shall be "HARTZ-PW HOTEL LIMITED
PARTNERSHIP", which name may be changed by the General Partner after Notice to
the Partners.
1.03 Place of Business. The principal office and place of business of
the Partnership shall be located at 400 Plaza Drive, P.O. Box 1411, Secaucus,
New Jersey 07094. The General Partner may change the location of the
Partnership' 5 principal office and may establish such
2
<PAGE> 8
additional offices of the Partnership as it may from time to time determine
after Notice to the Partners.
1.04 Term. The Partnership shall continue in full force and effect until
December 31, 2086, unless sooner dissolved in accordance with the provisions of
this Agreement.
ARTICLE II
DEFINITIONS
The following terms have the definitions hereinafter indicated whenever
used in this Agreement with initial capital letters:
2.01 Act: The Revised New Jersey Uniform Limited Partnership Act,
N.J.S.A. 42: 2A-1 et. seq. as it may be amended from time to time.
2.02 Affiliate: When used with reference to a specific Person, a Person
who (i) directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, the specified Person; (ii) is a
partner of the specified Person; (iii) owns or controls ten percent (10%) or
more of the outstanding voting securities of the specified Person; or, (iv) is
an entity in which the specified Person is a partner.
3
<PAGE> 9
2.03 Agreement: This Agreement of Limited Partnership, as it may be
amended from time to time.
2.04 Bankruptcy: For purposes of this Agreement the institution by a
referenced Person of a voluntary case in bankruptcy, or the voluntary taking
advantage by a referenced Person of any bankruptcy or insolvency law, or the
adjudication of such Person as bankrupt or insolvent, or the filing by such
Person of any petition or answer seeking for itself any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, or the filing by
such Person of any answer admitting (or the failure by such Person to make a
required responsive pleading to) the material allegations of a petition filed
against such Person in any such proceeding or the seeking or consenting to or
acquiescence in the judicial appointment of any trustee, fiscal agent, receiver
or liquidator of such Person or of all or any substantial part of its properties
or the taking of any action looking to its dissolution or liquidation, or if,
within ninety (90) days after the commencement of an involuntary case or action
against such Person seeking any bankruptcy, reorganization, arrangement,
composition, readjustment, liquidation, dissolution
4
<PAGE> 10
or similar relief under any present or future statute, law or regulation, the
failure of such case or action to have been dismissed or all orders in
proceedings thereunder affecting the operations or the business of such Person
stayed, or if the stay of any such order or proceeding thereafter shall be set
aside, or if, within ninety (90) days after the judicial appointment without the
consent or acquiescence of such Person of any trustee, fiscal agent, receiver or
liquidator of such Person or of all or any substantial part of its properties,
such appointment shall not have been vacated, such insolvency being deemed to
occur when such Person shall make a general assignment for the benefit of
creditors or shall admit in writing that its assets are insufficient to pay its
liabilities as they come due.
2.05 Budget: On or before the thirtieth (30th) day after the
commencement date of each Fiscal Year, the General Partner shall submit to the
Limited Partner a budget for such Fiscal Year for the operation of the business
of the Partnership.
2.06 Capital Account: The account maintained by the Partnership for each
Partner which, as of any given date, reflects its Capital Contributions paid to
the Partnership (i) increased to reflect its distributive
5
<PAGE> 11
share of Partnership income and gain (or item thereof), including income exempt
from tax, for each Fiscal Year (or fraction thereof), and (ii) decreased to
reflect its distributive share of Partnership losses and deductions for each
Fiscal Year (or fraction thereof) and the amount of cash or the fair market
value of property distributed by the Partnership to it and its distributive
share of expenses of the Partnership described in Section 705(a)(2)(B) of the
Code. In addition, Capital Accounts shall be adjusted to take account of any
other items which give rise to Capital Account adjustments under the regulations
issued pursuant to Section 704 of the Code, as finally adopted.
2.07 Capital Contribution: The total amount of money or the fair market
value of other property contributed by each Partner to the Partnership pursuant
to the terms of this Agreement, including the Capital Contributions made by any
predecessor holders(s) of the Interest of such Partner.
2.08 Capital Proceeds: The aggregate of (i) the net cash proceeds
resulting from any condemnation of the Property (and not used to repair or
restore the Property or applied by the holder of the First Mortgage or of any
other mortgage or deed of trust affecting the
6
<PAGE> 12
Property to the reduction of the principal amount thereof), (ii) the net cash
proceeds resulting from the settlement of any title, fire or extended coverage
insurance claim (and not used to repair or restore the Property or applied by
the holder of the First Mortgage or any other mortgage of deed of trust
affecting the Property, to the reduction of the principal amount thereof), (iii)
the net cash proceeds from the sale of all or a portion of the Property, (iv)
the net cash proceeds actually received by the Partnership from the refinancing
of any mortgage or deed of trust affecting the Property, including the First
Mortgage (and not applied to the reduction of the Partnership's liabilities,
used to pay the expenses of the Partnership in connection with such refinancing,
to repair or improve the Property or set aside by the General Partner to create
or maintain reasonable reserves for improvements to the Property), and (v) any
reserves previously set aside from Capital Proceeds which are deemed available
for distribution by the General Partner or Liquidator .
2.09 Capital Transaction: Any event giving rise to Capital Proceeds.
7
<PAGE> 13
2.10 Code: The Internal Revenue Code of 1954, as amended from time to
time, and any successor statute.
2.11 Commitment: A loan commitment on the terms set forth on Exhibit "B"
annexed hereto and made a part hereof.
2.12 Commencement Date: Shall have the meaning set forth in the
Hotel/Office Lease.
2.13 Consent: Either the written consent of a Person, or the affirmative
vote of such Person at a meeting duly called and held pursuant to this
Agreement, as the case may be, to do the act or thing for which the Consent is
solicited, or the act of granting such Consent, as the context may require.
2.14 Deficit Capital Contributions: Shall have the meaning set forth in
Section 4.03 hereof.
2.15 Easements: The easements more particularly described in Exhibit "C"
annexed hereto and made a part hereof.
2.16 First Mortgage: The first mortgage, to be entered into pursuant to
the Commitment, affecting the Properties, and any modification, extension or
replacement thereof.
8
<PAGE> 14
2.17 Fiscal Year: The taxable year of the Partnership, which shall be
the calendar year.
2.18 General Partner: Hartz Mountain Industries, Inc. and any and all
other Persons who become successor General Partner in accordance with the
provisions of the Agreement.
2.19 Ground Lease: The Ground Lease, dated of even date herewith,
between the General Partner, as landlord, and the Partnership, as tenant,
pursuant to which the General Partner leased to the Partnership the Land and the
Easements.
2.20 Guarantee: The Guarantee, dated of even date herewith, by the
Limited Partner, as guarantor, for the benefit of the General Partner.
2.21 Hartz Lease: The Lease, dated of even date herewith, between the
Partnership, as Landlord, and the General Partner, as tenant, pursuant to which
the Partnership leased the retail portion of the Improvements to the General
Partner.
2.22 Hotel/Office Lease: The Lease, dated of even date herewith, between
the Partnership, as landlord, and the Limited Partner, as tenant, pursuant to
which the Partnership leased a portion of the office portions of the
Improvements to the Limited Partner.
9
<PAGE> 15
2.23 Improvements: The 437,500 square foot office and hotel building to
be constructed on the Land.
2.24 Interest: The ownership interest of a Partner in the Partnership at
any particular time, including the right of such Partner to any and all benefits
to which such Partner may be entitled as provided in this Agreement and, to the
extent not inconsistent with this Agreement, in the Act, together with the
obligations of such Partner to comply with all the terms and provisions of this
Agreement and of the Act, which ownership Interest for voting and certain other
purposes of this Agreement shall, absent proof to the contrary, be as set forth
in Article IV of this Agreement.
2.25 IRS: The Internal Revenue Service, an agency of the United States
Government.
2.26 Land: The land more particularly described in Exhibit "A" annexed
hereto and made a part hereof.
2.27 Lease Acquisition Agreement: The Lease Acquisition Agreement, dated
of even date herewith, among Hartz-PW Limited Partnership, PaineWebber
Incorporated and Hartz Mountain Industries, Inc.
10
<PAGE> 16
2.28 Leasehold Estate: The leasehold estate created by the Ground Lease.
2.29 Limited Partner(s): The Limited Partner, and any and all Persons
who become a Substitute Limited Partner in accordance with the provisions of
this Agreement.
2.30 Liquidator: The General Partner or, if there is no General Partner
at the time in question, a Person designated by the Limited Partner to act as
Liquidator, or if the Limited Partner does not designate a Person to act as
Liquidator, such other Person who may be appointed in accordance with applicable
law, who shall be responsible for taking all action necessary or appropriate to
wind up the affairs of, and distribute the assets of, the Partnership upon its
dissolution.
2.31 MAI Appraiser: Shall have the meaning set forth in Section 14.08
hereof.
2.32 Net Operating Revenues: For any period, Operating Revenues, less
Operating Expenses.
2.33 Notice: A writing containing the information required by this
Agreement to be communicated to a Person and personally delivered to such Person
or sent by registered or certified mail, postage prepaid, return receipt
requested, to such Person at the last known
11
<PAGE> 17
address of such Person as shown on the books of the Partnership, the date of
personal delivery, registry or certification, as the case may be, being deemed
the effective date of such Notice.
2.34 Operating Deficits: For any period, any shortfall in the Operating
Revenues over the Operating Expenses.
2.35 Operating Deficit Loan: Shall have the meaning set forth in Section
4.03 hereof.
2.36 Operating Expenses: For any period, all costs and expenses
(including capital expenditures) of operation and management of the Partnership
and the Properties, including, without limitation, any rent due pursuant to the
Ground Lease determined on an accrual basis and any reasonable operating
reserves set aside by the General Partner, but excluding any debt service on the
First Mortgage or any other financing.
2.37 Operating Revenues: For any period, the sum of (i) all receipts of
the Partnership determined on an accrual basis, excluding Capital Proceeds and
Capital Contributions, (ii) the net proceeds of any insurance, other than title
or fire and extended coverage insurance, and (iii) any reserves previously set
aside from Operat-
12
<PAGE> 18
ing Revenues which are deemed available by the General Partner.
2.38 Partner(s): The General Partner, the Limited Partner, any
Substitute Limited Partner and any Special Limited Partner.
2.39 Partnership: Shall have the meaning set forth in the first WHEREAS
clause of this Agreement, as said limited partnership may from time to time be
constituted.
2.40 Partnership Accountants: Any firm of certified public accountants
reasonably satisfactory to the Partners.
2.41 Partnership Assets: All property and assets, whether real or
personal, tangible or intangible, at any time owned by the Partnership or in
which the Partnership shall have all interest, including, without limitation,
the Ground Lease and the Improvements.
2.42 Person: Any individual, partnership, corporation, trust or other
entity.
2.43 Prime Rate: The rate of interest publically announced from time to
time by Citibank, N.A., or its successors, 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").
13
<PAGE> 19
2.44 Property: The estate created by the Ground Lease, together with the
Improvements.
2.45 Purchase Option Agreement: The Purchase Option Agreement, dated of
even date herewith, between the General Partner and the Limited Partner.
2.46 Purchase Price: Shall have the meaning set forth in Section 14.08
hereof.
2.47 Receiving Partner: Shall have the meaning set forth in Section
14.08 hereof.
2.48 Sending Notice: Shall have the meaning set forth in Section 14.08
hereof.
2.49 Sending Partner: Shall have the meaning set forth in Section 14.08
hereof.
2.50 Special Limited Partner: Shall have the meaning set forth in
Section 7.05 hereof.
2.51 Substitute Limited Partner(s): Any Person admitted to the
Partnership as a Limited Partner pursuant to Section 9.03 hereof.
2.52 Successor Limited Partnership: A limited partnership which shall
continue the business of the Partnership following its dissolution and
reconstitution in accordance with the provisions of Article XI.
14
<PAGE> 20
2.53 Title Commitment: Shall have the meaning set forth in Section 14.09
hereof.
2.54 Transfer: Shall have the meaning set forth in Section 7.01 hereof.
2.55 Transportation and Completion Agreement: The Transportation and
Completion Agreement, dated of even date herewith, between Hartz-PW Limited
Partnership and PaineWebber Incorporated.
15
<PAGE> 21
ARTICLE III
PURPOSE AND BUSINESS
3.01 Business. The principal purpose and character of the business of
the Partnership shall be to acquire, own, construct, renovate, hold for capital
appreciation and finance the Property, to cause the General Partner to complete
construction of the Improvements, to manage, rent and otherwise operate the
Property, to sell, exchange, dispose of, lease, mortgage and otherwise encumber
all or any part of the Property, to incur indebtedness, whether secured or
unsecured, for any of the foregoing purposes, and to engage in any other kind of
lawful activity for profit related to the foregoing.
3.02 Authorized Activities. In carrying out the purposes of this
Partnership, but subject to all other provisions of this Agreement and
applicable law, the Partnership is empowered and authorized to:
(A) lease, hold and operate the Property for any legal use,
including, without limitation, hotel use, and any other real or personal
property which may be necessary, convenient or incidental to the accomplishment
of the purposes of the Partnership and, in appropriate circumstances, to sell,
transfer or otherwise dispose of the Property;
16
<PAGE> 22
(B) construct, renovate, operate, maintain, finance, improve,
own, sell, convey, assign, mortgage or lease any real estate and any personal
property necessary, convenient or incidental to the accomplishment of the
purposes of the Partnership;
(C) borrow money and issue evidences of indebtedness in
furtherance of the Partnership business, and to secure the same by mortgage,
pledge or other lien on any assets of the Partnership; provided that such
evidence of indebtedness and documents securing the same, if any, shall
effectively provide in substance and legal effect that the Limited Partner shall
not have any personal liability for the payment of such indebtedness beyond its
Interest;
(D) enter into, perform and carry out contracts of any kind,
including contracts with Affiliates of the General Partner pursuant to Section
6.04, necessary or incidental to the accomplishment of the purposes of the
Partnership;
(E) bring and defend actions at law or in equity or arbitration;
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(F) purchase, cancel or otherwise retire or dispose of the
Interest of any Partner pursuant to the express provisions of this Agreement;
(G) execute and deliver all documents for the sale of Interests;
(H) prepay, in whole or in part, refinance, recast, increase,
reduce, modify, or extend mortgages (including, without limitation, the First
Mortgage) affecting the Property, and in connection therewith to execute any
extensions, renewals or modifications of any mortgage or deed of trust on the
Property;
(I) sell, exchange, dispose of or refinance mortgages
(including, without limitation, the First Mortgage) on all or part of the
Partnership property;
(J) make interim investments in government obligations, insured
obligations, bank time deposits, commercial paper, tax-exempt investments, money
market funds, certificates of deposit and banker's acceptances; and
(K) engage in any kind of lawful activity, and perform and carry
out contracts of any kind, necessary or advisable in connection with the
accomplishment of the purposes of the Partnership.
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ARTICLE IV
PARTNERSHIP INTERESTS AND CAPITAL
4.01 General Partner:
(A) The address of the General Partner is 400 Plaza Drive, P.O.
Box 1411, Secaucus, New Jersey 07094.
(B) The General Partner previously has contributed to the
Partnership in cash an initial Capital Contribution of $791. As of the date
hereof, the Capital Account of the General Partner is equal to $791.
(C) The General Partner shall be obligated to make the Operating
Deficit Loans or Deficit Capital Contributions to the Partnership as set forth
in, and when required pursuant to, Section 4.03 hereof and to make such
additional Capital Contributions as are required in order to complete the
Improvements in accordance with the provisions of the Ground Lease and the
Hotel/Office Lease, but may not make any other additional Capital Contributions
to the Partnership.
(D) The General Partner shall fund any and all costs and
expenses of the Property from the date hereof through the day prior to the Fixed
Rent Commencement Date (as such term is defined in the Hotel/Office
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Lease) to the extent required by reason of the Partnership having insufficient
funds for such purpose.
(E) Nothing contained in this Agreement shall be deemed to
create any third party beneficiary status, or grant any rights to any Capital
Contributions, to any party or Person who is not a Partner.
4.02 Limited Partner.
(A) The address of the Limited Partner is 1285 Avenue of the
Americas, New York, New York 10019.
(B) The Limited Partner has contributed to the Partnership in
cash an initial Capital Contribution of $209. As of the date hereof, the Capital
Account of the Limited Partner is equal to $209.
(C) The Limited Partner may make the Limited Partner Loan or
Additional Capital Contributions as set forth in Section 4.03 hereof but shall
not be required to make any additional loans or Capital Contributions to the
Partnership.
(D) Nothing contained in this Agreement shall be deemed to
create any third party beneficiary status, or grant any rights to any Capital
Contributions, to any party or Person who is not a Partner.
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4.03 Loans and Capital Contributions to the Partnership by the Partners.
(A) Upon the occurrence of Operating Deficits or if the Net
Operating Revenues shall be insufficient to pay all debt service on any loan,
secured or unsecured, including without limitation, the First Mortgage,
affecting the Property or the Partnership, for any reason other than the failure
of (i) the Limited Partner being in default under the Guarantee or (ii) the
tenant under the Hotel/Office Lease to make any payments required thereunder,
including, without limitation, a failure to make any such payments in connection
with bankruptcy proceedings and whether or not the trustee in bankruptcy shall
disaffirm the Hotel/Office Lease, the General Partner shall be obligated, from
time to time, at its option either (x) to lend (collectively, the "Operating
Deficit Loan") to the Partnership such funds, (y) to make Capital Contributions
(the "Deficit Capital Contributions") of such funds, or (z) cause the
Partnership to borrow such funds pursuant to Section 4.03(C) hereof, as may be
necessary to fund such Operating Deficits and debt service on the First Mortgage
and other financing, upon the terms and conditions hereinafter set forth;
provided, however, that if such Operating Deficits shall arise by
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reason of a required capital expenditure, the General Partner shall use its best
efforts to cause the Partnership to borrow such funds prior to making any
Operating Deficit Loan or Deficit Capital Contribution. Notwithstanding the
foregoing, however, the General Partner may make neither an Operating Deficit
Loan nor make Deficit Capital Contributions nor cause the Partnership to borrow
funds in connection with Operating Deficits to the extent the same shall arise
by reason of the failure of the tenant under the Hartz Lease to make any payment
required thereunder. Subsequent to the twenty-fifth (25th) anniversary of the
Commencement Date (as such term is defined in the Hotel/Office Lease), the
General Partner shall have the right, but not the obligation, to make Operating
Deficit Loans and Deficit Capital Contributions.
(B) The Operating Deficit Loan shall bear interest at a rate
equal to that charged under the First Mortgage, compounded annually. The
Operating Deficit Loan, as well as interest thereon, shall be repayable in
accordance with the provisions of Sections 5.04 and 5.05 hereof. The Deficit
Capital Contributions shall be repaid, together with an amount in the nature of
interest calculated at a rate equal to that charged under the
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First Mortgage, compounded annually, in accordance with the provisions of
sections 5.04 and 5.05 hereof.
(C) Notwithstanding anything contained in Paragraph (B) hereof,
the General Partner shall have the option, in lieu of funding the Operating
Deficit Loan or making the Deficit Capital Contributions, of borrowing, or
causing the Partnership to borrow the funds necessary to fund Operating Deficits
or such debt service, and to secure any such loans with the Property or any
other assets of the Partnership.
(D) Notwithstanding the foregoing and provided that the
applicable Operating Deficit Loan or Deficit Capital Contribution shall not have
been made or the funds committed, in writing, by a third party, the Limited
Partner shall have the right, but not the obligation, upon ten (10) days'
written notice to the General Partner, from time to time, to lend (collectively,
the "Limited Partner Loan") or to make an additional Capital Contribution
("Additional Capital Contribution") to the Partnership of its proportionate
share of such funds as may be necessary to fund any such Operating Deficits or
such debt service (it being understood that the General Partner shall be under
no obligation to notify the Limited Partner prior to the General Partner making
any
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Operating Deficit Loans or Deficit Capital Contributions or obtaining funds from
a third party in the event of an emergency or due date requirement). The General
Partner may dispute the existence of any Operating Deficits claimed by the
Limited Partner pursuant to Section 14.12 hereof. The Limited Partner Loan shall
bear interest at a rate equal to that charged under the First Mortgage,
compounded annually. The Limited Partner Loan, as well as interest thereon shall
be repayable in accordance with the provisions of Sections 5.04 and 5.05 hereof.
The Additional Capital Contributions shall be repaid, together with an amount in
the nature of interest calculated at a rate equal to that charged under the
First Mortgage, compounded annually in accordance with the provisions of
Sections 5.04 and 5.05 hereof.
(E) Notwithstanding anything contained herein, none of the
Partners shall have any personal liability for the repayment of the Limited
Partner Loan or the Operating Deficit Loan nor shall the General Partner have
any personal liability beyond its Interest for failure to make any Operating
Deficit Loan or Deficit Capital Contribution.
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4.04 Default by General Partner.
(A) In the event the General Partner shall fail to make any
Operating Deficit Loan or any Deficit Capital Contribution to the Partnership or
to cause the Partnership to borrow the required funds for any reason other than
the fact that the Operating Deficits shall have arisen by reason of the Limited
Partner being in default under the Guarantee or the failure of the tenant under
the Hotel/Office Lease to make any payments required thereunder, including,
without limitation, a failure to make any such payments in connection with
bankruptcy proceedings and whether or not the trustee in bankruptcy shall
disaffirm the Hotel/Office Lease, and such default continues for twenty (20)
days after notice from the Limited Partner (or such shorter period of time as is
reasonably required to protect Partnership Assets), in addition to the remedies
provided in Paragraph (B) of this Section 4.04 or otherwise at law, the Limited
Partner shall have the right, at its option, to fund the Operating Deficit Loan
or the Deficit Capital Contributions by either:
(i) causing there to be lent to the Partnership by any person,
firm or corporation, all or any part of the necessary amounts, which loan shall
bear
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interest at a rate equal to two percentage points in excess of the then Prime
Rate, shall be non-recourse and shall be secured by the General Partner's
Interest and interest in the Operating Deficit Loan and the Deficit Capital
Contributions (the principal and interest of such loan to be repaid out of the
first distributions or payments to be paid to the General Partner pursuant to
this Agreement); or
(ii) to lend to the Partnership all or any part of such funds,
which loan shall bear interest at a rate equal to two percentage points in
excess of the then Prime Rate, shall be non-recourse and shall be secured by the
General Partner's Interest and interest in the Operating Deficit Loan and the
Deficit Capital Contributions (the principal and interest of such loan to be
repaid out of the first distributions or payments to be paid to the General
Partner pursuant to this Agreement).
(B) If the Limited Partner shall elect to lend to the
Partnership all or any part of such funds, the Limited Partner shall be deemed
to have been released from all obligations under the Guarantee and the same
shall be deemed to have terminated as of the date of any such loan.
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(C) The General Partner hereby pledges and grants to the
Partnership a security interest in its Interest, as security for its obligations
to fund the Operating Deficit Loan or to contribute Deficit Capital
Contributions or to cause the Partnership to borrow the required funds, to make
any Capital Contributions required to fund all construction costs of the
Improvement and, through the day prior to the twenty-fifth (25th) anniversary of
the Commencement Date, as security for the obligations of the tenant under the
Hartz Lease, and agrees that the Partnership shall have, in addition to the
rights provided for herein, all of the rights and remedies of a secured party
under the New Jersey Uniform Commercial Code other than the right to obtain a
deficiency judgment in connection therewith, in respect to its Interest in the
event of the failure of the General Partner to comply with its obligations as
provided in this Section 4.04 or the obligations of the tenant under the Hartz
Lease.
(D) If, pursuant to Section 4.03(A) hereof, the General Partner
is obligated to make an Operating Deficit Loan or a Deficit Capital Contribution
and fails to do so and, if the General Partner shall fail to execute any and all
documents, including without limita-
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tion, loan agreements, promissory notes, and transfer and sale documents which
the Limited Partner reasonably deems necessary to implement the rights and
remedies set forth in this Section 4.04 for ten (10) days after request therefor
by the Limited Partner, the General Partner hereby appoints the Limited Partner
its attorney-in-fact for the purpose of executing any and all such documents.
Such power of attorney granted herein shall be deemed to be coupled with an
interest, and such power of attorney shall, to the extent permitted by law,
survive the death, disability, incompetency, withdrawal, removal, or Bankruptcy
of the General Partner.
4.05 Interest. Except as specifically herein provided, interest earned
on Partnership funds shall inure to the benefit of the Partnership. The Partners
shall not receive interest on their Capital Contributions.
4.06 Capital Account. The Partnership shall maintain a Capital Account
for each Partner as described in Section 2.06 hereof.
4.07 Withdrawal of Capital Contributions. Except as otherwise provided
in this Agreement or by law, (i) no Partner shall have the right to withdraw or
reduce its Capital Contributions, or to demand and receive prop-
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erty other than cash from the Partnership in return for its Capital
Contributions and (ii) any return of Capital Contributions to the Limited
Partner shall be solely from Partnership assets, and the General Partner shall
not be personally liable for any such return.
4.08 Restoration of Negative Capital Accounts. At no time during the
term of the Partnership or upon the dissolution and liquidation of the
Partnership shall a Partner with a negative balance in his Capital Account have
any obligation to the Partnership or to any other Partner to restore such
negative balance, except in respect of any negative balance resulting from
withdrawal of capital or a distribution in contravention of this Agreement.
ARTICLE V
PROFITS, LOSSES AND DISTRIBUTIONS
5.01 Determination of Profits and Losses.
All profits and losses of the Partnership shall be determined by the
Partnership Accountants in accordance with the accrual method of accounting for
Federal income tax purposes, subject to appropriate adjustments resulting from
any election pursuant to Section 5.06 hereof.
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5.02 Allocation of Profits and Losses from
Operations.
(A) Losses. (i) Subject to Section 5.02(C), losses of the
Partnership incurred prior to the Fixed Rent Commencement Date, other than
Losses arising from Capital Transactions, shall be allocated as follows:
a) Deductions for non-cash losses shall be
allocated 79.1% to the General Partner and 20.9% to the Limited Partner; and
b) Losses (calculated by excluding deductions for
non-cash losses) shall be allocated 100% to the General Partner.
(ii) Subject to Section 5.02(C), Losses of the Partnership
incurred on or after the Fixed Rent Commencement Date, other than Losses arising
from Capital Transactions, shall be allocated 79.1% to the General Partner and
20.9% to the Limited Partner.
(B) Profits. Subject to Section 5.02(C), profits, other than
profits arising from Capital Transactions, shall be allocated, after making all
distributions pursuant to Sections 5.04 and 5.05 for the taxable year, as
follows:
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(i) first, to the General Partner and the Limited Partner,
respectively, an amount equal to the excess of (a) the aggregate of all amounts
distributed to such Partner pursuant to Section 5.04(A) or 5.05(A)(2) for all
taxable years (other than interest on Operating Deficit Loans or Limited Partner
Loans) over (b) the sum of (1) all amounts previously allocated to such Partner
pursuant to this Section 5.02(B)(i), Section 5.03(A)(ii), or Section 5.02(D) and
(2) the difference between the total amount of such loans and the amount
allocated to such Partner pursuant to Section 5.02(C)(i) with respect to such
loans;
(ii) second, to the General Partner and the Limited Partner,
respectively, an amount equal to the excess of (a) the aggregate of all amounts
distributed to such Partner pursuant to Section 5.04(B) or 5.05(A)(3) for all
taxable years (other than amounts in the nature of interest on Deficit Capital
Contributions or Additional Capital Contributions) over (b) the sum of (1) all
amounts previously allocated to such Partner pursuant to this Section
5.02(B)(ii), Section 5.03(A)(ii), or Section 5.02(D) and (2), the difference
between the total amount of such capital contributions and the
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amount allocated to such Partner pursuant to Section 5.02(C)(i) with respect to
such capital contributions;
(iii) thereafter, 79.1% to the General Partner and 20.9% to
the Limited Partner.
(C) Special Allocations. Notwithstanding Sections 5.02(A) and
5.02(B), to the extent that any Operating Deficit Loan, Limited Partner Loan,
Deficit Capital Contribution or Additional Capital Contribution is made by
reason of a partnership cash expenditure with respect to which the Partnership
is entitled to a deduction, such deduction shall be allocated to the Partner
making such Operating Deficit Loan, Limited Partner Loan, Deficit Capital
Contribution or Additional Capital Contribution.
(D) Anything to the contrary in this Article V notwithstanding,
losses shall not be allocated to a Partner who has a negative Capital Account
balance when any other Partner has a positive Capital Account balance, but shall
first be allocated to Partners who have positive Capital Account balances. In
addition, notwithstanding any other provision of Section 5.02 or 5.03, if at any
time the sum of the deficit capital account balances of the partners should
exceed the partnership's minimum gain (as defined in Prop. Reg. Section 1.704-
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1(b)(4)(iv), as proposed March 9, 1983), an amount of income or gains equal to
such excess shall first be allocated to such Partners, in proportion to their
respective shares of such excess.
5.03 Profits and Losses from Capital Transactions.
(A) All net gains of the Partnership, as determined for Federal
income tax purposes for the Fiscal Year, in connection with a Capital
Transaction, shall be allocated among the Partners (after giving effect to all
charges and credits for the then current Fiscal Year pursuant to Section 5.02
above, all distributions for such Fiscal Year pursuant to Section 5.04, and all
charges, credits and distributions attributable to transactions which occurred
earlier than the transaction pursuant to which the gain is being allocated,
pursuant to Sections 5.01, 5.02, 5.03, 5.04 or 5.05, but not including any
distributions pursuant to Section 5.05 with respect to the transaction pursuant
to which the gain is then being allocated or any charges, credits, and
distributions attributable to transactions which occurred subsequent to the
transaction pursuant to which the gain is being allocated) as follows and in the
following order of priority:
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(i) first, if the Capital Account of any Partner or Partners has
a negative balance, such gain shall be allocated to any such Partner or Partners
whose Capital Account has a negative balance in proportion to such negative
balances, until the balance of each such Partner's Capital Account is equal to
zero;
(ii) second, gain shall be allocated to the General Partner and
the Limited Partner, respectively, until the positive balance in each Partner's
Capital Account is equal to the sum of the amounts distributed during that
Fiscal Year, or available for distribution as of the end of that Fiscal Year to
such Partner pursuant to Section 5.05(A)(2) and 5.05(A)(3) (other than interest
on Operating Deficit Loans or Limited Partner Loans, and other than amounts in
the nature of interest on Deficit Capital Contributions and Additional Capital
Contributions) by reason of the Capital Transaction pursuant to which gain is
being allocated;
(iii) third, gain shall be allocated to the General Partner and
the Limited Partner, respectively, until the ratio of (a) the amount, if any, by
which the General Partner's Capital Account balance exceeds the amount
distributed during that Fiscal Year, or available for distribution as of the end
of that Fis-
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cal Year to it pursuant to Sections 5.05(A)(2) and 5.05(A)(3) (other than
interest on Operating Deficit Loans, and other than amounts in the nature of
interest on Deficit Capital Contributions), to (b) the amount, if any, by which
the Limited Partner's Capital Account balance exceeds the amount distributed
during that Fiscal Year, or available for distribution as of the end of that
Fiscal Year to it pursuant to Sections 5.05(A)(2) and 5.05(A)(3) (other than
interest on Limited Partner Loans, and other than amounts in the nature of
interest on Additional Capital Contributions), is 2 to 1; and
(iv) thereafter, the balance shall be allocated 79.1% to the
General Partner and 20.9% to the Limited Partner.
(B) Any loss incurred by the Partnership, as determined for
Federal income tax purposes, in connection with a Capital Transaction, shall be
allocated among the Partners (after giving effect to all charges and credits for
the then current Fiscal Year pursuant to Section 5.02 above, all distributions
for such Fiscal Year pursuant to Sections 5.04 or 5.05, and all prior charges,
credits and distributions, if any, during such Fiscal Year pursuant to Sections
5.01, 5.02, 5.03 or 5.04, but not including any charges and credits with
35
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respect to the transaction pursuant to which the loss is then being allocated or
any charges, credits, and distributions which occurred subsequent to the
transaction pursuant to which the loss is being allocated, but including the
distributions resulting from such transaction) as follows and in the following
order of priority:
(i) first, if the Capital Account of any Partner or Partners has
a positive balance, such loss shall be allocated to the Capital Account of any
such Partner or Partners whose Capital Account has a positive balance to make
the ratio of the positive Capital Accounts of the General Partner and the
Limited Partner to the sum of the Capital Accounts of the Partners 79.1% and
20.9% respectively;
(ii) thereafter, the balance of such loss shall be allocated
79.1% to the General Partner and 20.9% to the Limited Partner.
(C) In the event that any gain realized upon a sale of the
Property is characterized as ordinary income as a result of the recapture of
cost recovery or depreciation deductions attributable to the Property, such
ordinary income shall be allocated among the Partners in accordance with the
percentages that the aggregate cost recovery or depreciation deductions were
allo-
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cated. Notwithstanding the foregoing, in no event shall a Partner be allocated
such ordinary income in excess of the gain allocated and to be allocated to that
Partner pursuant to Section 5.03(A) hereof.
5.04 Distribution of Net Operating Revenues. Eighty-five percent
(85%) of Net Operating Revenues, after payment of debt service on the First
Mortgage or any other financing affecting the Property or the Partnership, shall
be distributed quarterly, in accordance with the Budget, within thirty (30) days
after the end of each quarter of each Fiscal Year by the General Partner, in the
following manner and order of priority:
(A) first, to pay any accrued and unpaid interest on the principal, and
the outstanding principal balance, of the Operating Deficit Loan and the Limited
Partner Loan, on a pari passu basis;
(B) second, to pay any accrued and unpaid amount in the nature of
interest on and the outstanding principal balance of any Deficit Capital
Contributions or Additional Capital Contributions, on a pari passu basis; and
(C) third, the balance, if any, shall be distributed 79.1% to the
General Partner and 20.9% to the Limited Partner.
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Such quarterly payments shall be adjusted annually, within ninety (90)
days after the end of each Fiscal Year, and excess amounts, if any, shall be
credited against future required payments; underpayments will be paid at the
time of such adjustment.
5.05 Distribution of Proceeds of Capital Transactions other than in
Liquidation.
(A) Capital Proceeds (other than in liquidation) shall be distributed as
follows and in the following order of priority:
(1) first, to the repayment of the First Mortgage or any other mortgage
or deed of trust or interim financing affecting the Property; if required
thereunder, including principal, interest and any fees or penalties incurred in
connection therewith;
(2) second, to the repayment of the outstanding principal balance of the
Operating Deficit Loan and the Limited Partner Loan, on a pari passu basis,
including any interest accrued thereon; and
(3) third, to the General Partner and the Limited Partner, respectively,
an amount equal to the excess of any Deficit Capital Contributions or Additional
Capital Contributions, including any amount in the nature of interest accrued
thereon, as the case may be, over the
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amount previously distributed pursuant to this Section 5.05(A)(3) or Section
5.04(B), in proportion to such excesses; and
(4) thereafter, the balance, if any, shall be paid 79.1% to the General
Partner and 20.9% to the Limited Partner.
(B) Notwithstanding anything contained herein, any proceeds secured by
the First Mortgage and actually received by the Partnership in excess of those
required in connection with payments under any construction agreement for the
construction of the Improvements, shall be paid to the General Partner as
repayment for certain amounts previously advanced or contributed to the
Partnership in connection with the acquisition and construction of the
Improvements.
5.06 Partnership Adjustments. The Partnership shall elect to adjust the
basis of the Partnership property pursuant to the election provided for in
Section 754 of the Code. Any increase or decrease in the amount of any item of
income, gain, loss, deduction or credit attributable to an adjustment to the
basis of Partnership assets made pursuant to such election, and pursuant to the
corresponding provisions of applicable state and local income tax laws, shall be
charged or credited, as
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the case may be, to those Partners entitled thereto under such laws.
5.07 Allocations to Transferred Interests. Profits, gains, losses,
deductions and credits allocated to an Interest assigned or reissued during a
Fiscal Year shall be allocated to each Person who was the holder of such
Interest during such Fiscal Year, in proportion to the number of days that each
such holder was recognized as the owner of such Interest during such Fiscal Year
or by an interim closing of the books or in any other proportion permitted by
the Code and selected by the General Partner in accordance with this Agreement,
without regard to the results of Partnership operations or the date, amount or
recipient of any distributions which may have been made with respect to such
Interest. The effective date of any assignment shall be (i) in the case of a
voluntary assignment, the actual date the assignment is recorded on the books of
the Partnership, or (ii) in the case of involuntary assignment, the date of the
operative event.
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ARTICLE VI
RIGHTS AND OBLIGATIONS OF
THE GENERAL PARTNERS
6.01 Management. Subject to and limited by the provisions of this
Agreement, the General Partner shall have full, exclusive and complete
authority, discretion, obligation and responsibility to make all decisions
affecting the business of the Partnership. The General Partner shall manage and
control the affairs of the Partnership to the best of its ability and shall use
its best efforts to carry out the business of the Partnership. The General
Partner shall devote to the Partnership such time as, in its discretion, may be
necessary for the proper performance of its duties hereunder.
The General Partner shall render to the Partnership such services as are
reasonably necessary for the management and conduct of the business of the
Partnership and shall be entitled to be reimbursed for out-of-pocket expenses
reasonably and necessarily incurred in connection with the performance of its
duties hereunder, including, without limitation, its acting as "Tax Matters"
Partner.
6.02 Authority. The General Partner shall have authority to bind the
Partnership, by execution of documents or otherwise, to any obligation not
inconsis-
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tent with the provisions of this Agreement. Except as otherwise provided in
Section 6.05, the General Partner may contract or otherwise deal with any Person
for the transaction of the business of the Partnership, which Person may, under
supervision of the General Partner, perform such acts or services for the
Partnership as the General Partners may approve.
6.03 Limitations on General Partner.
A. The General Partner shall not have any authority to:
(i) perform any act in violation of any applicable law
or regulation thereunder, including applicable Federal and state securities
laws;
(ii) perform any act in violation of the Act or this
Agreement;
(iii) consent to (a) any initial permanent mortgage
financing affecting the Property other than on the terms and in the amount of
the Commitment, (b) any refinancing of the First Mortgage or other initial
permanent mortgage financing, (c) any attempted sale or actual sale of the
Property except as specifically set forth herein or exercise of the
Partnership's rights under the Ground Lease to cancel the same except in
connection with a termination of the Hotel/Office Lease by
42
<PAGE> 48
PaineWebber Incorporated pursuant to Section 38.11 of the Hotel/Office Lease,
(d) any modification of the First Mortgage or such other initial permanent
mortgage financing, or (e) any sale or transfer of, or financing secured by, the
fee estate of the General Partner as landlord under the Ground Lease, if such
consent shall be required thereunder, without the prior Consent of the Limited
Partner, which Consent shall not be unreasonably withheld;
(iv) enter into any franchise agreement for the hotel
operation to be conducted at the Property;
(v) modify or cancel the Management Agreement, dated of
even date herewith, between the Partnership and Hartz Hotel Management Corp., or
to enter into a new management agreement;
(vi) cause the Partnership to voluntarily file for
Bankruptcy unless the need for the same shall arise by reason of the Limited
Partner being in default under the Guarantee or the tenant under the
Hotel/Office Lease to make any payments required thereunder, including, without
limitation, a failure to make any such payments in connection with bankruptcy
proceedings
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and whether or not the trustee in bankruptcy shall disaffirm the Hotel /Office
Lease;
(vii) perform any other act expressly requiring the
Consent of the Limited Partner under this Agreement without first obtaining such
Consent.
B. Notwithstanding the provisions of clause A(iii)(a) of this
Section 6.03, however, subsequent to the fifteenth (15th) anniversary of the
Commencement Date, the General Partner shall have the right to sell the Property
(but not any part thereof) (together with fee interest therein), without the
prior consent of the Limited Partner, provided that the proceeds of such sale,
when distributed to the Partners pursuant to Section 5.05 hereof, shall be
sufficient so that the Limited Partner shall receive an amount equal to the sum
of (x) the Limited Partner's full federal, state and local tax liability in
connection with such sale, and (y) an amount equal to the sum of the Limited
Partner's projected cash distribution of Net Operating Revenues and tax benefits
from the date of such sale to the twenty-fifth anniversary of the date hereof;
discounted to the then present value at the rate of 9% per annum. If there shall
be any dispute as to the value of the Limited Partner's project-
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ed tax benefits or projected Net Operating Revenues, either party may refer the
decision of the issues raised to one of the so-called "big eight" public
accounting firms, mutually satisfactory to the Partners, or if the Partners
shall be unable to agree, then the firm to which the dispute shall be referred
shall be chosen as follows: the Partners shall each be permitted to exclude one
of such firms from the pool of acceptable firms; the firm to which such decision
shall be referred shall then be chosen by lot from the pool of remaining firms,
and if the firm chosen by lot shall refuse to serve, a substitute firm shall be
chosen by lot. The decision of such accountants shall be conclusively binding
upon the Partners. The fees and expenses involved in such a decision shall be
borne by the unsuccessful Partner (and if both Partners are partially
unsuccessful, the accountants shall apportion the fees and expenses between the
parties based on the degree of success of each Partner).
C. In addition, notwithstanding the provisions of clause A(iii)(b)
of this Section 6.03, if any such proposed refinancing shall be non-recourse,
unguaranteed (or if, in spite of the General Partner's best efforts, it is not
possible to obtain non-recourse and unguaranteed financing, recourse or
guaranteed financing) and on
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terms and at an interest rate which are commercially reasonable for the type of
property and the location thereof, if the Limited Partner shall fail to approve
the same, then the Limited Partner shall be obligated to lend or to cause there
to be lent to the Partnership by any person, firm or corporation, including the
Limited Partner, any amount not less than the proposed refinancing on the same
or better terms. If there shall be a dispute as to whether the terms of the
financing proposed by the Limited Partners shall in fact be the same as or
better than those of the financing proposed by the Limited Partner, then,
pending resolution of such dispute, the General Partner shall have the
authority, without the Limited Partner's Consent to obtain any necessary interim
financing. The Limited Partner shall notify the General Partner of whether it
approves or disapproves of any such proposed refinancing within ten (10)
business days after notice thereof from the General Partner. Failure to respond
within such period shall be deemed to constitute approval by the Limited
Partner. In addition, if the Limited Partner shall fail to approve any proposed
refinancing required in connection with the repayment of any outstanding balance
of any loan on maturity or accelerated due date, then, provided that the General
Partner
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shall have notified the Limited Partner of the terms of the proposed refinancing
not less than one hundred eighty (180) days prior to the date on which such
prior loan shall be due or such shorter period as may be reasonable if such due
date shall be accelerated by the Lender, the Limited Partner shall be obligated
to lend, or cause there to be lent, an amount sufficient to repay such
outstanding balance not less than one hundred twenty (120) days prior to the
date on which the same shall be due.
6.04 Additional Limitations. The General Partner shall not be
entitled to:
(A) cause the Partnership to make loans to, or accept loans from
(other than on commercially reasonable terms), the General Partner or its
Affiliates; or
(B) accept rebates, subject to Section 6.05, or engage in any
reciprocal business arrangements which would violate this Section.
6.05 Business with Affiliates. Except as provided in Section 6.04
hereof, the General Partner may cause the Partnership to transact business with
any of its Affiliates for goods or services reasonably required in the conduct
of the Partnership's day-to-day business,
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provided that any such transaction shall be effected only if:
(A) The Limited Partner shall have Consented to such
transaction; or
(B) The following conditions shall have been complied with:
(i) the transaction is on terms competitive with those
that may be obtained from unaffiliated Persons;
(ii) any and all such transactions are disclosed to all
Partners; and
(iii) any goods or services provided by the General
Partner or its Affiliates to the Partnership shall be pursuant to a written
contract which sets forth the goods and services to be provided and the
compensation to be paid, and shall be terminable without cause or penalty upon
sixty (60) days' Notice.
6.06 Liability for Acts and Omissions.
(A) The General Partner shall not be liable, responsible or
accountable in damages or otherwise to any of the Partners for any act or
omission performed or omitted in good faith on behalf of the Partnership and in
a manner reasonably believed to be within the scope of the authority granted by
this Agreement and in
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the best interests of the Partnership, but shall be so liable, responsible or
accountable for fraud, gross negligence, willful misconduct or any material
breach of its fiduciary duty with respect to such acts or omissions.
(B) The General Partner shall be indemnified and held harmless
by the Partnership (but not any Partner) from and against any and all claims,
demands, liabilities, costs, damages and causes of action of any nature
whatsoever arising out of or incidental to the General Partner's management of
the Partnership affairs, except where the General Partner has committed fraud,
gross negligence or willful misconduct.
The indemnification authorized by this Section 6.06 shall
include, without limitation, payment of:
(i) reasonable attorneys' fees or other expenses incurred in
connection with settlement or in any legal proceeding; and
(ii) the removal of any liens affecting any property of the
indemnitee.
The indemnification rights contained in this Section 6.06 shall
be cumulative of, and in addition to, any and all rights, remedies, and
recourses to which the General Partner shall be entitled, whether pursuant to
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the provisions of this Agreement, at law, or in equity. Indemnifications
hereunder shall be made from Partnership Assets as an expense of the Partnership
and no general partner or limited partner(s) shall be personally liable to any
indemnitee.
6.07 Other Activities. Except as provided in Section 6.05 hereof, the
Partners and their Affiliates may engage in or possess an interest in other
business ventures of every nature and description for their own account,
independently or with others, including, without limitation, real estate
business ventures, whether or not such other enterprises shall be in competition
with any activities of the Partnership; and neither the Partnership nor the
other Partners shall have any right by virtue of this Agreement in and to such
independent ventures or to the income or profits derived therefrom.
6.08 Classification as a Partnership. In conducting the operation of the
Partnership, the General Partner shall at no time engage in any conduct that
might cause the Partnership not to be classified for Federal income tax purposes
as a partnership but as an association taxable as a corporation.
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6.09 Net Worth of General Partner. The General Partner hereby covenants
and agrees that it shall at all times have sufficient assets and net worth,
exclusive of its Interest, to permit the Partnership to be taxed as a
"partnership" and not as an association taxable as a corporation for Federal
income tax purposes under the provisions of the Code and the regulations
promulgated thereunder and in compliance with any requirements imposed by the
IRS.
6.10 Management. The General Partner will exercise good faith in all
activities relating to the conduct of the business of the Partnership, and will
take no action with respect to the business or assets of the Partnership which
is not reasonably related to the achievement of the purposes of the Partnership.
ARTICLE VII
WITHDRAWAL OF GENERAL PARTNER
7.01 Assignment or Withdrawal by a General Partner. No general partner
of the Partnership may sell, transfer, assign or otherwise dispose of, or
pledge, hypothecate or otherwise encumber (collectively, "Transfer") its
Interest, in whole or in part, or withdraw from the Partnership, except as
permitted by this Article, Section 4.04(C) and Section 14.08 hereof.
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7.02 Involuntary Withdrawal of a General Partner. In the event of the
involuntary withdrawal of a general partner due to death, disability,
Bankruptcy, dissolution or legal incapacity, such general partner shall
immediately cease to be a Partner and the Partnership shall purchase the
Interest of such Partner for an amount payable in cash equal to its fair market
value. For purposes of determining the fair market value under this Section, the
provisions of Section 14.08 hereof shall apply.
7.03 Obligations of a Prior General Partner. If any general partner
withdraws or is removed from the Partnership under Sections 7.02 or 7.08 hereof
it shall remain liable for all obligations and liabilities incurred by it as a
general partner before the effective date of such event and shall be liable for
all damages and costs to the Partnership, the General Partner (and any new
general partner) and the Limited Partner (and any Substitute Limited Partner) as
a result of such sale, transfer, assignment, withdrawal or removal.
7.04 Remaining General Partner. Upon the death, disability, Bankruptcy,
dissolution, legal incapacity or removal of a general partner, the remaining
general partner, if any, (i) shall immediately give No-
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tice to the Limited Partner of such event, (ii) shall serve as the General
Partner of the Partnership, and (iii) shall continue the business of the
Partnership. Upon the death, disability, Bankruptcy, dissolution, legal
incapacity or removal of the sole remaining general partner, or the Transfer by
the sole remaining general partner of its Interest, a Person selected by the
Limited Partner shall (i) serve as the General Partner of the Partnership, and
(ii) continue the business of the partnership if the Partnership is
reconstituted under Article XII.
7.05 Removal of General Partner.
(A) The General Partner may be removed by the Limited Partner
for fraud, willful misconduct, gross negligence or material breach of fiduciary
duty.
(B) Upon receipt of Notice from the Limited Partner seeking the
removal of the General Partner pursuant to Section 7.05(A), and specifying the
cause for such removal, the General Partner shall have the right within 20
calendar days of the date of receipt of such Notice to cure the alleged default
or, if such breach cannot reasonably be cured in such period, to commence
efforts to cure and diligently prosecute such cure. Should such cure not be so
made or efforts com-
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menced, then, unless the General Partner disputes such removal and within the
20-day period provides Notice to the Limited Partner of its intention to
commence arbitration pursuant to Section 14.12 of this Agreement, the General
Partner shall immediately cease to be a general partner and shall no longer have
the powers and authorities conferred on it as general partner as to the
operation of the Partnership business and the General Partner's Interest shall
be converted into that of a special limited partner ("Special Limited Partner")
and shall be entitled to all profits, losses, gains, distributions and other
credits and charges to which the General Partner was entitled under this
Agreement, but shall not be entitled to vote with the Limited Partner or the
Substitute Limited Partner(s) upon any matter which requires the consent or
approval of the Limited Partner or the Substitute Limited Partner(s) under this
Agreement. Promptly after such conversion, the Limited Partner shall file, or
cause there to be filed, an amendment to the Certificate of Limited Partnership,
indicating such conversion. The General Partner shall remain liable for all
liabilities and obligations of the Partnership incurred or arising out of
Partnership operations during the time it was the General Partner, but shall be
free from liability in
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respect of obligations and liabilities incurred or arising out of operations
thereafter, unless the Partnership is dissolved as a consequence of the act of
the General Partner by law or by the provisions of this Agreement.
7.06 Successor General Partner. A Person shall be admitted as a general
partner only if the following terms and conditions are satisfied:
(A) the admission of such Person shall have been Consented to by
any other general partner(s) and by the Limited Partner;
(B) the Person shall have accepted and agreed to be bound by all
the terms and provisions of this Agreement by executing a counterpart thereof
and such other documents or instruments that may be required or appropriate in
order to effect the admission of such Person as a general partner;
(C) a certificate evidencing the admission of such Person as a
general partner shall have been filed for recordation;
(D) if the successor general partner is a corporation, it shall
have provided counsel for the Partnership with a certified copy of a resolution
of its Board of Directors authorizing it to become a general partner; and
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(E) except in connection with a transfer pursuant to Section
14.08 hereof, counsel for the Partnership shall have rendered an opinion that
none of the actions taken in connection with such transfer or admission will
cause a termination of the Partnership pursuant to Section 708 of the Code,
which opinion can be waived by the remaining general partner(s) and the Limited
Partner.
7.07 Additional Limitation on Transferability. Anything to the contrary
in this Agreement notwithstanding, except in connection with a transfer pursuant
to Section 14.08 hereof, no general partner may Transfer its Interest, in whole
or in part, if such Transfer will cause a termination of the Partnership
pursuant to Section 708 of the Code, and any Transfer in violation of the
provisions hereof shall be void.
7.08 Permitted Assignments by the General Partner. Notwithstanding
anything contained herein to the contrary, the General Partner shall have the
right, upon compliance with the provisions of Section 7.06(B)-(E) but subject
to the provisions of Section 7.07, to assign its entire Interest to an
Affiliate. In addition, the General Partner shall have the right, from time to
time, upon compliance with the provisions of Section
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7.06(B) and (E) and subject to the provisions of Sections 4.04(C) and 7.07, to
assign a portion or portions of its Interest, not to exceed 78.9% in the
aggregate, to Affiliates, to Leonard Stern, members of his immediate family or
trusts for the benefit of Leonard Stern or members of his immediate family, and
to charitable foundations established by Leonard Stern, provided, however, that
no such assignee shall be deemed to be a general partner but rather a Special
Limited Partner, and shall be entitled to all profits, losses, gains,
distributions and other credits and charges to which the General Partner was
entitled under this Agreement and which are allocable to the portion of the
Interest so transferred, but shall not be entitled to vote with the Limited
Partner or the Substitute Limited Partner(s) upon any matter which requires the
consent or approval of the Limited Partner or the Substitute Limited Partner(s)
under this Agreement and provided further that each such assignee shall consent
in writing to its Interest being pledged to secure the obligations of the
General Partner in accordance with Section 4.04(C) hereof. In addition, upon
compliance with the provisions of Section 7.06(B) and (E) and subject to the
provisions of Sections 4.04(C) and 7.07, in the event of the death of Leonard
Stern, the General Partner may
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transfer its entire Interest to the Estate of Leonard Stern (the "Estate") in
connection with the dissolution of the General Partner and the transfer of its
assets to the Estate, provided that the Estate shall have a net worth not less
than the General Partner's immediately prior to such transfer, the Estate shall
acknowledge all claims against, and obligations of, the General Partner,
including, without limitation, the Guarantee, of even date hereof, by the
General Partner for the benefit of the Limited Partner, and the Estate shall
insure that there shall be a continuancy of management of the Parternship and
the Property.
Nothing contained herein shall be deemed to limit any rights the General
Partner may have to pledge its Interest, subject, however, to its prior pledge
pursuant to Section 4.04(C) hereof.
ARTICLE VIII
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNER
8.01 Management of the Partnership. The limited Partner shall not take
part in the management or control of the business of the Partnership or transact
any business in the name of the Partnership. The Limited Partner shall not have
the power or authority to bind the Partnership or to sign any agreement or
document in the
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name of the Partnership. The Limited Partner shall not have any power or
authority with respect to the Partnership, except insofar as the Consent of the
Limited Partner shall be expressly required by this Agreement. The exercise of
any of the rights and powers of the Limited Partner pursuant to the terms of
this Agreement shall not be deemed taking part in the day-to-day affairs of the
Partnership or the exercise of control over Partnership affairs.
8.02 Limitation on Liability. The liability of the Limited Partner shall
be limited hereunder to its Interest as and when it is payable under the
provisions of this Agreement. The Limited Partner shall not have any other
liability to contribute money to the Partnership, nor shall the Limited Partner
be personally liable for any obligations of the Partnership. Nothing contained
in this paragraph is intended to alter the provisions of any applicable state
statutes regarding limitations on the liability of limited partners.
8.03 Power of Attorney.
(A) The Limited Partner hereby makes, constitutes and appoints
the General Partner, and/or its authorized officers, agents, successors or
assigns, its true and lawful attorney-in-fact with full power and
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authority in its name, place and stead to make, execute, sign, acknowledge,
deliver, file and record at the appropriate public offices such documents as may
be necessary or appropriate to carry out the provisions of this Agreement,
including the following with respect to the Partnership:
(i) the certificate of limited partnership of the Partnership,
and all certificates, other agreements and amendments thereto, which the General
Partner reasonably deems necessary to continue the Partnership as a Limited
Partnership in each jurisdiction in which the Partnership conducts business;
(ii) all instruments which the General Partner reasonably deems
necessary to effect any sales or transfers by, or the dissolution and
liquidation of, the Partnership or to reflect a change or modification of the
Partnership, all made in accordance with the terms of this Agreement; or
(iii) all such other instruments as may be reasonably deemed
necessary or desirable by the General Partner to carry out fully the provisions
of this Agreement in accordance with its terms, or to manage and operate the
Property in the ordinary course of business (provided however, that nothing
herein contained shall be
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deemed to supersede any limitations specifically imposed on the General Partner
by any provision of this Agreement, including, without limitation, those
limitations which are contained in Sections 6.03 and 6.04 hereof).
(B) The foregoing power of attorney is hereby declared to be
irrevocable and coupled with an interest, and it shall survive the Bankruptcy,
legal disability, dissolution or cessation to exist as a legal entity of the
Limited Partner to the fullest extent permitted by law and extend to its heirs,
executors, personal representatives, successors and assigns, and the transfer or
assignment of all or any part of the Interest of such Partner; provided,
however, that if the Limited Partner transfers all or any part of its Interest,
the foregoing power of attorney of the transferor Limited Partner shall survive
such transfer only until such time as the transferee shall have been admitted to
the Partnership as a Substitute Limited Partner and all required documents and
instruments shall have been duly executed, filed and recorded to effect such
substitution.
(C) The power of attorney granted to the General Partner shall
not apply to Consent of the Limited Partner provided for in this Agreement
unless any specific time period set forth herein in connection with
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the granting or denying of such consent shall have expired.
(D) The Limited Partner further agrees to execute any and all
documents or instruments referred to in this Section 8.03 if the provisions of
the Act render ineffective the power of attorney granted hereunder.
8.04 Admission of Additional Partners. Except as provided in this
Agreement, no new partners may be admitted to the Partnership without the
Consent of all of the Partners. The admission of additional partners is further
subject to the condition that each such additional partner execute this
Agreement or an appropriate supplement hereto pursuant to which he agrees to be
bound by the terms and provisions hereof. The admission of an additional partner
pursuant hereto shall not be cause for dissolution of the Partnership.
ARTICLE IX
TRANSFER OF LIMITED PARTNERSHIP INTERESTS
9.01 No Unpermitted Transfers. The Limited Partner may not sell, assign,
transfer or otherwise dispose of, or pledge, hypothecate or otherwise encumber
his Interest, or any part thereof, except as permitted in this Article IX and
Sections 14.08 and 14.13 hereof, and
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any transaction in violation of this Article IX and Section 14.08 hereof shall
be null and void as against the Partnership, except as otherwise provided by
law.277
9.02 Assignment by Limited Partner.
(A) The Limited Partner may assign its Interest, in whole or in
part, by an executed and acknowledged written instrument only if all of the
following conditions are satisfied:
(i) the assignor and assignee file a notice of transfer
with the General Partner which contains the information reasonably required by
the General Partner; and
(ii) any reasonable costs of transfer shall have been
paid to the Partnership; and
(iii) the General Partner shall have Consented to the
assignment, which Consent may be granted or withheld in its sole discretion.
(B) Any such assignment shall be recognized by the Partnership
as effective only on the first day of the calendar month following receipt by
the Partnership of such notice of the proposed assignment and satisfaction of
the aforementioned conditions.
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(C) If an assignee of a Limited Partner does not become a
Substitute Limited Partner pursuant to Section 9.03, the Partnership shall not
recognize the assignment, and the assignee shall not have any rights to require
any information on account of the Partnership's business, inspect the
Partnership's books or vote on Partnership matters.
(D) Notwithstanding anything contained herein to the contrary,
upon compliance with the provisions of clauses (i) and (ii) of Paragraph (A) of
this Section, the Limited Partner, or any limited partner, or Special Limited
Partner, shall have the right to assign its Interest, in whole or in part, to an
Affiliate.
9.03 Substitute Limited Partner.
(A) An assignee of the whole or any portion of the Limited
Partner's Interest in accordance with Section 9.02 shall have the right to
become a Substitute Limited Partner in place of its assignor only if all of the
following conditions are satisfied:
(i) the fully executed and acknowledged written
instrument of assignment which has been filed with the Partnership sets forth a
statement of the intention of the assignor that the assignee become a Substitute
Limited Partner in his place;
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(ii) the assignee executes, adopts and acknowledges this
Agreement, and a certificate evidencing the admission of such Person as a
Substitute Limited Partner shall have been filed for recording;
(iii) any reasonable costs of transfer shall have been
paid to the Partnership;
(iv) the assignee meets the investment requirements
which may be established by the General Partner for investment in the
Partnership; and
(v) the General Partner shall have Consented to the
substitution, which Consent may be granted or withheld in its sole discretion.
(B) The General Partner may elect to treat an assignee who has
not become a Substitute Limited Partner as a Substitute Limited Partner in the
place of its assignor.
9.04 Involuntary Withdrawal by Limited Partner.
(A) Upon the Bankruptcy, dissolution or other cessation to exist
as a legal entity of the Limited Partner, at the election of the General
Partner, the Limited Partner shall immediately cease to be a Partner and the
Partnership shall purchase the Interest of the Limited Partner for an amount
payable in cash equal to its fair market value. For purposes of determining the
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fair market value under this Section, the provisions of Section 14.08 hereof
shall apply.
(B) The Bankruptcy, dissolution or cessation to exist as a legal
entity of the Limited Partner shall not dissolve or terminate the Partnership.
9.05 Additional Limitation on Transferability. Anything to the contrary
in this Agreement notwithstanding, the Limited Partner may not Transfer its
interest, in whole or in part, if such Transfer will cause a termination of the
Partnership pursuant to Section 708 of the Code, and any Transfer in violation
of the provisions hereof shall be void.
ARTICLE X
DISSOLUTION AND LIQUIDATION
10.01 Dissolution. Unless sooner terminated in accordance with its
terms, the Partnership shall be dissolved upon the occurrence of any one of the
following:
(A) an election to dissolve the Partnership is made by the
General Partner with the Consent of the Limited Partner;
(B) the sale, exchange or other disposition of all, or
substantially all, of Partnership Assets;
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(C) subject to the provisions of Article VII, the death,
disability, Bankruptcy, dissolution, legal incapacity, removal or withdrawal of
the sole remaining general partner or the sale, transfer or assignment, pursuant
to Section 7.01 or 7.08 hereof, by the sole remaining general partner of its
Interest;
(D) the occurrence of the date set forth in Section 1.05;
(E) the tenant under the Hotel/Office Lease shall elect pursuant
to the provisions of Section 38.11 of the Hotel/Office Lease to terminate the
Hotel/ Office Lease; or
(F) any other event causing dissolution of the Partnership under
the Act.
10.02 Liquidation of Partnership Assets. In the event of a dissolution
of the Partnership and the failure of the Partnership to be reconstituted under
Article XI, the Partnership shall be terminated. Upon such termination, a full
accounting of the assets and liabilities shall be taken, the assets shall be
liquidated, and the Capital Proceeds thereof shall be applied as follows:
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(a) All liabilities and obligations of the Partnership,
other than liabilities and obligations to the Partners as
Partners under this Agreement, shall be paid or provided for
(whether by such reserve as the Liquidator shall deem
appropriate or otherwise);
(b) All liabilities and obligations of the Partnership
to the Partners shall be paid or provided for (whether by such
reserve as the Liquidator shall deem appropriate or otherwise)
in the following order of priority:
(i) to the repayment of the outstanding principal
balance of the Operating Deficit Loan, the Deficit Capital Contributions, the
Limited Partner Loan and the Additional Capital Contributions, on a pari passu
basis, including interest accrued thereon; and
(c) After allocation of all income, gains and losses in
accordance with Article 5, to the Partners in accordance with
the positive balances in their Capital Accounts.
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ARTICLE XI
RECONSTITUTION
11.01 Reconstitution. Notwithstanding any dissolution of the Partnership
under Section 10.01(C) or (F), the business of the Partnership shall be
continued with the Partnership property and the Partnership assets shall not be
liquidated and the Partnership automatically shall be reconstituted with the
remaining general partner or substituted general partner acting as the General
Partner.
If the Partnership is dissolved and no general partner is then serving
in accordance with the provisions of Article VII, a successor Person may be
admitted within ninety (90) days after a dissolution, effective as of the date
of dissolution, as general partner with the Consent of the Limited Partner and
upon the satisfaction of the terms and conditions set forth in Section 7.07
hereof. Upon the admission of such Person as a successor general partner,
without any further Consent or approval of any other Partner, the Partnership
shall be reconstituted as a Successor Limited Partnership.
11.02 Continuation of Business. The Successor Limited Partnership shall
continue the business of the Partnership with the Partnership property. The
Interests
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of the Partners in the Successor Limited Partnership shall be in proportion to
their Interests in the dissolved Partnership. Such Successor Limited Partnership
shall be governed by the terms and provisions of this Agreement and references
in this Agreement to the Partnership or to the Partners or their rights and
obligations shall be understood to comprehend such Successor Limited Partnership
and the Partners thereof and their rights and obligations.
ARTICLE XII
ACCOUNTING AND REPORTS
12.01 Books and Records. The General Partner shall maintain at the
office of the Partnership full and accurate books of the Partnership showing all
receipts and expenditures, assets and liabilities, profits and losses, and all
other books, records and information required by the Act or necessary for
recording the Partnership's business and affairs. The Partnership's books and
records shall be maintained in accordance with the accrual method of accounting.
All Partners and their duly authorized representatives shall have the right to
inspect and copy at their expense any and all of the Partnership's books and
records, including books and records necessary to enable a Partner to defend any
tax
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audit or related proceeding, during reasonable business hours, upon two (2)
business days' Notice to the General Partner.
12.02 Annual Tax Returns. The General Partner shall cause the
Partnership Accountants to prepare all tax returns required of the Partnership.
The General Partner shall be the "tax matters partner" of the Partnership, as
that term is defined in Section 6231(a)(7) of the Code. The General Partner
shall be responsible for the preparation of filing of any tax shelter
registration documents, if applicable, that may be required in Section 6111 of
the Code. Notwithstanding the foregoing, however, the General Partner agrees
that the first tax return filed after completion of the Improvements shall be
subject to review by the Limited Partner. The Limited Partner shall notify the
General Partner of any objections it may have thereto within fifteen (15)
business days after receipt of such return. If the Limited Partner and the
General Partner shall thereafter be unable to agree, such dispute shall be
submitted to one of the so-called "big eight" accounting firms for resolution in
accordance with the provisions of Paragraph 4(c) of the Lease Acquisition
Agreement.
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12.03 Reports to Partners. As soon as practicable after the end of each
Fiscal Year, the General Partners shall cause the Partnership Accountants to
furnish the Partners with reports containing at least the following information:
(A) By each March 15, as the same may be extended as a result of
an extension pursuant to clause (B) of this Section 12.03, IRS Form K-1, or any
similar form as may be required by the IRS, stating the Partner's distributive
share of income, gain, loss, deduction or credit for the previous Fiscal Year;
(B) By each April 15, as the same may be extended by the
Partnership pursuant to requests to extend the date on which it must file its
Federal income tax forms, an unaudited balance sheet and related statements of
income, cash flow and Partners' capital and changes in financial position
certified by an officer of the General Partner;
(C) By each April 30:
(i) any information which the General Partner deems
relevant or is required by applicable law; and
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(ii) a report of the activities of the Partnership
during the previous Fiscal Year;
(D) Within sixty (60) days after the end of each fiscal quarter,
(i) a summary, prepared by the General Partner, of all transactions during such
fiscal quarter between the Partnership and the General Partner or its
Affiliates, if any (including the nature of the transaction and the payments
involved and any other information which the General Partner reasonably deems
relevant or is required by applicable law), and (ii) an unaudited operating
statement for such fiscal quarter.
12.04 Partnership Funds. The General Partner shall have the
responsibility for the safe-keeping and use of all funds and assets of the
Partnership and the General Partner shall not employ such funds in any manner
except for the benefit of the Partnership. All funds of the Partnership not
otherwise invested shall be deposited in one or more accounts maintained in such
banking institutions as the General Partner shall determine.
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ARTICLE XIII
AMENDMENTS AND MEETINGS
13.01 Amendment Procedure. The amendment
procedure is as follows:
(A) amendments to this Agreement may be proposed by the General
Partner or by the Limited Partner; and
(B) a proposed amendment will be adopted and effective only if
it receives the Consent of all the Partners.
In the event all Partners Consent to any of the above changes,
an amendment to this Agreement shall be executed and filed for recording in the
manner prescribed by the Act.
13.02 Meetings and Voting.
(A) Meetings of Partners may be called by the General Partner or
by the Limited Partner for informational purposes or for any purpose permitted
by this Agreement. The General Partner shall give all Partners Notice of the
purpose of such proposed meeting not less than fifteen (15) nor more than sixty
(60) days before the meeting. Meetings shall be held at a time and place
reasonably selected by the General Partner.
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(B) The General Partner may solicit required Consents of the
Limited Partner under this Agreement at a meeting held pursuant to Section
13.02(A) or by written ballot.
ARTICLE XIV
MISCELLANEOUS
14.01 Title to Partnership Property. All Partnership Assets, whether
real or personal, tangible or intangible, shall be deemed to be owned by the
Partnership as an entity, and no Partner, individually, shall have any ownership
interest in such property.
14.02 Validity. Each provision of this Agreement shall be considered
separate and, if for any reason, any provision(s) which is not essential to the
effectuation of the basic purposes of this Agreement is determined to be
invalid, illegal or unenforceable, such invalidity, illegality or
unenforceability shall not impair the operation of or affect those provisions of
this Agreement which are otherwise valid, except that if the provisions of
Section 8.02 hereof shall be determined to be invalid, illegal or unenforceable,
this Agreement shall be deemed to be void and of no further force or effect.
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14.03 Applicable Law. This Agreement, and the application or
interpretation thereof, shall be governed exclusively by its terms and by the
laws of the State of New Jersey.
14.04 Binding Agreement. This Agreement and all terms, provisions and
conditions hereof shall be binding upon the parties hereto, and shall inure to
the benefit of the parties hereto and, except as otherwise provided herein, to
their respective heirs, executors, personal representatives, successors and
assigns.
14.05 Waiver of Action for Partition. Each of the parties hereto
irrevocably waives during the term of the Partnership any right that it may have
to maintain any action for partition with respect to any property of the
Partnership.
14.06 Headings. All section headings in this Agreement are for
convenience of reference only and are not intended to qualify the meaning of any
section.
14.07 Terminology. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders, the singular shall include the plural, and vice versa, as the context
may require.
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14.08 Right of First Offer.
(A) Any Partner (the "Sending Partner"), at any time, may give
notice (the "Selling Notice") to the other Partners (the "Receiving Partners")
of its desire to sell its Partnership Interest. At any time within sixty (60)
days after receipt of the Selling Notice, the Receiving Partners each shall
either:
(i) elect, by notice to the Sending Partner, to purchase
or to cause its designee to purchase the Partnership Interest of the Sending
Partner; or
(ii) elect not to purchase or to cause its designee to
purchase the Partnership Interest of the Sending Partner.
(B) If one or more Receiving Partner shall elect to purchase the
Partnership Interest of the Sending Partner, then:
(i) the purchase price (the "Purchase Price") of such
interest shall be an amount equal to that which the Sending Partner would have
been entitled to receive if the Property were sold at the Fair Market Value, all
liabilities of the Partnership, including non-recourse liabilities with respect
to the Property were to be satisfied and the Partnership were to be dis-
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soland liquidated pursuant to the terms of Article X hereof;
(ii) the Purchase Price will be paid either in cash or,
at the election of any of the Receiving Partners, by delivery of a purchase
money note in the principal amount of the Purchase Price, which note will be
secured by either a collateral assignment of leases and rents or a second
mortgage, and which note shall have a term of three (3) years, prepayable in
full at any time without penalty and with interest only payable during such
term, at a rate computed and payable monthly on the basis of a fraction, the
denominator of which is 360 and the numerator of which is the number of days in
the billing period, equal to the Prime Rate in effect as of the first day of the
month preceding the month in which an installment of interest is due; and
(iii) the Sending Partner shall be removed immediately
from the Partnership and the Sending Partner shall not be entitled to receive
any distributions in connection therewith.
(C) Upon determination of the Fair Market Value, each Receiving
Partner shall have the option, to be exercised within ten (10) business days
after determination of the Fair Market Value, to rescind its
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election to purchase or to cause its designee to purchase the Partnership
Interest of the Sending Partner, in which event the provisions of Paragraph (D)
of this Section 14.08 shall be deemed to apply.
(D) If no Receiving Partner shall elect to purchase or to cause
its designee to purchase the Partnership Interest of the Sending Partner, or if
all Receiving Partners shall rescind their election to purchase or to cause
their designee to purchase the Partnership Interest of the Sending Partner,
then, upon compliance with the provisions of Sections 7.06(B)-(D) and
9.02(A)(i)-(ii) and subject to the provisions of Sections 7.07 and 9.05, as the
case may be, the Sending Partner may assign its entire Interest to a third party
for a purchase price, in the case of such a rescission, of not less than 95% of
the price which the Receiving Partners would have paid if they had not so
rescinded its election to purchase. In addition, in either event, if the Sending
Partner shall not have assigned its interest within six (6) months after the
Receiving Partners either shall have elected not to purchase or shall have
rescinded their election, then, prior to assigning its interest to a third
party, it shall once again offer its Interest to the Receiving Partners pursuant
to this Section 14.08.
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(E) If more than one Receiving Partner shall elect to purchase
the Sending Partner's Interest, then such Interest and the Purchase Price shall
be allocated among such Receiving Partners in the proportion that their
Interests bear to each other.
(F) For the purposes of this Section 14.08, "Fair Market Value"
shall be deemed to mean the amount which a willing buyer would pay and a willing
seller would accept, neither under a compulsion to buy or sell, as a purchase
price, in cash, for the Interest of the Sending Partner. If there shall be a
dispute between the Sending Partner and the Receiving Partners as to the fair
market value of the Interests of the Sending Partner, each shall select and
notify the other of the name and address of an appraiser who is a member of the
American Institute of Appraisers of the National Association of Real Estate
Boards (a "MAI Appraiser") (provided, however, that if there shall be more than
one limited partner, then the Limited Partner, acting in its sole discretion,
shall select an MAI Appraiser to act for all the limited partners). If one of
the parties shall fail to give Notice to the other party within five (5) days
thereafter, specifying the name and address of a MAI Appraiser designated by it,
then the appraiser chosen by
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the other party shall make the determination alone. If two appraisers have been
designated, each appraiser shall promptly, within fifteen (15) days after the
designation by each party, make a separate appraisal determining the then Fair
Market Value of the Interest of the Sending Partner, using the standard set
forth above, and each shall deliver to each other and both the parties a copy of
their appraisals, each of which shall include therein all factors considered in
reaching the fair market value of the Interest of the Sending Partner. Such two
appraisers shall meet twenty (20) days after receipt of each other's
determination, to confer with each other and to attempt to reach agreement on
the Fair Market Value of the Interest of the Sending Partner. If such appraisers
shall concur as to the determination of the Fair Market Value of the Interests,
such concurrence shall be final and binding upon the parties. If such appraisers
shall fail to concur, then they shall immediately designate a third MAI
Appraiser. If the two appraisers shall fail to agree upon the designation of
such third appraiser within five (5) days, then either party on behalf of both
may apply to the American Arbitration Association for the designation of such
third MAI Appraiser. The third appraiser shall conduct such hearings and
investigations as
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he may deem appropriate and shall, within ten (10) days after the date of his
designation determine the Fair Market Value of the Interest of the Sending
Partner, which determination in no event shall be higher than that of the
appraiser of the Sending Partner or lower than that of the appraiser of the
Receiving Partners. In making this determination, the third appraiser shall use
as a standard for determining Fair Market Value the standard set forth in this
Section 14.08. The two determinations closest to each other shall then be
averaged and such average shall be binding upon the parties. Each party shall
pay its own counsel fees and expenses, if any, in connection with any appraisal
under this Section, including the expenses and fees of any MAI Appraiser
selected by it in accordance with the provisions of this Section, and the
parties shall share equally all other expenses and fees of such appraisal. The
determination rendered in accordance with the provisions of this Section shall
be final and binding in fixing Fair Market Value. For purposes of this Section,
a MAI Appraiser shall be one who is independent, impartial and who shall have
had at least ten (10) years experience in valuations of properties of the
character and in the same general area as the Property.
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14.09 General Partner Representations. The General Partner represents
and warrants to the Partnership that:
(A) General Partner is a corporation duly formed and validly
existing in good standing under the laws of the State of New York, and will be
duly registered or qualified to conduct business in each jurisdiction or place
in which the conduct of its business legally requires such registration or
qualification;
(B) The execution, delivery and performance of this Partnership
Agreement by the General Partner and the consummation of the transactions
contemplated hereby have been authorized by all requisite action by or with
respect to the General Partner, and this Partnership Agreement, when executed by
the General Partner, will constitute a valid and binding obligation of the
General Partner, enforceable against the General Partner in accordance with its
terms, subject to bankruptcy laws, and laws affecting creditors rights
severally;
(C) The General Partner is not in violation of its certificate
of incorporation or bylaws or in default in any material respect in the
performance of any material agreement to which the General Partner is a party or
bound. The execution, delivery and performance
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of this Partnership Agreement by the General Partner, and the fulfillment by the
General Partner of the terms herein set forth and the consummation by the
General Partner of the transactions herein contemplated, will not conflict with
or constitute a breach of, or default in a material way under, the certificate
of incorporation or bylaws of the General Partner, or any other material
agreement or instrument to which the General Partner is a party or bound, or any
law;
(D) The Land is properly zoned for the completion of the
Improvements, and the Improvements, as designed, will comply with all applicable
zoning, environmental and other governmental laws, regulations and ordinances;
(E) The Property is not subject to any contract, agreement or
other instrument which will be binding upon the Partnership, or otherwise
affects the Property, other than the Ground Lease, the Hotel/Office Lease, the
Hartz Lease and the Reciprocal Construction Operation and Easement Agreement, to
be entered into substantially in the form of the draft dated March 5, 1986,
between the General Partner and the Township of Weehawken and such other
agreements as are set forth on the Title Insurance Commitment No. 819-055303,
issued by
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Commonwealth Land Title Insurance Company (the "Title Commitment");
(F) Attached hereto as Exhibit "D" is a true and complete list
of all contracts, agreements and other instruments (including, without
limitation, all policies of insurance affecting the Property), which the General
Partner has executed in connection with the Property, other than any contracts
or subcontracts executed in connection with the construction of the
Improvements; the General Partner has performed all of its obligations under all
of said documents and no event of default exists under any of said documents,
nor does any event exist which, with the giving of notice, or passage of time,
or both, would constitute an event of default thereunder (or, with respect to
policies of insurance, cause the cancellation thereof); neither the execution
and delivery of this Agreement, nor the assignment of said documents to the
Partnership will cause any such event of default;
(G) There are no actions, claims, suits, proceedings or
investigations, either administrative or judicial, pending or affecting the
Property;
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(H) The General Partner is the sole owner of the Land, free and
clear of all exceptions to title, except for those set forth in the Title
Commitment.
(I) The General Partner has received no notice of, and has no
knowledge of, any pending or contemplated condemnation of the Land or any part
thereof;
(J) No person or entity has any right or option to acquire the
Property or any portion thereof;
(K) The General Partner has not received any notice of any
violations of any Federal, state, county or municipal law, ordinance, order,
regulation or requirement with respect to the Property;
(L) At present, and at no time since the General Partner
acquired the Land, have hazardous substances or wastes within the meanings of
the Environmental Cleanup Responsibility Act (N.J.S.A. 13:1K-6 et seq.) and the
Spill Compensation and Control Act (N.J.S.A. 58:10-23.11 et seq.) or other toxic
or other hazardous material ("hazardous substances") been produced, refined,
treated, disposed of or discharged at the Land and the General Partner has no
knowledge that the Land was so used prior to the purchase of the Land. The
General Partner has at all times during its ownership of
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the Land properly disposed of all hazardous substances and wastes of any kind
generated by the use of the Land. The General Partner has not received any
letter or other communication, written or oral, from the New Jersey Department
of Environmental Protection relating to the presence of hazardous substances at
the Land;
(M) There are no leases, subleases, licenses, franchises,
concessions or other occupancy agreements of any nature whatsoever, oral or
written, affecting the use or occupancy of any portion of the Properties and to
which the Partnership will be bound other than the Ground Lease, the
Hotel/Office Lease, and the Hartz Lease; and
(N) The most currently available real estate taxes and
assessments for the Property are set forth on Exhibit "E" annexed hereto, and
all such real estate taxes and assessments which are due and payable have been
paid.
14.10 Counterparts. This Agreement may be executed in several
counterparts, and all so executed shall constitute one Agreement, binding on all
of the parties hereto, notwithstanding that all the parties are not signatories
to the original or the same counterpart.
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14.11 Entire Agreement. This Agreement contains the entire understanding
among the parties hereto and supersedes all prior written or oral agreements
among them respecting the within subject matter, unless otherwise provided
herein.
14.12 Arbitration. Any Partner may at any time request arbitration, of
any matter in dispute. The party requesting arbitration shall do so by giving
notice to that effect to the other party, specifying in said notice the nature
of the dispute, and said dispute shall be determined in Newark, New Jersey, by a
single arbitrator, in accordance with the rules then obtaining of the American
Arbitration Association (or any organization which is the successor thereto).
The award in such arbitration may be enforced on the application of either party
by the order or judgment of a court of competent jurisdiction. The fees and
expenses of any arbitration shall be borne by the parties equally, but each
party shall bear the expense of its own attorneys and experts and the additional
expenses of presenting its own proof.
14.13 Security Interest in Limited Partner's Interest. The Limited
Partner hereby pledges and grants to the Partnership a security interest in its
Interest, as security (i) for a period of five (5) years commencing
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on the Fixed Rent Commencement Date, for its obligations as tenant under the
Hotel/Office Lease (provided that it shall not have been released from liability
under the Hotel/Office Lease prior to the expiration of such five (5) year
period), and (y) for its obligations as guarantor under the Guarantee (provided
that the Guarantee shall not have sooner terminated as a result of the General
Partner's failure to make any required Deficit Capital Contribution or Operating
Deficit Loan or to cause the Partnership to borrow the required funds) and
agrees that the Partnership shall have all of the rights and remedies of a
secured party under the New Jersey Uniform Commercial Code (including the right
to obtain a deficiency judgment against the Limited Partner) in respect to its
Interest in the event of the failure of the Limited Partner to comply with its
obligations as tenant in accordance with the provisions of the Hotel/Office
Lease. Subsequent to such five (5) year period (as the same may be decreased
pursuant hereto), the Limited Partner shall have the right to pledge (such
pledge shall not be deemed to affect any right the General Partner may have to
Consent to any assignment of the Limited Partner's Interest pursuant to Section
9.02(A)(iii) hereof) its Interest to any third party.
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14.14 Financing, Transfer of Land. In connection with any financing
secured by the Improvements or the Ground Lease, including, without limitation,
the First Mortgage, the General Partner shall have the obligation, upon request
by the Limited Partner, to subject its fee interest in the Land to any such
secured financing, simultaneously with the closing of any such financing. In
addition, in connection with any sale or transfer of the Property, the Limited
Partner shall have the obligation, upon request by the General Partner, to
exercise its option pursuant to the Purchase Option Agreement to purchase up to
a one-third interest in the fee interest in the Land simultaneously with the
closing of such sale or transfer; provided, however, that in no event shall the
Limited Partner be required to expend in connection with such purchase an amount
in excess of the sums it will receive pursuant to Section 5.05 hereof as a
result of such sale, less all amounts required to pay the Limited Partner's full
Federal, state and local tax liability in connection therewith, and provided
further that if the General Partner shall make such request, then,
simultaneously with the closing of such sale or transfer, the General Partner
and the Limited Partner
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shall transfer title to the fee to the purchaser or transferee.
14.15 Use of Certain Capital Proceeds by the Limited Partner.
Notwithstanding anything contained herein to the contrary, if at any time during
the term of this Agreement, and provided that the Ground Lease shall be in
effect, the Limited Partner shall receive any funds pursuant to Section 5.05
hereof then, within thirty (30) days after receipt of such funds, the Limited
Partner shall use the same (less the amount of any Federal, state or local taxes
that may be due from the Limited Partner in connection therewith) to purchase an
interest in the fee (not to exceed a 20.9% interest in the aggregate) in
accordance with the Purchase Option Agreement. Thereafter, any amounts received
by the Limited Partner as ground rent under the Ground Lease shall be paid to
the General Partner, to be held in a separate, interest-bearing escrow account
and shall, together with any interest earned thereon, within thirty (30) days
after the end of each fiscal quarter, be released from escrow by the General
Partner and used by the Limited Partner (less the amount of any Federal, state
or local taxes that may be due from the Limited Partner in connection therewith)
to further purchase an interest on the fee
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(not to exceed a 20.9% interest in the aggregate) in accordance with the
Purchase Option Agreement. At such time as the Limited Partner shall have
acquired a full 20.9% or more (other than pursuant to the Default Option (as
such term is defined in the Purchase Option Agreement) interest in the fee
interest in the Land, at the election of the General Partner or the Limited
Partner, the Ground Lease shall be terminated in accordance with the provisions
thereof and the Land conveyed to the Partnership.
14.16 Limited Partner Representations. The Limited Partner represents
and warrants to the Partnership that:
(A) The Limited Partner is a corporation duly formed and validly
existing in good standing under the laws of the State of Delaware, and will be
duly registered or qualified to conduct business in each jurisdiction or place
in which the conduct of its business legally requires such registration or
qualification;
(B) The execution, delivery and performance of this Partnership
Agreement by the Limited Partner and the consummation of the transactions
contemplated hereby have been authorized by all requisite action by or with
respect to the Limited Partner, and this Partnership
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Agreement, when executed by the Limited Partner, will constitute a valid and
binding obligation of the Limited Partner, enforceable against the Limited
Partner in accordance with its terms, subject to bankruptcy laws, and laws
affecting creditors rights severally; and
(C) The Limited Partner is not in violation of its certificate
of incorporation or bylaws or in default in any material respect in the
performance of any material agreement to which the Limited Partner is a party or
bound. The execution, delivery and performance of this Partnership Agreement by
the Limited Partner, and the fulfillment by the Limited Partner of the terms
herein set forth and the consummation by the Limited Partner of the transactions
herein contemplated, will not conflict with or constitute a breach of, or
default in a material way under, the certificate of incorporation or bylaws of
the Limited Partner, or any other material
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agreement or instrument to which the Limited Partner is a party or bound, or
any law.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and
year first above written.
GENERAL PARTNER:
HARTZ MOUNTAIN INDUSTRIES, INC.
By: /s/ Stephen M. Kelty,
--------------------------------
Stephen M. Kelty,
Vice President
LIMITED PARTNER:
PAINEWEBBER INCORPORATED
By: /s/ Rodger Parker,
--------------------------------
Rodger Parker,
Senior Vice President
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Exhibit "A"
Description of Land
BLOCK 34c LOT 4.04
TOWNSHIP OF WEEHAWKEN
HUDSON COUNTY, NEW JERSEY
Commencing at a point in the easterly line of Park Avenue, said
point being N 21 degrees-21'-30" E 1129.16 feet along the same from its
intersection with the northerly line of 15th Street, all as shown on a map
entitled "Subdivision of Properties of Hartz Mountain Industries, Inc:," and
prepared by Azzolina & Feury Engineering Company, dated March 14, 1986, revised
to March 19, 1986, and running; thence,
A) N 21 degrees-21'-30" E along said property line, 86.70 feet to
a point on a curve; thence,
B) Northeasterly, along the property line on a curve to the left
having a radius of 1093:01 and a radial bearing of N 14
degrees-11'-23" W through a central angle of 25 degrees-01'-56"
for an arc distance of 477:53 feet; thence,
C) Along said property line, N 38 degrees-30'-00" E, 550.05 feet;
thence,
D) Departing from said property line, S 50 degrees-33'-12" E,
86.23 feet to a point; thence,
E) N 38 degrees-52'-10" E, 383.37 feet to a point of curvature;
thence,
F) Northeasterly, on a curve to the right having a radius of 40
feet through a central angle of 90 degrees-00'-00" for an arc
distance of 62.83 feet; thence,
G) S 51 degrees-07'-50" E, 156.00 feet; thence,
H) S 38 degrees-52'-10" W, 35.00 feet to the point of beginning;
thence,
1) S 51 degrees-07'-50" E, 101.00 feet; thence,
2) N 38 degrees-52'-10" E, 121.00 feet; thence,
A-1
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3) S 51 degrees-07'-50" E, 124.00 feet; thence,
4) S 38 degrees-52'-10" W, 122.13 feet; thence,
5) S 8 degrees-06'-20" E, 41.04 feet; thence,
6) S 38 degrees-52'-10" W, 91.74 feet; thence,
7) S 85 degrees-50'-40" W, 41.04 feet; thence,
8) S 38 degrees-52'-10" W, 102.13 feet; thence,
9) N 51 degrees-07'-50" W, 225.00 feet; thence,
10) N 38 degrees-52'-10" E, 251.00 feet to the point
of beginning.
Containing 75,071 square feet (1.72 acres).
A-2
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[SUBDIVISION OF LINCOLN HARBOR]
GRAPHIC
A-3
<PAGE> 103
Exhibit "B"
Terms of Commitment
Principal Amount: Up to $87 per square foot
of floor space in the Improvements
Term: Minimum of 17 years 6 months from the
Commencement Date (as such term is
defined in the Agreement of Lease,
dated of even date herewith, between
Hartz-PW Limited Partnership, as
landlord, and the Limited Partner, as
tenant, for the premises known as the
Data Processing Center)
Amortization Schedule: 11.97% constant
Interest Rate: 11.25% or less per annum
Security: Senior leasehold mortgage,
subordinated fee, no personal liability
B-1
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Exhibit "C"
Easements
The easements granted pursuant to the Reciprocal Easement and
Maintenance Agreement, dated of even date herewith, among the General Partner,
the Partnership and Hartz-PW Limited Partnership.
C-1
<PAGE> 105
Exhibit "D"
Contracts
HARTZ-PW/HOTEL LIMITED PARTNERSHIP AGREEMENT
<TABLE>
<CAPTION>
NAME OF DOCUMENT PARTIES DATE
- ---------------- ------- ----
<S> <C> <C>
Cover Note Insurance J.H. Minet & Co. Ltd. May 1, 1985
Binder and Hartz Mountain Industries,
Inc., et al.
Liability Insurance Firemen's Fund Insurance June 17, 1985
Policy Company and Hartz Mountain
Industries, Inc., et al.
Property Coverage The Aetna Casualty and Surety May 1, 1983
Insurance Policy Company and Hartz Mountain
Industries, Inc., et al.
</TABLE>
D-1
<PAGE> 106
Exhibit "E"
Taxes
E-1
<PAGE> 107
[Weehawken Tax Bill]
FRONT
<PAGE> 108
[Weehawken Tax Bill]
BACK
<PAGE> 109
Prepared by:
/s/ Debra L. Wenig, Esq.
----------------------------
Debra L. Wenig, Esq.
HOROWITZ, BROSS, SININS
& IMPERIAL, P.A.
500 Plaza Drive
Secaucus, New Jersey 07096-3279
RESTATED CERTIFICATE
OF
LIMITED PARTNERSHIP
OF
HARTZ-PW HOTEL LIMITED PARTNERSHIP
Pursuant to the Laws of the State of New Jersey
WHEREAS, pursuant to the laws of the State of New Jersey and a certain
Limited Partnership Agreement dated April 14, 1986 as amended by First Amendment
to the Limited Partnership Agreement of Hartz-PW Hotel Limited Partnership,
dated of even date herewith, (collectively, the "Partnership Agreement"), and as
set forth in a certain Certificate of Limited Partnership of Hartz-PW Hotel
Limited Partnership dated April 14, 1986 (the "Certificate"), a New Jersey
Limited Partnership named Hartz-PW Hotel Limited Partnership (the "Partnership")
was formed;
WHEREAS, the partners desire to restate and amend the Certificate, as
more particularly provided herein.
NOW THEREFORE, the undersigned do hereby amend and restate the
Certificate in its entirety as follows:
WE, THE UNDERSIGNED, desiring to continue the Partnership as a limited
partnership pursuant to the laws of the State of New Jersey and a certain
Limited Partnership Agreement heretofore executed as amended (herein referred to
collectively as the "Partnership Agreement") do hereby certify as follows:
1. NAME.
The name of the limited partnership is: HARTZ-PW TOWER B LIMITED
PARTNERSHIP.
<PAGE> 110
2. NATURE OF BUSINESS.
The purpose and character of the business of the Partnership is to
acquire leasehold interest in, own, construct, renovate, hold for capital
appreciation and finance certain properties, to cause the General Partner to
complete construction and renovation of improvements thereto, to manage, rent
and otherwise operate the properties, to sell, exchange, dispose of lease,
mortgage and otherwise encumber all or any part of the properties, to incur
indebtedness, for any of the foregoing purposes, and to engage in any other kind
of lawful activity related to the foregoing.
3. REGISTERED OFFICE AND REGISTERED AGENT.
The registered office of the Partnership in the State of New Jersey
shall be c/o Hartz Mountain Industries, Inc., 400 Plaza Drive, Post Office Box
1411, Secaucus, New Jersey 07096-1411 and the registered agent of the
Partnership for service of process in the State of New Jersey shall be Hartz
Mountain Industries, Inc., 400 Plaza Drive, Post Office Box 1411, Secaucus, New
Jersey 07096-1411.
4. NAMES, ADDRESSES AND CAPITAL CONTRIBUTIONS.
(a) The name, business address and initial capital
contribution of the General Partner is:
<TABLE>
<CAPTION>
Capital
Name Address Contribution
---- ------- ------------
<S> <C> <C>
Hartz Mountain 400 Plaza Drive $834.20
Industries, Inc. Secaucus, N.J. 07096-1411
</TABLE>
(b) The name, business address and initial capital
contribution of the Limited Partner is:
<TABLE>
<CAPTION>
Capital
Name Address Contribution
---- ------- ------------
<S> <C> <C>
PaineWebber 1285 Avenue of $165.80
Incorporated the Americas
New York, N.Y. 10019
</TABLE>
5. ADDITIONAL CONTRIBUTIONS.
The General Partner shall be obligated to make Operating Deficit Loans
or Deficit Capital Contributions (as such terms are defined in the Partnership
Agreement) to the Partnership upon the occurrence of operating deficits if of
the net operating revenues shall be insufficient to pay all debt service on any
loan, secured or unsecured, including without limitation,
-2-
<PAGE> 111
the first mortgage, affecting the properties or the Partnership, for any reason
other than the failure of the tenant under the lease to make all payments
required thereunder, including, without limitation, in connection with
bankruptcy proceedings and whether or not the trustee in bankruptcy shall
disaffirm the lease, and to make such additional capital contributions as are
necessary in order to complete the Improvements (as defined in the Partnership
Agreement) in accordance with the provisions of the ground lease and the lease,
but may not make any other additional capital contributions to the Partnership.
The Limited Partner may make the Limited Partner Loan (as defined and set forth
in the Partnership Agreement) but shall not be required to make any additional
loans or capital contributions to the Partnership.
6. TERM.
The term of the Partnership shall be from the date of filing of this
Certificate until December 31, 2086.
7. ASSIGNMENT BY LIMITED PARTNER.
The Limited Partner may assign its ownership interest in the Partnership
in whole or in part, by an executed and acknowledged written instrument only if
all of the following conditions are satisfied:
(a) the assignor and assignee file a notice of transfer with the
General Partner which contains the information reasonably
required by the General Partner; and
(b) any reasonable costs of transfer shall have been paid to the
Partnership; and
(c) the General Partner shall have consented to the assignment,
which consent may be granted or withheld in its sole discretion,
unless the Limited Partner assigns its interest in the
Partnership, in whole or in part, to an Affiliate (as defined in
the Partnership Agreement) .
8. WITHDRAWAL OF PARTNERS.
The Limited Partner and the General Partner may transfer and sell their
respective interests in the Partnership pursuant to the Partnership Agreement,
subject to the Right of First Offer (as defined in the Partnership Agreement).
9. DISTRIBUTIONS OF PROPERTY.
Capital Proceeds and eighty-five percent (85%) of Net Operating Revenues
(as such terms are defined in the Partnership
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<PAGE> 112
Agreement) shall be distributed quarterly, after the payment of debt service on
the first mortgage or any other financing affecting property or the Partnership,
(a) first to pay any accrued unpaid interest on the principal, and the
outstanding principal balance of the Operating Deficit Loan, the Deficit Capital
Contributions and the Limited Partner Loan (as such terms are defined in the
Partnership Agreement), on a pari passu basis; and (b) second, the balance, if
any, shall be distributed 83.42% to the General Partner and 16.58% to the
Limited Partner.
Such quarterly payments shall be adjusted annually within ninety (90)
days after the end of each fiscal year, and excess amounts, if any shall be
credited against future required payments; underpayments will be paid at the
time of such adjustment.
10. RETURN OF CONTRIBUTION.
No partner shall have the right to withdraw or reduce its capital
contributions except, upon the dissolution of the Partnership, the Liquidator
(as defined in the Partnership Agreement) shall liquidate the assets of the
Partnership and contributions of the Partners will be returned to them in
accordance with the positive balances in their capital accounts after the
allocations of all income, gains and losses in accordance with provisions of the
Partnership Agreement, subject, however, to prior satisfaction of the following:
(a) all liabilities and obligations of the Partnership other
than to the Partners; and
(b) all liabilities and obligations of the Partnership to the
Partners in the following order of priority: to repayment of the
outstanding principal balance of the Operating Deficit Loan, the
Deficit Capital Contributions, and the Limited Partner Loan (as
such terms are defined in the Partnership Agreement) on a pari
passu basis, including interest accrued thereon.
11. DISSOLUTION.
The Partnership shall be dissolved upon the happening of any of the
following events:
(a) an election to dissolve the Partnership is made by the
General Partner with the consent of the Limited Partner;
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<PAGE> 113
(b) the sale, exchange, or other disposition
of all, or substantially all of the Partnership's assets;
(c) the death, bankruptcy, dissolution, disability, legal
incapacity, removal or withdrawal of the sole remaining General
Partner or the sale, transfer or assignment by the sole
remaining General Partner of its general partnership interest;
(d) the occurrence of December 31, 2086;
(e) the tenant under the Lincoln Harbor Tower II Lease (as such
term is defined in the Partnership Agreement) shall elect
pursuant to Section 38.11 of the Lincoln Harbor Tower B Lease to
terminate the lease; and
(f) any other event causing dissolution of the Partnership under
the Revised New Jersey Uniform Limited Partnership Act, N.J.S.A.
42:2A-1 et. seq.
Upon dissolution of the Partnership, a full accounting of the assets shall be
taken, the assets shall be liquidated, and the capital proceeds thereof shall be
distributed.
12. CONTINUATION AFTER WITHDRAWAL
OF A GENERAL PARTNER.
Upon the death, bankruptcy, dissolution, disability, legal incapacity,
or removal of a General Partner, the remaining General Partner, if any, shall
serve as the General Partner of the Partnership, and shall continue the business
of the Partnership. Upon the death, bankruptcy, dissolution, disability, legal
incapacity, or removal of the sole remaining General Partner, or the transfer by
the sole remaining General Partner of its partnership interest, a person
selected by the Limited Partner shall serve as the General Partner of the
Partnership and continue the business of the Partnership if the Partnership is
reconstituted under the Partnership Agreement.
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<PAGE> 114
13. AGREEMENT OF LIMITED PARTNERSHIP.
The provisions of this Restated Certificate of Limited Partnership shall
be subject to the Partnership Agreement.
IN WITNESS WHEREOF, the undersigned have hereto set their hands this
30th day of March , 1988.
GENERAL PARTNER:
ATTEST: HARTZ MOUNTAIN INDUSTRIES, INC.
BY: /s/ BY: /s/
----------------------- ------------------------------------------
LIMITED PARTNER:
PaineWebber Incorporated
BY: /s/ BY: /s/ Rodger Parker,
----------------------- ------------------------------------------
Rodger Parker,
Senior Vice President
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<PAGE> 115
STATE OF NY )
:SS.:
COUNTY OF NY )
BE IT REMEMBERED, that on this 14th day of March of 1988, before me the
subscriber Martha Feltenstein personally appeared Rodger Parker, who I am
satisfied, is the person who signed the within instrument as Vice President of
PaineWebber Incorporated, the corporation named therein and he thereupon
acknowledged that the said instrument made by the corporation and sealed with
its corporate seal, was signed, sealed with the corporate seal and delivered by
him as such officer and is the voluntary act and deed of the corporation, made
by virtue of authority from its Board of Directors.
/s/ Martha Feltenstein
------------------------------
Notary Public
-7-
<PAGE> 116
STATE OF NJ )
:SS.:
COUNTY OF HUDSON )
BE IT REMEMBERED, that on this 22nd day of March of 1988, before me the
subscriber Renee E. Ranuro personally appeared Irwin A. Horowitz, who I am
satisfied, is the person who signed the within instrument as Vice President of
Hartz Mountain Industries, Inc., the corporation named therein and he thereupon
acknowledged that the said instrument made by the corporation and sealed with
its corporate seal, was signed, sealed with the corporate seal and delivered by
him as such officer and is the voluntary act and deed of the corporation, made
by virtue of authority from its Board of Directors.
/s/ Renee E. Ranuro
-----------------------------
Notary Public
-8-
<PAGE> 1
Exhibit 10.42
-----------------------------------------
GROUND LEASE
BETWEEN
HARTZ MOUNTAIN INDUSTRIES, INC.
and
HARTZ-PW LIMITED PARTNERSHIP
-----------------------------------------
Premises:
Operations Center
Lincoln Harbor Project
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
ARTICLE PAGE
------- ----
<S> <C>
1. Definitions .................................. 1
2. Demise and Term .............................. 4
3. Rent ......................................... 5
4. Use of Demised Premises ...................... 6
5. Construction of Building ..................... 6
6. Tax and Operating Expense Payments ........... 7
7. Common Areas ................................. 11
8. Mortgaging and Transfer by Landlord .......... 11
9. Quiet Enjoyment .............................. 12
10. Assignment, Subletting and Mortgaging ........ 12
11. Compliance with Laws ......................... 16
12. Insurance and Indemnity ...................... 17
13. Rules and Regulations ........................ 20
14. Alterations .................................. 21
15. Repairs and Maintenance ...................... 21
16. Electric Energy .............................. 22
17. Other Services: Service Interruption ........ 22
18. Access, Changes and Name ..................... 22
19. Mechanics' Liens and Other Liens ............. 23
20. Non-Liability and Indemnification ............ 23
21. Damage or Destruction ........................ 25
22. Eminent Domain ............................... 26
23. Surrender .................................... 28
24. Conditions of Limitation ..................... 28
25. Re-Entry by Landlord ......................... 29
26. Damages ...................................... 30
27. Affirmative Waivers .......................... 33
28. No Waivers ................................... 33
29. Broker ....................................... 34
30. Curing Tenant's Defaults ..................... 34
31. Notices ...................................... 35
32. Estoppel Certificates ........................ 35
33. Arbitration .................................. 36
34. Memorandum of Lease .......................... 36
35. Miscellaneous ................................ 37
</TABLE>
<TABLE>
<CAPTION>
EXHIBITS
--------
<S> <C>
Exhibit "A" Building
Exhibit "B" Fixed Rent
Exhibit "C" Floor Space
Exhibit "D" Property Description
Exhibit "E" Lincoln Harbor Project
Exhibit "F" Mortgage Terms
Exhibit "G" Operating Expenses
Exhibit "H" Fee Mortgage Amounts
Exhibit "I" Landlord's Share of Insurance Proceeds and Con-
demnation Awards
Exhibit "J" Nondisturbance Agreement
</TABLE>
<PAGE> 3
LEASE, dated April 14, 1986, between HARTZ MOUNTAIN INDUSTRIES, INC., a
New York corporation having an office at 400 Plaza Drive, Post Office Box 1411,
Secaucus, New Jersey 07094, and HARTZ-PW LIMITED PARTNERSHIP, a New Jersey
limited partnership having an address at 400 Plaza Drive, Post Office Box 1411,
Secaucus, New Jersey 07094.
ARTICLE 1 - DEFINITIONS
1.01. As used in this Lease the following words and phrases shall have
the meanings indicated:
A. Additional Charges: All amounts that become payable by Tenant to
Landlord hereunder other than the Fixed Rent.
B. Broker: Joseph Hilton & Associates Incorporated.
C. Building: The building to be located on the Land as more
particularly described on the plan attached hereto as Exhibit "A".
D. Calendar Year: Any twelve-month period during the term of this Lease
commencing on a January 1.
E. Commencement Date: The date of this Lease.
F. Demised Premises: The Land, and the Building and any other
improvements now or hereafter located thereon, which Building and other
improvements are and shall be the property of Tenant.
G. Expiration Date: The date that is the day before the ninety-eighth
(98th) anniversary of the Commencement Date if the Commencement Date is the
first day of a month, or the ninety-eighth (98th) anniversary of the last day of
the month in which the Commencement Date occurs if the Commencement Date is not
the first day of a month.
H. Fixed Rent: As set forth on the Rent Schedule annexed hereto as
Exhibit "B".
<PAGE> 4
I. Fixed Rent Commencement Date: Shall mean the Commencement Date (as
defined in the Space Lease).
J. Floor Space: 604,528, as the same may be increased or decreased
pursuant to Section 35.13 hereof, and as more particularly set forth on Exhibit
"C" annexed hereto and made a part hereof.
K. Hartz Lease: The Agreement of Lease, dated of even date herewith,
between Tenant, as landlord, and Hartz Mountain Industries, Inc., as tenant,
pursuant to which Tenant subleased a portion of the Building to Hartz Mountain
Industries, Inc.
L. Insurance Requirements: Rules, regulations, orders and other
requirements of the applicable board of underwriters and/or the applicable fire
insurance rating organization and/or any other similar body performing the same
or similar functions and having jurisdiction or cognizance over the Land and
Building, whether now or hereafter in force.
M. Land: The land described on Exhibit "D" annexed hereto and made a
part hereof.
N. Landlord: On the date as of which this Lease is made, shall mean
Hartz Mountain Industries, Inc., a New York corporation having an address at 400
Plaza Drive, Secaucus, New Jersey 07094, but thereafter "Landlord" shall mean
only the fee owner of the Land.
O. Legal Requirements: Laws and ordinances of all federal, state and
local governments, and rules, regulations, orders and directives of all
departments, subdivisions, bureaus, agencies or offices thereof, and of any
other governmental authorities having jurisdiction over the Land and Building.
P. Lincoln Harbor Project: The project more particularly described on
Exhibit "E" annexed hereto and made a part hereof.
Q. Mortgage: The mortgage creating a lien on the leasehold estate
created pursuant to this Lease, to be entered into pursuant to a loan commitment
substantially on the terms set forth in the schedule annexed hereto as Exhibit
"F", and any replacement, extension, modification, or amendment thereto.
2
<PAGE> 5
R. Operating Expenses: The costs and expenses for the items set forth
on said Exhibit "G" annexed hereto and made a part hereof.
S. Permitted Uses: Any and all uses permitted by law and which are in
keeping with the character and quality of the Lincoln Harbor Project.
T. Person: A natural person or persons, a partnership, a corporation,
or any other form of business or legal association or entity.
U. Project Floor Space: 2,206,457, as the same may be increased or
decreased pursuant to Section 35.13 hereof, and as more particularly set forth
on Exhibit "C" annexed hereto and made a part hereof.
V. Real Estate Taxes: The real estate taxes, assessments and special
assessments imposed upon the Demised Premises by any federal, state, municipal
or other governments or governmental bodies or authorities. If at any time
during the Term the methods of taxation prevailing on the date hereof shall be
altered so that in lieu of, or as an addition to or as a substitute for, the
whole or any part of such real estate taxes, assessments and special assessments
now imposed on real estate there shall be levied, assessed or imposed on
Landlord specifically in substitution for any of the foregoing Real Estate Taxes
(a) a tax, assessment, levy, imposition, license fee or charge wholly or
partially as a capital levy or otherwise on the rents received therefrom, or (b)
any other such additional or substitute tax, assessment, levy, imposition or
charge, then all such taxes, assessments, levies, impositions, fees or charges
or the part thereof so measured or based shall be deemed to be included within
the term "Real Estate Taxes" for the purposes hereof, calculated as if
Landlord's only asset were the leasehold estate created by this Lease.
W. Rent: The Fixed Rent and the Additional Charges.
X. Rules and Regulations: The reasonable rules and regulations that may
be promulgated by Landlord from time to time in connection with the common areas
of the Lincoln Harbor Project, as may be reasonably changed by Landlord from
time to time.
3
<PAGE> 6
Y. Space Lease: The Agreement of Lease, dated of even date herewith,
between Tenant, as Landlord, and PaineWebber Incorporated, as tenant, pursuant
to which Tenant subleased the Land and the Building to PaineWebber, Inc.
Z. Subtenants: The tenants under the Space Lease and the Hartz Lease
from time to time.
AA. Tenant: On the date as of which this Lease is made shall mean
Hartz-PW Limited Partnership, but thereafter "Tenant" shall mean only the tenant
under this Lease at the time in question, provided, however, that nothing herein
shall be construed as relieving Hartz-PW Limited Partnership of any liability
for the obligations of Tenant hereunder in the event Hartz-PW Limited
Partnership ceases to be the Tenant hereunder, except as otherwise expressly
provided herein or by separate agreement between Landlord and Hartz-PW Limited
Partnership.
BB. Tenants' Fraction: 27.4%, determined by dividing the Floor Space by
the Project Floor Space, as the same may be decreased pursuant to Section 35.13
hereof.
CC. Term: The period commencing on the Commencement Date and ending
at 11:59 P.M. of the Expiration Date, unless otherwise terminated in accordance
with the provisions hereof.
DD. Unavoidable Delay: A delay arising from or as a result of a strike,
lockout, or labor difficulty, explosion, sabotage, accident, riot or civil
commotion, act of war, fire or other catastrophe, Legal Requirement or an act of
the other party and any cause beyond the reasonable control of that party other
than such party's financial condition, provided that the party asserting such
Unavoidable Delay has exercised its best efforts to minimize such delay. The
party asserting such delay promptly upon becoming aware of such Unavoidable
Delay, shall give written notice of such Unavoidable Delay to the other party.
4
<PAGE> 7
ARTICLE 3 - RENT
3.01. Tenant shall pay the Fixed Rent in equal monthly installments in
advance on the fifth (5th) day of each and every calendar month beginning on the
Fixed Rent Commencement Date. If the Fixed Rent Commencement Date occurs on a
day other than the first day of a calendar month, the Fixed Rent for such
partial calendar month shall be prorated on a per diem basis and paid on the
Fixed Rent Commencement Date.
3.02. The Rent shall be paid in lawful money of the United States to
Landlord at its office, or such other place, or Landlord's agent, as Landlord
shall designate by notice to Tenant. Tenant shall pay the Rent promptly when due
and without any abatement, deduction or setoff for any reason whatsoever, except
as may be expressly provided in this Lease. Tenant shall assume the risk of
lateness or failure of delivery of the mails, and no lateness or failure of the
mails will excuse Tenant from its obligation to have made the payment in
question when required under this Lease.
3.03. No payment by Tenant or receipt or acceptance by Landlord of a
lesser amount than the correct Rent shall be deemed to be other than a payment
on account, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment be deemed an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance or pursue any other remedy in this Lease or at law
provided.
3.04. If Tenant is in arrears in payment of Rent, Tenant waives
Tenant's right, if any, to designate the items to which any payments made by
Tenant are to be credited, and Landlord may apply any payments made by Tenant to
such items as Landlord sees fit, irrespective of and notwithstanding any
designation or request by Tenant as to the items to which any such payments
shall be credited.
3.05. If Tenant shall fail to pay any installment of Fixed Rent within
ten (10) days or any other item of Rent within thirty (30) days after the date
when such payment is due and Landlord shall have delivered a bill for same
(which delivery may be by invoice and shall not be required to comply with the
requirements for notices
5
<PAGE> 8
specified in Article 31 of this Lease), then any such payment shall bear
interest calculated from the due date to the date such payment is received by
Landlord, at a rate equal to two (2) percentage points in excess of 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")
(the "Late Payment Rate").
3.06. It is the intention of the parties that the Fixed Rent payable
under this Lease shall be net to Landlord, so that this Lease shall yield to
Landlord the Fixed Rent specified herein during the Term of this Lease, and that
all costs, expenses and obligations of every kind and nature whatsoever relating
to the Demised Premises shall be paid by Tenant, other than liens placed on the
Demised Premises by Landlord, or claims against Landlord for Landlord's
negligence or default under the terms of this Lease (nothing herein shall be
construed as affecting the provisions of any insurance carried by Landlord,
Tenant, subtenant or assign with respect to the Demised Premises, including fire
and hazard insurance, liability insurance and any other insurance).
ARTICLE 4 - USE OF DEMISED PREMISES
4.01. Tenant shall use and occupy the Demised Premises only for the
Permitted Uses and in compliance with all Legal Requirements.
ARTICLE 5 - CONSTRUCTION OF BUILDING
5.01. Tenant shall, at its own cost and expense, cause the construction
of the Building and the other improvements contemplated in connection therewith
substantially in accordance with the provisions of the Space Lease.
5.02. Tenant shall at all times during the term of this Lease, at its
own cost and expense, keep and maintain in good condition, or cause to be kept
and maintained, the Demised Premises in compliance with all Insurance
Requirements and Legal Requirements. Landlord shall not be required to furnish
any services or facilities or to make any improvements, repairs or alterations
in or to the Demised Premises during the term of this Lease.
6
<PAGE> 9
5.03. Tenant may, at its option and its own cost and expense, at any
time and from time to time, make such alterations, changes, replacements,
improvements and additions (herein collectively called "Alterations") in and to
the Demised Premises as it may deem desirable.
5.04. At any time on or before the Expiration Date, Tenant shall have
the right, but not the obligation, to remove all or any portion of the Building.
If, on the Expiration Date, all or any portion of the Building shall remain on
the Land, title thereto shall become the sole property of the Landlord.
5.05. Landlord reserves the right, at any time and from time to time,
to increase, reduce or change the number, type, size, location, elevation,
nature and use of any buildings and other improvements in the Lincoln Harbor
Project, including, without limitation, the right to move and/or remove same,
provided same shall not block or unreasonably interfere with Tenant's means of
ingress or egress to and from the Building; provided that such shall not deviate
materially from the approved site plan without Tenant's prior written consent,
which consent shall not be unreasonably withheld or delayed, and provided
further that Tenant may thereupon request a recalculation of Operating Expenses
in accordance with Section 35.14 hereof.
ARTICLE 6 - TAX AND OPERATING EXPENSE PAYMENTS
6.01. On or before the Commencement Date (as such term is defined in
the Space Lease) Landlord shall use its best efforts to obtain from the City of
Weehawken a separate tax lot and zoning lot number for the Demised Premises.
Commencing on the Commencement Date and provided that Landlord shall have
obtained a separate tax lot number for the Demised Premises, Tenant shall pay to
the appropriate governmental authority the Real Estate Taxes for the Land and
the Building for each year during the Term not later than one (1) business day
before any delinquency fee would be imposed upon the payment of the same. If
Landlord shall not have obtained a separate tax lot number for the Demised
Premises on or before the Commencement Date, then, commencing on the
Commencement Date, Tenant shall pay to Landlord an amount equal to its
Proportionate Share (hereinafter defined) of the Real Estate Taxes for the Land
and the Building for the tax lot of which the Demised Premises form a part for
any
7
<PAGE> 10
year during the Term not later than five (5) business days before any
delinquency fee would be imposed upon the payment of the same, until such time
as Landlord shall have obtained such separate tax lot number; but in no event
shall Tenant's payment for Real Estate Taxes be more or less than that amount
which Tenant would have paid if the Demised Premises were a separate tax lot.
Tenant's "Proportionate Share" shall mean the sum of (x) the tax attributable to
the Building and other improvements located on the Land, as may be separately
assessed or as shown in the Tax Assessor's Notes, and (y) 4.42% of the tax
attributable to the tax lot of which the Land forms a portion. Landlord agrees
that, throughout the term thereafter, the Demised Premises will constitute a
separate tax and zoning lot, separate and apart from other real property. In
determining the amount of Real Estate Taxes for the partial calendar years in
which the Term shall commence or expire, Real Estate Taxes payable in such
calendar year shall be apportioned for that portion of the Tax Year (hereinafter
defined) occurring within the calendar year and Real Estate Taxes for such
calendar year shall be prorated for the number of days in such calendar year
occurring subsequent to the Commencement Date or prior to the Expiration Date,
as the case may be. "Tax Year" shall mean the period January 1 through December
31 (or such other period as hereafter may be duly adopted by the City of
Weehawken as its fiscal year for Real Estate Tax purposes), any portion of which
occurs during the Term. Tenant shall have the right to institute, and in good
faith prosecute, tax certiorari proceedings with respect to the Building and the
Land. In the event of the institution of such proceedings, such proceedings
shall be at Tenant's sole cost and expense and Landlord shall cooperate fully
with Tenant in connection with any such proceedings.
6.02. (a) Prior to the Commencement Date, Landlord shall deliver to
Tenant a statement estimating the Operating Expenses for the partial calendar
year commencing on the Commencement Date and Tenant shall pay to Landlord on a
monthly basis on or before the tenth (10th) day of each calendar month during
the first partial calendar year of the Term an amount equal to such estimated
Operating Expenses divided by the number of months or partial months in such
partial calendar year. On or before February 15 of each calendar year or partial
calendar year during the Term, Landlord shall furnish Tenant with an operating
statement (the "Operating State-
8
<PAGE> 11
ment") in reasonable detail setting forth the actual Operating Expenses for the
preceding calendar year. If such Operating Statement shall show that the actual
Operating Expenses for the preceding calendar year were in excess of those
estimated by Landlord and previously paid by Tenant, then within forty (40) days
after receipt of such actual Operating Statement, Tenant shall remit to Landlord
any such deficiency together with interest thereon at the Late Payment Rate,
calculated from the date of each payment to the date of payment or refund, as
the case may be. If such Operating Statement shall show that Tenant shall have
paid amounts in excess of the actual Operating Expenses, then Landlord shall
remit to Tenant together with such Operating Statement a check in the amount
equal to such excess payments together with interest thereon at the Late Payment
Rate, calculated from the date of each payment to the date of payment or refund,
as the case may be.
(b) In addition, in each Operating Statement, Landlord may set forth
any estimated increases in Operating Expenses for the then current calendar
year, provided, however, that in no event shall Landlord's estimate exceed an
amount equal to the sum of the actual Operating Expenses for the preceding
calendar year and an amount equal to such actual Operating Expenses multiplied
by the percentage increase in 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 (1967 = 100), or any
successor index thereto, appropriately adjusted (the "CPI"). If the CPI 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 CPI. If
Landlord or Tenant are unable to agree as to such substituted index, such matter
shall be submitted to the American Arbitration Association or any successor
organization for determination in accordance with the regulations and procedures
thereof then obtaining for commercial arbitration. After receipt of such
Operating Statement, Tenant shall pay to Landlord a sum equal to 1/12th of the
amount shown on such statement multiplied by the number of months of the Term in
said calendar year preceding the demand, less the amount (if any) paid by Tenant
prior to such demand pursuant hereto for such months, and thereafter, commencing
with the month in which the demand is made in continuing thereafter for each
month of the Term until the rendition
9
<PAGE> 12
of a new Operating Statement, 1/12th of the amount shown on such Operating
Statement.
6.03. Each such statement given by Landlord pursuant to Section 6.02
shall be conclusive and binding upon Tenant unless within 120 days after the
receipt of the Operating Statement provided for above Tenant shall notify
Landlord that it or the Subtenant under the Space Lease disputes the correctness
of the statement, specifying, to the extent the information is available, the
particular respects in which the statement is claimed to be incorrect. If such
notice is sent, Tenant, Subtenant, and its accountants may examine Landlord's
books and records relating to the Operating Expenses to determine the accuracy
of the Operating Statement. If, after such examination, Tenant or Subtenant
still disputes such Operating Statement, any party may refer the decision of the
issues raised to one of the so-called "big eight" public accounting firms,
mutually satisfactory to Landlord, Tenant and Subtenant, or if Landlord, Tenant
and Subtenant shall be unable to agree, then the firm to which the dispute shall
be referred shall be chosen as follows: Landlord, Tenant and Subtenant shall
each be permitted to exclude one of such firms from the pool of acceptable
firms; the firm to whom such decision shall be referred shall then be chosen by
lot from the pool of remaining firms, and if the firm chosen by lot shall refuse
to serve, a substitute firm shall be chosen by lot. Provided, however, that if
such a firm has been chosen by Tenant and the Subtenant by such process, the
firm so chosen shall be deemed acceptable to Landlord and Tenant. The firm so
chosen may, in its discretion, retain one or more consultants to assist in the
resolution of the dispute referred to it. The decision of such accountants,
absent manifest error, shall be conclusively binding upon the parties. The fees
and expenses (including the fees of such consultants) involved in such decisions
shall be borne by the unsuccessful party as between Landlord and Tenant (and if
both parties are partially successful, the accountants shall apportion the fees
and expenses between the parties based on the degree of success of each party).
If such dispute is ultimately determined in Tenant's favor (either by agreement
between Landlord or Tenant or by decision of the accountants), Landlord promptly
after such determination shall pay to Tenant any amount overpaid by Tenant.
Pending the determination of such dispute by agreement or arbitration as
aforesaid, Tenant shall, within twenty (20) days after
10
<PAGE> 13
receipt of such statement, pay the Additional Charges in accordance with
Landlord's statement, without prejudice to Tenant's position.
ARTICLE 7 - COMMON AREAS
7.01. Tenant and its subtenants and concessionaires, and their
respective officers, employees, agents, customers and invitees, shall have the
non-exclusive right, in common with Landlord and all others to whom Landlord (or
other owner of the Lincoln Harbor Project) has granted or may hereafter grant
such right, but subject to the Rules and Regulations, to use the common areas of
the Lincoln Harbor Project. Landlord reserves the right, at any time and from
time to time, to close temporarily all or any portions of such common areas
(provided that such closure does not unreasonably interfere with Tenant's
business at the Demised Premises, except in cases of emergency) when in
Landlord's reasonable judgment any such closing is necessary or to (a) make
repairs or changes or to effect construction within the Lincoln Harbor Project;
(b) prevent the acquisition of public rights in such areas; or (c) protect or
preserve natural persons or property. Landlord also reserves the right to grant
easements for public utilities (including, without limitation, easements
affecting the Land, in connection with the development of the Lincoln Harbor
Project. Landlord may do such other acts in and to such common areas as in its
reasonable judgment may be desirable to improve or maintain same, provided,
however that Landlord shall not change the standard of maintenance of such
common areas without Tenant's approval, which approval shall not be unreasonably
withheld or delayed. In all such events, such work shall be commenced and
prosecuted diligently and with as little interference as possible with Tenant's
use of the Demised Premises.
7.02. Tenant agrees that it, any subtenant or licensee and their
respective officers, employees; contractors and agents will park their
automobiles and other vehicles only upon the Land.
ARTICLE 8 - MORTGAGING AND TRANSFER BY LANDLORD
8.01. Landlord may not mortgage the fee or the Land except in
connection with a mortgage or mortgages in an aggregate amount not to exceed the
amounts set forth
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on Exhibit "H" annexed hereto and made a part hereof, with an aggregate annual
debt service in no event to exceed the quotient of the Fixed Rent for such year
divided by 1.2, and which shall be prepayable at any time without penalty. The
lien of any such mortgage shall be expressly subordinate to the estate created
by this Lease. Landlord may not further lease its fee interest in the Land.
8.02. Landlord may not sell, transfer or otherwise convey its interest
in the Land except to an entity, person or partnership with a general partner or
partners with a net worth at least $100,000,000, as the same shall be increased
or decreased on each anniversary of the Commencement Date commencing on the
fifth (5th) anniversary of the Commencement Date by an amount equal to the
product of $100,000,000 and seventy-five percent (75%) of the percentage
increase or decrease in the CPI for the immediately preceding twelve (12) month
period; provided however, that in no event shall the same be decreased to be
less than $100,000,000.
ARTICLE 9 - QUIET ENJOYMENT
9.01. So long as no Event of Default shall have occurred and be
continuing, Tenant shall peaceably and quietly have, hold and enjoy the Demised
Premises without hindrance, ejection or molestation by Landlord or any person
lawfully claiming through or under Landlord, subject, nevertheless, to the
provisions of this Lease.
ARTICLE 10 - ASSIGNMENT, SUBLETTING AND MORTGAGING
10.01. Tenant shall have the right, at any time, without Landlord's
consent, upon thirty (30) days prior written notice to Landlord, to (a) assign
or otherwise transfer this Lease, or offer or advertise to do so, and (b) sublet
the Demised Premises or any part thereof, or offer or advertise to do so, or
allow the same to be used, occupied or utilized by anyone other than Tenant, or
(c) mortgage, pledge, encumber or otherwise hypothecate this Lease in any manner
whatsoever.
10.02. If this Lease is assigned, Landlord may collect rent from the
assignee. If the Demised Premises or any part thereof are sublet or used or
occupied by anybody other than Tenant, Landlord may, after default by Tenant,
and expiration of Tenant's time to cure such
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default, collect rent from the subtenant or occupant. In either event, Landlord
may apply the net amount collected to the Rent, but no such assignment,
subletting, occupancy or collection shall be deemed a release of Tenant from the
performance by Tenant of Tenant's obligations under this Lease.
10.03. Any assignee shall execute, acknowledge and deliver to Landlord,
within thirty (30) days after an assignment of this Lease, an agreement whereby
the assignee shall assume Tenant's obligations under this Lease and whereby the
assignee shall agree that all of the provisions in this Article 10 shall,
notwithstanding such assignment or transfer, continue to be binding upon it in
respect to all future assignments and transfers.
10.04. Without limiting any of the provisions of Article 27, if,
pursuant to the Federal Bankruptcy Code (or any similar law hereafter enacted
having the same general purpose), Tenant assigns this Lease, adequate assurance
of future performance by an assignee expressly permitted under such Code shall
be deemed to mean the deposit of cash security in an amount equal to the sum of
one (1) year's Fixed Rent plus an amount equal to the Additional Charges for the
Calendar Year preceding the year in which such assignment is intended to become
effective, which deposit shall be held by Landlord for the balance of the Term,
without interest, as security for the full performance of all of Tenant's
obligations under this Lease.
10.05. Landlord agrees, upon written request of Tenant, to subordinate
its fee interest in the Land and any interest it may have in the Building to the
lien of the Mortgage or any other financing at any time secured by the estate
created by this Lease. Landlord promptly shall execute and deliver any
instruments confirming such subordination, including the Mortgage, requested by
the holder of the Mortgage at any time.
10.06. In addition to the Mortgage, Tenant may further mortgage and
otherwise encumber this Lease, provided such other mortgages and encumbrances
shall be subject and subordinate in all respects to the Mortgage.
10.07. Landlord shall give to each mortgagee, including the holder of
the Mortgage, of which it has been notified, at the address of such mortgagee
set forth
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in such notice, and otherwise in the manner provided by Article 34 hereof, a
copy of each notice of an Event of Default by Tenant at the same time as, and
whenever, any such notice of an Event of Default shall thereafter be given by
Landlord to Tenant, and no such notice of an Event of Default by Landlord shall
be deemed to have been duly given to Tenant unless and until a copy thereof
shall have been so given to each mortgagee. Subject to the prior rights of the
holder of the Mortgage, each other mortgagee (i) shall thereupon have a period
of ten (10) business days more, after such notice is given to it, for remedying
the Event of Default, or causing the same to be remedied, than is given Tenant
after such notice is given to it, and (ii) shall, within such period and
otherwise as herein provided, have the right to remedy such Event of Default or
cause the same to be remedied. Landlord will accept performance by a mortgagee,
including the holder of the Mortgage, of any covenant, condition, or agreement
on Tenant's part to be performed hereunder with the same force and effect as
though performed by Tenant. In addition, no Event of Default by Tenant shall be
deemed to exist as long as the holder of the Mortgage or any other mortgagee, in
good faith, shall have commenced promptly either (i) to cure the Event of
Default and to prosecute the same to completion, or (ii) if possession of the
Premises is required in order to cure the Event of Default or if the Event of
Default is of a nature that is not susceptible to cure (i.e., bankruptcy), to
institute foreclosure proceedings and obtain possession directly or through a
receiver, to prosecute such proceedings with diligence and continuity and, upon
obtaining such possession, commenced promptly to cure the Event of Default (if
the same shall be susceptible of cure) and to prosecute the same to compliance
with diligence and continuity, provided, however, that the mortgagee shall have
delivered to Landlord, in writing, its agreement to take the action described in
clause (i) or (ii) herein, and that during the period in which such action is
being taken (and any foreclosure proceedings are pending) all of the other
obligations of Tenant under this Lease, to the extent they are susceptible of
being performed by the mortgagee, are being duly performed. However, at any time
after the delivery of the aforementioned agreement, the mortgagee may notify
Landlord, in writing, that it has relinquished possession of the Demised
Premises or that it will not institute foreclosure proceedings or, if such
proceedings have been commenced, that it has discontinued them, and in such
event the
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mortgagee shall have no further liability under such agreement from and after
the date it delivers such notice to Landlord (except for any obligations
accruing prior to the date it delivers such notice), and thereupon Landlord
shall have the unrestricted right to terminate this Lease and to take any other
action it deems appropriate by reason of any Event of Default by Tenant, and
upon any such termination the provisions of Section 11.10 hereof shall be
applicable.
10.08. Landlord and Tenant agree that they will not modify or amend
this Lease in any respect, or cancel or terminate this Lease other than as
provided herein, without the prior written consent of the holder of the Mortgage
and any other mortgagee of which Landlord has notice.
10.09. (a) In case of termination of this Lease by reason of any Event
of Default, Landlord shall give prompt notice thereof to each mortgagee holding
a mortgage on Tenant's leasehold estate. Landlord, subject to the rights of the
holder of the Mortgage, on written request of a mortgagee made any time within
thirty (30) days after the giving of such notice by Landlord, shall execute and
deliver a new lease of the Demised Premises to such mortgagee, or its designee
or nominee, for the remainder of the Term, upon all the covenants, conditions,
limitations and agreements herein contained, provided that the mortgagee shall
pay to Landlord, simultaneously with the delivery of such new lease, all unpaid
Rent due under this Lease up to and including the date of the commencement of
the term of such new lease and all expenses including, but not limited to,
reasonable attorneys' fees and disbursements and court costs incurred by
Landlord in connection with the Event of Default by Tenant, the termination of
this Lease and the preparation of the new lease. To the extent permitted by law,
any such new lease and the leasehold estate thereby created shall, subject to
the same conditions contained in this Lease, continue to maintain the same
priority as this Lease with regard to the Mortgage or any other mortgage or any
part thereof or any other lien, charge or encumbrance thereon whether or not the
same shall then be in existence. Concurrently with the execution and delivery of
such new lease, Landlord shall assign to tenant named therein all of its right,
title and interest in and to moneys (including insurance and condemnation
proceeds), if any, then held by or payable to Landlord, which Tenant would
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have been entitled to receive but for the termination of this Lease, less any
sums reasonably expended by Landlord as a result of such Event of Default, and
any sums then held by or payable to Landlord shall be deemed to be held by or
payable to it as Landlord under the new lease.
(b) Upon the execution and delivery of a new lease under this
Section 10.09, if the Space Lease, the Hartz Lease or any other sublease for the
Demised Premises or a portion thereof theretofore shall have been assigned to
Landlord, it thereupon shall be assigned and transferred, without recourse, by
Landlord to tenant named in such new lease. Between the date of termination of
this Lease and the date of execution and delivery of such new lease, if a
mortgagee shall have requested such new lease as provided in paragraph (a) of
this Section, Landlord will not cancel the Lease or any other such sublease or
accept any cancellation, termination or surrender thereof (unless such
termination shall be effected as a matter of law on the termination of this
Lease or the Space Lease, the Hartz Lease, or such other sublease has expired in
accordance with its terms) without the consent of the mortgagee.
10.10. If there is more than one mortgage, Landlord will recognize the
holder of the Mortgage and, thereafter, the mortgagee whose mortgage is senior
in lien, as the Person entitled to the rights afforded by Sections 10.07, 10.08
and 10.09 hereof.
10.11. No mortgagee shall become liable for the performance or
observance of any covenants or conditions to be performed or observed by Tenant
unless and until such mortgagee becomes the owner of Tenant's interest hereunder
upon the exercise of any remedy provided far in any mortgage. Thereafter such
mortgagee shall be liable for the Performance and observance of such covenants
and conditions only so long as such mortgagee owns such interest.
ARTICLE 11 - COMPLIANCE WITH LAWS
11.01. Tenant shall comply with all Legal Requirements which shall, in
respect of the Demised Premises or the use and occupation thereof, or the
abatement of any nuisance in, on or about the Demised Premises, impose any
violation, order or duty on Landlord or Tenant; and Tenant shall pay all the
cost, expenses, fines,
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penalties and damages which may be imposed upon Landlord by reason of or arising
out of Tenant's failure to fully and promptly comply with and observe the
provisions of this Section 11.01. However, Tenant need not comply with any Such
law or requirement of any public authority so long as Tenant shall be contesting
the validity thereof, or the applicability thereof to the Demised Premises, in
accordance with Section 11.02.
11.02. Tenant may contest, by appropriate proceedings prosecuted
diligently and in good faith, the validity, or applicability to the Demised
Premises, of any Legal Requirement, provided that (a) Landlord shall not be
subject to criminal or civil penalty and neither the Demised Premises nor any
part thereof shall be subject to being condemned or vacated, by reason of
non-compliance or otherwise by reason of such contest; and (b) Tenant shall keep
Landlord advised as to the status of such proceedings. Without limiting the
application of the above, Landlord shall be deemed subject to prosecution for a
crime if Landlord, or its managing agent, or any officer, director, partner,
shareholder or employee of Landlord or its managing agent, as an individual, is
charged with a crime of any kind or degree whatsoever, whether by service of a
summons or otherwise.
ARTICLE 12 - INSURANCE AND INDEMNITY
12.01. (a) Tenant shall at all times during the term hereof maintain or
cause to be maintained business interruption insurance with a rent insurance
endorsement payable to Landlord, covering the Rent for a period of at least
twelve (12) months. An endorsement or assignment of such insurance maintained by
the Subtenants or other subtenants of Tenant may be provided to Landlord. Tenant
also shall obtain and keep in full force and effect insurance against loss or
damage by fire and other casualty to the Building, as may be insurable under
then available standard forms of "all risk" insurance policies, in an amount
equal to 100% of the replacement value thereof. Landlord shall cooperate with
Tenant and Tenant's insurance companies in the adjustment of any claims for any
damage to the Building. On or prior to the Commencement Date (as such term is
defined in the Space Lease), Tenant shall deliver to Landlord appropriate
certificates of insurance, including evidence of waivers of subrogation required
pursuant to Section 12.04 hereof, required, to be carried by Tenant pursuant to
this
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Article 12. Evidence of each renewal or replacement of a policy shall be so
delivered by Tenant to Landlord at least fifteen days prior to the expiration of
such policy. Any certificates so deposited by Tenant with Landlord shall
indicate whether the insurance required by this Article 12 is affected under a
blanket insurance policy and, if so, shall certify to the aggregate amount of
such blanket insurance policy and to the fact that there are no sublimits which
derogate from the coverage required by this Article.
12.02. Tenant also shall maintain the following insurance: (a)
comprehensive general public liability insurance in respect of the Demised
Premises and the conduct and operation of business therein, with Landlord as an
additional named insured, with limits of not less than $3,000,000 for bodily
injury or death to any one person and $5,000,000 for bodily injury or death to
any number of persons in any one occurrence, and $500,000 for property damage,
including water damage and sprinkler leakage legal liability, and (b) any other
insurance required for compliance with the Insurance Requirements. Tenant shall
deliver to Landlord and any additional named insured(s) certificates for such
fully paid-for policies at least ten (10) days before the Commencement Date (as
such term is defined in the Space Lease). Tenant shall procure and pay for
renewals of such insurance from time to time before the expiration thereof, and
Tenant shall deliver to Landlord and any additional insured(s) certificates
therefor at least 20 days before the expiration of any existing policy. All such
policies shall be issued by companies of recognized responsibility licensed to
do business in New Jersey, and all such policies shall contain a provision
whereby the same cannot be cancelled unless Landlord and any additional
insured(s) are given at least 30 days' prior written notice of such
cancellation.
12.03. The provisions of Section 20.02 of this Lease are incorporated
herein by reference as though set forth more particularly at length in this
Section 12.03.
12.04. The parties hereto shall procure an appropriate clause in, or
endorsement on, any fire or extended coverage insurance covering the Demised
Premises and personal property, fixtures and equipment located thereon or
therein, pursuant to which the insurance companies waive subrogation or consent
to a waiver of right
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of recovery, or an express agreement that the applicable insurance policy shall
not be invalidated if the insured waives, or has waived before the casualty, the
right of recovery, or an express agreement that the applicable insurance policy
shall not be invalidated if the insured waives, or has waived before the
casualty, the right of recovery against any party responsible for a casualty
covered by such policy, and having obtained such clauses or endorsements or
agreements of waiver of subrogation or consent to a waiver of right of recovery,
the parties agree that they will not make any claim against or seek to recover
from the other or anyone acting or claiming under or through the other or any of
their respective officers, directors, shareholders, partners, employees, agents
or contractors, for any loss or damage to its property or the property of others
resulting from fire or other hazards covered by such fire and extended coverage
insurance, 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. 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 or if such clause may not be obtained, even with the
payment of an additional premium, then (in either event) such party shall so
notify the first party and the first party's agreement not to make any claim or
seek recovery shall not be effective thereafter. If either party shall be unable
to obtain the inclusion of such clause even with the payment of an additional
premium, then such party shall attempt to name the other party as an additional
insured (but not a loss payee) under the policy. If the payment of an additional
premium is required for naming the other party as an additional insured (but not
a loss payee), each party shall advise the other of the amount of any such
additional premium 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 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 or if it shall not be possible to have the other
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party named as an additional insured (but not loss payee), even with the payment
of an additional premium, then (in either event) such party shall so notify the
first party and the first party's agreement to name the other party as an
additional insured shall be satisfied. If either party shall fail to have fire
or extended coverage insurance in effect as required pursuant to this Article
12, the agreement not to make any claim or seek recovery contained in the first
sentence of this Section 12.04 shall be in full force and effect to the same
extent as if such required insurance (containing the required waiver of
subrogation clause, endorsement or agreement) were in effect.
ARTICLE 13 - RULES AND REGULATIONS
13.01. Tenant and its employees and agents shall faithfully observe and
comply with the Rules and Regulations and such reasonable changes therein
(whether by modification, elimination or addition) as Landlord at any time or
times hereafter may make and communicate to Tenant, which in Landlord's
reasonable judgment, shall be necessary for the operation or maintenance of the
common areas of the Lincoln Harbor Project, and which do not unreasonably affect
the conduct of Tenant's business in the Demised Premises; provided, however,
that in case of any conflict or inconsistency between the provisions of this
Lease and any of the Rules and Regulations, the provisions of this Lease shall
control. Nothing in this Lease contained shall be construed to impose upon
Landlord any duty or obligation to enforce the Rules and Regulations against any
other tenant or any employees or agents of any other tenant, and Landlord shall
not be liable to Tenant for violation of the Rules and Regulations by any other
tenant or its employees, agents, invitees or licensees, provided, however,
Landlord shall not enforce any Rule or Regulation against Tenant which Landlord
shall not then be enforcing against all other tenants of the Lincoln Harbor
Project. If Tenant disputes the reasonableness of any additional Rule or
Regulation hereafter adopted by Landlord, the dispute shall be determined by
arbitration in the City of Newark in accordance with the rules and regulations
then obtaining of the American Arbitration Association or its successor. Any
such determination shall be final and binding upon the parties hereto, whether
or not a judgment shall be entered in any court.
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ARTICLE 14 - ALTERATIONS
14.01. Subject to the provisions of the Mortgage or any leasehold
mortgage to which Landlord may have subordinated its fee interest in the Land,
and the Space Lease and the Hartz Lease, Tenant shall have the right to
demolish, replace, remove and alter the Demised Premises, or any part thereof,
and make any addition thereto, all in compliance with Legal Requirements.
ARTICLE 15 - REPAIRS AND MAINTENANCE
15.01. Notwithstanding anything contained herein to the contrary,
Landlord shall be responsible for maintenance of the common areas of the Lincoln
Harbor Project, all which shall be maintained in accordance with standards
reasonably satisfactory to Landlord and Tenant and in any event in accordance
with the standards of a first-class office project in the northern New Jersey
metropolitan area and with the provisions of the Reciprocal Construction
Operation and Easement Agreement, to be entered into substantially in accordance
with the draft dated March 5, 1986, between Landlord and the Township of
Weehawken. Landlord hereby covenants and agrees to use its best efforts to
enforce in accordance with their terms, the provisions of all other agreements
affecting the Lincoln Harbor Project. To the extent that Landlord shall fail to
maintain such common areas, upon thirty (30) days' prior written notice to
Landlord (or such shorter notice as may be reasonable in the event of an
emergency) Tenant shall have the right to perform any such maintenance work on
behalf of the Landlord and Landlord, promptly after receipt of demand therefor
from Tenant, shall reimburse Tenant for any expenses incurred by Tenant on
behalf of Landlord for such maintenance, together with interest thereon at the
Late Payment Rate, calculated from the date of expenditure by Tenant through the
date of repayment by Landlord.
15.02. Except as otherwise expressly provided in this Lease, Landlord
shall have no liability to Tenant, nor shall Tenant's covenants and obligations
under this Lease be reduced or abated in any manner whatsoever, by reason of any
inconvenience, annoyance, interruption or injury to business arising from
Landlord's doing any repairs, maintenance, or changes which Landlord is required
or permitted by this Lease, or required by law, to make in or to any portion of
the Demised Premises.
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ARTICLE 16 - ELECTRIC ENERGY
16.01. Tenant shall purchase the electric energy required by it in the
Demised Premises at its own expense on a direct-metered basis from the public
utility servicing the Demised Premises. Landlord shall not be liable for any
failure, inadequacy or defect in the character or supply of electric current
furnished to the Demised Premises except for actual damage suffered by Tenant by
reason of any such failure, inadequacy or defect caused by the gross negligence
or willful or wrongful act of Landlord.
ARTICLE 17 - OTHER SERVICES: SERVICE INTERRUPTION
17.01. Tenant shall cause the Building, including the exterior and
the interior of the windows of the Building, to be cleaned.
17.02. Landlord shall cause water to be supplied to the Demised
Premises for Tenant's purposes and Tenant shall pay for such as shown on the
public utility meters therefor.
ARTICLE 18 - ACCESS, CHANGES AND NAME
18.01. Landlord and its agents shall have the right, with as little
interference of Tenant's business as possible, to enter and/or pass through the
Demised Premises upon reasonable notice and at reasonable times to examine the
Demised Premises, without any liability to Tenant and without any reduction of
Tenant's obligations hereunder. The right of Landlord and Landlord's agent to
enter into the Demised Premises shall not include any area of the Demised
Premises designated on written notice to Landlord as a "security area" unless a
representative of Tenant shall be present, which representative Tenant agrees to
have present at the Demised Premises upon reasonable advance oral notice by
Landlord, provided, however, that in the event of any emergency, Landlord shall
have the right to enter into any such security area without being accompanied by
such representative of Tenant, but shall be accompanied by a police officer,
fireman or other public official. During the period of eighteen (18) months
prior to the Expiration Date, Landlord and its agents may exhibit the Demised
Premises to prospective tenants.
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18.02. Tenant shall have the right, from time to time, to name the
Building.
ARTICLE 19 - MECHANICS' LIENS AND OTHER LIENS
Nothing contained in this Lease shall be deemed, construed or
interpreted to imply any consent or agreement on the part of Landlord to subject
Landlord's interest or estate to any liability under the mechanic's or other
lien law. If any mechanic's or other lien or any notice of intention to file a
lien is filed against the Land, or any part thereof, or the Demised Premises, or
any part thereof, for any work, labor, service or materials claimed to have been
performed or furnished for or on behalf of Tenant or anyone holding any part of
the Demised Premises through or under Tenant, Tenant shall cause the same to be
cancelled and discharged of record by payment, bond or order of a court of
competent jurisdiction within thirty (30) days after notice by Landlord to
Tenant.
ARTICLE 20 - NON-LIABILITY AND INDEMNIFICATION
20.01. In addition to the provisions of Article 12 of this Lease,
except as set forth in the Guarantees, dated of even date herewith, by Landlord
for the benefit of Paine Webber, Inc. (collectively, the "Guarantees"), neither
Landlord nor any partner, joint venturer, director, officer, agent, servant or
employee of Landlord shall be liable to Tenant for any loss, injury or damage to
Tenant or to any other Person, or to its or their property, irrespective of the
cause of such injury, damage or loss, except to the extent caused by or
resulting from the gross negligence or willful acts of Landlord, its agents,
servants or employees in the operation or maintenance of the common areas of the
Lincoln Harbor Project. Further, neither Landlord nor any partner, joint
venturer, director, officer, agent, servant or employee of Landlord shall be
liable (a) for any damage caused by either tenants or Persons in, upon or about
the Demised Premises, or caused by operations in construction of any private,
public or quasi-public work; or (b) even if negligent, for consequential damages
arising out of any loss of use of the Demised Premises or any equipment or
facilities therein by Tenant or any Person claiming through or under Tenant.
20.02. Tenant shall indemnify and hold harmless Landlord and its
partners, joint venturers, directors, officers, agents, servants and employees
from and against any and all claims arising from or in connection with (a)
Tenant's conduct or management of the Demised Premises or of any business
therein, or any work or thing
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whatsoever done, or any condition created (other than by Landlord) in the
Demised Premises during the Term or during the period of time, if any, prior to
the Commencement Date that Tenant may have been given access to the Demised
Premises; (b) any act, omission or negligence of tenant or any of its subtenants
or licensees or its or their partners, joint ventures, directors, officers,
agents, employees or contractors; (c) any accident, injury or damage whatever
(except to the extent caused by Landlord's willful acts or gross negligence)
occurring in the Demised Premises or the common areas of the Lincoln Harbor
Project; and (d) any breach or default by Tenant in the full and prompt payment
and performance of Tenant's obligations under this Lease; together with all
costs, expenses and liabilities incurred in or in connection with each such
claim or action or proceeding brought thereon, including, without limitation,
all attorneys' fees and expenses. In case any action or proceeding is brought
against Landlord and/or its partners, joint venturers, directors, officers,
agents and/or employees by reason of any such claim, Tenant, upon notice from
Landlord, shall resist and defend such action or proceeding by counsel
reasonably satisfactory to Landlord. Counsel appointed by the insurance company
insuring the Demised Premises shall be deemed satisfactory to Landlord.
20.03. Notwithstanding any provision to the contrary, except as set
forth in the Guarantees, Tenant shall look solely to the estate and property of
Landlord in and to the Demised Premises (or the proceeds net of bona fide liens
and expenses received by Landlord on a sale of such estate and property). In the
event of any claim against Landlord arising out of or in connection with this
Lease, the relationship of Landlord and Tenant or Tenant's use of the Demised
Premises, or the common areas of the Lincoln Harbor Project, Tenant, (and its
successors and assigns) agrees that the liability of Landlord arising out of or
in connection with this Lease, the relationship of Landlord and Tenant or
Tenant's use of the Demised Premises, or the common areas of the Lincoln Harbor
Project shall be limited to such estate and property of Landlord (or sale
proceeds net of bona fide liens and expenses). No other properties or assets of
Landlord or any partner, joint Venturer, director, officer, agent, servant or
employee of Landlord shall be subject to levy, execution or other enforcement
procedures for the satisfaction of any judgment (or other judicial process) or
for the satisfaction of any other
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remedy of Tenant arising out of, or in connection with, this Lease, the
relationship of Landlord and Tenant or Tenant's use of the Demised Premises, or
the common areas of the Lincoln Harbor Project. If Tenant shall acquire a lien
on or interest in any other properties or assets by judgment or otherwise,
Tenant shall promptly release such lien on or interest in such other properties
and assets by executing, acknowledging and delivering to Landlord an instrument
to that effect prepared by Landlord's attorneys.
ARTICLE 21 - DAMAGE OR DESTRUCTION
21.01. Tenant hereunder shall have no obligation to repair or restore
any damage by fire or other casualty to the Demised Premises.
21.02. Landlord shall have no right to terminate this Lease in
connection with any casualty. Tenant shall have the right to terminate this
Lease in accordance with the provisions of Section 35.12 hereof.
21.03. Except as provided for in Section 35.12 of this Lease, Tenant
shall not be entitled to terminate this Lease and no damages, compensation or
claim shall be payable by Landlord for inconvenience, loss of business or
annoyance arising from any repair or restoration of any portion of the Demised
Premises pursuant to this Article 21. At no time shall there be an abatement or
reduction of the Rent as a result of any casualty.
21.04. Notwithstanding any of the foregoing provisions of this Article
21, if by reason of some act or omission on the part of Tenant or any of its
subtenants or its or their partners, directors, officers, servants, employees,
agents or contractors, either (a) Tenant shall be unable to collect all of the
insurance proceeds (including, without limitation, rent insurance proceeds)
applicable to damage or destruction of the Demised Premises by fire or other
casualty, or (b) the Demised Premises shall be damaged or destroyed or rendered
completely or partially untenantable on account of fire or other casualty, then,
without prejudice to any other remedies which may be available against Tenant,
there shall be no abatement or reduction of the Rent. Further, nothing contained
in this Article 21 shall relieve Tenant from any liability that may exist as a
re-
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sult of any damage or destruction by fire or other casualty.
21.05. In the event of any casualty or other damage, all insurance
proceeds shall be paid to and be the property of Tenant; provided, however, that
if Tenant shall elect to terminate this Lease in accordance with the provisions
of Section 35.12 hereof, or if this Lease is otherwise terminated prior to
restoration all insurance proceeds shall first be paid to, and be the property
of, Landlord in the amount set forth on Exhibit "I" annexed hereto and made a
part hereof, and the balance shall be paid to, and be the property of Tenant.
21.06. The provisions of this Article 21 shall be deemed an express
agreement governing any case of damage or destruction of the Demised Premises by
fire or other casualty, and any law providing for such a contingency in the
absence of an express agreement, now or hereafter in force, shall have no
application in such case.
ARTICLE 22 - EMINENT DOMAIN
22.01. If the whole of the Demised Premises shall be taken by any
public or quasi-public authority under the power of condemnation, eminent domain
or expropriation, or in the event of conveyance of the whole of the Demised
Premises in lieu thereof (collectively referred to as a "Taking") this Lease
shall terminate as of the day possession shall be taken by such authority, it
being understood that there shall be no abatement of Fixed Rent but that
Operating Expenses, Tenant's Fraction and Tenant's Proportionate Share, if
applicable, shall be equitably adjusted. If fifteen percent (15%) or less of the
Demised Premises shall be so taken or conveyed, this Lease shall terminate only
in respect of the part so taken or conveyed as of the day possession shall be
taken by such authority. If more than fifteen percent (15%) of the Demised
Premises shall be so taken or conveyed, this Lease shall terminate only in
respect of the part so taken or conveyed as of the day possession shall be taken
by such authority, but Tenant shall have the right to terminate this Lease upon
notice given to the other party within sixty (60) days after the filing of the
declaration of taking. If so much of the parking facilities shall be so taken or
conveyed that the number of parking spaces necessary, for the continued lawful
operation of
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the Demised Premises shall not be available, Tenant may, by notice to Landlord,
terminate this Lease as of the day possession shall be taken. Except as
specifically provided herein, in the event of any such taking or conveyance
there shall be no reduction in Rent. If this Lease shall be terminated in
accordance with the provisions of this Section 22.01, this Lease and the Term
shall come to an end and expire as of the date of such termination, with the
same effect as if such date were the Expiration Date, and the Rent shall be
apportioned as of the date of such termination and any prepaid portion of Rent
for any period after such date shall be refunded by Landlord to Tenant. If this
Lease shall continue in effect, Tenant shall, at its expense, but shall be
obligated only to the extent of the net award or other compensation (after
deducting all expenses in connection with obtaining same) available to Tenant
for the improvements taken or conveyed, make all necessary alterations so as to
constitute the remaining Demised Premises a complete architectural and
tenantable unit. It being understood that there shall be no abatement of Fixed
Rent but that Operating Expenses, Tenant's Fraction and Tenant's Proportionate
Share, if applicable, shall be equitably adjusted. All awards and compensation
for any taking or conveyance, whether for the whole or a part the Demised
Premises, shall be divided between Landlord and Tenant in accordance with the
provisions of Section 22.03.
22.02. If the temporary use or occupancy of all or any part of the
Demised Premises shall be taken during the Term, Tenant shall be entitled,
except as hereinafter set forth, to receive that portion of the award or payment
for such taking which represents compensation for the use and occupancy of the
Demised Premises, for the taking of the Tenant's Property and for moving
expenses, and restoration and Tenant shall restore the Demised Premises. This
Lease shall be and remain unaffected by such taking and Tenant shall continue
responsible for all of its obligations hereunder insofar as such obligations are
not affected by such taking and shall continue to pay the Rent in full when due.
If the period of temporary use or occupancy shall extend beyond the Expiration
Date, that part of the award or payment which represents compensation for the
use and occupancy of the Demised Premises (or a part thereof) shall be divided
between Landlord and Tenant so that Tenant shall receive (except as otherwise
provided below) so much thereof as represents compensation for the period up to
and includ-
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ing the Expiration Date and Landlord shall receive so much thereof as represents
compensation for the period after the Expiration Date.
22.03. In the event this Lease is terminated as the result of a Taking
the proceeds of any award given in connection with such Taking shall, subject to
the provisions of the Mortgage, be paid first to Landlord up to the amount shown
on Exhibit "I" annexed hereto and made a part hereof and the balance shall be
paid to Tenant. In the event of a Taking which does not result in a termination
of this Lease, any award or compensation given for any such Taking shall,
subject to the provisions of the Mortgage, be paid to Tenant.
ARTICLE 23 - SURRENDER
23.01. On the Expiration Date, or upon any earlier termination of this
Lease, or upon any re-entry by Landlord upon the Demised Premises, Tenant shall
quit and surrender the Demised Premises to Landlord.
23.02. If Tenant remains in possession of the Demised Premises after
the expiration of the Term, Tenant shall be deemed to be occupying the Demised
Premises as a tenant from month to month subject to all of the provisions of
this Lease, except that the monthly Fixed Rent shall be twice the Fixed Rent in
effect during the last month of the Term.
23.03. No act or thing done by Landlord or its agents shall be deemed
an acceptance of a surrender of the Demised Premises, and no agreement to accept
such surrender shall be valid unless in writing and signed by Landlord.
ARTICLE 24 - CONDITIONS OF LIMITATION
24.01. This Lease is subject to the limitations (collectively referred
to as "Events of Default") that: (a) if Tenant shall default in the payment of
any installment of Fixed Rent, and such default shall continue for ten (10) days
after invoice for same by Landlord or for ten (10) days after notice of such
default, whichever is shorter, or if Tenant shall default in the payment of any
installment of Rent (other than Fixed Rent) and such default shall continue for
forty-five (45) days after notice of such default, or (b) if Tenant shall,
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whether by action or inaction, be in default of any of its obligations under
this Lease (other than a default in the payment of Rent) and such default shall
continue and not be remedied within forty-five (45) days after Landlord shall
have given to Tenant a notice specifying the same, or, in the case of a default
which cannot with due diligence be cured within a period of forty-five (45) days
and the continuance of which for the period required for cure will not subject
Landlord to prosecution for a crime (as more particularly described in the last
sentence of Section 11.02), if Tenant shall not, (i) within said forty-five (45)
day period advise Landlord of Tenant's intention to take all steps necessary to
remedy such default, (ii) duly commence within said forty-five (45) day period,
and thereafter diligently prosecute to completion all steps necessary to remedy
the default, and (iii) complete such remedy within a reasonable time after the
date of said notice by Landlord, then in any of said cases Landlord may give to
Tenant a notice of intention to end the Term at the expiration of fifteen (15)
days from the date of the service of such notice of intention, and upon the
expiration of said fifteen (15) days, whether or not the Term shall theretofore
have commenced, this Lease shall terminate with the same effect as if that day
were the expiration date of this Lease, but Tenant shall remain liable for
damages as provided in Article 26.
ARTICLE 25 - RE-ENTRY BY LANDLORD
25.01. If this Lease shall terminate as provided in Article 24,
Landlord or Landlord's agents and employees may immediately or at any time
thereafter re-enter the Demised Premises, or any part thereof, either by summary
dispossess proceedings or by any suitable action or proceeding at law, or
otherwise, without being liable to indictment, prosecution or damages therefor,
and may repossess the same, and may remove any Person therefrom, to the end that
Landlord may have, hold and enjoy the Demised Premises. The word "re-enter", as
used herein, is not restricted to its technical legal meaning. If this Lease is
terminated under the provisions of Article 24, or if Landlord shall re-enter the
Demised Premises under the provisions of this Article 25, or in the event of the
termination of this Lease, or of re-entry, by or under any summary dispossess or
other proceedings or action or any provision of law by reason of default
hereunder on the part of Tenant, Tenant shall thereupon pay to Landlord the Rent
payable up to the time of such
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termination of this Lease, or of such recovery of possession of the Demised
Premises by Landlord, as the case may be, and shall also pay to Landlord damages
as provided in Article 26.
25.02. In the event of a breach by Tenant of any of its obligations
under this Lease, Landlord shall also have the right of injunction. The special
remedies to which Landlord may resort hereunder are cumulative and are not
intended to be exclusive of any other remedies to which Landlord may lawfully be
entitled at any time and Landlord may invoke any remedy allowed at law or in
equity as if specific remedies were not provided for herein.
25.03. If this Lease shall terminate under the provisions of Article
24, or if Landlord shall re-enter the Demised Premises under the provisions of
this Article 25, or in the event of the termination of this Lease, or of
re-entry by or under any summary dispossess or other proceeding or action or any
provision of law by reason of default hereunder on the part of Tenant, Landlord
shall be entitled to retain all monies, if any, paid by Tenant to Landlord,
whether as advance Rent, security or otherwise, but such monies shall be
credited by Landlord against any Rent due from Tenant at the time of such
termination or re-entry or, at Landlord's option, against any damages payable by
Tenant under Article 26 or pursuant to law.
ARTICLE 26 - DAMAGES
26.01. If this Lease is terminated under the provisions of Article 24,
or if Landlord shall re-enter the Demised Premises under the provisions of
Article 25, or in the event of the termination of this Lease, or of re-entry, by
or under any summary dispossess or other proceeding or action or any provision
of law by reason of default hereunder on the part of Tenant, Tenant shall pay to
Landlord as damages, at the election of Landlord, either:
(a) a sum which at the time of such termination of this Lease
or at the time of any such re-entry by Landlord, as the case may be, represents
the then value of the excess, if any, of (i) the aggregate amount of the Rent
which would have been payable by Tenant (conclusively presuming the average
monthly Additional Charges to be the same as were the average monthly
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Additional Charges payable for the year, or if less than 365 days have then
elapsed since the Commencement Date, the partial year, immediately preceding
such termination or re-entry) for the period commencing with such earlier
termination of this Lease or the date of any such re-entry, as the case may be,
and ending with the Expiration Date, over (ii) the aggregate rental value of the
Demised Premises for the same period, which amount shall be discounted to the
then present worth at a rate equal to nine percent (9%) per annum; or
(b) sums equal to the Fixed Rent and the Additional Charges
which would have been payable by Tenant had this Lease not so terminated, or had
Landlord not so re-entered the Demised Premises, payable upon the due dates
therefor specified herein following such termination or such re-entry and until
the Expiration Date, provided, however, that if Landlord shall relet the
De-mised Premises during said period, Landlord shall credit Tenant with the net
rents received by Landlord from such reletting, such net rents to be determined
by first deducting from the gross rents as and when received by Landlord from
such reletting the expenses incurred or paid by Landlord in terminating this
Lease or in re-entering the Demised Premises and in securing possession thereof,
as well as the expenses of reletting, including, without limitation, altering
and preparing the Demised Premises for new tenants, brokers' commissions, legal
fees, and all other expenses properly chargeable against the Demised Premises
and the rental therefrom, it being understood that any such reletting may be for
a period shorter or longer than the period ending on the Expiration Date; but in
no event shall Tenant be entitled to receive any excess of such net rents over
the sums payable by Tenant to Landlord hereunder, nor shall Tenant be entitled
in any suit for the collection of damages pursuant to this sub-division (b) to a
credit in respect of any rents from a reletting, except to the extent that such
net rents are actually received by Landlord. If the Demised Premises or any part
thereof should be relet in combination with other space, then proper
apportionment on a square foot basis shall be made of the rent received from
such reletting and of the expenses of reletting.
If the Demised Premises or any part thereof be relet by Landlord before
presentation of proof of such damages to any court, commission or tribunal, the
amount of rent reserved upon such reletting shall, prima facie, be the
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fair and reasonable rental value for the Demised Premises, or part thereof, so
relet during the term of the reletting. Landlord shall not be liable in any way
whatsoever for its failure or refusal to relet the Demised Premises or any part
thereof, or if the Demised Premises or any part thereof are relet, for its
failure to collect the rent under such reletting, and no such refusal or failure
to rent or failure to collect rent shall release or affect Tenant's liability
for damages or otherwise under this Lease.
26.02. Suit or suits for the recovery of such damages or, any
installments thereof, may be brought by Landlord at any time and from time to
time at its election, and nothing contained herein shall be deemed to require
Landlord to postpone suit until the date when the Term would have expired if it
had not been so terminated under the provisions of Article 25, or under any
provision of law, or had Landlord not re-entered the Demised Premises. Nothing
herein contained shall be construed to limit or preclude recovery by Landlord
against Tenant of any sums or damages to which, in addition to the damages
particularly provided above, Landlord may lawfully be entitled by reason of any
default hereunder on the part of Tenant. Nothing herein contained shall be
construed to limit or prejudice the right of Landlord to prove for and obtain as
damages by reason of the termination of this Lease or re-entry on the Demised
Premises for the default of Tenant under this Lease an amount equal to the
maximum allowed by any statute or rule of law in effect at the time when, the
governing the proceedings in which, such damages are to be proved whether or not
such amount be greater than, equal to, or less than any of the sums referred to
in Section 26.01.
26.03. In addition, if this Lease is terminated under the provisions of
Article 24, or if Landlord shall re-enter the Demised Premises under the
provisions of Article 25, Tenant covenants that for the breach of any covenant
of tenant set forth above in this Section 26.03, Landlord shall be entitled
immediately, without notice or other action by Landlord, to recover, and Tenant
shall pay, as and for liquidated damages therefor, the cost of performing such
covenant (as estimated by an independent contractor selected by Landlord).
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26.04. In addition to any other remedies Landlord may have under this
Lease, and without reducing or adversely affecting any of Landlord's rights and
remedies under this Article 26, if any Rent or damages payable hereunder by
Tenant to Landlord are not paid within ten (10) days after demand therefor, the
same shall bear interest at the Late Payment Rate from the due date thereof
until paid, and the amounts of such interest shall be Additional Charges
hereunder.
ARTICLE 27 - AFFIRMATIVE WAIVERS
27.01. Tenant, on behalf of itself and any and all persons claiming
through or under Tenant, does hereby waive and surrender all right and privilege
which it, they or any of them might have under or by reason of any present or
future law, to redeem the Demised Premises or to have a continuance of this
Lease after being dispossessed or ejected from the Demised Premises by process
of law or under the terms of this Lease or after the termination of this Lease
as provided in this Lease.
27.02. Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim brought by either against the other on any matter
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, and Tenant's use or occupancy of the
Demised Premises and use of the Common areas, including, without limitation, any
claim of injury or damage, and any emergency and other statutory remedy with
respect thereto. Tenant shall not interpose any counterclaim of any kind in any
action or proceeding commenced by Landlord to recover possession of the Demised
Premises (unless failure to do so would constitute a waiver thereof) nor attempt
to remove such action or proceeding to the law division of the Superior Court of
New Jersey.
ARTICLE 28 - NO WAIVERS
The failure of either party to insist in any one or more instances upon
the strict performance of any one or more of the obligations of this Lease, or
to exercise any election herein contained, shall not be construed as a waiver or
relinquishment for the future of the performance of such one or more obligations
of this Lease or of the right to exercise such election, but the same shall
continue and remain in full force and effect
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with respect to any subsequent breach, act or omission. The receipt by Landlord
of Fixed Rent or Additional Charges with knowledge of breach by Tenant of any
obligation of this Lease shall not be deemed a waiver of such breach.
ARTICLE 29 - CURING TENANT'S DEFAULTS
If Tenant shall default in the performance of any of Tenant's
obligations under this Lease, Landlord, without thereby waiving such default,
may (but shall not be obligated to) perform the same for the account and at the
expense of Tenant, without notice in a case of emergency, and in any other case
only if such default continues after the expiration of forty-five (45) days from
the date Landlord gives Tenant notice of the default. Bills for any expenses
incurred by Landlord in connection with any such performance by it for the
account of Tenant, and bills for all costs, expenses and disbursements of every
kind and nature whatsoever, including reasonable attorneys' fees and expenses,
involved in collecting or endeavoring to collect the Rent or any part thereof or
enforcing or endeavoring to enforce any rights against Tenant or Tenant's
obligations hereunder, under or in connection with this Lease or pursuant to
law, including any such cost, expense and disbursement involved in instituting
and prosecuting summary proceedings or in recovering possession of the Building
after default by Tenant or upon the expiration of the Term or sooner termination
of this Lease, and interest on all sums advanced by Landlord under this Article
at the Late Payment Rate, may be sent by Landlord to Tenant monthly, or
immediately, at Landlord's option, and such amounts shall be due and payable in
accordance with the terms of such bills.
ARTICLE 30 - BROKER
Landlord and Tenant each represent to the other that no broker except
the Broker was instrumental in bringing about or consummating this Lease and
that it had no conversations or negotiations with any broker except the Broker
concerning the leasing of the Demised Premises. Each party agrees to indemnify
and hold harmless the other against and from any claims for any brokerage
commissions and all costs, expenses and liabilities in connection therewith,
including, without limitation, attorneys' fees and expenses, arising out of any
conversations or negotiations had by the indemnifying party
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with any broker other than the Broker. The commissions due the Broker if any,
shall be paid pursuant to a separate agreement with the Broker.
ARTICLE 31 - NOTICES
Any notice, statement, demand, consent, approval or other communication
required or permitted to be given, rendered or made by either party to the
other, pursuant to this Lease or pursuant to any applicable Legal Requirement,
shall be in writing and shall (except with respect to invoices for Fixed Rent)
be deemed to have been properly given, rendered or made only if hand delivered
or sent by United States registered or certified mail, return receipt requested,
addressed with respect to Tenant c/o Hartz Mountain Industries, Inc., Attention
General Counsel, with copies to Paine Webber, Inc., 1285 Avenue of the Americas,
New York, New York 10019, Attention: Facilities Department - Vice President and
to Skadden, Arps, Slate, Meagher and Flom, 919 Third Avenue, New York, New York
10022, Attention: Benjamin F. Needell, Esq., and to Horowitz, Bross, Sinins &
Imperial, P.A., 1180 Raymond Boulevard, Newark, New Jersey 07102, Attention:
Irwin A. Horowitz, Esq. and with respect to Landlord, to the attention of
General Counsel with a concurrent notice to the attention of President, with a
copy to Horowitz, Bross, Sinins & Imperial, P.A., 1180 Raymond Boulevard,
Newark, New Jersey 07102, Attention: Irwin A. Horowitz, Esq., and any mailed
notice, statement, demand, consent, approval or other communication, shall be
deemed to have been given, rendered or made on the date delivered or if mailed
on the day after the day so mailed, unless mailed outside the State of New
Jersey in which case it shall be deemed to have been given, rendered or made on
the third business day after the day so mailed. Either party may, by notice as
aforesaid, designate a different address or addresses for notices, statements,
demands, consents, approvals or other communications intended for it.
ARTICLE 32 - ESTOPPEL CERTIFICATES
Each party shall, at any time and from time to time, as requested by
the other party, upon not less than ten (10) days' prior notice, execute and
deliver to the requesting party a statement certifying that this Lease is
unmodified and in full force and effect (or if there have been modifications,
that the same is in full force
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and effect as modified and stating the modifications), certifying the dates to
which the Fixed Rent and Additional Charges have been paid, stating whether or
not, to the best knowledge of the party giving the statement, the requesting
party is in default in performance of any of its obligations under this Lease,
and, if so, specifying each such default of which the party giving the statement
shall have knowledge, and stating whether or not, to the best knowledge of the
party giving the statement, any event has occurred which with the giving of
notice or passage of time, or both, would constitute such a default of the
requesting party, and, if so, specifying each such event; any such statement
delivered pursuant hereto shall be deemed a representation and warranty to be
relied upon by the party requesting the certificate and by others with whom such
party may be dealing, regardless of independent investigation. Each party also
shall include in any such statement such other information concerning this Lease
as each party may reasonably request.
ARTICLE 33 - ARBITRATION
Except as may be otherwise expressly provided in this Lease, Landlord
or Tenant may at any time request arbitration, of any matter in dispute. The
party requesting arbitration shall do so by giving notice to that effect to the
other party, specifying in said notice the nature of the dispute, and said
dispute shall be determined in Newark, New Jersey, by a single arbitrator, in
accordance with the rules then obtaining of the American Arbitration Association
(or any organization which is the successor thereto). The award in such
arbitration may be enforced on the application of either party by the order or
judgment of a court of competent jurisdiction. The fees and expenses of any
arbitration shall be borne by the parties equally, but each party shall bear the
expense of its own attorneys and experts and the additional expenses of
presenting its own proof.
ARTICLE 34 - MEMORANDUM OF LEASE
This Lease shall not be recorded, however, at the request of either
party, landlord and Tenant shall promptly execute, acknowledge and deliver to
the other party (i) a memorandum of lease in respect of this Lease sufficient
for recording and (ii) after the Fixed Rent Commencement Date either an
agreement or a restated memorandum (if a memorandum shall have been executed or
re-
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corded as provided immediately above) stating the Fixed Rent Commencement Date
sufficient for recording. Failure by either party to request or to execute,
acknowledge or deliver any such memorandum or agreement, however, shall not
affect the determination of the Fixed Rent Commencement Date. Such memorandum
shall not be deemed to change or otherwise affect any of the obligations or
provisions of this Lease. Whichever party records such memorandum of Lease shall
pay all recording costs and expenses, including any taxes that are due upon such
recording.
ARTICLE 35 - MISCELLANEOUS
35.01. Tenant expressly acknowledges and agrees that Landlord has not
made and is not making, and Tenant, in executing and delivering this Lease, is
not relying upon, any warranties, representations, promises or statements,
except to the extent that the same are expressly set forth in this Lease or in
any other written agreement(s) which may be made between the parties
concurrently with the execution and delivery of this Lease. All understandings
and agreements heretofore had between the parties are merged in this Lease and
any other written agreement(s) made concurrently herewith, which alone fully and
completely express the agreement of the parties and which are entered into after
full investigation. Neither party has relied upon any statement or
representation not embodied in this Lease or in any other written agreement(s)
made concurrently herewith.
35.02. No agreement shall be effective to change, modify, waive,
release, discharge, terminate or effect an abandonment of this Lease, in whole
or in part, unless such agreement is in writing, refers expressly to this Lease
and is signed by the Landlord and Tenant.
35.03. If Tenant shall at any time request Landlord to sublet or let
the Demised Premises for Tenant's account, Landlord or its agent is authorized
to receive keys for such purposes without releasing Tenant from any of its
obligations under this Lease, and Tenant hereby releases Landlord of any
liability for loss or damage to any of the Tenant's Property in connection with
such subletting or letting.
35.04. Except as otherwise expressly provided in this Lease, the
obligations under this Lease shall bind and benefit the successors and assigns
of the par-
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ties hereto with the same effect as if mentioned in each instance where a party
is named or referred to; provided, however, that the provisions of this Section
35.04 shall not be construed as modifying the conditions of limitation contained
in Article 24.
35.05. Except for Tenant's obligations to pay Rent, the time for
Landlord or Tenant, as the case may be, to perform any of their respective
obligations hereunder shall be extended if and to the extent that the
performance thereof shall be prevented due to any Unavoidable Delays. Except as
expressly provided to the contrary, the obligations of Tenant hereunder shall
not be affected, impaired or excused, nor shall Landlord have any liability
whatsoever to Tenant, (a) because Landlord is unable to fulfill, or is delayed
in fulfilling, any of its obligations under this Lease due to any of the matters
set forth in the first sentence of this Section 35.05, or (b) because of any
failure or defect in the supply, quality or character of electricity, water or
any other utility or service furnished to the Demised Premises for any reason
beyond Landlord's reasonable control.
35.06. Any liability for payments or reimbursement of payments
hereunder (including, without limitation, Additional Charges) shall survive the
expiration of the Term or earlier termination of this Lease.
35.07. Tenant shall not exercise its rights under Article 14 or any
other provision of this Lease in a manner which would violate Landlord's union
contracts or create any work stoppage, picketing, labor disruption or dispute or
any interference with the business of Landlord.
35.08. Tenant shall give prompt notice to Landlord of (a) any
occurrence in or about the Demised Premises for which Landlord might be liable,
and (b) any fire or other casualty in the Demised Premises.
35.09. This Lease shall be governed by and construed in accordance with
the laws of the State of New Jersey. If any provision of this Lease shall, be
invalid or unenforceable, the remainder of this Lease shall not be affected and
shall be enforced to the extent permitted by law. The table of contents,
captions, headings and titles in this Lease are solely for convenience of
reference and shall not affect its interpretation. If any
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words or phrases in this Lease shall have been stricken out or otherwise
eliminated, whether or not any other words or phrases have been added, this
Lease shall be construed as if the words or phrases so stricken out or otherwise
eliminated were never included in this Lease and no implication or inference
shall be drawn from the fact that said words or phrases were so stricken out or
otherwise eliminated. Each covenant, agreement, obligation or other provision of
this Lease on Tenant's part to be performed, shall be deemed and construed as a
separate and independent covenant of Tenant, not dependent on any other
provision of this Lease. All terms and words used in this Lease, regardless of
the number or gender in which they are used, shall be deemed to include any
other number and any other gender as the context may require.
35.10. Landlord recognizes and acknowledges that for so long as the
Space Lease and the Hartz Lease shall be in full force and effect, all
obligations of Tenant hereunder may be performed by the tenants under the Space
Lease and the Hartz Lease. Notwithstanding anything contained herein to the
contrary, to the extent that the tenant under the Space Lease or the Hartz Lease
shall perform or comply with any obligation required to be performed or complied
with thereunder, Landlord shall accept such performance and Tenant shall be
deemed to have performed or complied with the corresponding obligation
hereunder.
35.11. Upon request by the tenant under the Space Lease, Landlord shall
enter into a non-disturbance agreement in the form annexed hereto and made a
part hereof as Exhibit "J", with any subtenant of the tenant under the Space.
Lease occupying one or more full floors of the Demised Premises.
35.12. Notwithstanding anything contained herein to the contrary, upon
any termination of the Space Lease, including, but not limited to, whether
because of (x) the exercise by the tenant thereunder of any rights it may have
to so terminate, including pursuant to Section 38.11 of the Space Lease, or (y)
the occurrence of an Event of Default (as such term is defined in the Space
Lease) and the termination of the Space Lease by Tenant, as landlord thereunder,
Tenant shall have the option to terminate this Lease effective as of the date of
termination of the Space Lease. Upon the termination of this Lease, Tenant's
liability for Rent thereafter accruing
39
<PAGE> 42
shall cease. In addition, so long as the Space Lease is in full force and
effect, neither Landlord nor Tenant shall have the right to exercise any option
either may have to terminate this Lease, unless (x) the tenant under the Space
Lease shall have exercised a parallel right to terminate the Space Lease and the
same shall thereafter be terminated, or (y) if there shall be an Event of
Default (as such term as defined in the Space Lease) under the Space Lease and
Tenant, as landlord thereunder, shall have exercised its right to terminate the
Space Lease. In addition, if the subtenant under the Space Lease exercises its
option to purchase Landlord's fee interest or at least a one-third interest
therein, in the Land pursuant to the Purchase Option, dated of even date
herewith, between Landlord and PaineWebber, Inc., and if pursuant to the
Agreement of Limited Partnership of Tenant, Tenant shall elect to terminate this
Lease, this Lease shall automatically terminate simultaneously with the transfer
of title to the fee, or interest therein in the Land.
35.13. If the Subtenant under the Space Lease shall at any time during
the term of the Space Lease, pursuant to Section 38.10 of the Space Lease,
request (x) a remeasurement of the Floor Space and redetermination of Tenant's
Fraction (as such term is defined in the Space Lease) because of a claimed
difference in Floor Space (as such term is defined in the Space Lease) of the
Building, or (y) a redetermination of Operating Expenses (as such term is
defined in the Space Lease) because of either a claimed increase in the floor
space of improvements constructed in the Lincoln Harbor Project or because of a
redetermination of the Floor Space (as such term is defined in the Space Lease),
such Floor Space shall be less than 578,028, then Tenant shall have a parallel
right hereunder, and whatever results shall be obtained thereunder may not be
inconsistent with the results obtained pursuant hereto. It is acknowledged that
for purposes of determining Operating Expenses hereunder and under the Space
Lease, the Project Floor Space was deemed to be 2, 206,457.
35.14. If, in connection with the Mortgage, a lending institution shall
request reasonable modifications of this Lease that do not materially increase
Ten-ant's monetary obligations, materially increase Tenant's
40
<PAGE> 43
other obligations, or materially and adversely affect the rights or obligations
of Tenant under this Lease, Tenant shall make such modifications.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease
as of the day and year first above written.
Landlord:
HARTZ MOUNTAIN INDUSTRIES,
INC.
By: /s/ Stephen M. Kelty
-----------------------------------------
Stephen M. Kelty, Vice President
Tenant:
HARTZ-PW LIMITED
PARTNERSHIP
BY: Hartz Mountain
Industries, Inc.,
General Partner
By: /s/ Stephen M. Kelty
-----------------------------------------
Stephen M. Kelty, Vice President
41
<PAGE> 44
EXHIBIT "A"
Building
The proposed PaineWebber Operations Building is to be located at
Lincoln Harbor, Weehawken, New Jersey. The 10-11 story, center core building,
of approximately 604,528 gross square feet, and will house a retail area
cafeteria, print center, bulk storage and mail area. The Operations Center is to
be connected by a "skywalk," to the existing Data Processing Center building.
A-1
<PAGE> 45
EXHIBIT "B"
Fixed Rent
<TABLE>
<CAPTION>
Years Commencing on
the Fixed Rent
Commencement Date Fixed Rent
- ----------------- ----------
<S> <C>
1 $ 79,108
2- 5 545,692
6-10 996,627
11-15 2,717,511
16-20 4,213,533
21-40 4,272,522
41-74 4,272,522, as increased by 1/2 CPI for
the period from year 21 to year 40
75-98 rent for years 41-74, as increased by
1/2 CPI for the period from year 41 to
year 74
</TABLE>
B-1
<PAGE> 46
EXHIBIT "C"
Floor Space
As to a building, the sum of the floor area stated in square feet
bounded by the exterior faces of the exterior walls, or by the exterior or
common areas face of any wall between the premises and any portion of the common
areas, or by the center line of any wall between the premises and space leased
or available to be leased to another tenant or occupant. Any reference to floor
space of a building shall mean the floor area of all levels or stories of such
building, excluding any roof, except such portion thereof as is permanently
enclosed, and including any interior basement level or mezzanine area not
occupied or used by a tenant on a continuing or repetitive basis, and any
mechanical room, enclosed or interior truck dock, interior common areas, and
areas used by a landlord for storage, for housing meters and/or other equipment
or for other purposes. Any reference to the floor space is intended to refer to
floor space of the entire area in question irrespective of the person(s) who may
be the owner(s) of all or any part thereof.
The anticipated Floor Space of the Building is estimated to be 604,528.
C-1
<PAGE> 47
EXHIBIT "D"
Property Description
(to include easement for skywalk)
SKYWALK EASEMENT
The precise metes and and bounds description (deed description) of the
easement for the skywalk connecting the Data Processing Center and the
Operations Center, created pursuant to the Reciprocal Easement and Maintenance
Agreement, dated of even date herewith, among Hartz, Landlord and Landlord, is
not capable of precise determination until such time as the design of the
structure has been determined by Tenant. The easement shall be as mutually
agreed between the two (2) parties connecting the two (2) structures. The
easement shall be an air rights easement with rights of support at the locations
which will be determined with specificity upon final approval by Tenant of the
design for construction.
Upon such determination, the precise metes and bounds description shall
be prepared and attached to this Lease as part of this Exhibit and incorporated
herein by reference.
BLOCK 34C LOT 4.03
TOWNSHIP OF WEEHAWKEN
HUDSON COUNTY, NEW JERSEY
Commencing at a point in the easterly line of Park Avenue, said point
being N 21 degrees-21'-30" E, 1129.16 feet along the same from its intersection
with the northerly line of 15th Street, all as shown on a map entitled
"Subdivision of Properties of Hartz Mountain Industries, Inc.," and prepared by
Azzolina & Feury Engineering Company, dated February 27, 1986, revised to March
19, 1986, and running; thence,
A) N 21 degrees-21'-30" E, 86.70 feet along said property
line to a point on curve; thence,
D-1
<PAGE> 48
B) Northeasterly, along the property line on a curve to the left having a
radius of 1093.01 and a radial bearing of N 14 degrees-11'-23" W
through a central angle of 25 degrees-01'-56" for an arc distance of
477.53 feet; thence,
C) Along said property line, N 38 degrees-30'-00" E, 550.05 feet; thence,
D) Departing from said property line, S 50 degrees-33'-12" E, 86.23 feet
to the point of beginning; thence,
1) N 38 degrees-52'-10" E, 383.37 feet to a point of curvature;
thence,
2) Northeasterly, on a curve to the right having a radius of 40
feet through a central angle of 90 degrees-00'-00" for an arc
distance of 62.83 feet; thence,
3) S 51 degrees-07'-50" E, 156.00 feet; thence,
4) S 38 degrees-52'-10" W, 286.00 feet; thence,
5) Along the outer face of the wall of Tower 1, S 51
degrees-07'-50" E, 392.18 feet; thence,
6) S 38 degrees-52'-10" W, 132.37 feet to a point of curvature;
thence,
7) Southwesterly, on a curve to the right having a radius of 40
feet through a central angle of 90 degrees-00'-00" for an arc
distance of 62.83 feet; thence,
8) N 51 degrees-07'-50" W, 513.18 feet to a point of curvature;
thence,
9) Northwesterly, on a curve to the right having a radius of 35
feet through a central angle of 90 degrees-00'-00" for an arc
distance of 54.98 feet to the point or place of beginning.
Containing 156,420 square feet (3.59 acres).
D-2
<PAGE> 49
[GRAPHIC]
D-3
<PAGE> 50
EXHIBIT "E"
Lincoln Harbor Project
E-1
<PAGE> 51
[GRAPHIC]
<PAGE> 52
EXHIBIT "F"
MORTGAGE TERMS
<TABLE>
<CAPTION>
<S> <C>
PRINCIPAL AMOUNT: $75,000,009
TERM: Minimum 17 years and 6 months from
the Commencement Date (as defined in
the Agreement of Lease, dated of even
date herewith, between Landlord, as
landlord, and Tenant, as tenant, for
the premises known as the Data Pro-
cessing Center)
AMORTIZATION SCHEDULE: 11.979 constant
INTEREST RATE: 11.25% or less per annum
SECURITY: Senior leasehold mortgage, subordi-
nated fee, no personal liability
</TABLE>
F-1
<PAGE> 53
EXHIBIT "G"
GROUND LEASE OFFICE PREMISES
OPERATING EXPENSES
The cost and expense (whether or not within the contemplation of the
parties but only to the extent the same are treated, in accordance with GAAP, as
expenses and not capital expenditures) for (a) the Common Open Space, Interior
Walkway, Walkway and Private Roads, Shared Parking Facilities and Utility Trunk
Lines (collectively, the "Areas") (as such terms are defined in the Reciprocal
Construction Operating and Easement Agreement ("RCOEA") draft dated March 5,
1986) and (b) the real estate taxes, if any, in respect of the Areas, and (c)
reasonable legal, accounting and other professional fees; plus four percent (4%)
of the total of expenses under clause (a) above for office administration and
overhead cost and expense. All items shall be stated in accordance with
generally accepted accounting principles. The Operating Expenses attributable to
the Demised Premises are determined by dividing the Floor Space constructed on
the Demised Premises by the municipally approved Floor Space of the Lincoln
Harbor Project (presently 2,206,457 square feet); provided, however that, except
in the event of condemnation the 2,206,457 square feet of Floor Space shall be
presumed to be the minimum Floor Space. For example, the Office Building,
estimated at 604,528 square feet of Floor Space divided by 2,206,457 square feet
of presently approved Floor Space divided by 2,206,457 square feet of presently
approved Floor Space of the Lincoln Harbor Project equals 0.2740 or 27.40%).
G-1
<PAGE> 54
EXHIBIT "H"
Fee Mortgage Amounts
<TABLE>
<CAPTION>
Years Amount
- ----- ------
<S> <C>
1- 3 $15,233,419
4- 6 19,151,510
7- 9 23,698,486
10-12 27,050,892
13-20 29,962,901
21-40 32,210,118
41-74 32,210,118, as increased by 1/2 CPI
for the period from year 21 to year 40
75-98 fee mortgage amount for years
41-74, as increased by 1/2 CPI for
the period from year 41 to year 74
</TABLE>
H-1
<PAGE> 55
EXHIBIT "I"
Landlord's Share of Insurance Proceeds
and Condemnation Awards
<TABLE>
<CAPTION>
Years Amount
- ----- ------
<S> <C>
1- 3 $19,041,774
4- 6 23,939,388
7- 9 29,623,108
10-12 33,813,614
13-20 37,453,627
21-40 40,262,649
41-74 40,262,649, as increased by 1/2 CPI
for the period from year 21 to year 40
75-98 Landlord's share of insurance proceeds and condemnation
awards for years 41-74 as increased by 1/2 CPI for the period
from year 41 to year 74
</TABLE>
I-1
<PAGE> 56
EXHIBIT "J"
NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS AGREEMENT, dated as of the _____ day of ___________, 19__, between
HARTZ MOUNTAIN INDUSTRIES, INC., a New York corporation, having an office at 400
Plaza Drive, Post Office Box 1411, Secaucus, New Jersey 07094 ("Ground Lessor"),
and __________, a __________ having an office at __________ ("Subtenant").
WITNESSETH :
WHEREAS, Ground Lessor is the owner of the land (the "Land") described
in Exhibit "A" annexed hereto and made a part hereof; and
WHEREAS, Ground Lessor has entered into a ground lease (the "Ground
Lease") , dated as of _____________, whereby Ground Lessor demised and leased,
as ground lessor, all of the Land to HARTZ-PW LIMITED PARTNERSHIP ("Ground
Lessee") , as lessee; and
WHEREAS, Ground Lessee has entered into an Agreement of Lease, dated as
of the _____ day of March, 1986 (the "Space Lease") , with PAINEWEBBER
INCORPORATED, ("Space Tenant") pursuant to which Ground Lessee leased and
demised to Space Tenant a portion of the space in the building known as the
[PaineWebber Building] (the "Demised Premises") , as more fully described in
such Space Lease;
WHEREAS, Space Tenant has entered into an Agreement of Sublease (the
"Sublease") , dated as of the _____ day of ___________, 19__, pursuant to which
Space Tenant subleased and demised to Subtenant [the Demised Premises or a
portion thereof] , as more fully described in Exhibit "B" annexed hereto and
made a part hereof; and
WHEREAS, the parties hereto desire to provide inter alia for the
non-disturbance of Subtenant by Ground Lessor.
J-1
<PAGE> 57
NOW, THEREFORE, the parties hereto agree as follows:
1. So long as the Sublease is in full force and effect, and no default
of Subtenant exists nor has any event occurred which with the passage of time or
notice would entitle Space Tenant to terminate the Sublease or dispossess
Subtenant, Ground Lessor will not name or join (unless required by law or unless
failure to do so by Ground lessor would result in a waiver by Ground Lessor of
any rights) Subtenant as a party defendant or otherwise in any suit, action or
proceeding brought to enforce any rights granted to Ground Lessor under the
Ground Lease or the Space Lease or to terminate one or both of such leases, and
the Ground Lessor will not terminate the Sublease or take any action to recover
possession of the premises demised to Subtenant or affect or disturb Subtenant's
possession or rights under the Sublease.
2. If Ground Lessor or its designee shall enter into and become
lawfully possessed of the Demised Premises and shall succeed to the rights of
Ground Lessee under the Ground Lease and Space Tenant under the Space Lease by
reason of the termination of the Ground Lease and the Space Lease or otherwise,
and if Subtenant is not then in default under the Sublease beyond the time
permitted therein to cure such default, then (a) the Sublease shall not
terminate, (b) Subtenant shall attorn to Ground Lessor or its designee, and
recognize it as its landlord, such attornment to be upon the then executory
terms and conditions of the Sublease, and (c) Ground Lessor or its designee
shall accept such attornment and recognize Subtenant as the Ground Lessor's
lessee under the Sublease. Upon such attornment and recognition, the Sublease
shall continue in full force and effect as, or as if it were, a direct lease
between the Ground Lessor or its designee and Subtenant, upon all of the then
executory terms, conditions and covenants as set forth in the Sublease and
which shall be applicable after such attornment, except that Ground Lessor
shall not be (i) liable for any previous act or omission of Space Tenant which
constitutes a default under the Sublease; (ii) subject to any offset or defenses
not expressly provided for in the Sublease which the Subtenant might have
against Space Tenant; (iii) bound by any prepayment of more than one month's
[Fixed Rent] or [Additional Charges] (as such terms are defined in the
Sublease); and (d) bound by any
J-2
<PAGE> 58
amendment or modification of the Sublease made without Ground Lessor's prior
written consent.
3. The terms of this Agreement shall bind and inure to the benefit of
the parties hereto, and their respective heirs, successors and assigns.
4. All notices and other communications hereunder shall be in writing
and shall be hand delivered or mailed by certified or registered mail, return
receipt requested, postage prepaid, addressed (a) if to Ground Lessor at 400
Plaza Drive, Post Office Box 1411, Secaucus, New Jersey 07094, Attention:
General Counsel, with a copy to Horowitz, Bross, Sinino & Imperial, P.A., 1180
Raymond Boulevard, Newark, New Jersey 07102, Attention: Irwin Horowitz, Esq., or
at such other address as Ground Lessor shall have furnished to Subtenant in
writing, or (b) if to Subtenant, at _______________________________
_____________________ Attention: ____________, or at such other address as
Subtenant shall have furnished to Ground Lessor in writing.
5. This Agreement shall be governed by the laws of the State of New
Jersey. If any term of this Agreement or the application thereof to any person
or circumstances shall to any extent be invalid or unenforceable, the remainder
of this Agreement or the application of such term to any person or circumstances
other than those as to which it is invalid or unenforceable shall not be
affected thereby, and each term of this Agreement shall be valid and enforceable
to the fullest extent permitted by law.
6. This Agreement may not be discharged or modified orally or in any
manner other than by an agreement in writing specifically referring to this
Agreement and signed by the party or parties to be charged thereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HARTZ MOUNTAIN INDUSTRIES, INC.
By: _________________________
[SUBTENANT]
By: _________________________
J-3
<PAGE> 59
Acknowledgement
J-4
<PAGE> 60
EXHIBIT "A"
Land
J-5
<PAGE> 61
EXHIBIT "B"
Demised Premises
J-6
<PAGE> 1
EXHIBIT 10.47
==========================================================================
LIMITED PARTNERSHIP AGREEMENT
of
PW PARTNERS 1995 L.P.
Dated as of October 31, 1995
THE LIMITED PARTNERSHIP INTERESTS EVIDENCED BY THIS PARTNERSHIP
AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
UNDER ANY STATE SECURITIES LAW AND MUST BE HELD INDEFINITELY UNLESS
SOLD IN COMPLIANCE WITH ALL APPLICABLE
SECURITIES LAWS.
==========================================================================
<PAGE> 2
LIMITED PARTNERSHIP AGREEMENT
of
PW PARTNERS 1995 L.P.
Table of Contents
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
DEFINITIONS AND TERMS .............. 1
1.01. Definitions .............................................. 1
1.02. Terms Generally .......................................... 6
ARTICLE II
THE PARTNERSHIP ................. 6
2.01. Name ..................................................... 6
2.02. Term ..................................................... 6
2.03. Principal Place of Business .............................. 6
2.04. Registered Office in Delaware ............................ 7
2.05. Names and Addresses of the Partners ...................... 7
ARTICLE III
PURPOSE AND POWERS ................ 7
3.01. Purpose and Powers ....................................... 7
ARTICLE IV
MANAGEMENT AND CONTROL .............. 8
4.01. Authority of General Partner ............................. 8
4.02. Expenses ................................................. 9
4.03. No Compensation to General Partner ....................... 9
ARTICLE V
CAPITAL CONTRIBUTIONS AND LOANS .......... 9
5.01. Capital Contributions .................................... 9
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
5.02. Loans ................................................... 10
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS ........... 11
6.01. Allocation of Income and Loss ........................... 11
6.02. Liability of General and Limited Partners ............... 12
6.03. Allocations for Tax Purposes ............................ 13
6.04. Valuation ............................................... 13
6.05. Distributions ........................................... 14
ARTICLE VII
PARTNERS .................... 15
7.01. Designation of Limited Partners ......................... 15
7.02. Vesting of Interests; Purchase of a Limited Partner's
Interest .............................................. 16
7.03. Transfer of a Limited Partner's Interest ................ 17
7.04. Transfer of General Partner's Interest .................. 17
7.05. Admission or Substitution of New Limited Partners ....... 17
7.06. Admission of Substitute or Additional General Partners .. 18
7.07. Withdrawal of a Limited or General Partner .............. 19
7.08. Final Events with Respect to a Partner .................. 19
7.09. Continuation of Partnership ............................. 19
7.10. Removal of General Partner .............................. 20
7.11. Compliance with Law ..................................... 20
ARTICLE VIII
DISSOLUTION OF THE PARTNERSHIP .......... 20
8.01. Dissolution ............................................. 20
8.02. Amounts Reserved ........................................ 21
ARTICLE IX
REPORTS TO PARTNERS ................ 22
9.01. Books of Account ........................................ 22
9.02. Audit and Report ........................................ 22
9.03. Fiscal Year ............................................. 23
ARTICLE X
MISCELLANEOUS .................. 23
10.01. Governing Law ........................................... 23
10.02. Indemnification ......................................... 23
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
10.03. Notice .................................................. 23
10.04. Counterparts ............................................ 23
10.05. Completeness and Amendments ............................. 23
10.06. Power of Attorney ....................................... 24
</TABLE>
iii
<PAGE> 5
PW PARTNERS 1995 L.P.
LIMITED PARTNERSHIP AGREEMENT, dated as of October 31, 1995, among
PAINEWEBBER PARTNERS II, INC., a Delaware corporation, as general partner, and
the persons listed on the signature pages hereof, as limited partners.
The Partners (as defined below), in consideration of their mutual
covenants herein contained, hereby agree to become partners and to form a
limited partnership (the "Partnership") under the Delaware Revised Uniform
Limited Partnership Act (the "Delaware Act") upon the filing for record of the
Certificate of Limited Partnership in the office of the Secretary of State as
required by Section 17-201 of the Delaware Act, for the purposes and duration,
and upon the terms and conditions, hereinafter set forth, and further hereby
mutually covenant and agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
1.01. DEFINITIONS. For the purposes of this Agreement, the following
terms shall have the corresponding meanings, except as otherwise specifically
provided herein:
"Affiliate" shall mean, with respect to another Person, any Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such other Person.
"Bankruptcy" shall mean, with respect to any Person, the occurrence of
any of the following events: (i) the filing of an application by such Person
for, or a consent to, the appointment of a trustee or custodian of his assets;
(ii) the filing by such Person of a voluntary petition in bankruptcy or the
seeking of relief under Title 11 of the United States Code, as now constituted
or hereafter amended, or the filing of a pleading in any court of record
admitting in writing his inability to pay his debts as they become due; (iii)
the failure of such Person to pay his debts as such debts become due; (iv) the
making by such Person of a general assignment for the benefit of creditors; (v)
the filing by such Person of an answer admitting the material allegations of, or
his consenting to or defaulting in answering, a bankruptcy petition filed
against him in any bankruptcy proceeding or petition seeking relief under Title
11 of the United States Code, as now constituted or as hereafter amended; or
(vi) the entry of an order, judgment or decree by any court of competent
jurisdiction adjudicating such Person a bankrupt or insolvent or for relief in
respect of such Person or appointing a trustee or custodian of his assets and
the continuance of such order, judgment or decree unstayed and in effect for a
period of 60 consecutive days.
<PAGE> 6
2
"Capital Account" shall mean, with respect to any Partner, an account
maintained for such Partner to which is credited such Partner's contributions to
the Partnership and any net income allocated to such Partner pursuant to Section
6.01 and from which is debited any distributions to such Partner and any net
losses allocated to such Partner pursuant to Section 6.01. In the case of any
distribution in kind, Capital Accounts shall be adjusted as if the asset
distributed had been sold in a taxable transaction and the proceeds distributed
in cash, and any resulting gain or loss on such sale shall be allocated pursuant
to Section 6.01.
"Capital Contribution" shall mean, with respect to any Partner, all
contributions of capital to the Partnership made by such Partner in accordance
with Section 5.01.
"Capital Gain (Loss)" shall mean, with respect to the sale or other
disposition of an Investment, the amount, if any, by which (i) the proceeds of
such sale or other disposition exceed (are less than) (ii) the cost or other
basis of such Investment to the Partnership, plus any interest on indebtedness
or other expenses incurred with respect thereto, less any interest, dividends or
other income received with respect thereto.
"Capital Percentage" shall mean, with respect to any Partner, the
percentage that the Capital Contribution of such Partner bears to the sum of all
Capital Contributions.
"Capital Schedule" shall mean a capital schedule distributed pursuant
to Section 5.01(a).
"Certificate of Limited Partnership" shall mean the Certificate of
Limited Partnership dated and filed for record in the Office of the Secretary of
State of Delaware on October 31, 1995, pursuant to Section 17-201 of the
Delaware Act.
A "Change in Control" shall be deemed to have occurred if:
(i) any "person", as such term is used in Sections 13(d) and 14(d)(2)
of the Securities Exchange Act of 1934 (the "Act"), becomes a beneficial
owner, as such term is used in Rule 13d-3 promulgated under the Act, of
securities of PWG or PWI representing 20% or more of the combined voting
power of the outstanding securities of PWG or PWI, as the case may be,
having the right to vote in the election of directors (any such owner being
herein referred to as an "Acquiring Person");
(ii) a majority of the Board of Directors of PWG ("PWG Board") at any
time consists of individuals elected to membership at a PWG Board meeting or
a PWG shareholders' meeting other than individuals nominated or approved by
a majority of the Disinterested Directors;
<PAGE> 7
3
(iii) all or substantially all the business of PWI is disposed of
pursuant to a merger, consolidation or other transaction (other than a
merger, consolidation or other transaction with a company of which 50% or
more of the combined voting power of the outstanding securities having a
right to vote at the election of directors is owned, directly or indirectly,
by PWG both before and immediately after the merger, consolidation or other
transaction) in which PWI is not the surviving corporation or PWG is
materially or completely liquidated; or
(iv) PWG or PWI combines with another company and is the surviving
corporation (other than a merger, consolidation or other transaction with a
company of which 50% or more of the combined voting power of the outstanding
securities having a right to vote at the election of directors is owned,
directly or indirectly, by PWG both before and immediately after the merger,
consolidation or other transaction) but, immediately after the combination,
the shareholders of PWG hold, directly or indirectly, less than 50% of the
total outstanding securities of the combined company having the right to
vote in the election of directors.
"Code" shall mean the Internal Revenue Code of 1986, as from time to
time amended and in effect.
"Compensation Committee" shall mean the Compensation Committee of the
Board of Directors of PWG.
"Contribution Date" shall mean each date, fixed by the General Partner
in its discretion, on which Capital Contributions shall be made by the Limited
Partners.
"Designated Investment Receipts" shall mean the cash receipts received
by the Partnership in connection with the sale, transfer or other disposition of
an Investment (other than (a) an Investment described in Section 3.01(b) and (b)
Special Investments) and the amount of any dividend, interest, distribution or
other income received with respect to an Investment (other than (a) an
Investment described in Section 3.01(b) and (b) Special Investments), reduced by
(i) the amount thereof applied to the repayment of interest (including any
accrued but unpaid interest) on any loan described in Section 5.02(a) and (ii)
the amount thereof that the General Partner distributes (or reserves for
distribution) to the Partners in accordance with Section 6.05(b).
"Disinterested Director" shall mean any member of the PWG Board (i) who
is not an officer or employee of PWG, PWI or any of their subsidiaries, (ii) who
is not an Acquiring Person or an affiliate or associate of an Acquiring Person
or a nominee or representative of an Acquiring Person or of any such affiliate
or associate and (iii) who was a member of the PWG Board prior to the date of
this Agreement or was recommended for election or elected by a majority of the
Disinterested Directors then on the PWG Board.
<PAGE> 8
4
"Drawdown Date" shall mean the date on which the Partnership draws down
on a loan contemplated by Section 5.02(a) in the manner contemplated by Section
5.02(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Final Event" shall mean the death, adjudication of incompetency,
Bankruptcy, liquidation, dissolution or withdrawal from the Partnership of any
Person who is a Partner.
"General Partner" shall mean the Person named herein as General Partner
and any Person admitted as an additional or substitute General Partner, so long
as such Person shall remain a General Partner.
"Investments" shall mean and include common and preferred stock
(including warrants, rights, put and call options and other options relating
thereto or any combination thereof), partnership interests, notes, bonds,
debentures, trust receipts and other obligations, instruments or evidences of
indebtedness, choses in action, other property or interests commonly regarded as
securities, interests in real property, whether improved or unimproved,
interests in oil and gas properties and mineral properties, interests in "hedge
funds" or similar investment vehicles, whether or not registered under the
Investment Company Act of 1940, as amended, short-term investments commonly
regarded as money-market investments, bank deposits, interests in personal
property of all kinds, whether tangible or intangible, and cash.
"Limited Partner" shall mean any of the Persons named herein as Limited
Partners or any other Person admitted as an additional or substitute Limited
Partner, so long as such Person shall remain a Limited Partner.
"Limited Partnership Percentage" shall mean, with respect to any
Limited Partner, the Capital Contribution of such Limited Partner divided by the
Capital Contributions of all the Limited Partners. For the purpose of this
definition, all Limited Partnership interests held by the General Partner shall
be excluded.
"Loan Proceeds" shall mean the principal amount of a loan described in
Section 5.02(a) which is applied to the purchase of an Investment.
"Net Capital Gain" shall mean the sum of all Capital Gains realized by
the Partnership on or prior to a given date, less the sum of the following:
(i) all Capital Losses or, without duplication, other losses realized
by the Partnership on or prior to such date;
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(ii) a reserve established by the General Partner in its discretion for
unrealized losses and, subject to clause (iii) below, for the repayment of
indebtedness of the Partnership;
(iii) the amount of any payment of interest or principal with respect
to any loan of the Partnership that will become due and payable within 12
months after such date; and
(iv) the value of all distributions previously made to the Limited
Partners in accordance with Section 6.05 (valued, in the case of noncash
distributions, at the time of such distribution).
"Net Value" shall mean, with respect to any Investment as of any date,
the value of the Investment on such date, as determined in Section 6.04, minus
the sum of the Partnership's liabilities incurred with respect to such
Investment. For the purpose of determining Net Value, the loans borrowed by the
Partnership pursuant to Section 5.02 shall be deemed to have been incurred with
respect to each of the Investments of the Partnership in proportion to the
relative cost of each such Investment.
"Operative Date" shall mean the date, if any, following a Change in
Control that has been designated in a resolution adopted by a majority of the
Disinterested Directors, in their sole discretion, as the Operative Date.
"PaineWebber" shall mean PWG or any Affiliate of PWG.
"Partner" shall mean any Person who is a partner in the Partnership,
whether the General Partner or a Limited Partner.
"Person" shall include any individual, corporation, partnership,
association, trust, joint stock company or unincorporated organization.
"PWG" shall mean Paine Webber Group Inc., a Delaware corporation.
"PWI" shall mean PaineWebber Incorporated, a Delaware corporation.
"Senior Limited Partners" shall mean the three individuals who are the
Limited Partners who have the three largest Limited Partnership Percentages on
the Operative Date. If more than three Limited Partners have Limited Partnership
Percentages equal to or greater than the third largest Limited Partnership
Percentage, then all such persons shall be Senior Limited Partners. If three or
fewer persons are Limited Partners on the Operative Date, then such remaining
Limited Partners shall be Senior Limited Partners.
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"Special Investment" shall mean any short-term Investment of the
Partnership with an anticipated investment period of less that twenty-four (24)
months.
"Successor in Interest" shall mean any (i) shareholder of; (ii)
trustee, custodian, receiver or other Person acting in any bankruptcy or
reorganization proceeding with respect to; (iii) assignee for the benefit of the
creditors of; (iv) officer, director or partner of; (v) trustee or receiver, or
former officer, director or partner, or other fiduciary acting for or with
respect to the dissolution, liquidation or termination of; or (vi) other
executor, administrator, committee, legal representative or other successor or
assign of any Partner, whether by operation of law or otherwise.
1.02. TERMS GENERALLY. The definitions in Section 1.01 shall apply
equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". All the terms
herein that relate to accounting matters shall be interpreted in accordance with
generally accepted accounting principles from time to time in effect. All
references to "Sections" and "Articles" shall refer to Sections and Articles of
this Agreement unless otherwise specified. The words "hereof" and "herein" and
similar terms shall relate to this Agreement.
ARTICLE II
THE PARTNERSHIP
2.01. NAME. The Partnership shall conduct its activities under the name
of PW Partners 1995 L.P. The General Partner shall have the power at any time to
change the name of the Partnership. The General Partner shall give prompt notice
of any such change to each Limited Partner.
2.02. TERM. The Partnership commenced upon the filing of the
Certificate of Limited Partnership in the Office of the Secretary of State of
Delaware on October 31, 1995, and shall continue through the close of business
on December 31, 2008, unless sooner terminated pursuant to the provisions of
Section 7.09 or Section 8.01(a). The General Partner may, at any time on or
prior to December 31, 2008, extend the term of the Partnership for up to five
years if such extension is deemed desirable to permit the orderly liquidation of
the Partnership or otherwise to further the purposes of the Partnership.
2.03. PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Partnership shall be at 1285 Avenue of the Americas, New York, New York
10019, or such other place, either within or without the State of Delaware, as
may be designated by the General Partner from time to time. The General Partner
shall give prompt notice of any change in its principal place of business to
each Limited Partner.
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2.04. REGISTERED OFFICE IN DELAWARE. The address of the Partnership's
registered office in Delaware is 1209 Orange Street in the City of Wilmington,
County of New Castle. The name of the Partnership's registered agent at such
address is The Corporation Trust Company.
2.05. NAMES AND ADDRESSES OF THE PARTNERS. The name and business
address of each Partner is as set forth opposite his signature.
ARTICLE III
PURPOSE AND POWERS
3.01. PURPOSE AND POWERS. The purpose of the Partnership is to acquire
Investments that, in the opinion of the General Partner, present opportunities
for Capital Gains and to engage in such other businesses and activities as the
General Partner may, in its discretion, determine. In furtherance of this
purpose, the Partnership shall have all powers necessary, suitable or convenient
for the accomplishment of this purpose, alone or with others, as principal or
agent, including the following:
(a) to buy, sell and otherwise acquire Investments, whether such
Investments are readily marketable or not, except that no such Investment
may be acquired with Designated Investment Receipts;
(b) to invest and reinvest the cash assets of the Partnership in
money-market or other short-term Investments pending (i) the identification
by the General Partner of Investments with suitable Capital Gains
opportunities, (ii) the payment of interest on a loan described in Section
5.02(a), (iii) the repayment of principal on a loan described in Section
5.02(a) with Designated Investment Receipts or (iv) a distribution permitted
under Section 6.05 or Article VIII;
(c) to hold, receive, mortgage, pledge, lease, transfer, exchange or
otherwise dispose of or grant options with respect to and otherwise deal in
and exercise all rights, powers, privileges and other incidents of ownership
or possession with respect to all property held or owned by the Partnership;
(d) to borrow or raise money from time to time and to issue promissory
notes, drafts, bills of exchange, warrants, bonds, debentures and other
negotiable and nonnegotiable instruments and evidences of indebtedness, to
secure payment of the principal of any such indebtedness and the interest
thereon by mortgage, pledge, conveyance or assignment in trust of, or the
granting of a security interest in, the whole or any part of the property of
the Partnership, whether at the time owned or thereafter acquired, to
guarantee the obligations of others and to buy, sell, pledge or otherwise
dispose of any such instrument or evidence of indebtedness;
<PAGE> 12
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(e) to lend any of its property or funds, either with or without
security, at any legal rate of interest or without interest;
(f) to have and maintain one or more offices within or without the
State of Delaware, and in connection therewith, to rent or acquire office
space, engage personnel and compensate them and do such other acts and
things as may be advisable or necessary in connection with the maintenance
of such office or offices;
(g) to open, maintain and close accounts, including margin accounts,
with brokers;
(h) to open, maintain and close bank accounts and draw checks and other
orders for the payment of moneys;
(i) to engage accountants, custodians, investment advisers, attorneys
and any and all other agents and assistants, both professional and
nonprofessional, and to compensate them as may be necessary or advisable;
(j) to form or cause to be formed and to own the stock of one or more
corporations, whether foreign or domestic, and to form or cause to be formed
and to participate in partnerships and joint ventures, whether foreign or
domestic;
(k) to enter into, make and perform all contracts, agreements and other
undertakings as may be necessary or advisable or incident to carrying out
its purpose;
(l) to sue and be sued, to prosecute, settle or compromise all claims
against third parties, to compromise, settle or accept judgment to claims
against the Partnership, and to execute all documents and make all
representations, admissions and waivers in connection therewith; and
(m) to distribute, subject to the limitations hereinafter set forth in
Sections 5.02 and 6.05 or otherwise, at any time and from time to time to
all the Partners cash or Investments or other property of the Partnership or
any combination thereof.
ARTICLE IV
MANAGEMENT AND CONTROL
4.01. AUTHORITY OF GENERAL PARTNER. (a) The management and operation of
the Partnership and the formulation and execution of investment policy shall be
vested exclusively in the General Partner. The General Partner shall, in its
sole discretion, exercise all powers necessary or convenient for the purposes of
the Partnership, including those enumerated in Section 3.01, on behalf and in
the name of the
<PAGE> 13
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Partnership. If at any time the Partnership shall have two or more General
Partners, then each such General Partner shall have the full authority of the
General Partner under this Agreement, provided, however, that any controversy
among the General Partners shall be resolved in favor of the General Partners
having the greater interest in the Partnership (based upon Capital
Contributions).
(b) A Limited Partner shall have no right to, and shall not, take part
in the management or control of the Partnership's business or act for or bind
the Partnership, and shall have only the rights and powers granted to Limited
Partners herein.
(c) No provision of this Agreement shall be construed to preclude any
Partner, or any Affiliate of any Partner, from engaging in any activity
whatsoever, including receiving compensation from issuers of Investments for
investment banking services, managing Investments, participating in Investments,
brokerage or consulting arrangements or acting as an adviser to or participant
in any corporation, partnership, trust or other business entity or from
receiving compensation or profit therefor.
4.02. EXPENSES. To the extent not paid by PaineWebber, the General
Partner shall pay all the expenses of the Partnership, excluding (i) costs and
expenses directly related to the purchase or sale of Investments by the
Partnership (including brokerage fees and commissions, transfer taxes and costs
relating to the registration or qualification for sale of such Investments);
(ii) any Federal, state, local or other taxes of the Partnership; and (iii)
interest expense.
4.03. NO COMPENSATION TO GENERAL PARTNER. The General Partner shall not
receive any fees or other compensation for serving as such pursuant to this
Agreement.
ARTICLE V
CAPITAL CONTRIBUTIONS AND LOANS
5.01. CAPITAL CONTRIBUTIONS. (a) Prior to any Contribution Date, the
General Partner shall prepare and distribute to each prospective Limited Partner
designated pursuant to Section 7.01 a Capital Schedule for such date stating the
current and cumulative Capital Contribution of the General Partner and of such
prospective Limited Partner. The General Partner shall promptly notify each
prospective Limited Partner of any change in such Capital Schedule relating to
the General Partner or such prospective Limited Partner.
(b) On or before each Contribution Date, the General Partner and each
Limited Partner shall make a Capital Contribution to the Partnership in the
amount and in the manner provided on the Capital Schedule for such Contribution
Date. The
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General Partner's Capital Contribution will at all times be an amount equal to
1% of the aggregate Capital Contributions of all Partners.
(c) The General Partner may, in its sole discretion, determine that
Capital Contributions shall be made in any number of installments. If, for any
Contribution Date, the General Partner shall determine that Capital
Contributions shall be made in installments, the Capital Schedule shall provide
the amount of the first installment, which shall be due on the Contribution
Date, and each subsequent installment shall be due in the amount and on the date
determined by the General Partner upon not less than five business days' prior
written notice to each Limited Partner. Any installments paid in the amount and
on the date so determined shall be deemed to have been made as of the applicable
Contribution Date.
5.02. LOANS. (a) Subject to the conditions in Section 5.02(c), promptly
after any Contribution Date, the General Partner shall agree to loan to the
Partnership on an unsecured basis an amount equal to five times the aggregate
amount of capital contributed by the General Partner and Limited Partners on
such Contribution Date, such loan to bear interest from the Drawdown Date at a
variable rate equal to the greater of (i) the rate of interest set forth on the
Reuters Screen LIBO Page which is offered for an amount substantially equal to
the unpaid principal amount of the loan and for the six-month interest period of
the loan plus 0.35% and (ii) the Applicable Federal Rate promulgated under
Section 1274(d) of the Code for short-term loans with semiannual compounding
originating in the month in which (A) the loan is made (in the case of the
initial period) and (B) the day on which each subsequent interest period
commences (in the case of subsequent interest periods), all as set forth more
fully in the form of a promissory note executed and delivered by the Partnership
to the General Partner. The interest period of the loan shall be six months, and
the interest rate on the loan shall be redetermined by the General Partner for
each interest period in accordance with the previous sentence. Interest on the
loan shall be payable semiannually and at maturity. Overdue amounts of principal
or interest on the loan shall bear interest payable on demand at a rate per
annum equal at all times to two percent (2%) per annum above the interest rate
described above. Designated Investment Receipts shall be applied within three
days following the Partnership's receipt thereof to the repayment of the
principal on any loan from the General Partner described in this Section 5.02(a)
which is then outstanding, regardless of the portion of such outstanding loan
allocable to such investment. If there is more than one loan from the General
Partner outstanding at the time the Partnership receives any Designated
Investment Receipts, such receipts shall be applied first to the outstanding
principal amount of the loan which originated earliest in time, and any
remaining portion of such Designated Investment Receipts shall be applied to the
repayment of the outstanding principal amount of the other loans in the order of
their origination. To the extent not previously repaid, any principal amount of
a loan described in this Section 5.02 and any interest thereon shall be due and
payable in full on December 31, 2008.
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(b) At the time that the Partnership makes an Investment, the General
Partner shall drawdown on the loan described in Section 5.02(a) in an amount
that will cause the ratio of Loan Proceeds and Capital Contributions applied to
the purchase price of such Investment to be approximately 5 to 1. The General
Partner may drawdown on the loan at such other times to further the business
purposes of the Partnership.
(c) The obligation of the General Partner to make the loans referred to
in Section 5.02(a) (or to permit any periodic drawdown on such loan) is subject
in the case of each such loan to the conditions that (i) funds are available
therefor, (ii) such loan may be made without jeopardizing the statutory
requirements or loan covenants of PaineWebber and (iii) the General Partner, in
the exercise of its own sound business judgment, shall not have concluded that
such loan is inconsistent with the best interests of PaineWebber at the time
such loan is to be made.
(d) The General Partner shall not have the authority to make any change
in the terms of any loan theretofore agreed to by it pursuant to this Section
5.02 except with the prior written approval of a majority in interest of the
Limited Partners (based upon Limited Partnership Percentages).
(e) The General Partner shall have the authority, on behalf of the
Partnership, to refinance, with a loan from one or more third parties who are
not Affiliates of PaineWebber or the Partnership, all or a portion of any loan
described in this Section 5.02; provided, however, that (i) the proceeds from
such refinancing shall be applied in full to the repayment of the loan described
in Section 5.02(a), and (ii) a reserve which, in the opinion of the General
Partner, is sufficient for the purposes of repayment of any then outstanding
loans under Section 5.02(a) from the General Partner and the interest thereon
and any losses or contingent losses of the Partnership shall have been
established by the Partnership.
ARTICLE VI
ALLOCATIONS AND DISTRIBUTIONS
6.01. ALLOCATION OF INCOME AND LOSS. (a) The net income (or net loss)
of the Partnership shall be determined in each fiscal year in accordance with
the accounting methods followed by the Partnership for Federal income tax
purposes and shall be allocated among the Partners and credited to (or debited
from) their respective Capital Accounts in accordance with their respective
Capital Percentages; provided, however, that if Partners are deemed (in
accordance with any reasonable convention permissible for Federal income tax
purposes and selected by the General Partner) to be admitted to the Partnership
at different times, no Partner shall be allocated items of net income or net
loss allocable to periods prior to such Partner's admission to the
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Partnership, but the Partners shall be specially allocated items of net income
or net loss in the year in which Partners are admitted to the Partnership or in
subsequent years so that, as rapidly as possible, the proportion that any
Partner's Capital Account represents of the aggregate Capital Accounts of all
Partners equals the proportion such Partner's Capital Contribution represents of
all Capital Contributions.
(b) The net loss allocated pursuant to Section 6.01(a) shall not exceed
the maximum amount of net loss that can be so allocated and considered to have
economic effect under Treasury Regulation Section 1.704-1(b)(2)(ii)(d).
(c) If, during any fiscal year or other period of the Partnership, any
Limited Partner unexpectedly receives an adjustment, allocation or distribution
described in Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6)
that causes or increases a deficit in such Limited Partner's Capital Account
balance (as defined for purposes of Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and as determined after all other allocations provided for
in this Section 6.01 have been tentatively made as if this Section 6.01(c) were
not in this Agreement), there shall be allocated to such Partner a pro rata
portion of each item of Partnership income, including gross income, and gain for
such year in an amount and manner sufficient to eliminate such Partner's deficit
Capital Account balance as quickly as possible. Notwithstanding any other
provision of this Section 6.01, the General Partner shall make such offsetting
special allocations of Partnership income, gain, loss or deduction in whatever
manner it determines appropriate so that, after such offsetting allocations are
made, each Partner's Capital Account balance is, to the extent possible, equal
to the Capital Account balance such Partner would have had if the preceding
sentence were not part of the Agreement and all Partnership items were allocated
pursuant to Sections 6.01(b) and (c).
6.02. LIABILITY OF GENERAL AND LIMITED PARTNERS. (a) The General
Partner shall have unlimited liability for the satisfaction and discharge of all
losses, liabilities and expenses of the Partnership.
(b) Each Limited Partner and former Limited Partner shall be liable for
the satisfaction and discharge of all losses, liabilities and expenses of the
Partnership allocable to him pursuant to Section 6.03, but only to the extent of
his aggregate Capital Contribution. In no event shall any Limited Partner or
former Limited Partner be obligated to make any additional capital contribution
to the Partnership in excess of his initial Capital Contribution, or have any
liability in excess of his aggregate Capital Contribution for the satisfaction
and discharge of the losses, liabilities and expenses of the Partnership.
However, after any Limited Partner or former Limited Partner has received the
return in whole or in part of any Capital Contribution, he shall nevertheless be
liable to the Partnership for the amount of cash, Investments or other assets
(valued as of the date of distribution thereof) so received necessary to
discharge any losses, liabilities and expenses of the Partnership to creditors
who extended credit or whose
<PAGE> 17
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claims arose before such distribution was made, to the extent that the assets of
the Partnership are not sufficient to discharge such losses, liabilities and
expenses. Notwithstanding the foregoing, if the General Partner has purchased
the partnership interest of a former Limited Partner pursuant to Section
7.02(b), the purchase price received by such former Limited Partner on such sale
shall not be deemed to be a return of any of such former Limited Partner's
Capital Contribution.
(c) A Partner shall not have any obligation to the Partnership or to
any other Partner to restore any negative balance in the Capital Account of such
Partner. Until distribution of any such Partner's interest in the Partnership
upon the dissolution of the Partnership, neither his Capital Account nor any
part thereof shall be subject to withdrawal or redemption except with the
consent of the General Partner.
6.03. ALLOCATIONS FOR TAX PURPOSES. (a) All items of income, deduction
and credit realized by or allowable to the Partnership shall be determined and
allocated among the Partners for Federal, state and local income tax purposes in
the same manner as set forth in Section 6.01.
(b) The General Partner shall be the "tax matters partner" for all
purposes of the Code and shall have the power and authority to effect the
allocations provided for in this Section 6.03 and to take such actions as the
tax matters partner is required or permitted to take under the Code and to take
all other actions that in the good faith opinion of the General Partner are
necessary or convenient for the Partnership to take to ensure compliance with
the Code or any other applicable law or regulation. Notwithstanding any other
provision of this Agreement to the contrary, if in the good faith opinion of the
General Partner any of the allocations provided for in this Section 6.03 shall
be prohibited by the Code or other applicable law or regulation or shall subject
the Partnership or any Partner to legal penalty or onerous condition, the
General Partner shall have the power and authority to modify any such allocation
to the extent necessary to comply with the Code or other applicable law or
regulation or to avoid such legal penalty or onerous condition.
6.04. VALUATION. For the purpose of determining Net Value, the value of
any Investment as of any date (or in the event such date is not a business day,
as of the next preceding business day) shall be determined as follows:
(a) marketable Investments listed on a national securities exchange
shall be valued at the last sales price on the date of valuation or, in the
absence of a sale on such date, at the last bid price on the date of
valuation;
(b) marketable Investments traded in the over-the-counter market and
reported in the National Association of Securities Dealers' Automated
Quotation System will be valued at the closing bid price as reported by such
system; and
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(c) all other Investments shall be valued at fair market value.
All valuation decisions pursuant to this Section 6.04 shall be made by
the General Partner.
6.05. DISTRIBUTIONS. (a) Following the date that the Limited Partners
become fully vested in their interests in the Partnership in accordance with
Section 7.02(a) (the "Vesting Date"), all cash receipts of the Partnership not
required to be applied to the repayment of the loan or loans from the General
Partner by Section 5.02(a) above (excluding cash receipts from an Investment
described in Section 3.01(b) and, at the discretion of the General Partner, from
Special Investments) (i) with respect to any Capital Gain realized on or after
the Vesting Date shall be distributed as soon as practicable after the receipt
thereof to the Partners and (ii) with respect to any Capital Gain realized prior
to the Vesting Date for which a distribution has been delayed by the General
Partner in accordance with the next sentence shall be distributed as soon as
practicable after such Vesting Date, in either case in proportion to their
respective Capital Accounts. Prior to the Vesting Date and except as otherwise
required by Section 6.05(b), the cash receipts of the Partnership with respect
to any Capital Gain realized prior to the Vesting Date which are not required to
be applied to the repayment of the loan or loans from the General Partner by
Section 5.02(a) above (including cash receipts from an investment described in
Section 3.01(b) or from Special Investments) may, in the sole discretion of the
General Partner, (i) be distributed in whole or in part in one or more
installments prior to the Vesting Date to the Partners in proportion to their
Capital Accounts or (ii) be retained in whole or in part by the Partnership
until such time (and in such manner) as such cash receipts are required to be
distributed to the Partners in accordance with the preceding sentence. Anything
in this Section 6.05 to the contrary notwithstanding, in no event shall (A) a
distribution be made under this Section 6.05(a) unless (I) the loans described
in Section 5.02(a) have been completely repaid and the Partnership has agreed
with the General Partner that no future loans will be drawn down or (II) the
Partnership shall have established a reserve which, in the opinion of the
General Partner, is sufficient for the purposes of repayment of any outstanding
and future loans, the interest thereon and any interest which may accrue and any
losses or contingent losses of the Partnership or (B) the amount to be
distributed to the Partners under this Section 6.05 exceed the Net Capital Gain
of the Partnership at the time of such distribution.
(b) To the extent cash is available to the Partnership, the General
Partner shall make annual distributions of cash to the Partners for payment of
applicable Federal, state and local taxes on any substantial amount of net
realized taxable income not otherwise distributed to the Partners for any fiscal
year of the Partnership. Such distributions shall be disbursed as soon as
possible after preparation and mailing of the report provided for in Section
9.02. The aggregate amount of any such distribution shall be determined by the
General Partner, subject to the limitation that the minimum
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aggregate amount of such distribution be the tax that would be payable if the
taxable income of the Partnership were all allocated to an individual subject to
the then-prevailing maximum combined Federal, New York State and New York City
tax rates (taking into account the extent to which the taxable income allocated
by the Partnership was composed of long-term capital gains and the extent to
which state and local income taxes may be deductible for Federal income tax
purposes). Each such distribution shall be allocated among the Partners in
accordance with the allocation of taxable income to the Partners pursuant to
Section 6.03.
(c) In addition to distributions required by Section 6.05(a) and
Section 6.05(b), the General Partner may, in its sole discretion, subject to the
terms of any applicable investment agreement to which the Partnership is a
party, at any other time make distributions to the Partners of cash, Investments
or other assets or any combination thereof; provided, however, that (A) no
distribution may be made under this Section 6.05(c) unless (I) the loans
described in Section 5.02(a) have been completely repaid and the Partnership has
agreed with the General Partner that no future loans will be drawn down or (II)
the Partnership shall have established a reserve which, in the opinion of the
General Partner, is sufficient for the purposes of repayment of any outstanding
loans and the interest thereon and any losses or contingent losses of the
Partnership and (B) no distribution may exceed the Net Capital Gain of the
Partnership at the time of such distribution. Each such distribution shall be
allocated to the Partners in accordance with their respective Capital Accounts.
(d) Subject to Section 6.05(b), the General Partner may, in its sole
discretion, reinvest some or all of the income or capital gains received with
respect to a Special Investment.
ARTICLE VII
PARTNERS
7.01. DESIGNATION OF LIMITED PARTNERS. (a) The General Partner may at
any time invite any Person to become a Limited Partner by delivery of a Capital
Schedule prepared in accordance with Section 5.01. Any Person so invited who
agrees in writing prior to the Contribution Date to make the Capital
Contribution set forth on such Capital Schedule shall have the opportunity to do
so, but no Person shall be deemed to be a Limited Partner until he has made a
Capital Contribution and been admitted to the Partnership pursuant to Section
7.05.
(b) At the request of any employee of PaineWebber who has been invited
by the General Partner to become a Limited Partner, the General Partner may, in
its sole discretion, permit a trust designated by such employee to make the
Capital Contribution for such person and to become a Limited Partner of the
Partnership. If under such
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circumstances a trust is admitted as a Limited Partner, all references herein to
the termination of employment of a Limited Partner or to any Final Event with
respect to a Limited Partner shall be deemed to refer both to such trust and to
the employee of PaineWebber who designated such trust. All references herein to
an employee of PaineWebber shall include consultants to PaineWebber, and all
references herein to employment by PaineWebber shall include the performance of
services for PaineWebber as a consultant.
(c) The General Partner's right to designate all the Limited Partners
shall be exercised in its sole discretion and shall not be subject to challenge
by any Limited Partner. The fact that a Limited Partner was a limited partner
with respect to a previous partnership sponsored or established by PaineWebber
shall not confer upon him any right to be a Limited Partner of this Partnership.
7.02. VESTING OF INTERESTS; PURCHASE OF A LIMITED PARTNER'S INTEREST.
(a) Prior to the third anniversary of the first Contribution Date on which a
Limited Partner makes a contribution to the Partnership, such Limited Partner
shall be entirely invested in his interest in the Partnership. On and after the
third anniversary of such Contribution Date, such Limited Partner shall be
entirely vested in his interest in the Partnership. Notwithstanding anything in
this Section 7.02(a) to the contrary, the General Partner (acting unanimously in
the case of multiple General Partners), with the consent of the Compensation
Committee (or, after an Operative Date has been declared, without such consent),
may at any time or from time to time accelerate, in whole or in part, the
vesting of all (but not less than all) of the Limited Partners. All Limited
Partners shall be entirely vested in their interests upon the complete repayment
by the Partnership of all loans and any interest accrued thereon and, in
connection therewith, the agreement by the Partnership that it shall no longer
be entitled to loans under Section 5.02.
(b) In the event the employment of a Limited Partner by PaineWebber
shall terminate for any reason whatsoever (other than death, permanent
disability as determined by the Board of Directors of PWI, retirement pursuant
to any then existing pension or retirement plan of PaineWebber or otherwise with
the prior approval of the Compensation Committee), the General Partner shall
have the right, exercisable in its sole discretion and on written notice given
within the one hundred twenty (120) calendar day period beginning on the day
following the date of such termination, to purchase for cash such Limited
Partner's interest in the Partnership (or, if such Person has ceased to be a
Limited Partner, his rights or the rights of his Successor in Interest, if any,
to receive allocations and distributions with respect thereto) at a price
determined as follows:
<PAGE> 21
17
(i) If such termination occurs on or after such Limited Partner becomes
entirely vested in his interest in the Partnership, an amount equal to the
sum of (A) such Limited Partner's Capital Account (calculated as of the last
business day of the Partnership's fiscal quarter in which such Limited
Partner ceased to be employed by PaineWebber) plus (or minus) (B) such
Limited Partner's share (based on his Capital Percentage) of any unrealized
appreciation (or depreciation) in the Net Value of each Investment held by
the Partnership;
(ii) If such termination occurs before such Limited Partner becomes
entirely vested in his interest in the Partnership, an amount equal to the
lesser of (A) the sum calculated as set forth in subparagraph (i) above or
(B) the sum of such Limited Partner's Capital Contribution.
7.03. TRANSFER OF A LIMITED PARTNER'S INTEREST. Each Limited Partner
shall have the right to sell, assign, mortgage, pledge or otherwise dispose of
or transfer all or any part of the interest in the Partnership to which such
Limited Partner is entitled, but only with the prior written consent of the
General Partner. No Person acquiring any Limited Partner's interest in the
Partnership shall become a Partner of the Partnership, or acquire such Limited
Partner's right to participate in the affairs of the Partnership to the extent
permitted herein, unless such person shall be admitted as a Limited Partner
pursuant to Section 7.05. Such Person, however, shall, to the extent of the
interest transferred to him, be entitled to such Limited Partner's share of
allocations and distributions pursuant to Articles VI and VIII (subject to the
right of the General Partner to purchase such interest pursuant to Section
7.02(b)).
7.04. TRANSFER OF GENERAL PARTNER'S INTEREST. The General Partner may
not transfer or assign its interest as General Partner of the Partnership to any
Person other than PaineWebber, and no such transfer or assignment shall be
effective unless and until the transferee or assignee shall have been admitted
to the Partnership as a General Partner in accordance with Section 7.06.
7.05. ADMISSION OR SUBSTITUTION OF NEW LIMITED PARTNERS. (a) The
General Partner shall admit as an additional Limited Partner any person not
already a Limited Partner who shall make a Capital Contribution in accordance
with Section 5.01. The General Partner also shall have the right, in its sole
discretion, to admit as a substitute or additional Limited Partner any Person
who acquires in accordance with this Agreement the interest in the Partnership,
or any part thereof, of a Limited Partner. The admission of any Person as a
substitute or additional Limited Partner shall be in writing signed by the
General Partner but shall not be effective until such Person's written
acceptance and adoption of all the terms and provisions of this Agreement. The
General Partner's failure or refusal to admit a transferee (as to whom the
General Partner has given his written consent pursuant to Section 7.03) as a
substitute or additional Limited Partner shall not affect the right of such
transferee to receive
<PAGE> 22
18
allocations and distributions pursuant to Articles VI and VIII to which his
predecessor in interest was entitled.
(b) If the General Partner permits a Limited Partner to transfer all or
part of such Limited Partner's interest to a trust designated by such Limited
Partner, and the General Partner admits such trust into the Partnership as a
Limited Partner, all references herein to the termination of employment of a
Limited Partner or to any Final Event with respect to a Limited Partner shall be
deemed to refer both to such trust and to the employee of PaineWebber who
transferred such interest to such trust.
(c) A transferee who is admitted as a substitute or additional Limited
Partner pursuant to this Section 7.05 shall reimburse the General Partner or
PaineWebber, as necessary, for any out-of-pocket expenses incurred by it
directly as a result of such transferee's admission to the Partnership.
7.06. ADMISSION OF SUBSTITUTE OR ADDITIONAL GENERAL PARTNERS. (a) No
Person other than PaineWebber shall be admitted to the Partnership as a General
Partner unless such Person shall have been designated in writing by the Limited
Partners. Except where this Agreement provides otherwise, the Limited Partners
may designate a Person to be admitted as a General Partner by the action of
two-thirds in interest of the Limited Partners (based upon Limited Partnership
Percentages).
(b) Subject to Section 7.06(a), the admission of a Person to the
Partnership as General Partner shall become effective when such Person shall
have agreed in writing to adopt and accept this Agreement and to be bound by all
its terms and provisions as a General Partner.
(c) Notwithstanding any other provision of this Agreement, on the
Operative Date the then General Partner(s) shall automatically be deemed to have
been removed as such without any further action of any nature whatsoever by the
Limited Partners or such General Partner(s), and each such former General
Partner shall thereupon cease to be a Partner, and the then Senior Limited
Partners shall thereupon automatically become the only General Partners without
any further action of any nature whatsoever by the Limited Partners or the
former General Partner(s). All rights and interests of such Senior Limited
Partners as limited partners of the Partnership shall continue in effect without
change even though such Senior Limited Partners shall also be General Partners.
(d) Within 30 days after the admission of a General Partner pursuant to
this Section 7.06, the General Partner shall cause the Certificate of Limited
Partnership of the Partnership to be amended in accordance with Section 17-202
of the Delaware Act.
<PAGE> 23
19
7.07. WITHDRAWAL OF A LIMITED OR GENERAL PARTNER. (a) A Limited Partner
may not withdraw from the Partnership without the consent of the General
Partner, which may be withheld for any reason whatsoever or for no reason.
(b) Subject to Section 7.07(c), a General Partner may withdraw from the
Partnership as of the end of any fiscal year by delivery to each of the Limited
Partners of written notice of such withdrawal not less than 50 days before the
effective date thereof.
(c) The withdrawal of any Partner shall be a Final Event with respect
to such Partner, within the meaning of Section 7.08.
7.08. FINAL EVENTS WITH RESPECT TO A PARTNER. Upon the occurrence of a
Final Event with respect to any Partner, such Partner shall thereupon cease to
be a Partner. If such a Final Event shall occur, no Successor in Interest to any
such Partner shall for any purpose hereof become or be deemed to become a
Partner. The sole right, as against the Partnership and the remaining Partners,
acquired hereunder by, or resulting hereunder to, a Successor in Interest to any
Partner shall be to receive any distributions and allocations pursuant to
Articles VI and VIII (subject to the right of the General Partner to purchase
the interest of such former Partner pursuant to Section 7.02(b)) to the extent,
at the time, in the manner and in the amount otherwise payable to such Partner
had such a Final Event not occurred, and no other right shall be acquired
hereunder by, or shall result hereunder to, a Successor in Interest to such
Partner, whether by operation of law or otherwise. Until distribution of any
such Partner's interest in the Partnership upon the dissolution of the
Partnership as provided in Article VIII, neither his Capital Account nor any
part thereof shall be subject to withdrawal or redemption without the consent of
the General Partner. The Partnership shall be entitled to treat any Successor in
Interest to such Partner as the only Person entitled to receive distributions
and allocations hereunder.
7.09. CONTINUATION OF PARTNERSHIP. If a Final Event shall occur with
respect to one or more Limited Partners, no dissolution or termination of the
Partnership shall be effected thereby, and the remaining Partners shall continue
the Partnership and its business until the dissolution or termination thereof as
provided herein. If a Final Event shall occur with respect to a General Partner
and there is no other General Partner in the Partnership, the Partnership shall
terminate and shall be dissolved by the Limited Partners in accordance with
Article VIII, unless, within 30 days after the occurrence of any such Final
Event, (i) all the Limited Partners elect to continue the business of the
Partnership and (ii) all the obligations of the General Partner hereunder are
assumed by a successor General Partner approved in writing by all the Limited
Partners, in which case the Partnership shall not be dissolved but shall
continue.
<PAGE> 24
20
7.10. REMOVAL OF GENERAL PARTNER. At any time after all loans made to
the Partnership by the General Partner pursuant to Section 5.02 have been paid
in full, the Partners may, by the action of Limited Partners having a majority
interest in the Partnership (based upon Limited Partnership Percentages), remove
the General Partner, which shall thereupon cease to be a Partner, and in such
case the Limited Partners, by the action of Limited Partners having a majority
interest in the Partnership (based upon Limited Partnership Percentages), shall
designate a new General Partner which shall have the right to manage the affairs
of the Partnership and to vote as a Partner to the extent of any interest in the
Partnership. The sole right, as against the Partnership and the remaining
Partners, of a General Partner removed pursuant to this Section 7.10 or pursuant
to Section 7.06(c) shall be to receive any distributions and allocations
pursuant to Articles VI and VIII, to the extent, in the manner and in the amount
otherwise payable to it had it not been so removed, and no other rights shall be
acquired hereunder by, or shall result hereunder to, such removed General
Partner, whether by operation of law or otherwise. The Partnership shall be
entitled to treat such removed General Partner as the only person entitled to
receive distributions and allocations hereunder. Until distribution of such
removed General Partner's interest in the Partnership upon the dissolution of
the Partnership as provided in Article VIII, neither its capital account nor any
part thereof shall be subject to withdrawal or redemption.
7.11. COMPLIANCE WITH LAW. Notwithstanding any provision hereof to the
contrary, no sale or other disposition of an interest in the Partnership may be
made except in compliance with all Federal, state and other applicable laws,
including Federal and state securities laws.
ARTICLE VIII
DISSOLUTION OF THE PARTNERSHIP
8.01. DISSOLUTION. (a) The General Partner may, at any time prior to
the occurrence of a Change of Control, dissolve the Partnership effective as of
the end of the fiscal year during which such notice is given by written notice
delivered to the Limited Partners not less than 30 days before the effective
date of such dissolution. After the occurrence of a Change of Control, the
General Partner shall not have the power or authority to dissolve the
Partnership without the consent of 80% of the Limited Partners (based upon
Limited Partnership Percentages).
(b) When the Partnership is dissolved, whether by expiration of its
full term (subject to extension as provided in Section 2.02) or otherwise, the
business and property of the Partnership shall be wound up and liquidated by the
General Partner or, in the event of the unavailability of the General Partner,
such Limited Partners or other Persons as shall be named by a majority in
interest (based upon Limited Partnership Percentages).
<PAGE> 25
21
(c) Within 60 days after the effective date of dissolution of the
Partnership, the Partnership's assets (except, in the case of clause (iii)
below, for amounts reserved pursuant to Section 8.02) shall be distributed in
the following manner and order:
(i) first, all debts and liabilities to creditors of the Partnership
who are not Partners shall be paid and discharged or provision therefor
shall be made (through reserve accounts or otherwise);
(ii) second, the claims of all creditors of the Partnership who are
Partners shall be paid and discharged or provision therefor shall be made
(through reserve accounts or otherwise); and
(iii) third, the remaining assets of the Partnership shall be paid to
the Partners in cash or Investments pro rata in accordance with the
Partners' Capital Accounts. Investments divisible only into shares or other
units shall be distributed pro rata to the extent practicable; leftover
shares shall be sold and the cash distributed unless reserved in accordance
with Section 8.02.
8.02. AMOUNTS RESERVED. (a) If there are any Investments which, in the
judgment of the General Partner (or any other appropriate party selected
pursuant to Section 8.01(b)), cannot be sold, or properly distributed in kind in
the case of dissolution, without sacrificing a significant portion of the value
thereof, the value of a Partner's interest in each such Investment may be
excluded from the amount distributed to such Partner pursuant to Section
8.01(c)(iii). Any Partner's interest, including his pro rata interest in any
gains, losses or distributions, in Investments so excluded shall not be paid or
distributed until such time as the General Partner (or any other appropriate
party selected pursuant to Section 8.01(b)) shall determine.
(b) If there is any pending transaction, or claim by or against the
Partnership, as to which the interest or obligation of any Partner therein
cannot, in the judgment of the General Partner (or any other appropriate party
selected pursuant to Section 8.01(b)), be then ascertained, the value thereof or
probable loss therefrom may be deducted from the amount distributable to such
Partner pursuant to Section 8.01(c)(iii). No amount shall be paid or charged to
any such Partner on account of any such transaction or claim until its final
settlement or such earlier time as the General Partner (or any other appropriate
party selected pursuant to Section 8.01(b)) shall determine. The Partnership may
meanwhile retain from other sums due such Partner an amount which the General
Partner (or any other appropriate party selected pursuant to Section 8.01(b))
estimates to be sufficient to cover the share of such Partner in any probable
loss or liability on account of such transaction or claim.
(c) Upon determination by the General Partner (or any other appropriate
party selected pursuant to Section 8.01(b)) that circumstances no longer require
the
<PAGE> 26
22
exclusion of Investments or retention of sums as provided in Sections 8.02(b)
and (c), the General Partner (or any other appropriate party selected pursuant
to Section 8.01(b)) shall, at the earliest practicable time, pay such sums or
distribute such Investments or the proceeds realized from the sale of such
Investments to each Partner from whom such sums or Investments have been
withheld.
ARTICLE IX
REPORTS TO PARTNERS
9.01. BOOKS OF ACCOUNT. Appropriate books of account shall be kept, on
a cash basis, at the principal place of business of the Partnership, and each
Partner shall have access to all books, records and accounts and the right to
make copies thereof under such conditions and restrictions as the General
Partner may reasonably prescribe.
9.02. AUDIT AND REPORT. (a) The books and records of the Partnership
shall be audited and reported on as of the end of each fiscal year by
accountants selected by the General Partner for this purpose. Within 120 days
after the end of each fiscal year or, if later, as soon as practicable after
receipt of applicable financial information, the Partnership will cause to be
mailed to each Partner a written report, which shall include (i) a statement
prepared by the Partnership setting forth such Partner's Capital Account and the
amount of such Partner's allocable share of the Partnership's items of income
and deduction, capital gain and loss or credit for such year, in sufficient
detail to enable him to prepare his Federal, state, local and other tax returns
and (ii) a balance sheet, a statement of income and expense and a statement of
changes in financial position of the Partnership for such fiscal year.
(b) At the same time as financial statements are furnished pursuant to
Section 9.02(a), the Partnership shall cause to be mailed to each Partner a
written report setting forth a brief description of each Investment held by the
Partnership as of the end of such fiscal year, the cost and value of each such
Investment as determined by the General Partner and a brief description of the
nature of the business of the issuer of each such Investment.
(c) The Partnership shall cause to be mailed to each Limited Partner a
copy of the Partnership's Federal, state and local income tax returns for each
year promptly after such returns become available.
(d) The General Partner shall also cause to be delivered to each
Limited Partner such other information as such Limited Partner may reasonably
request for the purpose of enabling him to comply with any reporting or filing
requirements imposed by any governmental agency or authority pursuant to any
statute, rule, regulation or otherwise.
<PAGE> 27
23
9.03. FISCAL YEAR. The fiscal year of the Partnership shall end on
December 31 of each calendar year unless otherwise determined by the General
Partner.
ARTICLE X
MISCELLANEOUS
10.01. GOVERNING LAW. The terms of this Agreement and all rights and
obligations of the Partners hereunder shall be governed by the laws of the State
of Delaware.
10.02. INDEMNIFICATION. The General Partner shall not be liable to any
Partner for any action taken or not taken by it or for any action taken or not
taken by any other Partner or other person with respect to the Partnership. The
Partnership shall indemnify the General Partner and each of its officers and
directors against any losses, claims, damages or liabilities (including legal or
other expenses reasonably incurred in investigating or defending against any
such losses, claims, damages or liabilities), joint or several, to which it the
General Partner may become subject by reason of its being the General Partner or
to which such officers and directors may become subject by reason of their being
officers and directors of the General Partner. Notwithstanding the above, the
General Partner shall not be exculpated or exonerated from liability, and the
General Partner and each of its officers and directors shall not be indemnified
against loss, for violations of Federal or state securities laws, or for any
other intentional or criminal wrongdoing. Limited Partners will not be
personally obligated with respect to indemnification pursuant to this Section
10.02.
10.03. NOTICE. All notices hereunder shall be in writing and shall be
deemed to have been duly given when personally delivered or mailed by registered
or certified mail, return receipt requested, to the Partnership at 1285 Avenue
of the Americas, New York, New York 10019, Attention of PaineWebber Partners II,
Inc., or such other address or addresses as to which the Partners shall have
been given notice, and to the Partners at the addresses as to which the
Partnership shall have been given notice.
10.04. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which together shall constitute a single instrument. It
shall not be necessary that any counterpart be signed by all the parties so long
as all counterparts signed by each Limited Partner shall also be signed by the
General Partner.
10.05. COMPLETENESS AND AMENDMENTS. This Agreement sets forth the
entire understanding of all the parties. The provisions of this Agreement shall
not be amended except by an instrument in writing executed (i) by the General
Partner (or, if
<PAGE> 28
24
there is more than one General Partner, by the General Partner or Partners
entitled to act for the Partnership in accordance with the proviso to the last
sentence of Section 4.01(a)) and (ii) by a majority in interest of the Limited
Partners (based upon Limited Partnership Percentages), except that any provision
of this Agreement requiring the approval or consent of greater than a majority
in interest of the Limited Partners shall not be amended except by an instrument
in writing executed by the percentage in interest of Limited Partners whose
approval or consent would be required by such provision; provided, however, that
no amendment of any provision of this Agreement shall, unless the same shall be
in writing and signed by a lender described in Section 5.02 above, adversely
affect the rights and duties of such lender under any promissory note delivered
in connection with a loan made by it to the Partnership pursuant to Section
5.02.
10.06. POWER OF ATTORNEY. The Limited Partners hereby appoint the
person who from time to time shall be a General Partner, including a successor
General Partner pursuant to Section 7.06(c), as their true and lawful
representative and attorney-in-fact, in their name, place and stead to make,
execute, sign and file all instruments, documents and certificates which, from
time to time, may be required by this Agreement (including Section 7.06(d)) or
by the laws of the United States of America, the State of Delaware or any other
state in which the Partnership shall determine to do business, or any political
subdivision or agency thereof, to execute, implement and continue the valid and
subsisting existence of the Partnership. The General Partner, as representative
and attorney-in-fact, however, shall not have any rights, powers or authority to
amend or modify this Agreement when acting in such capacity, except as expressly
provided herein. Such power of attorney is coupled with an interest and shall
continue in full force and effect notwithstanding the subsequent occurrence of a
Final Event with respect to any Limited Partner.
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have hereunto executed
this Agreement as of the date first above written.
GENERAL PARTNER:
PAINEWEBBER PARTNERS II, INC.
By:
------------------------
Name: Ronald M. Schwartz
Title: President
Address of General Partner:
1285 Avenue of the Americas
New York, New York 10019
LIMITED PARTNER:
- ---------------------------
Name:
- ---------------------------
- ---------------------------
Address
THE LIMITED PARTNERSHIP INTERESTS EVIDENCED BY THIS PARTNERSHIP
AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR UNDER ANY STATE SECURITIES LAW AND MUST BE HELD
INDEFINITELY UNLESS SOLD IN COMPLIANCE WITH ALL APPLICABLE
SECURITIES LAWS.
<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>
Years Ended December 31,
-----------------------------------------------
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
PRIMARY:
Weighted average common shares outstanding 92,030,417 71,693,020 68,535,178
Incremental stock options and awards 9,241,691 6,370,453 5,824,821
Weighted average effect of Cumulative Participating
Convertible Voting Preferred Stock -- -- 4,329,959
------------- ------------- -------------
Weighted average common and common equivalent shares 101,272,108 78,063,473 78,689,958
============= ============= =============
Net income $ 80,750 $ 31,631 $ 246,183
Interest savings on convertible debentures and
short-term borrowings 3,322 1,330 --
Preferred dividend requirements (29,291) (1,219) (1,834)
------------- ------------- -------------
Net income applicable to common shares $ 54,781 $ 31,742 $ 244,349
============= ============= =============
Primary earnings per common share $ 0.54 $ 0.41 $ 3.11
============= ============= =============
FULLY DILUTED:
Weighted average common shares outstanding 92,030,417 71,693,020 68,535,178
Incremental stock options and awards 9,241,691 7,673,929 6,785,963
Weighted average effect of Cumulative Participating
Convertible Voting Preferred Stock -- -- 4,329,959
Weighted average common shares issuable assuming conversion
of 8% Convertible Debentures and equity securities -- 1,647,190 4,676,191
------------- ------------- -------------
Weighted average common and common equivalent shares 101,272,108 81,014,139 84,327,291
============= ============= =============
Net income $ 80,750 $ 31,631 $ 246,183
Interest savings on convertible debentures and
short-term borrowings 1,526 2,181 3,004
Preferred dividend requirements (29,291) (969) --
------------- ------------- -------------
Net income applicable to common shares $ 52,985 $ 32,843 $ 249,187
============= ============= =============
Fully diluted earnings per common share $ 0.52 $ 0.41 $ 2.95
============= ============= =============
</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>
Years Ended December 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Income before taxes $ 102,677 $ 44,385 $ 407,576 $ 339,115 $ 226,247
---------- ---------- ---------- ---------- ----------
Preferred stock dividends 36,260 1,710 5,828 27,789 34,732
---------- ---------- ---------- ---------- ----------
Fixed charges:
Interest 1,969,811 1,428,653 1,130,712 879,242 1,056,124
Interest factor in rents 59,491 51,102 50,133 45,962 43,804
---------- ---------- ---------- ---------- ----------
Total fixed charges 2,029,302 1,479,755 1,180,845 925,204 1,099,928
---------- ---------- ---------- ---------- ----------
Total fixed charges and preferred
stock dividends 2,065,562 1,481,465 1,186,673 952,993 1,134,660
---------- ---------- ---------- ---------- ----------
Income before taxes and fixed charges $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 1.0 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>
Years Ended December 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Income before taxes $ 102,677 $ 44,385 $ 407,576 $ 339,115 $ 226,247
---------- ---------- ---------- ---------- ----------
Fixed charges:
Interest 1,969,811 1,428,653 1,130,712 879,242 1,056,124
Interest factor in rents 59,491 51,102 50,133 45,962 43,804
---------- ---------- ---------- ---------- ----------
Total fixed charges 2,029,302 1,479,755 1,180,845 925,204 1,099,928
---------- ---------- ---------- ---------- ----------
Income before taxes and
fixed charges $2,131,979 $1,524,140 $1,588,421 $1,264,319 $1,326,175
========== ========== ========== ========== ==========
Ratio of earnings to fixed charges 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.
<PAGE> 1
EXHIBIT 13
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Years Ended December 31,
(In thousands of dollars except per share amounts) 1995(1) 1994(2) 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Results
Total revenues $ 5,320,090 $ 3,964,077 $ 4,004,717 $ 3,363,731 $ 3,165,895
Net revenues (including net interest) $ 3,350,279 $ 2,535,424 $ 2,874,005 $ 2,484,489 $ 2,109,771
Income before taxes $ 102,677 $ 44,385 $ 407,576 $ 339,115 $ 226,247
Net income $ 80,750 $ 31,631 $ 246,183 $ 213,175 $ 150,716
-------------------------------------------------------------------------
Per Common Share(3)
Primary earnings $ 0.54 $ 0.41 $ 3.11 $ 2.83 $ 2.10
Fully diluted earnings $ 0.52 $ 0.41 $ 2.95 $ 2.37 $ 1.67
Dividends declared $ 0.48 $ 0.48 $ 0.38 $ 0.31 $ 0.24
Book value $ 15.62 $ 15.96 $ 16.29 $ 14.24 $ 12.23
------------------------------------------------------------------------
Financial Condition
Total assets $45,671,294 $35,856,125 $37,026,909 $26,508,982 $22,621,763
Long-term borrowings and
Redeemable Preferred Stock $ 2,622,797 $ 2,501,384 $ 1,936,082 $ 1,150,553 $ 815,728
Stockholders' equity $ 1,552,288 $ 1,630,499 $ 1,195,047 $ 1,080,667 $ 1,050,478
Total capitalization $ 4,175,085 $ 4,131,883 $ 3,131,129 $ 2,231,220 $ 1,866,206
-------------------------------------------------------------------------
</TABLE>
(1) The 1995 results include after-tax charges of $146 million ($230 million
before income taxes) related to the resolution of the issues arising from
the Company's sale of public proprietary limited partnerships.
(2) The 1994 results include after-tax costs of $36 million ($50 million before
income taxes) and $34 million ($57 million before income taxes) related to
the purchase of certain net assets and specific businesses of Kidder,
Peabody Group Inc. and a non-recurring mutual fund charge, respectively.
(3) All per share data have been restated to reflect three-for-two
common stock splits in March 1994 and December 1991.
-----------------
PAGE 1
<PAGE> 2
FINANCIAL PERFORMANCE
Contents
- --------------------------------------------------------------------------------
Management's Discussion
and Analysis 28
Consolidated Financial Statements 38
Notes to Consolidated
Financial Statements 43
Report of Independent Auditors 59
Five Year Financial Summary 60
Common Stock and
Quarterly Information 62
Corporate Information 63
---------------
PAGE 27
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
- -------------------------------------------------------------------------------
BUSINESS DESCRIPTION
Paine Webber Group Inc. ("PWG") is a holding company which, together with its
operating subsidiaries (collectively, the "Company"), forms one of the largest
full-service securities and commodities firms in the industry. Founded in 1879,
the Company employs approximately 15,900 people in 310 offices worldwide.
The Company's principal line of business is to serve the investment and
capital needs of individual, corporate, institutional and public agency clients
through its broker-dealer subsidiary, PaineWebber Incorporated ("PWI"), and
other specialized subsidiaries. The Company holds memberships in all major
securities and commodities exchanges in the United States, and makes a market in
many securities traded on the National Association of Securities Dealers
Automated Quotation system ("NASDAQ") or in other over-the-counter markets.
The Company is comprised of interrelated business groups, including
Research, the Private Client Group, the Municipal Securities Group, Investment
Banking, Asset Management, Global Fixed Income and Commercial Real Estate, and
Global Equities and Transaction Services, which utilize common operational and
administrative personnel and facilities.
The Research group provides investment advice to institutional and
individual investors, and other business areas of the Company covering 786
companies in 73 industry sectors.
The Private Client Group consists primarily of a domestic branch office
system and consumer product groups through which PWI and certain other
subsidiaries provide clients with financial services and products, including the
purchase and sale of securities, option contracts, commodity and financial
futures contracts, fixed income instruments, mutual funds, trusts and selected
insurance products. The Company may act as principal or agent in providing these
services. Fees charged vary according to the size and complexity of a
transaction, and the activity level of a client's account.
The Municipal Securities Group structures, underwrites, sells and trades
taxable and tax-exempt issues for municipal and public agency clients.
Through the Investment Banking group, the Company provides financial advice
to, and raises capital for, a broad range of domestic and international
corporate clients. Investment Banking manages and underwrites public and private
offerings, participates as an underwriter in syndicates of public offerings
managed by others, and provides advice in connection with mergers and
acquisitions, restructurings and recapitalizations.
The Asset Management group is comprised of Mitchell Hutchins Asset
Management Inc. ("MHAM"), Mitchell Hutchins Institutional Investors Inc.
("MHII") and Mitchell Hutchins Investment Advisory division ("MHIA"). MHAM and
MHII provide investment advisory and portfolio management services to pension
and endowment funds. MHAM also provides investment advisory and portfolio
management services to individuals and mutual funds. MHIA provides portfolio
management services to individuals, trusts and institutions.
Through the Global Fixed Income and Global Equities groups, the Company
places securities for, and executes trades on behalf of, institutional clients
both domestically and internationally. In addition, the Company takes positions
in both fixed income securities and listed and over-the-counter equity
securities to facilitate client transactions or for the Company's own account.
The Commercial Real Estate group provides a full range of capital market
services to real estate clients, including underwriting of debt and equity
securities, principal lending activity, debt restructuring, property sales and
bulk sales services, and a broad range of other advisory services.
The Transaction Services group includes the correspondent services, prime
brokerage and securities lending businesses, and specialist trading. Through
Correspondent Services Corporation [csc], the Company provides execution and
clearing services to broker-dealers
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in the U.S. and overseas. The Company also acts as a specialist responsible for
executing transactions and maintaining an orderly market in certain securities.
The Company's businesses operate in one of the nation's most highly
regulated industries. Violations of applicable regulations can result in the
revocation of broker-dealer licenses, the imposition of censures or fines, and
the suspension or expulsion of a firm. The Company's businesses are regulated by
various agencies, including the Securities and Exchange Commission ("SEC"), the
New York Stock Exchange ("NYSE"), the Commodity Futures Trading Commission
("CFTC") and the National Association of Securities Dealers.
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 are subject to fluctuations reflecting the
impact of these factors.
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GENERAL BUSINESS ENVIRONMENT
The general business environment was significantly more favorable in 1995 than
in 1994. After growing at a rapid 4% pace in 1994, the U.S. economy slowed
appreciably in 1995. This reduced the risk of inflation, making it possible for
the Federal Reserve to ease monetary policy in the second half of 1995, and
sparked a substantial increase in bond prices. The yield on the 30-year treasury
bond declined nearly 200 basis points during the year. Despite the economic
slowdown, profits of corporations included in the S&P 500 rose nearly 20% in
1995, as U.S. corporations benefited from cost-cutting, a weak dollar and strong
global demand for high-technology equipment. Benefiting from both rising
earnings and declining interest rates, stock prices rose strongly in 1995, with
the S&P 500 rising 34% and the NASDAQ Composite rising 40%. Most major foreign
stock markets also rose in 1995, but their performance generally lagged that of
the U.S.
With securities markets buoyant, business activity has increased. The value
of mergers and acquisitions announced in 1995 was 32% higher than in 1994. Total
common stock offerings increased by 46% in 1995. The NYSE average daily volume
was 346 million shares in 1995, versus 291 million shares in 1994. As for the
debt market, corporate debt underwriting volume rose 28%.
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THE KIDDER, PEABODY ACQUISITION
In October 1994, the Company entered into an agreement, as thereafter
supplemented, with General Electric Company ("GE") and Kidder, Peabody Group
Inc. ("Kidder"), whereby the Company agreed to purchase certain assets and
liabilities (the "net assets"), and specific businesses of Kidder in a series of
transactions which were consummated in December 1994 and early 1995. The net
assets acquired approximated $1.9 billion. The consideration given in exchange
for the net assets and businesses acquired included cash of approximately $1.4
billion and the issuance of the Company's common and preferred stock valued at
$603.5 million at the date of issuance (See Note 2 in the Company's Notes to
Consolidated Financial Statements). As a result of this transaction, GE owns
approximately 25% of the common stock of the Company on a fully diluted basis.
GE is restricted from increasing ownership of the Company pursuant to a
stockholders' agreement among the Company, GE and Kidder, except in certain
limited circumstances.
The acquisition has been accounted for under the purchase method of
accounting. The excess of the purchase price over the fair value of the net
assets acquired resulted in the Company recording approximately $98 million in
goodwill, which is being amortized over 35 years on a straight-line basis. The
consolidated financial statements of the Company include the results
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of operations of the Kidder businesses acquired in December 1994 and early 1995
from the date of acquisition. As a result of the acquisition, the Company
recorded after-tax costs of approximately $36 million in the fourth quarter of
1994 relating primarily to the elimination of duplicate facilities, severance
and other personnel-related costs.
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RESULTS OF OPERATIONS
1995 COMPARED WITH 1994
Net income for the year ended December 31, 1995 was $226.8 million, or $1.98 per
primary share ($1.90 per fully diluted share), before giving effect to after-tax
charges of approximately $146 million ($230 million before income taxes)
associated with the resolution of the issues arising from the Company's sale of
public proprietary limited partnerships. This compares to net income of $101.5
million, or $1.30 per primary share ($1.27 per fully diluted share), earned
during 1994 before giving effect to the costs related to the Kidder acquisition
and a non-recurring charge in the second quarter related to the PaineWebber
Short-Term U.S. Government Income Fund (the "Fund"). Net income for 1995,
including the charges, was $80.8 million, or $0.54 per primary share ($0.52 per
fully diluted share). This compares to 1994 net income of $31.6 million, or
$0.41 per primary and fully diluted share, after giving effect to acquisition
costs and the non-recurring charge related to the Fund.
The results for the year ended December 31, 1995 were reduced by charges in
the second and fourth quarters of $125.9 million ($200.0 million before income
taxes) and $20.1 million ($30.0 million before income taxes), respectively,
related to the costs of resolving the SEC, individual and class action claims,
and administrative costs related to the Company's sale of public proprietary
limited partnerships in the 1980s and early 1990s. The charges are included in
"Other expenses" in the Consolidated Statement of Income. The Company has now
reached a final and comprehensive resolution of the issues related to the sale
of the limited partnerships, including an agreement to settle all pending class
actions, a settlement with the SEC and an agreement to settle with various state
regulators.
The results for the year ended December 31, 1994 were reduced by after-tax
costs in the fourth quarter of approximately $36 million ($50 million before
income taxes) associated with the Kidder acquisition. The costs related to
closing duplicate facilities, severance and other personnel-related costs are
included in "Other expenses" in the Consolidated Statement of Income.
In addition, results for the year ended December 31, 1994 were reduced by a
non-recurring after-tax charge in the second quarter of approximately $34
million ($57 million before income taxes) relating to the reimbursement to
certain shareholders of the Fund, a mutual fund managed by the Company's
investment subsidiary, MHAM, for losses and other expenses attributable to
mortgage-derivative securities owned by the Fund. The Fund's performance was
adversely affected by the rapid and substantial decline in the mortgage-backed
securities market which was triggered by rising interest rates. Beyond these
unusual market conditions, however, the Company determined that certain
Non-Planned Amortization Class ("non-PAC") interest only and principal only
("I/O and P/O") securities held by the Fund had shown an unacceptable level of
volatility and reduced liquidity. In view of the Fund's stated investment
objectives, the Company decided to reimburse certain then current and former
Fund shareholders for the decline in the net asset value attributable to these
securities.
Revenues, net of interest expense, increased 32%, primarily attributable to
the Kidder acquisition and improved market conditions.
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Commission revenues earned during 1995 were $1,272.8 million, 31% higher
than the $970.3 million earned during 1994. Commissions on listed securities
increased $229.7 million, or 46%, mutual fund commissions increased $42.7
million, or 27%, and commissions from over-the-counter securities increased
$34.8 million, or 49%. These increases were partially offset by lower insurance
commissions due to decreased sales of insurance annuities.
Principal transactions revenues increased $394.8 million, or 76%, primarily
due to improved trading results in mortgage, corporate debt, municipal and
equity securities. These gains were partially offset by lower trading results in
U.S. government and agency obligations.
Investment banking revenues were $326.8 million, as compared to $284.5
million, reflecting an increased number of equity and corporate debt
underwritings and an increased dollar volume of lead-managed municipal issues.
Asset management fees increased 12% to $399.5 million, primarily due to
higher fees earned on managed or wrap accounts and trust accounts. Average
assets in wrap and trust accounts during 1995 were 46% higher than during 1994.
The increase also reflects higher advisory fees earned on money market and
institutional accounts partially offset by lower advisory and distribution fees
earned on proprietary long-term mutual funds. The average assets under
management in money market, institutional and long-term mutual funds were
approximately $42 billion during 1995 compared to $37 billion in 1994.
Net interest increased $21.0 million, or 8%, primarily due to the expansion
of the stock loan business and increased margin lending to clients. These
increases were partially offset by lower spreads earned on fixed income
positions.
Other income increased $11.2 million,or 8%, due to increased transaction
fees and higher fees from Individual Retirement Accounts ("IRAs") as a result of
an increased number of accounts. These increases were partially offset by lower
dividends on proprietary trading inventories.
Compensation and benefit expenses for 1995 increased $458.1 million, or
30%, primarily due to higher revenue-driven compensation paid to retail and
institutional investment executives and higher performance-based incentive
compensation. The increased compensation costs also reflect the acquisition of
Kidder businesses and normal salary increases. Compensation and benefits as a
percentage of net revenues were 59.8% during 1995, as compared to 61.0% during
1994.
All other operating expenses increased $298.4 million, or 32%, over 1994.
In 1995, other expenses include the $230.0 million charge related to the limited
partnership settlements, and, in 1994, other expenses include the charge related
to the Fund and costs associated with the Kidder acquisition. Higher
professional fees relate primarily to increased legal and consulting fees.
Higher office and equipment, communications, business development, and brokerage
and clearing fees are primarily attributable to the acquired Kidder businesses.
All other operating expenses as a percentage of net revenues, excluding the
non-recurring charges, were 30.2% in 1995, as compared to 33.0% during 1994.
1994 COMPARED WITH 1993
Net income for the year ended December 31, 1994, before giving effect to the
costs related to the Kidder acquisition and the second quarter non-recurring
charge related to the Fund, was $101.5 million, or $1.30 per primary share
($1.27 per fully diluted share), compared to $246.2 million, or $3.11 per
primary share ($2.95 per fully diluted share), earned during 1993. Net income,
including the acquisition costs and the charge related to the Fund, was $31.6
million, or $0.41 per primary and fully diluted share. During 1994, total
revenues of $4.0 billion were relatively unchanged from
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1993, as decreases resulting from lower mutual fund sales and lower activity
from retail and institutional clients were offset by higher interest income.
Revenues, net of interest expense, decreased 12% to $2.5 billion.
During 1994, commission revenues decreased 3% to $970.3 million as a result
of lower mutual fund sales and a lower volume of activity among retail clients
offset by higher activity among our institutional equity clients. Commissions
from listed securities decreased $20.7 million, or 4%, commissions from
over-the-counter securities decreased $6.2 million, or 8%, and mutual fund
commissions decreased $5.4 million, or 3%. In addition, 1993 revenues included
$18.0 million of commissions from the institutional commodities business. The
Company exited this business during 1993. These decreases were partially offset
by a $26.0 million increase in insurance commissions due to a higher level of
annuity sales and expansion of the insurance business during 1994.
Principal transactions revenues decreased by $260.0 million, or 33%,
primarily due to reduced liquidity in the mortgage business and lower trading
volumes in the fixed income markets. These declines were partially offset by
improved results in U.S. government and agency obligations, and corporate equity
securities.
Investment banking revenues declined 31% during 1994 to $284.5 million.
This decrease was attributable to the lower volume of corporate equity and debt
issues underwritten and a lower dollar volume of lead-managed municipal issues.
These declines were partially offset by higher merger and acquisition and
increased private placement fees.
Asset management fees increased 9% to $356.4 million primarily due to a 28%
increase in the average level of assets in managed or wrap-fee accounts and
trust accounts. The increase also reflects higher advisory fees earned on money
market accounts and closed-end mutual funds. The average assets under management
in money market, institutional and proprietary long-term mutual funds were
approximately $37 billion during 1994 and $38 billion during 1993.
Net interest increased $20.1 million, or 8%, as a result of higher margin
lending to clients at improved spreads and expansion of the stock loan business
partially offset by decreased interest income on lower fixed income inventory
levels.
Other income rose $25.6 million, or 23%, primarily due to higher
transaction and account fees, increased proxy business and an increased number
of IRAs and Resource Management Accounts ("RMAs"). During 1994, the number of
IRAs and RMAs increased approximately 8% and 6%, respectively, from December 31,
1993.
Compensation and benefit expenses decreased $82.4 million, or 5%, primarily
due to lower performance-based incentive compensation and lower revenue-driven
compensation paid to retail and institutional investment executives. These
decreases were partially offset by salary increases, higher costs associated
with employee benefit plan enhancements, a change in pension plan assumptions
and severance costs. Compensation and benefit expenses as a percentage of net
revenues were 61.0% during 1994 and 56.7% during 1993.
All other operating expenses increased $107.0 million, or 13% over 1993,
primarily due to costs related to the Kidder acquisition and charges related to
the Fund. The increase also reflects higher consulting fees and increased costs
related to technology initiatives.
INCOME TAXES
The effective tax rate for the year ended December 31, 1995 was 21.4% as
compared to 28.7% for 1994. The decline in the effective rate was primarily due
to lower state and local taxes, proportionally lower nondeductible expenses, and
higher nontaxable interest for the year. The effective tax rate for the year
ended December 31, 1994 declined 10.9% from the 1993 rate of 39.6%. This decline
was due to higher nontaxable dividends and interest, and foreign tax credits.
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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 the 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 the 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 December 31, 1995 were $45.7 billion compared
to $35.9 billion at December 31, 1994 reflecting increases primarily in
securities purchased under agreements to resell and trading assets. 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 two unsecured senior revolving credit
agreements to provide up to $2.0 billion, including $1.2 billion, which expires
in December 1996 with provisions for renewal through December 1997, and $800.0
million, which expires in December 1997. The facilities are available for
general corporate purposes and to finance asset purchases. At December 31, 1995,
there were no outstanding borrowings under these credit facilities.
Additionally, the Company had approximately $5.0 billion in uncommitted lines of
credit at December 31, 1995.
The Company maintains public shelf registration statements for the issuance
of debt securities with the SEC. During 1995, the Company filed a shelf
registration statement with the SEC providing for the issuance of an additional
$400.0 million of debt securities. The Company issued $473.0 million of debt
under these registration statements in 1995. At December 31, 1995, the Company
had $784.6 million in debt securities available for issuance.
Long-term borrowings at December 31, 1995 grew to $2,436.0 million from
$2,315.4 million at December 31, 1994. This increase primarily reflects the
issuances of $125.0 million of 8 7/8% Notes in March 1995, $125.0 million of
8 1/4% Notes in May 1995, and $223.0 million of Medium-Term Notes during the
year. Offsetting these increases were the maturities of $150.0 million of 9 5/8%
Notes in May 1995 and $215.0 million of Medium-Term Notes. In addition, on
January 23, 1996, the Company issued $100.0 million of 6 3/4% Notes Due 2006. At
December 31, 1995, $135.8 million of long-term borrowings had maturity dates in
1996. The weighted average maturity on all outstanding long-term borrowings at
December 31, 1995 was 6.2 years.
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. The Company's total
capital base, which includes long-term borrowings, redeemable preferred stock
and stockholders' equity, was $4.2 billion at December 31, 1995, an increase of
$43.2 million from the prior year.
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The growth in total capital is primarily due to an increase in long-term
borrowings of $120.6 million offset by a decline in stockholders' equity of
$78.2 million.
During 1995, the Company issued 6.4 million shares of common stock related
to employee compensation programs, increasing equity capital by over $39
million. In the fourth quarter of 1995, the Company's Board of Directors
increased the number of shares of common stock authorized for repurchase by 7.5
million shares. In accordance with the repurchase programs, 8.6 million shares
of common stock were repurchased during the year for $173.5 million. At December
31, 1995, the remaining number of shares of common stock authorized to be
repurchased by the Company's Board of Directors was 7.7 million.
The Board of Directors declared regular quarterly cash dividends of $0.12
per share on the Company's common stock during 1995. Dividends were also
declared on the Redeemable Preferred Stock and the Convertible Preferred Stock.
Also, the stockholders of the Company approved an increase in the number of
common shares authorized for issuance from 100.0 million shares to 200.0 million
shares in the second quarter of 1994.
PWI is subject to the net capital requirements of the SEC, the NYSE and the
CFTC 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 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 December 31, 1995, the Company had investments in merchant banking
transactions which were affected by liquidity, reorganization or restructuring
issues amounting to $85.5 million, net of reserves, compared to $56.9 million,
net of reserves, at December 31, 1994. These investments have not had a material
effect on the Company's results of operations. Included in the portfolio at
December 31, 1995 and 1994 was an investment of $52.2 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 December 31,
1995, the Company held $215.1 million of high-yield securities, with
approximately 74% of such securities attributable to three 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 year ended
December 31, 1995, the Company recorded pre-tax trading profits of $10.4 million
on transactions in high-yield securities. For the years ended December 31, 1994
and 1993, the Company recorded a pre-tax trading loss and profit on transactions
in high-yield securities of $16.3 million and $24.4 million, respectively.
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PAINEWEBBER ANNUAL REPORT 1995
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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, certain options
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 $43.0 billion and $39.4 billion at December 31,
1995 and 1994, respectively, which included $26.7 billion and $16.3 billion,
respectively, related to "to be announced" mortgage securities requiring forward
settlement. Also included in these amounts were $1.9 billion and $1.8 billion
notional amounts of interest rate swap agreements used to hedge the Company's
long-term borrowings at December 31, 1995 and 1994, respectively. (For further
discussion on the Company's derivative financial instruments, see Note 11 in the
Company's Notes to Consolidated Financial Statements.)
The Company records any unrealized gains and losses on its derivative
contracts used in a trading capacity by marking-to-market the contracts on a
daily basis. The unrealized gain or loss is recorded on the Consolidated
Statement of Financial Condition with the related profit or loss reflected in
principal transactions or net interest, depending upon the type of contract. The
Company accrues interest income and expense on interest rate swap agreements
used to hedge its fixed rate long-term borrowings. The interest rate swap
agreements had the effect of increasing net interest expense on the Company's
long-term borrowings by $1.7 million for the year ended December 31, 1995 and
reducing net interest expense on the Company's long-term borrowings by $29.6
million and $28.1 million for the years ended December 31, 1994 and 1993,
respectively. The Company had no deferred gains or losses recorded at December
31, 1995 and 1994 related to terminated swap agreements.
The fair value of an exchange traded derivative financial instrument is
determined by quoted market prices, while over-the-counter derivatives are
valued based upon pricing models which consider time value and volatility, as
well as other economic factors. The fair values of the Company's derivative
financial instruments held for trading purposes at December 31, 1995 were $375.5
million and $275.6 million for assets and liabilities, respectively, and are
reflected on the Consolidated Statement of Financial Condition. The fair values
of these instruments at December 31, 1994 were $302.4 million and $195.5 million
for assets and liabilities, respectively.
All financial instruments involve 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 market values of the
assets underlying the instruments. The Company
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actively monitors its market risk profile through a variety of control
procedures including market risk modeling, review of trading positions and
hedging strategies, and monitoring adherence to established limits by an
independent risk management group.
Credit risk represents the amount of accounting loss the Company would
incur should counterparties to its proprietary transactions fail to perform and
the value of any collateral prove inadequate. The Company manages credit risk by
monitoring net exposure to individual counterparties, monitoring credit limits
and requiring additional collateral where appropriate. The current credit
exposure represents the fair value or replacement cost on contracts in which the
Company has recorded an unrealized gain. At December 31, 1995 and 1994, the fair
values amounted to $375.5 million and $302.4 million, respectively.
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RISK MANAGEMENT
The Company monitors its exposure to market and counterparty risk on a daily
basis through a variety of financial, security position, and credit exposure
reporting and control procedures.
Each department's trading positions, exposures, profits and losses, and
trading strategies are reviewed by the senior management of each business group
on a daily basis. The Company also has an independent risk management group that
meets daily to review the Company's risk profile and adherence to established
trading limits, and aids in the development of risk management policies. Trading
position and exposure limits, as well as credit policy, are established by the
Asset/Liability Management Committee which meets regularly and is comprised of
senior corporate and business unit managers.
Credit risk is substantially reduced by the industry practice of obtaining
and maintaining adequate collateral until the commitments are settled. The
Company also manages the credit exposure relating to its trading activities by
entering into master netting agreements when feasible. The Company monitors its
exposure to counterparty risk on a daily basis through the use of credit
exposure information and monitoring of collateral values. The Credit department
establishes and reviews credit limits for clients and other counterparties
seeking margin, resale and repurchase agreement facilities, securities borrowed
and securities loaned arrangements, and various other products. Although the
Company closely monitors the creditworthiness of its clients, the debtors'
ability to discharge amounts owed is dependent upon, among other things, general
market conditions. The Company has no material concentration of credit risk with
any individual counterparty.
In addition to the above procedures, the Company has in place committees
and management controls to review inventory positions, other asset accounts and
asset agings on a regular basis.
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INFLATION
Because the Company's assets are, to a large extent, liquid in nature, they are
not significantly affected by inflation. However, inflation may result in
increases in the Company's expenses, which may not be readily recoverable in the
price of services offered. To the extent inflation results in rising interest
rates and has other negative effects upon the securities markets, it may
adversely affect the Company's financial condition and results of operations.
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PAINEWEBBER ANNUAL REPORT 1995
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SEGMENT INFORMATION
The Company's business activities encompass several classes of highly integrated
services, primarily those of a full-line securities broker-dealer, and are
considered a single business segment for purposes of Statement of Financial
Accounting Standards ("SFAS") No. 14, "Financial Reporting for Segments of a
Business Enterprise." (For information on geographic data, see Note 17 in the
Company's Notes to Consolidated Financial Statements.)
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NEW ACCOUNTING
DEVELOPMENTS
In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," effective for fiscal years beginning after December 15, 1995.
SFAS No. 121 requires impairment losses to be recognized when the sum of the
expected future cash flows from the use of the asset is less than the carrying
amount of the asset. The Statement also addresses accounting for long-lived
assets that are expected to be disposed. The adoption of the new standard in
1996 is not expected to have a material impact on the financial statements.
---------------
PAGE 37
<PAGE> 13
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
(In thousands of dollars except per share amounts) 1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Commissions $1,272,766 $ 970,294 $ 996,127
Principal transactions 914,201 519,438 779,444
Investment banking 326,777 284,503 413,643
Asset management 399,540 356,368 325,690
Other 150,056 138,902 113,253
Interest 2,256,750 1,694,572 1,376,560
---------------------------------------
Total revenues 5,320,090 3,964,077 4,004,717
Interest expense 1,969,811 1,428,653 1,130,712
---------------------------------------
Net revenues 3,350,279 2,535,424 2,874,005
---------------------------------------
Non-interest expenses
Compensation and benefits 2,004,585 1,546,467 1,628,889
Office and equipment 266,291 225,375 211,880
Communications 149,047 130,095 123,601
Business development 90,752 85,430 93,962
Brokerage, clearing and exchange fees 93,657 82,577 79,752
Professional services 101,911 78,856 66,825
Other 541,359 342,239 261,520
---------------------------------------
Total non-interest expenses 3,247,602 2,491,039 2,466,429
---------------------------------------
Income before taxes 102,677 44,385 407,576
Provision for income taxes 21,927 12,754 161,393
---------------------------------------
Net income $ 80,750 $ 31,631 $ 246,183
=======================================
Net income applicable to common shares $ 54,781 $ 31,742 $ 244,349
=======================================
Earnings per common share:
Primary $ 0.54 $ 0.41 $ 3.11
Fully diluted $ 0.52 $ 0.41 $ 2.95
---------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
---------------
PAGE 38
<PAGE> 14
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
(In thousands of dollars except share and per share amounts) 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 222,497 $ 259,238
Cash and securities segregated and on deposit for
federal and other regulations 427,068 369,585
Trading assets, at fair value 14,095,446 10,784,117
Securities purchased under agreements to resell 16,699,295 10,804,445
Securities borrowed 7,226,515 7,826,211
Receivables:
Clients, net of allowance for doubtful accounts of
$12,400 and $9,139 in 1995 and 1994, respectively 4,070,599 3,495,670
Brokers and dealers 279,676 432,565
Dividends and interest 263,948 229,462
Fees and other 200,444 233,027
Office equipment and leasehold improvement, net of
accumulated depreciation and amortization of $288,807
and $245,225 in 1995 and 1994, respectively 322,056 272,365
Other assets 1,863,750 1,149,440
--------------------------
$45,671,294 $35,856,125
==========================
Liabilities and Stockholders' Equity
Short-term borrowings $ 991,227 $ 1,889,609
Trading liabilities, at fair value 6,233,054 6,034,706
Securities sold under agreements to repurchase 25,199,377 16,873,848
Securities loaned 2,752,429 2,225,918
Payables:
Clients 3,698,477 2,899,240
Brokers and dealers 155,118 303,244
Dividends and interest 256,338 218,719
Other liabilities and accrued expenses 1,639,403 933,977
Accrued compensation and benefits 570,786 344,981
--------------------------
41,496,209 31,724,242
Long-term borrowings 2,436,037 2,315,415
--------------------------
43,932,246 34,039,657
--------------------------
Commitments and contingencies
Redeemable Preferred Stock 186,760 185,969
Stockholders' Equity:
Convertible Preferred Stock 100,000 100,000
Common stock, $1 par value, 200,000,000 shares authorized; issued
104,492,091 shares and 100,613,737 shares in 1995 and 1994, respectively 104,492 100,614
Additional paid-in capital 831,763 784,974
Retained earnings 719,325 715,052
--------------------------
1,755,580 1,700,640
Treasury stock, at cost; 7,417,845 shares and 1,297,081 shares
in 1995 and 1994, respectively (151,616) (21,981)
Unamortized cost of restricted stock (55,302) (51,803)
Foreign currency translation adjustment 3,626 3,643
--------------------------
1,552,288 1,630,499
--------------------------
$45,671,294 $35,856,125
==========================
</TABLE>
See Notes to Consolidated Financial Statements.
---------------
PAGE 39
<PAGE> 15
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Cumulative
Participating $1.375 6% Cumulative
Convertible Convertible Convertible
Voting Exchangeable Redeemable
(In thousands of dollars except share and per share amounts) Preferred Stock Preferred Stock Preferred Stock
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1992 $ 150,000 $ 38,760 $ 0
- ------------------------------------------------------------------------------------------------------------------
Net income
Dividends declared:
Common stock, $.38 per share
$1.375 Preferred Stock, $1.241 per share
Participating Preferred Stock, $.33 per share
Redemption and conversion of Participating Preferred Stock (150,000)
Redemption or conversion of $1.375 Preferred Stock (38,760)
Exercises of stock option
Restricted stock awards
Amortization of the cost of restricted stock
Conversion of debentures
Tax benefit relating to employee compensation programs
Minimum pension liability
Other
Repurchases of common stock
Foreign currency translation
- ------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 0 0 0
- ------------------------------------------------------------------------------------------------------------------
Net income
Dividends declared: Common stock, $.48 per share
Dividends accrued:
Redeemable Preferred Stock
Convertible Preferred Stock
Issuance of Convertible Preferred Stock 100,000
Issuance of common stock relating to business acquisition
Exercises of stock options
Restricted stock awards
Amortization of the cost of restricted stock
Conversion of debentures
Tax benefit relating to employee compensation programs
Other
Repurchases of common stock
Foreign currency translation
- ------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 0 0 100,000
- ------------------------------------------------------------------------------------------------------------------
Net income
Dividends declared:
Common stock, $.48 per share
Redeemable Preferred Stock, $9.00 per share
Convertible Preferred Stock, $6.00 per share
Exercises of stock options
Restricted stock awards
Amortization of the cost of restricted stock
Conversion of debentures
Tax benefit relating to employee compensation programs
Other
Repurchases of common stock
Foreign currency translation
- ------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 $ 0 $ 0 $ 100,000
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes in Consolidated Financial Statements.
----------------
PAGE 40
<PAGE> 16
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Unamortized
Additional Cost of
Common Paid-in Retained Treasury Restricted
(In thousands of dollars except share and per share amounts) Stock Capital Earnings Stock Stock
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1992 $ 78,519 $ 470,315 $ 529,049 $(149,462) $ (30,709)
- --------------------------------------------------------------------------------------------------------------------------------
Net income 246,183
Dividends declared:
Common stock, $.38 per share (27,454)
$1.375 Preferred Stock, $1.241 per share (1,833)
Participating Preferred Stock, $.33 per share (1,686)
Redemption and conversion of Participating Preferred Stock 3,247 (22,529) 93,420
Redemption or conversion of $1.375 Preferred Stock 551 10,261 (615)
Exercises of stock options 888 (1,195) 19,428
Restricted stock awards 3,628 64,156 (67,784)
Amortization of the cost of restricted stock 37,513
Conversion of debentures (13,912) 39,162
Tax benefit relating to employee compensation programs 29,651
Minimum pension liability 4,635
Other 17 1,329 1,689
Repurchases of common stock (116,627)
Foreign currency translation
- --------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 83,603 568,487 721,115 (112,390) (60,980)
- --------------------------------------------------------------------------------------------------------------------------------
Net income 31,631
Dividends declared: Common stock, $.48 per share (36,475)
Dividends accrued:
Redeemable Preferred Stock (969)
Convertible Preferred Stock (250)
Issuance of Convertible Preferred Stock
Issuance of common stock relating to business acquisition 14,000 177,374 127,095
Exercises of stock options 579 3,803
Restricted stock awards 2,432 32,464 (34,896)
Amortization of the cost of restricted stock 44,073
Conversion of debentures (205) 1,455
Tax benefit relating to employee compensation programs 2,597
Other 454 4,992
Repurchases of common stock (43,133)
Foreign currency translation
- --------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 100,614 784,974 715,052 (21,981) (51,803)
- --------------------------------------------------------------------------------------------------------------------------------
Net income 80,750
Dividends declared:
Common stock, $.48 per share (47,203)
Redeemable Preferred Stock, $9.00 per share (22,500)
Convertible Preferred Stock, $6.00 per share (6,000)
Exercises of stock options 942 (4,377) 34,388
Restricted stock awards 2,936 52,471 (55,407)
Amortization of the cost of restricted stock 51,908
Conversion of debentures (4,252) 9,502
Tax benefit relating to employee compensation programs 2,947
Other (774)
Repurchases of common stock (173,525)
Foreign currency translation
- --------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 $ 104,492 $ 831,763 $ 719,325 $(151,616) $ (55,302)
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Foreign Number of Shares
Currency Total ---------------------------
Translation Stockholders' Common Treasury
(In thousands of dollars except share and per share amounts) Adjustment Equity Stock Stock
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at December 31, 1992 $ (5,805) $1,080,667 $ 78,518,729 $(12,476,834)
- --------------------------------------------------------------------------------------------------------------------------
Net income 246,183
Dividends declared:
Common stock, $.38 per share (27,454)
$1.375 Preferred Stock, $1.241 per share (1,833)
Participating Preferred Stock, $.33 per share (1,686)
Redemption and conversion of Participating Preferred Stock (75,862) 7,500,000
Redemption or conversion of $1.375 Preferred Stock (28,563) 551,154
Exercises of stock options 19,121 888,409 1,537,137
Restricted stock awards 0 3,628,205
Amortization of the cost of restricted stock 37,513
Conversion of debentures 25,250 2,771,672
Tax benefit relating to employee compensation programs 29,651
Minimum pension liability 4,635
Other 3,035 16,765 135,592
Repurchases of common stock (116,627) (6,036,000)
Foreign currency translation 1,017 1,017
- --------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993 (4,788) 1,195,047 83,603,262 (6,568,433)
- --------------------------------------------------------------------------------------------------------------------------
Net income 31,631
Dividends declared: Common stock, $.48 per share (36,475)
Dividends accrued:
Redeemable Preferred Stock (969)
Convertible Preferred Stock (250)
Issuance of Convertible Preferred Stock 100,000
Issuance of common stock relating to business acquisition 318,469 14,000,000 7,500,000
Exercises of stock options 4,382 578,593
Restricted stock awards 0 2,431,882
Amortization of the cost of restricted stock 44,073
Conversion of debentures 1,250 84,740
Tax benefit relating to employee compensation programs 2,597
Other 5,446 291,750
Repurchases of common stock (43,133) (2,605,138)
Foreign currency translation 8,431 8,431
- --------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1994 3,643 1,630,499 100,613,737 (1,297,081)
- --------------------------------------------------------------------------------------------------------------------------
Net income 80,750
Dividends declared:
Common stock, $.48 per share (47,203)
Redeemable Preferred Stock, $9.00 per share (22,500)
Convertible Preferred Stock, $6.00 per share (6,000)
Exercises of stock options 30,953 942,511 1,993,837
Restricted stock awards 0 2,935,843
Amortization of the cost of restricted stock 51,908
Conversion of debentures 5,250 524,303
Tax benefit relating to employee compensation programs 2,947
Other (774)
Repurchases of common stock (173,525) (8,638,904)
Foreign currency translation (17) (17)
- --------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 $ 3,626 $1,552,288 $104,492,091 $ (7,417,845)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements.
----------------
PAGE 41
<PAGE> 17
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
(In thousands of dollars) 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 80,750 $ 31,631 $ 246,183
Adjustments to reconcile net income to cash
provided by (used for) operating activities:
Noncash items included in net income:
Depreciation and amortization 54,100 40,619 31,034
Deferred income taxes (90,778) (48,827) 3,609
Amortization of deferred charges 174,122 128,817 90,923
Other 213,852 29,232 51,058
(Increase) decrease in operating receivables:
Clients 189,652 (82,116) (628,297)
Brokers and dealers 152,889 479,265 (351,984)
Dividends and interest (33,608) (12,205) (45,449)
Fees and other 37,124 (113,067) 75,898
Increase (decrease) in operating payables:
Clients 587,798 154,031 462,492
Brokers and dealers (148,126) (361,016) 40,546
Dividends and interest 37,602 (47,992) 66,767
Other 739,065 142,176 134,327
(Increase) decrease in:
Cash and securities on deposit (57,483) (42,413) 149,760
Trading assets (3,310,637) 5,534,676 (5,919,229)
Securities purchased under agreements to resell (5,820,114) (530,933) (3,895,664)
Securities borrowed 599,696 (1,908,905) 352,572
Other assets (820,625) (318,193) (274,529)
Increase (decrease) in:
Trading liabilities 198,348 (1,502,636) 2,641,834
Securities sold under agreements to repurchase 8,285,379 (29,888) 4,096,326
Securities loaned 526,511 100,101 687,745
-----------------------------------------
Cash provided by (used for) operating activities 1,595,517 1,642,357 (1,984,078)
-----------------------------------------
Cash flows from investing activities:
Proceeds from (payments for):
Net assets acquired in business acquisition (624,090) (726,217) --
Acquisition-related expenditures (46,157) -- --
Sales (purchases) of investments 112,499 (234,531) --
Office equipment and leasehold improvements (81,880) (82,904) (95,886)
-----------------------------------------
Cash used for investing activities (639,628) (1,043,652) (95,886)
-----------------------------------------
Cash flows from financing activities:
Net proceeds from (payments on):
Short-term borrowings (898,382) (889,604) 1,459,006
Proceeds from:
Long-term borrowings 493,357 637,379 1,126,907
Employee stock transactions 36,203 11,078 21,121
Payments for:
Long-term borrowings (374,580) (259,750) (316,997)
Repurchases of common stock (173,525) (43,133) (116,627)
Preferred stock transactions -- -- (104,425)
Dividends (75,703) (36,475) (30,973)
-----------------------------------------
Cash (used for) provided by financing activities (992,630) (580,505) 2,038,012
-----------------------------------------
Increase (decrease) in cash and cash equivalents (36,741) 18,200 (41,952)
Cash and cash equivalents, beginning of year 259,238 241,038 282,990
-----------------------------------------
Cash and cash equivalents, end of year $ 222,497 $ 259,238 $ 241,038
=========================================
</TABLE>
See Notes to Consolidated Financial Statements.
-----------------
PAGE 42
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of dollars except share and per share amounts)
- --------------------------------------------------------------------------------
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Paine Webber Group Inc. ("PWG") is a holding company which, together with its
operating subsidiaries (collectively, the "Company"), forms one of the largest
full-service securities and commodities firms in the industry. The Company is
engaged in one principal line of business, that of serving the investment and
capital needs of individual, corporate, institutional and public agency clients.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of PWG and its wholly
owned subsidiaries, including its principal subsidiary PaineWebber Incorporated
("PWI"). 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 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.
TRADING INSTRUMENTS
Trading assets and liabilities are generally recorded in the Consolidated
Statement of Financial Condition on settlement date. Recording such transactions
on a trade date basis would not result in a material difference. Related
revenues and expenses are generally recorded in the accounts on trade date.
Trading assets and liabilities, including derivative contracts held for
trading or to hedge trading inventory positions, are recorded at fair value in
the Consolidated Statement of Financial Condition. Realized and unrealized gains
and losses are reflected in revenues in the period during which the change in
fair value occurs. Fair value is generally based upon quoted market prices. If
quoted market prices are not available, or if liquidating the Company's position
is reasonably expected to impact market prices, fair value is determined based
upon other relevant factors, including dealer price quotations, price activity
of similar instruments and pricing models. Pricing models consider the time
value and volatility factors underlying the financial instruments and other
economic measurements.
COLLATERALIZED SECURITIES TRANSACTIONS
Securities purchased under agreements to resell ("resale agreements") and
securities sold under agreements to repurchase ("repurchase agreements"),
principally U.S. government and agency securities, are recorded at the amount at
which the securities will be resold or reacquired as specified in the respective
agreements, plus accrued interest. It is Company policy to obtain possession or
control of securities, which have a fair value in excess of the original
principal amount loaned, in order to collateralize resale agreements. The
Company is required to provide securities to counterparties in order to
collateralize repurchase agreements. The Company monitors the fair value of the
securities purchased and sold under these agreements daily. Should the fair
value of the securities decline below or increase above the principal amount
advanced or received, plus accrued interest, additional collateral is requested
or excess collateral is returned when deemed appropriate. When specific
conditions are met, including the existence of a legally enforceable master
netting agreement, resale agreements and repurchase agreements are netted on the
Consolidated Statement of Financial Condition as permitted under Financial
Accounting Standards Board Interpretation No. 39, "Offsetting of Amounts Related
to Certain Contracts," and Interpretation No. 41, "Offsetting of Amounts Related
to Certain Repurchase and Reverse Repurchase Agreements."
Resale agreements and repurchase agreements for which the resale/repurchase
date corresponds to the maturity date of the underlying securities, are
accounted for as purchases and sales, respectively.
Securities borrowed and securities loaned are recorded at the amount of
cash collateral advanced or received in connection with the transaction.
Securities borrowed transactions require the Company to deposit cash or other
collateral with the lender. With respect to securities loaned, the Company
receives collateral. The initial collateral advanced or received has a fair
value equal to, or greater than, the fair value of the securities borrowed or
loaned. The Company monitors the fair value of the securities borrowed and
loaned on a daily basis and requests additional collateral or returns excess
collateral, as appropriate.
OFFICE EQUIPMENT AND LEASEHOLD IMPROVEMENTS
The Company depreciates office equipment using the straight-line method over
estimated useful lives of
-----------------
PAGE 43
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
three to ten years. Leasehold improvements are amortized over the lesser of the
estimated useful life of the asset or the remaining term of the lease.
INCOME TAXES
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred taxes are provided based upon the net tax effects
of temporary differences between the book and tax bases of assets and
liabilities. The Company files a consolidated federal income tax return.
TRANSLATION OF FOREIGN CURRENCIES
Assets and liabilities denominated in foreign currencies are translated at
year-end rates of exchange, and revenues and expenses are translated at average
rates of exchange during the year. Gains and losses resulting from translation
adjustments are accumulated in a separate component of stockholders' equity.
Gains or losses resulting from foreign currency transactions are included in net
income.
STOCK BASED COMPENSATION
The Company grants stock options to employees and non-employee directors with an
exercise price equal to the fair market value at the date of grant. The Company
accounts for stock option grants in accordance with Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and, accordingly,
recognizes no compensation expense related to the granting of such stock
options.
CASH FLOWS
Cash and cash equivalents are defined as highly liquid investments not held for
resale, with a maturity of three months or less when purchased. Total interest
payments for the years ended December 31, 1995, 1994 and 1993 were $1,932,192,
$1,499,398 and $1,063,945, respectively.
ACCOUNTING DEVELOPMENTS
In March 1995, the Financial Accounting Standards Board ("FASB") issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," effective for fiscal years beginning after December
15, 1995. SFAS No. 121 requires impairment losses to be recognized when the sum
of the expected future cash flows from the use of the asset is less than the
carrying amount of the asset. SFAS No. 121 also addresses accounting for
long-lived assets that are expected to be disposed. The adoption of SFAS No. 121
is not expected to have a material impact on the financial statements.
- --------------------------------------------------------------------------------
NOTE 2: BUSINESS ACQUISITION
In October 1994, the Company entered into an agreement, as thereafter
supplemented, with General Electric Company ("GE") and Kidder, Peabody Group
Inc. ("Kidder"), whereby the Company agreed to purchase certain assets and
liabilities (the "net assets"), and specific businesses of Kidder in a series of
transactions which were consummated in December 1994 and early 1995. The net
assets acquired approximated $1,900,000. The consideration given in exchange for
the net assets and businesses acquired included cash of approximately $1,400,000
and the issuance of the Company's common and preferred stock valued at $603,469
at the date of issuance. The cash proceeds were obtained from various funding
sources. The Company issued 21,500,000 shares of common stock valued at
$318,469, 2,500,000 shares of 20 year 9% Cumulative Redeemable Preferred Stock,
Series C valued at $185,000 at the date of issuance, and 1,000,000 shares of 20
year 6% Cumulative Convertible Redeemable Preferred Stock, Series A valued at
$100,000 (See Note 8). As a result of this transaction, GE owns approximately
25% of the common stock of the Company on a fully diluted basis. GE is
restricted from increasing ownership of the Company pursuant to a stockholders'
agreement among the Company, GE and Kidder, except in certain limited
circumstances.
The acquisition has been accounted for under the purchase method of
accounting. The excess of the purchase price over the fair value of the net
assets acquired resulted in the Company recording approximately $98,000 in
goodwill, which is being amortized over 35 years on a straight-line basis. The
consolidated financial statements of the Company include the results of
operations of the Kidder businesses acquired in December 1994 and early 1995
from the date of acquisition. As a result of the acquisition, the Company
recorded after-tax costs of approximately $36,000 in the fourth quarter of 1994
relating primarily to the elimination of duplicate facilities, severance and
other personnel-related costs.
-----------------
PAGE 44
<PAGE> 20
PAINEWEBBER ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
NOTE 3: LIMITED PARTNERSHIP INVESTMENT CHARGES
The results for the year ended December 31, 1995 were reduced by after-tax
charges of approximately $146,000 ($230,000 before income taxes) associated with
the resolution of the issues arising from the Company's sale of public
proprietary limited partnerships in the 1980s and early 1990s. The charges are
included in "Other expenses" in the Consolidated Statement of Income. The
Company has now reached a final and comprehensive resolution of the issues
related to the sale of the limited partnerships, including an agreement to
settle all pending class actions, a settlement with the Securities and Exchange
Commission ("SEC") and an agreement to settle with various state regulators.
- --------------------------------------------------------------------------------
NOTE 4: 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 December 31, 1995 and 1994, the fair values of long-term borrowings were
$2,478,095 and $2,107,538, respectively, as compared to the carrying amounts of
$2,436,037 and $2,315,415, 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 substantially all of its fixed rate debt, the
Company enters into interest rate swap agreements to convert its fixed rate
payments into floating rate 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 $33,756 receivable and $172,193 payable at December 31, 1995 and
1994, respectively. The carrying amounts of the interest rate swap agreements
included in the Company's Consolidated Statement of Financial Condition at
December 31, 1995 and 1994 were net receivables of $1,730 and $4,480,
respectively. For discussion on the fair values of the Company's
off-balance-sheet financial instruments see Notes 11 and 13.
- --------------------------------------------------------------------------------
NOTE 5: TRADING INVENTORIES
At December 31, 1995 and 1994, trading assets and liabilities, recorded at fair
value, consisted of the following:
<TABLE>
<CAPTION>
1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Trading assets
U.S. government and agency obligations $ 4,854,878 $ 3,560,201
Mortgages and mortgage-backed securities 4,240,163 2,441,940
Corporate debt securities 2,364,597 1,816,747
Commercial paper and other short-term debt 1,252,652 1,242,988
State and municipal obligations 821,487 1,018,875
Corporate equity securities 561,669 703,366
-------------------------
$14,095,446 $10,784,117
=========================
Trading liabilities
U.S. government and agency obligations $ 4,570,733 $ 4,918,655
Mortgages and mortgage-backed securities 127,708 44,370
Corporate debt securities 714,588 398,913
State and municipal obligations 21,467 57,751
Corporate equity securities 798,558 615,017
-------------------------
$ 6,233,054 $ 6,034,706
=========================
</TABLE>
-----------------
PAGE 45
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Trading liabilities commit the Company to deliver specified securities at
predetermined prices. These transactions may result in market risk since, to
satisfy the obligation, the Company must acquire the securities at market
prices, which may exceed the values reflected in the Consolidated Statement of
Financial Condition.
- --------------------------------------------------------------------------------
NOTE 6: 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 December 31, 1995 and 1994 consisted of the
following:
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
Commercial paper $ 547,554 $ 906,650
Bank loans and other 443,673 982,959
------------------------
$ 991,227 $ 1,889,609
========================
</TABLE>
The interest rate on commercial paper fluctuates throughout the year. The
weighted average interest rates on commercial paper borrowings outstanding at
December 31, 1995 and 1994 were 6.00% and 5.90%, respectively, and during 1995
and 1994 were 6.09% and 4.34%, respectively.
Bank loans generally bear interest at rates based on either the federal
funds rate or the London Interbank Offered Rate ("LIBOR"). The weighted average
interest rates on bank loans outstanding at December 31, 1995 and 1994 were
5.63% and 6.25%, respectively, and the weighted average interest rates during
1995 and 1994 were 6.63% and 4.37%, respectively.
At December 31, 1995, the Company had committed and available two unsecured
senior revolving credit facilities with a group of banks aggregating $2,000,000,
of which $1,200,000 expires in December 1996 with provisions for renewal through
December 1997, and $800,000 expires in December 1997. Interest on borrowings
under the terms of the revolving credit facilities is computed, at the option of
the Company, at a rate based on LIBOR or an alternate rate based on the higher
of a base rate or the federal funds rate. The Company pays a fee on the
commitments. At December 31, 1995, there were no outstanding borrowings under
these credit facilities. At December 31, 1994, there was $500,000 outstanding
under these facilities included in bank loans and other.
- --------------------------------------------------------------------------------
NOTE 7: LONG-TERM BORROWINGS
Long-term borrowings at December 31, 1995 and 1994 consisted of the following:
<TABLE>
<CAPTION>
1995 1994
- --------------------------------------------------------------------------
<S> <C> <C>
Fixed Rate Notes due 1996 - 2014 $1,289,478 $ 1,177,159
Fixed Rate Subordinated Notes due 2002 174,412 174,324
Medium-Term Senior Notes 651,475 618,070
Medium-Term Subordinated Notes 283,150 308,150
Convertible Debentures 17,038 18,627
Other 20,484 19,085
-------------------------
$2,436,037 $ 2,315,415
=========================
</TABLE>
----------------
PAGE 46
<PAGE> 22
PAINEWEBBER ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
During 1995, the Company issued, in two separate offerings, fixed rate
notes in an aggregate principal amount of $250,000 due 2002 and 2005, with
interest rates of 8 1/4% and 8 7/8%, respectively. In the second quarter of
1995, $150,000 of 9 5/8% Notes matured. Interest rates on the remaining fixed
rate notes and subordinated notes outstanding at December 31, 1995 range from
6 1/4% to 9 1/4% and the weighted average interest rate on these notes
outstanding at December 31, 1995 was 7.56%. Interest on the notes is payable
semi-annually.
The Company has a Multiple Currency Medium-Term Note Program under the
terms of which the Company may offer for sale medium-term senior and
subordinated notes (collectively, the "Medium-Term Notes") due from nine months
to thirty years from date of issuance. The Medium-Term Notes may be either fixed
or variable with respect to interest rates. At December 31, 1995, the Company
had outstanding $753,425 of fixed rate Medium-Term Notes and $181,200 of
variable rate Medium-Term Notes. The Medium-Term Notes outstanding at December
31, 1995 had an average maturity of 3.7 years and a weighted average interest
rate of 7.03%.
The Company has entered into interest rate swap agreements which
effectively convert substantially all of its fixed rate notes into floating rate
obligations. The floating interest rates are based on LIBOR and generally adjust
semi-annually. The effective weighted average interest rates on the fixed rate
obligations, after giving effect to the interest rate swap agreements, were
7.07% and 6.86% at December 31, 1995 and 1994, respectively. The notional
amounts and maturities of the interest rate swap agreements outstanding at
December 31, 1995 were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------
<S> <C>
1996 - 1998 $ 461,700
1999 - 2001 642,000
2002 - 2004 535,000
2005 - 2007 300,000
-----------
$ 1,938,700
============
</TABLE>
Pursuant to an employee benefit plan, the Company has issued 8% Convertible
Debentures (the "8% Debentures") due December 1998 and 2000, and 6.5%
Convertible Debentures (the "6.5% Debentures") due December 2002 (collectively,
"the Debentures"). The Debentures are shown net of receivables, representing
loans by the Company to employees to finance a portion of the Debentures. A
portion of the principal amount of the employee loans may be forgiven at the end
of a calendar year in which certain specified pre-tax earnings are achieved by
the Company.
The 8% Debentures are fully convertible, at the option of the holders, into
340,000 shares of 7.5% Convertible Preferred Stock, which are then convertible
into 927,383 shares of common stock. The 6.5% Debentures are fully convertible,
at the option of the holders, into 1,945,009 shares of 6.0% Convertible
Preferred Stock, which are then convertible into 2,917,514 shares of common
stock. The Debentures are redeemable at the employees' option, subject to
certain conditions through 1998. In January 1996, the Company called for the
redemption of the 8% Debentures due 1998.
The aggregate amount of principal repayment requirements on long-term
borrowings for each of the five years subsequent to December 31, 1995, and the
total amount due thereafter, are as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------
<S> <C>
1996 $ 135,750
1997 168,750
1998 280,976
1999 155,475
2000 445,407
Thereafter 1,249,679
-----------
$2,436,037
===========
</TABLE>
-----------------
PAGE 47
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 8: PREFERRED STOCK
The Company has authorization to issue up to 20,000,000 shares of preferred
stock, in one or more series, with a par value of $20.00 per share.
REDEEMABLE PREFERRED STOCK
In connection with the acquisition of certain net assets of Kidder in December
1994 (See Note 2), the Company issued 2,500,000 shares of 20 year 9% Cumulative
Redeemable Preferred Stock, Series C (the "Redeemable Preferred Stock"), with a
stated value and liquidation preference of $100.00 per share. The Redeemable
Preferred Stock was recorded at its fair value of $185,000 at the date of
issuance, which is increased periodically by charges to retained earnings, using
the interest method, so that the carrying amount equals the redemption amount of
$250,000 at the mandatory redemption date on December 15, 2014. The Redeemable
Preferred Stock is redeemable at any time on or after December 16, 1999, in
whole or in part, at the option of the Company at a price of $100.00 per share,
plus accrued and unpaid dividends. Dividends on the Redeemable Preferred Stock
are cumulative and payable in quarterly installments. Holders of the Redeemable
Preferred Stock have no voting rights except in the event of certain dividend
payment defaults.
CONVERTIBLE PREFERRED STOCK
The Company also issued, in connection with the Kidder acquisition, 1,000,000
shares of 20 year 6% Cumulative Convertible Redeemable Preferred Stock, Series A
(the "Convertible Preferred Stock"), with a stated value and liquidation
preference of $100.00 per share. The Convertible Preferred Stock was recorded at
its fair value of $100,000. The Convertible Preferred Stock is convertible into
Common stock at any time, in whole or in part, at the option of the holder, at a
conversion price of $18.13 per common share, subject to adjustment. The
Convertible Preferred Stock is redeemable in cash at any time, in whole or in
part, at the option of the Company, at redemption prices equal to the greater of
$140.00 per share or a formula price for the first five years, then $105.00 per
share on or after December 16, 1999 and declining by $1.00 per share per year to
$100.00 per share on or after December 16, 2004, plus accrued and unpaid
dividends. Beginning December 16, 1999, in lieu of a cash payment upon
redemption, the Company may issue, subject to shareholder approval, shares of
its common stock equivalent to the redemption price divided by the then current
market price per common share. The Convertible Preferred Stock is subject to
mandatory redemption on December 15, 2014. Dividends on the Convertible
Preferred Stock are cumulative and payable in quarterly installments. Holders of
the Convertible Preferred Stock have no voting rights, except in the event of
certain dividend payment defaults.
- --------------------------------------------------------------------------------
NOTE 9: COMMON STOCK
During 1995, the Company repurchased 8,638,904 shares of its common stock at an
aggregate cost of $173,525. In the fourth quarter of 1995, the Company's Board
of Directors increased the number of shares of common stock authorized for
repurchase by 7,500,000 shares. In accordance with the repurchase programs, the
Company had available to repurchase at December 31, 1995 a maximum of 7,742,898
shares of common stock. As of December 31, 1995, the Company had 32,866,933
authorized shares of common stock reserved for issuance in connection with
convertible securities, and stock option and stock award plans.
In December 1994, the Company issued 21,500,000 shares of common stock
valued at $318,469 in connection with the Kidder acquisition (See Note 2), of
which 7,500,000 shares were issued from treasury stock at an average cost of
$16.95 per share.
On February 3, 1994, the Board of Directors of the Company declared a
three-for-two common stock split in the form of a 50% stock dividend, effective
on March 10, 1994. All share and per share data presented in this Annual Report
to Stockholders reflect the effect of the split. In addition, during the second
quarter of 1994, the stockholders of the Company approved an increase in the
number of common shares authorized for issuance from 100,000,000 shares to
200,000,000 shares.
-----------------
PAGE 48
<PAGE> 24
PAINEWEBBER ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
NOTE 10: CAPITAL REQUIREMENTS
PWI, a registered broker-dealer, is subject to the SEC Uniform Net Capital Rule
and New York Stock Exchange ("NYSE") 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 December 31, 1995, PWI's net capital of $587,544 was 13% of
aggregate debit items and its net capital in excess of the minimum required was
$494,549.
Advances, dividend payments and other equity withdrawals by PWI and other
regulated subsidiaries are restricted by the regulations of the SEC, NYSE, and
international securities and banking agencies, as well as by covenants in
various loan agreements. At December 31, 1995, the equity of the Company's
subsidiaries totaled approximately $1,550,000. Of this amount, approximately
$469,000 was not available for payment of cash dividends and advances.
Under the terms of certain borrowing agreements, the Company is subject to
dividend payment restrictions and minimum net worth and net capital
requirements. At December 31, 1995, these restrictions did not affect the
Company's ability to pay dividends.
- -------------------------------------------------------------------------------
NOTE 11: 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.
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 on the following page 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
December 31, 1995 and 1994. 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.
-----------------
PAGE 49
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Notional or Contract Amount
December 31, 1995 December 31, 1994
------------------------------------------------------
Purchases Sales Purchases Sales
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-backed forward contracts
and options written and purchased $13,140,269 $15,861,501 $ 8,757,807 $ 9,256,738
Foreign currency forward contracts, futures
contracts, and options written and purchased 1,894,724 2,040,414 2,325,721 1,855,557
Equity securities contracts including futures,
forwards, and options written and purchased 993,161 1,220,400 1,931,330 2,216,565
Other fixed income securities contracts
including futures, forwards, and options
written and purchased 2,647,504 3,148,312 5,321,100 5,374,546
Interest rate swaps, caps and floors 104,050 - 285,450 230,000
</TABLE>
Set forth below are the fair values of derivative financial instruments
held or issued for trading purposes as of December 31, 1995 and 1994. 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 Financial Accounting Standards Board Interpretation
No. 39 are met.
<TABLE>
<CAPTION>
Fair Value at
December 31, 1995 December 31, 1994
----------------------------------------------------
Assets Liabilities Assets Liabilities
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-backed forward contracts
and options written and purchased $129,272 $116,536 $ 30,606 $ 25,209
Foreign currency forward contracts, futures
contracts, and options written and purchased 83,222 48,710 55,345 44,244
Equity securities contracts including futures,
forwards, and options written and purchased 135,977 52,250 204,938 116,973
Other fixed income securities contracts
including futures, forwards, and options
written and purchased 22,353 58,148 10,150 8,988
Interest rate swaps, caps and floors 4,660 - 1,372 128
</TABLE>
Set forth below are the average fair values of derivative financial
instruments held or issued for trading purposes during the years ended December
31, 1995 and 1994. The average fair value is based on the average of the
month-end balances during the year.
<TABLE>
<CAPTION>
Average Fair Value for the Years Ended
December 31, 1995 December 31, 1994
----------------------------------------------------
Assets Liabilities Assets Liabilities
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage-backed forward contracts
and options written and purchased $118,784 $108,825 $202,484 $191,687
Foreign currency forward contracts, futures
contracts, and options written and purchased 71,805 89,857 56,528 53,810
Equity securities contracts including futures,
forwards, and options written and purchased 217,849 142,507 162,388 155,422
Other fixed income securities contracts
including futures, forwards, and options
written and purchased 16,620 21,449 23,527 13,293
Interest rate swaps, caps and floors 2,132 - 1,757 1,147
</TABLE>
-----------------
PAGE 50
<PAGE> 26
PAINEWEBBER ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
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 December 31, 1995, over 98% of the off-balance-sheet derivative
trading financial instruments had remaining maturities of less than one year.
The Company's risk of loss in the event of counterparty default is limited
to the current fair value or 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 $375,484
and $302,411 at December 31, 1995 and 1994, 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 following table summarizes the Company's principal transactions
revenues (net trading revenues) by business activity for the years ended
December 31, 1995 and 1994. Principal transactions revenues include realized and
unrealized gains and losses in the fair value of derivative and other financial
instruments.
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Corporate equities (includes equity securities, equity index futures, equity
index options and swaps, and equity options contracts) $ 377,650 $ 324,178
Municipals (includes municipal and government securities) 139,764 139,039
U.S. government (includes U.S. government securities,
financial futures and options contracts) 125,397 123,211
Mortgage and mortgage-backed (includes mortgage-backed and government
securities, mortgage-backed forwards and options contracts) 110,836 (116,032)
Corporate debt and other (includes debt, foreign currency forwards, futures
and options contracts, and other securities) 160,554 49,042
-------------------------
$ 914,201 $ 519,438
=========================
</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
December 31, 1995 and 1994, the Company had outstanding interest rate swap
agreements with commercial banks with notional amounts of $1,938,700 and
$1,836,250, respectively. These agreements effectively converted substantially
all of the Company's fixed rate debt at December 31, 1995 into floating rate
debt. The interest rate swap agreements entered into have had the effect of
increasing net interest expense on the Company's long-term borrowings by $1,682
for the year ended December 31, 1995 and reducing net interest expense by
$29,563 and $28,116 for the years ended December 31, 1994 and 1993,
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 December 31, 1995 and 1994. 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 4 for further discussion of interest rate swap agreements used
for hedging purposes.
-----------------
PAGE 51
<PAGE> 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 12: 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.
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 December 31, 1995, the market
value of client securities loaned to other brokers approximated the amounts due
or collateral obtained.
CREDIT RISK IN CLIENT 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 December 31, 1995 were settled
without adverse effect on the Company's financial statements, taken as a whole.
----------------
PAGE 52
<PAGE> 28
PAINEWEBBER ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
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 December
31, 1995, the Company had outstanding resale agreements and securities borrowed
of $8,502,505 with brokers and dealers, and $7,032,233 with commercial banks
which were collateralized by cash and securities of approximately equal fair
value.
- -------------------------------------------------------------------------------
NOTE 13: COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases office space and equipment under noncancelable operating
lease agreements which expire at various dates through 2014. As of December 31,
1995, the aggregate minimum future rental payments required by operating leases
with initial or remaining lease terms exceeding one year are as follows:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
1996 $ 146,640
1997 134,646
1998 120,294
1999 112,868
2000 78,731
Thereafter 404,511
---------
$ 997,690
=========
</TABLE>
Rentals are subject to periodic escalation charges and do not include
amounts payable for insurance, taxes and maintenance. In addition, minimum
payments have not been reduced by future minimum sublease rental income of
$27,680.
For the years ended December 31, 1995, 1994 and 1993, rent expense under
operating leases was $169,852, $145,508 and $143,120, respectively.
OTHER COMMITMENTS AND CONTINGENCIES
At December 31, 1995 and 1994, the Company was contingently liable under
unsecured letters of credit totaling $114,090 and $212,211, respectively, which
approximates fair value. In addition, at December 31, 1995, 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 $9,100 in certain investment funds as of
December 31, 1995.
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 certain specific circumstances.
At December 31, 1995 and 1994, securities with a fair value of $441,612 and
$674,669, respectively, had been loaned or pledged as collateral for securities
borrowed of approximately equal fair value.
In meeting the financing needs of certain of its clients, PWI has issued
standby letters of credit which amounted to $20,322 at December 31, 1995. The
standby letters of credit are fully collateralized by marginable securities.
In the normal course of business, the Company enters into when-issued
transactions and underwriting
-----------------
PAGE 53
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
commitments. Settlement of these transactions at December 31, 1995 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 14: STOCK OPTIONS AND STOCK AWARDS
Under the Company's various Stock Option and Award Plans (the "Plans"), officers
and other key employees are granted options (both non-qualified stock options
and incentive stock options) to purchase shares of common stock at a price not
less than the fair market value of the stock on the date the option is granted.
Options for the Company's common stock have also been granted to limited
partnerships, in which key employees of the Company are limited partners, and to
non-employee directors. Options are exercisable at either the date of grant, in
ratable installments or otherwise, generally over a period of one to four years
from the date of grant. The rights generally expire within ten years after the
date of grant.
The activity during the years ended December 31, 1993, 1994, and 1995 was
as follows:
<TABLE>
<CAPTION>
Number of Option price
Shares per share
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Options outstanding at December 31, 1992 (4,501,062 exercisable) 9,996,304 $ 6.55 - 16.27
Granted 5,244,957 14.75 - 20.42
Exercised (2,425,546) 6.55 - 19.47
Terminated (534,760) 7.22 - 19.47
----------------------------
Options outstanding at December 31, 1993 (2,776,678 exercisable) 12,280,955 6.55 - 20.42
Granted 4,095,550 14.44 - 18.67
Exercised (574,586) 6.55 - 16.29
Terminated (630,309) 7.14 - 19.46
----------------------------
Options outstanding at December 31, 1994 (5,201,831 exercisable) 15,171,610 6.55 - 20.42
Granted 5,666,430 14.44 - 20.13
Exercised (2,934,098) 6.55 - 19.46
Terminated (958,519) 6.55 - 19.46
----------------------------
Options outstanding at December 31, 1995 (3,188,665 exercisable) 16,945,423 $ 6.55 - 20.42
============================
</TABLE>
The Plans also provide for the granting of cash and restricted stock
awards, stock appreciation rights, restricted stock units, stock purchase
rights, performance units and other stock based awards. The Company had no stock
appreciation rights or stock purchase rights outstanding at December 31, 1995.
Restricted stock awards are granted to key employees, whereby shares of the
Company's common stock are awarded in the name of the employee, who has all
rights of a stockholder, subject to certain sale and transfer restrictions. The
awards generally contain restrictions on sales and transfer ranging from one to
three years. The restricted stock awards are subject to forfeiture if the
employee is terminated prior to the prescribed restriction period.
During the years ended December 31, 1995, 1994 and 1993, the Company
awarded 2,935,843, 2,431,882 and 3,628,205 shares, respectively, of restricted
stock, net of forfeitures. The market value of the restricted shares awarded has
been recorded as unamortized cost of restricted stock and is shown as a separate
component of stockholders' equity. The unamortized cost of restricted stock is
being amortized over the restricted period. The charge to compensation expense,
net of forfeitures, amounted to $51,908, $44,073 and $37,513, in the years ended
December 31, 1995, 1994 and 1993, respectively.
At December 31, 1995 and 1994, there were 6,560,893 and 5,319,467 shares,
respectively, available for future stock option, common stock and restricted
stock awards under these Plans.
-----------------
PAGE 54
<PAGE> 30
PAINEWEBBER ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
NOTE 15: EMPLOYEE BENEFIT PLANS
PENSION PLAN
The Company has a non-contributory defined benefit pension plan (the "Plan"),
which provides benefits to eligible employees. Pension expense for the years
ended 1995, 1994 and 1993 for the Plan included the following components:
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost for benefits earned during the period $ 14,641 $ 14,626 $ 9,906
Interest cost on projected benefit obligation 17,024 16,448 14,017
Actual return on Plan assets (47,269) 1,777 (20,203)
Net amortization and deferral 32,424 (15,167) 9,247
-------------------------------------
Net periodic pension cost $ 16,820 $ 17,684 $ 12,967
=====================================
</TABLE>
The following table summarizes the funded status and the prepaid pension
asset included in "Other assets" on the Company's Consolidated Statement of
Financial Condition at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
1995 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested $254,656 $182,032
Non-vested 8,185 5,851
---------------------
Accumulated benefit obligation 262,841 187,883
Effect of projected future compensation levels 15,273 10,821
---------------------
Projected benefit obligation 278,114 198,704
Plan assets at fair value 274,505 216,761
---------------------
Plan assets in excess of (less than) projected benefit obligation (3,609) 18,057
Unrecognized net assets existing at January 1, 1987
being recognized over fifteen years (5,365) (6,205)
Unrecognized prior service cost 5,817 7,854
Unrecognized net loss and actuarial experience 81,593 51,551
---------------------
Prepaid pension asset at year end $ 78,436 $ 71,257
=====================
</TABLE>
The projected benefit obligation for the Plan was determined for 1995 and
1994 using assumed discount rates of 7 1/4% and 8 3/4%, respectively, and an
assumed rates of compensation increase of 5%. The weighted average assumed rate
of return on Plan assets was 9 1/2% for 1995, 1994 and 1993.
The Company's funding policy is to contribute to the Plan amounts that can
be deducted for federal income tax purposes. The Company's contributions paid
for the Plan years 1995, 1994 and 1993 were $24,000, $10,295 and $66,604,
respectively. Plan assets consist primarily of equity securities and U.S.
government and agency obligations.
SAVINGS INVESTMENT PLAN
The PaineWebber Savings Investment Plan ("SIP") is a defined contribution plan
for eligible employees of the Company. Under SIP, employee contributions are
matched by the Company on a graduated scale, which for 1995 and 1994, was based
in part on the Company's pre-tax earnings and the compensation of eligible
employees. For 1993, the scale was based, in part, on the Company's pre-tax
return on equity and the compensation of eligible employees. The provision for
Company contributions for amounts contributed or to be contributed in cash or
stock to SIP amounted to approximately $7,400, $5,900 and $3,500 for the years
ended December 31, 1995, 1994 and 1993, respectively.
OTHER BENEFIT PLANS
The Company also provides certain life insurance and health care benefits to
employees. The costs of such benefits for the years ended December 31, 1995,
1994 and 1993 were $55,600, $50,800 and $45,800, respectively.
-----------------
PAGE 55
<PAGE> 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 16: INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. For financial reporting
purposes, net deferred tax assets are included in "Other assets" in the
Consolidated Statement of Financial Condition. Deferred tax assets are reflected
without reduction for a valuation allowance. Significant components of the
Company's deferred tax assets and liabilities as of December 31, 1995, 1994 and
1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Employee benefits $ 98,389 $ 73,783 $57,489
Deferred deductions 99,205 44,388 30,735
Valuation of trading assets and investments - - 6,857
Other 26,998 28,456 -
-----------------------------------
Total deferred tax assets 224,592 146,627 95,081
-----------------------------------
Deferred tax liabilities:
Tax over book depreciation 15,543 14,135 13,087
Accelerated deductions and deferred income 16,809 10,379 24,608
Safe harbor leases 5,567 6,135 6,625
Valuation of trading assets and investments 5,270 17,154 -
Other 3,711 11,910 12,674
-----------------------------------
Total deferred tax liabilities 46,900 59,713 56,994
-----------------------------------
$177,692 $ 86,914 $38,087
===================================
</TABLE>
The significant components of the provision for income taxes for the years
ended December 31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 64,953 $12,224 $103,890
State 27,033 9,930 35,403
Foreign 20,719 11,448 18,491
------------------------------------
Total current 112,705 33,602 157,784
------------------------------------
Deferred:
Federal (65,601) (17,947) 7,935
State (25,177) (6,490) (737)
Foreign - 3,589 (3,589)
------------------------------------
Total deferred (90,778) (20,848) 3,609
------------------------------------
$ 21,927 $12,754 $161,393
====================================
</TABLE>
-----------------
PAGE 56
<PAGE> 32
PAINEWEBBER ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
The reconciliation of income taxes, computed at the statutory federal rate,
to the provision for income taxes recorded for the years ended December 31,
1995, 1994 and 1993, is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
- --------------------------------------------------------------------------------------------------------
Amount % Amount % Amount %
------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax at statutory federal rate $35,937 35.0% $15,536 35.0% $142,652 35.0%
State and local income taxes,
net of federal tax benefit 1,206 1.2 2,236 5.0 22,533 5.5
Foreign rate differential (2,500) (2.4) (1,141) (2.6) (4,636) (1.1)
Nontaxable dividends and interest (9,754) (9.5) (3,545) (8.0) (2,383) (0.6)
Restricted stock dividends (1,025) (1.0) (864) (1.9) (636) (0.2)
Nondeductible expenses 2,779 2.7 2,743 6.2 1,055 0.3
Other, net (4,716) (4.6) (2,211) (5.0) 2,808 0.7
---------------------------------------------------------
$21,927 21.4% $12,754 28.7% $161,393 39.6%
=========================================================
</TABLE>
Income taxes paid for the years ended December 31, 1995, 1994 and 1993 were
$28,248, $68,455 and $128,089, respectively.
Undistributed earnings of the Company's foreign subsidiaries are considered
to be permanently reinvested and, accordingly, no provision for U.S. income
taxes is required on such earnings. As of December 31, 1995, such earnings were
estimated to be $128,000. The estimated U.S. income taxes that would be payable
upon the repatriation of such earnings are not material.
- -------------------------------------------------------------------------------
NOTE 17: GEOGRAPHIC DATA
The Company's business activities are highly integrated and constitute a single
industry segment for purposes of SFAS No. 14, "Financial Reporting for Segments
of a Business Enterprise." The table below presents information about the
Company's operations by geographic area. Calculations are based on the location
of the Company's individual legal entities within their respective subsidiaries.
Due to the global nature of the financial markets and the integration of the
Company's business activities, the Company believes that the amounts derived in
this manner are not necessarily meaningful in understanding its business.
<TABLE>
<CAPTION>
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Total revenues:
United States $ 5,107,476 $ 3,806,784 $ 3,848,280
Non-U.S.* 212,614 157,293 156,437
-----------------------------------------
$ 5,320,090 $ 3,964,077 $ 4,004,717
=========================================
Net revenues:
United States $ 3,161,799 $ 2,399,884 $ 2,731,634
Non-U.S.* 188,480 135,540 142,371
-----------------------------------------
$ 3,350,279 $ 2,535,424 $ 2,874,005
=========================================
Income before taxes:
United States $ 58,498 $ 220 $ 378,078
Non-U.S.* 44,179 44,165 29,498
-----------------------------------------
$ 102,677 $ 44,385 $ 407,576
=========================================
Identifiable assets:
United States $36,575,206 $29,758,945 $ 33,997,979
Non-U.S.* 9,096,088 6,097,180 3,028,930
------------------------------------------
$45,671,294 $35,856,125 $ 37,026,909
==========================================
</TABLE>
*Predominantly the United Kingdom.
-----------------
PAGE 57
<PAGE> 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE 18: EARNINGS PER COMMON SHARE
Earnings per common share is computed 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.
In 1995 and 1994, the Company computed its earnings per common share under
the modified treasury stock method in accordance with Accounting Principles
Board Opinion No. 15, "Earnings Per Share." The modified treasury stock method
is used when the number of shares obtainable upon exercise of outstanding
options, warrants and their equivalents, in the aggregate, exceeds 20% of the
Company's outstanding common stock. Under this method, all options, warrants and
their equivalents are assumed to have been exercised, whether or not dilutive,
and the aggregate proceeds used to repurchase up to 20% of the outstanding
shares. Any remaining proceeds are then used to reduce short-term borrowings.
In 1993, the Company computed its earnings per common share under the
treasury stock method which assumes the aggregate proceeds obtainable upon
exercise of dilutive options, warrants and their equivalents were used to
repurchase outstanding shares.
The Company calculated primary and fully-diluted earnings per common share
as follows:
<TABLE>
<CAPTION>
Years Ended December 31,
1995 1994 1993
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Primary:
Weighted average common shares outstanding 92,030,417 71,693,020 68,535,178
Incremental stock options and awards 9,241,691 6,370,453 5,824,821
Weighted average effect of Cumulative Participating
Convertible Voting Preferred Stock - - 4,329,959
----------------------------------------
Weighted average common and common equivalent shares 101,272,108 78,063,473 78,689,958
========================================
Net income $80,750 $31,631 $246,183
Interest savings on convertible debentures and
short-term borrowings 3,322 1,330 -
Preferred dividend requirements (29,291) (1,219) (1,834)
-----------------------------------------
Net income applicable to common shares $54,781 $31,742 $244,349
=========================================
Primary earnings per common share $ 0.54 $ 0.41 $ 3.11
=========================================
Fully Diluted:
Weighted average common shares outstanding 92,030,417 71,693,020 68,535,178
Incremental stock options and awards 9,241,691 7,673,929 6,785,963
Weighted average effect of Cumulative Participating
Convertible Voting Preferred Stock - - 4,329,959
Weighted average common shares issuable assuming conversion
of 8% Debentures and equity securities - 1,647,190 4,676,191
-----------------------------------------
Weighted average common and common equivalent shares 101,272,108 81,014,139 84,327,291
=========================================
Net income $80,750 $31,631 $246,183
Interest savings on convertible debentures and
short-term borrowings 1,526 2,181 3,004
Preferred dividend requirements (29,291) (969) -
-----------------------------------------
Net income applicable to common shares $52,985 $32,843 $249,187
=========================================
Fully diluted earnings per common share $ 0.52 $ 0.41 $ 2.95
=========================================
</TABLE>
----------------
PAGE 58
<PAGE> 34
PAINEWEBBER ANNUAL REPORT 1995
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND STOCKHOLDERS
PAINE WEBBER GROUP INC.
We have audited the accompanying consolidated statements of financial condition
of Paine Webber Group Inc. as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by man
agement, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Paine Webber Group Inc. at December 31, 1995 and 1994, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally accepted accounting
principles.
New York, New York
January 31, 1996
/s/ Ernst & Young LLP
-----------------------
-----------------
PAGE 59
<PAGE> 35
FIVE YEAR FINANCIAL SUMMARY
(in thousands of dollars except share and per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
1995(1) 1994(2) 1993 1992 1991
- -------------------------------------------------------------------------------------------------------------------------------
Amount % Amount % Amount % Amount % Amount %
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues
Commissions
Listed securities $ 734,525 21.9 $ 504,829 19.9 $ 525,541 18.3 $ 434,957 17.5 $ 390,434 18.5
Mutual funds 198,897 5.9 156,242 6.2 161,661 5.6 127,425 5.1 104,087 4.9
Options 81,992 2.5 75,494 3.0 74,058 2.6 65,615 2.6 47,092 2.2
Direct investments 74 0.0 858 0.0 4,553 0.2 15,288 0.6 24,937 1.2
Commodities 47,456 1.4 38,171 1.5 55,374 1.9 71,900 2.9 67,463 3.2
Over-the-counter securities 106,065 3.2 71,254 2.8 77,471 2.7 53,874 2.2 42,250 2.0
Insurance 103,757 3.1 123,446 4.9 97,469 3.4 52,819 2.2 46,785 2.2
-------------------------------------------------------------------------------------------------
1,272,766 38.0 970,294 38.3 996,127 34.7 821,878 33.1 723,048 34.2
-------------------------------------------------------------------------------------------------
Principal transactions
Corporate securities 627,203 18.7 330,480 13.0 345,360 12.0 293,422 11.8 365,815 17.4
U.S. government and
agency obligations 98,557 3.0 82,584 3.3 321,514 11.2 331,071 13.3 205,565 9.7
Municipal obligations 188,441 5.6 106,374 4.2 112,570 3.9 95,296 3.8 77,912 3.7
-------------------------------------------------------------------------------------------------
914,201 27.3 519,438 20.5 779,444 27.1 719,789 28.9 649,292 30.8
-------------------------------------------------------------------------------------------------
Investment banking
Selling concessions and
underwriting fees:
Corporate securities 171,903 5.1 136,494 5.4 223,745 7.8 217,180 8.8 160,950 7.6
Municipal obligations 35,842 1.1 32,228 1.3 55,573 1.9 40,705 1.6 30,288 1.4
Underwriting
management fees:
Corporate securities 35,596 1.0 44,592 1.7 70,510 2.4 51,394 2.1 37,485 1.8
Municipal obligations 7,736 0.2 7,413 0.3 13,303 0.5 9,385 0.4 6,033 0.3
Private placement and
other fees 75,700 2.3 63,776 2.5 50,512 1.8 65,657 2.6 62,847 3.0
-------------------------------------------------------------------------------------------------
326,777 9.7 284,503 11.2 413,643 14.4 384,321 15.5 297,603 14.1
-------------------------------------------------------------------------------------------------
Asset management 399,540 11.9 356,368 14.1 325,690 11.3 267,088 10.8 217,433 10.3
-------------------------------------------------------------------------------------------------
Other 150,056 4.5 138,902 5.5 113,253 3.9 76,114 3.1 64,271 3.1
-------------------------------------------------------------------------------------------------
Interest
Resale agreements 850,013 25.4 538,532 21.2 419,520 14.6 382,766 15.4 457,507 21.7
Securities borrowed 143,560 4.3 88,552 3.5 46,519 1.6 33,667 1.3 67,600 3.2
Trading inventory 876,583 26.2 569,990 22.5 621,828 21.6 463,956 18.7 443,114 21.0
Client margin accounts 309,429 9.2 220,382 8.7 158,440 5.5 132,388 5.3 133,711 6.4
Other 77,165 2.3 277,116 10.9 130,253 4.6 81,764 3.3 112,316 5.3
-------------------------------------------------------------------------------------------------
2,256,750 67.4 1,694,572 66.8 1,376,560 47.9 1,094,541 44.0 1,214,248 57.6
-------------------------------------------------------------------------------------------------
Total revenues 5,320,090 158.8 3,964,077 156.4 4,004,717 139.3 3,363,731 135.4 3,165,895 150.1
Interest expense 1,969,811 (58.8) 1,428,653 (56.4) 1,130,712 (39.3) 879,242 (35.4) 1,056,124 (50.1)
-------------------------------------------------------------------------------------------------
Net revenues $3,350,279 100.0 $2,535,424 100.0 $2,874,005 100.0 $2,484,489 100.0 $2,109,771 100.0
=================================================================================================
</TABLE>
---------------
PAGE 60
<PAGE> 36
FIVE YEAR FINANCIAL SUMMARY
(in thousands of dollars except share and per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
1995(1) 1994(2) 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------------
Amount % Amount % Amount % Amount % Amount %
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Non-interest expenses
Compensation
and benefits $ 2,004,585 59.8 $1,546,467 61.0 $1,628,889 56.7 $1,432,930 57.7 $1,228,070 58.2
Office and equipment 266,291 7.9 225,375 8.9 211,880 7.4 192,948 7.8 187,985 8.9
Communications 149,047 4.5 130,095 5.1 123,601 4.3 112,255 4.5 113,780 5.4
Business development 90,752 2.7 85,430 3.4 93,962 3.3 75,061 3.0 67,420 3.2
Brokerage, clearing and
exchange fees 93,657 2.8 82,577 3.2 79,752 2.8 75,689 3.1 63,219 3.0
Professional services 101,911 3.0 78,856 3.1 66,825 2.2 59,820 2.4 52,479 2.5
Other 541,359 16.2 342,239 13.5 261,520 9.1 196,671 7.9 170,571 8.1
-------------------------------------------------------------------------------------------------
Total non-interest
expenses 3,247,602 96.9 2,491,039 98.2 2,466,429 85.8 2,145,374 86.4 1,883,524 89.3
-------------------------------------------------------------------------------------------------
Income before taxes 102,677 3.1 44,385 1.8 407,576 14.2 339,115 13.6 226,247 10.7
Provision for income taxes 21,927 0.7 12,754 0.5 161,393 5.6 125,940 5.0 75,531 3.6
-------------------------------------------------------------------------------------------------
Net income $ 80,750 2.4 $ 31,631 1.3 $ 246,183 8.6 $ 213,175 8.6 $ 150,716 7.1
=================================================================================================
Earnings per
common share:(3)
Primary $ 0.54 $ 0.41 $ 3.11 $ 2.83 $ 2.10
Fully diluted $ 0.52 $ 0.41 $ 2.95 $ 2.37 $ 1.67
=================================================================================================
Weighted average
common shares:(3)
Primary 101,272,108 78,063,473 78,689,958 69,379,863 60,745,674
Fully diluted 101,272,108 81,014,139 84,327,291 92,365,438 95,178,175
=================================================================================================
Dividends declared
per share:
Common stock(3) $ .48 $ .48 $ .38 $ .31 $ .24
Preferred stock:
Redeemable Preferred Stock $ 9.00 $ -- $ -- $ -- $ --
Convertible Preferred Stock $ 6.00 $ -- $ -- $ -- $ --
7% Preferred Stock $ -- $ -- $ -- $ 2.336 $ 3.115
$1.375 Preferred Stock $ -- $ -- $ 1.241 $ 1.375 $ 1.375
Participating Preferred
Stock $ -- $ -- $ .33 $ .053 $ --
=================================================================================================
</TABLE>
(1) The 1995 results include after-tax charges of $146 million ($230 million
before income taxes) related to the resolution of the issues arising from
the Company's sale of public proprietary limited partnerships.
(2) The 1994 results include after-tax costs of $36 million ($50 million before
income taxes) and $34 million ($57 million before income taxes) related to
the purchase of certain net assets and specific businesses of Kidder,
Peabody Group Inc. and a non-recurring mutual fund charge, respectively.
(3) All share and per share data have been restated to reflect three-for-two
common stock splits in March 1994 and December 1991.
---------------
PAGE 61
<PAGE> 37
COMMON STOCK AND QUARTERLY INFORMATION
- -------------------------------------------------------------------------------
COMMON STOCK DIVIDEND HISTORY
During 1995, Paine Webber Group Inc. continued its policy of paying quarterly
common stock dividends. Dividends declared during the last twelve quarters were
as follows:
<TABLE>
<CAPTION>
Calendar Quarter
1st 2nd 3rd 4th
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 $ .12 $ .12 $ .12 $ .12
1994 .12 .12 .12 .12
1993 .08 .10 .10 .10
</TABLE>
On February 1, 1996, Paine Webber Group Inc. declared its 1996 first
quarter dividend of $0.12 per share. However, there is no assurance that
dividends will continue to be paid in the future since they are dependent upon
income, financial condition and other factors, including the restrictions
described in Note 10 in the Notes to Consolidated Financial Statements.
- -------------------------------------------------------------------------------
MARKET FOR COMMON STOCK
The common stock of Paine Webber Group Inc. is listed on the New York Stock
Exchange ("NYSE") and the Pacific Stock Exchange. The following table summarizes
the high and low sales prices per share of the common stock as reported on the
Composite Tape for the periods indicated:
<TABLE>
<CAPTION>
High Low
- ---------------------------------------------------------------------------
<S> <C> <C>
Calendar 1995
4th Quarter $ 23.13 $ 18.00
3rd Quarter 20.88 18.63
2nd Quarter 20.38 15.88
1st Quarter 18.13 14.38
======================
Calendar 1994
4th Quarter $ 15.88 $ 12.75
3rd Quarter 17.13 14.13
2nd Quarter 17.50 15.00
1st Quarter 19.75 16.50
======================
</TABLE>
On February 16, 1996, the last reported sale price per share of common
stock on the NYSE was $20.63.
The approximate number of holders of record of Paine Webber Group Inc.
common stock as of the close of business on February 16, 1996 was 6,528.
Included as one holder of record is PaineWebber Incorporated, which holds
securities beneficially owned by approximately 5,815 clients.
- -------------------------------------------------------------------------------
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
<TABLE>
<CAPTION>
Earnings (loss) per
Income (loss) Net common share
(In thousands of dollars Total Net before Income Primary/Fully
except per share amounts) Revenues Revenues taxes (loss) diluted
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Calendar 1995
4th Quarter $ 1,374,377 $ 887,672 $ 78,803 (1) $ 58,798 (1) $ .52/.50 (1)
3rd Quarter 1,379,558 912,025 116,702 78,190 .71/.67
2nd Quarter 1,332,245 824,798 (145,613)(1) (90,548)(1) (1.06)/(1.06)(1)
1st Quarter 1,233,910 725,784 52,785 34,310 .27/.27
===============================================================================
Calendar 1994
4th Quarter $ 1,039,231 $ 614,567 $(40,499)(2) $(19,299)(2) $ (.28)/(.28)(2)
3rd Quarter 940,049 589,814 33,895 20,337 .27/.26
2nd Quarter 902,349 578,966 (41,758)(3) (25,055)(3) (.35)/(.35)(3)
1st Quarter 1,082,448 752,077 92,747 55,648 .71/.70
===============================================================================
</TABLE>
The sum of the quarterly earnings per common share amounts does not equal
the annual amount reported, as per share amounts are computed independently for
each quarter and the full year based on respective weighted average common and
common equivalent shares outstanding during each period.
(1) Includes after-tax charges of $125.9 million ($200 million before income
taxes) and $20.1 million ($30 million before income taxes) in the second
and fourth quarters, respectively, related to the resolution of the issues
arising from the Company's sale of public proprietary limited partnerships.
(2) Includes after-tax costs of $36 million ($50 million before income taxes)
related to the Kidder acquisition.
(3) Includes an after-tax charge of $34 million ($57 million before income
taxes) related to a non-recurring mutual fund charge.
----------------
PAGE 62
<PAGE> 1
EXHIBIT 21
PAINE WEBBER GROUP INC.
SUBSIDIARIES OF THE REGISTRANT
A list of significant subsidiaries, all of which are consolidated, of Paine
Webber Group Inc. (the "Company") as of December 31, 1995 and the state or
jurisdiction in which organized follows. In each case, 100% of the voting
securities are owned by the Company. Certain subsidiaries have been omitted
because, in the aggregate, they do not constitute a significant subsidiary.
<TABLE>
<CAPTION>
State or
jurisdiction of
incorporation or
Name organization
---- ------------------
<S> <C>
PaineWebber Incorporated Delaware
Mitchell Hutchins Asset Management Inc. Delaware
Correspondent Services Corporation (csc) Delaware
PaineWebber International (U.K.) Ltd. United Kingdom
PaineWebber Real Estate Inc. Delaware
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report on Form 10-K
of Paine Webber Group Inc. of our report dated January 31, 1996, included in the
1995 Annual Report to Stockholders of Paine Webber Group Inc.
We also consent to the incorporation by reference in the registration statements
on Form S-8 (Registration Nos. 2-56284, 2- 64984, 2-74819, 2-78627, 2-81554,
2-87418, 2-92770, 33-2959, 33-20240, 33-22265, 33-39539, 33-40489, 33-45583,
33-65296, 33- 65298, 33-53489, 33-55451 and 33-55457) and on Form S-3
(Registration Nos. 2-99979, 33-7738, 33-29253, 33-33613, 33-38960, 33-39818,
33-47267, 33-58124, 33-53776, 33-51149 and 33-52695) of Paine Webber Group Inc.
and in the related prospectuses, of our reports dated January 31, 1996 with
respect to the consolidated financial statements and financial statement
schedule of Paine Webber Group Inc. included and/or incorporated by reference
in this 1995 Annual Report on Form 10-K for the year ended December 31, 1995.
/s/ ERNST & YOUNG LLP
NEW YORK, NEW YORK
MARCH 26, 1996
<TABLE> <S> <C>
<ARTICLE> BD
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF PAINE WEBBER GROUP INC. FOR THE PERIOD ENDED DECEMBER
31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
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<NAME> N/A
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 649,565
<RECEIVABLES> 4,814,667
<SECURITIES-RESALE> 16,699,295
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186,760
100,000
<COMMON> 104,492
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<TRADING-REVENUE> 914,201
<INTEREST-DIVIDENDS> 2,256,750
<COMMISSIONS> 1,272,766
<INVESTMENT-BANKING-REVENUES> 326,777
<FEE-REVENUE> 399,540
<INTEREST-EXPENSE> 1,969,811
<COMPENSATION> 2,004,585
<INCOME-PRETAX> 102,677
<INCOME-PRE-EXTRAORDINARY> 80,750
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