SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
x Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended Commission file number
December 31, 1997 1-12043
___Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from _________ to _________.
FAHNESTOCK VINER HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Ontario, Canada 98-0080034
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
P.O. Box 2015, Suite 1110
20 Eglinton Avenue West
Toronto, Ontario, Canada M4R 1K8
(Address of principal executive offices)(Zip Code)
Registrant's Telephone number, including area code: (416) 322-1515
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Class A non-voting shares New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Not Applicable
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. [ ]
The aggregate market value of the voting stock of the Company held
by non-affiliates of the Company cannot be calculated because no class
of voting stock of the Company is publicly traded. The aggregate
market value of the Class A non-voting shares held by non-affiliates of
the Company at December 31, 1997 was $216,364,500.
The number of shares of the Company's Class A non-voting shares and
Class B voting shares (being the only classes of common stock of the
Company), outstanding on March 25, 1998 was 12,598,760 and
99,680 shares, respectively.
_______________________________________________________
TABLE OF CONTENTS
Item Number Page
PART 1
1. Business 1
2. Properties 11
3. Legal Proceedings 12
4. Submission of Matters to a Vote of Security Holders 12
PART II
5. Market for the Registrant's Common Equity and Related
Stockholder Matters 13
6. Selected Financial Data 16
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
8. Financial Statements and Supplementary Data 21
9. Changes in and Disagreements with Accountants and
Financial Disclosure 21
PART III
10. Directors and Executive Officers of the Registrant 22
11. Executive Compensation 23
12. Security Ownership of Certain Beneficial Owners and
Management 28
13. Certain Relationships and Related Transactions 29
PART IV
14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 30
Signatures 31
PART I
Item 1. BUSINESS
Fahnestock Viner Holdings Inc., formerly called E.A. Viner Holdings
Limited and immediately prior to that called Goldale Investments
Limited (the "Company"), maintains its registered office and principal
place of business at 20 Eglinton Avenue West, Suite 1110, Toronto,
Ontario M4R 1K8 and its telephone number is (416)322-1515.
The Company was originally incorporated under the laws of British
Columbia. Pursuant to Certificate and Articles of Continuation
effective October 12, 1977, the Company's legal existence was
continued under the Business Corporation Act (Ontario) as if it had
been incorporated as an Ontario corporation.
The Company is a holding company and carries on no active business.
It owns, directly or through intermediate subsidiaries, Fahnestock &
Co., Inc. (formerly Edward A. Viner & Co., Inc.), a New York
corporation ("Fahnestock"), Freedom Investments, Inc., a Delaware
corporation ("Freedom"), Hudson Capital Advisors Inc., a New York
corporation ("Hudson Capital") and, since July 1997, First of
Michigan Corporation, a Michigan corporation ("FOM"). Fahnestock,
Freedom, FOM and Hudson Capital are sometimes collectively
referred to as the "Operating Subsidiaries". Through the Operating
Subsidiaries, the Company is engaged in the securities brokerage and
trading business and offers investment advisory and other related
financial services. Fahnestock and FOM are the principal Operating
Subsidiaries. Fahnestock is engaged in the securities brokerage
business in the United States and, through the agency of local licensed
broker-dealers, Fahnestock operates offices in Buenos Aires, Argentina
and Caracas, Venezuela. FOM is engaged in securities brokerage and
trading and investment banking in the United States. Freedom provides
discount securities brokerage services in the United States. Hudson
Capital is engaged in the investment advisory business in the United
States.
On July 17, 1997, a subsidiary of Fahnestock acquired approximately
99.4% of the outstanding common stock of First of Michigan Capital
Corporation ("FOMCC") by way of a US$15.00 per share cash tender
offer. On July 31, 1997, the Company acquired the remaining
outstanding shares pursuant to a back-end "short-form" merger of the
Company's subsidiary with and into FOMCC. The total purchase price
was $37,609,000. The acquisition was accounted for by the purchase
method.
At December 31, 1997, Fahnestock and FOM together employed 724
full-time registered representatives and 639 employees in trading,
research, investment banking, investment advisory services, public
finance and support positions for Fahnestock's 47 offices in the
United States, FOM's 26 offices (of which 25 are located in Michigan)
and for Freedom in its offices in Omaha, Nebraska. Fahnestock, FOM
and Freedom are broker-dealers registered with the Securities and
Exchange Commission (the "SEC") and in all other jurisdictions where
their respective businesses requires registration. Fahnestock, in
addition to its United States operations, conducts business in Caracas
and Buenos Aires through local broker-dealers who are licensed under
the laws of Venezuela and Argentina, respectively.
The operations of the Company and the Operating Subsidiaries are
within a single industry segment. No material part of the Company's
revenues, taken as a whole, are derived from a single customer or
group of customers.
The Operating Subsidiaries are collectively engaged in a broad range of
activities in the securities brokerage business, including retail securities
brokerage, institutional sales, bond trading and investment banking -
offering both corporate and public finance services, underwriting,
research, market making and investment advisory and asset
management services.
Fahnestock, FOM and Freedom are members of the New York Stock
Exchange, Inc. ("NYSE") and the National Association of Securities
Dealers, Inc. ("NASD"); and Fahnestock and FOM are members of the
American Stock Exchange, Inc. ("AMEX"), the Chicago Stock
Exchange Incorporated ("CSE"), the Chicago Board Options
Exchange, Inc. ("CBOE"), the Philadelphia Stock Exchange, Inc.
("PHLX"), the New York Futures Exchange, Inc. ("NYFE"), the
National Futures Association ("NFA") and the Securities Industry
Association ("SIA"). In addition, Fahnestock has satisfied the
requirements of the Municipal Securities Rulemaking Board ("MSRB")
for effecting customer transactions in municipal securities.
Fahnestock, which acts as a clearing broker for FOM and Freedom, is
also a member of the Securities Investor Protection Corporation
("SIPC"), which provides, in the event of the liquidation of a broker-
dealer, protection for customers' accounts (including the customer
accounts of other securities firms when it acts on their behalf as a
clearing broker) held by the firm of up to $500,000 for each customer,
subject to a limitation of $100,000 for claims for cash balances. SIPC is
funded through assessments on registered broker-dealers which may
not exceed 1% of a broker-dealer's gross revenues (as defined); SIPC
assessments were a flat fee of $150 in 1997 and in 1996 and 1995 was
0.095% of the adjusted combined gross revenues of Fahnestock and
Freedom (and until July, 1995, Pace Securities Inc.). In addition,
Fahnestock has purchased protection from Aetna Casualty and Surety
Company of an additional $9,500,000 per customer. Upon request,
Fahnestock, at the customer's expense, will obtain additional protection
for a customer whose securities account is in excess of $10,000,000.
The following table sets forth the amount and percentage of the
Company's revenues from each principal source for the periods
indicated and includes the consolidated revenues of FOMCC from July
17, 1997, the date of its acquisition.
Year ended December 31,
1997 % 1996 % 1995 %
(Dollars in thousands, except percentages)
Commissions $103,323 43% $73,992 35% $69,072 37%
Principal
transactions, net 65,972 27% 80,508 38% 56,430 1%
Interest 40,123 17% 32,981 15% 36,233 19%
Underwriting fees 11,042 4% 8,672 4% 6,540 4%
Advisory fees 15,808 7% 14,189 6% 11,251 6%
Other 5,890 2% 3,646 2% 4,907 3%
Total revenues $242,158 100% $213,988 100% $184,433 100%
The Company derives most of its revenues from the operations of its
principal subsidiaries, Fahnestock and FOM. Although maintained as
separate entities, because Fahnestock acts as clearing broker in
transactions initiated by FOM and Freedom, the operations of the
Company's brokerage subsidiaries are closely related. Except as
expressly otherwise stated, the discussion below pertains to the
operations of Fahnestock.
COMMISSIONS
A significant portion of Fahnestock's and FOM's revenues is derived
from commissions from retail and, to a lesser extent, institutional
customers on brokerage transactions in exchange-listed and over-the-
counter corporate equity and debt securities. Brokerage commissions
are charged on both exchange and over-the-counter transactions in
accordance with a schedule which Fahnestock has formulated. In
certain cases, discounts are granted to customers, generally on large
trades or to active customers. Fahnestock and FOM also provide a
range of services in other financial products to retail and institutional
customers, including the purchase and sale of options on the CBOE,
the AMEX and other stock exchanges as well as futures on indexes
listed on various exchanges.
Commission business relies heavily on the services of account
executives with good sales production records. Competition among
securities firms for such personnel is intense. Retail clients' accounts
are serviced by retail account executives (excluding the institutional
account executives referred to below) in Fahnestock's and FOM's
offices. Fahnestock's and FOM's institutional clients, which include
mutual funds, banks, insurance companies, and pension and profit-
sharing funds, are served by institutional brokers. (For a discussion of
the regulation of these, see "Regulation".) The institutional department
is supported by the research department which provides coverage of a
number of commercial and industrial as well as emerging growth
companies and special situation investments.
Securities Clearance Activities
Fahnestock provides a full range of securities clearance services to
three non-affiliated securities firms on a fully-disclosed basis. In
addition to commissions and service charges, Fahnestock derives
substantial interest revenue from its securities clearing activities. See
"Interest" and "Securities Borrowed And Loaned." In most cases,
Fahnestock provides margin financing for the clients of the securities
firms for which it clears, with the securities firms guaranteeing the
accounts of their clients. Fahnestock also extends margin credit directly
to its correspondent firms to the extent that such firms hold securities
positions for their own account. Because Fahnestock must rely on the
guarantees and general credit of its correspondent firms, Fahnestock
may be exposed to significant risks of loss if any of its correspondents
or its correspondents' customers are unable to meet their respective
financial commitments. See "Risk Management."
The correspondent clearing procedure for fully-disclosed accounts
involves a series of steps: The correspondent broker opens an account
for its customer and takes the customer's order for the purchase and
sale of securities. The order is then executed by the correspondent firm
or Fahnestock. Fahnestock completes the transaction by taking
possession of the customer's cash, if securities are being purchased, or
certificates, if securities are being sold, lending the customer any
amounts required if the purchase is being made on margin, and making
delivery to the broker for the other party to the transaction. Fahnestock
or the correspondent sends the customer a written confirmation
containing the details of each transaction the day after it is executed,
and Fahnestock sends each customer a monthly statement for the entire
account. The execution, clearance, settlement, receipt, delivery and
record-keeping functions involved in the clearing process require the
performance of a series of complex steps, many of which are
accomplished with data processing equipment.
In addition to executing trades, Fahnestock also provides other services
to its correspondents, including performance of accounting functions,
provision of office services, custody of securities and compliance with
regulatory requirements. The responsibilities rising out of Fahnestock's
clearing relationships are allocated pursuant to agreements with its
correspondents. To the extent that the correspondent broker has
financial resources available, this allocation of responsibilities protects
Fahnestock against claims by customers of correspondent brokers
where the responsibility for the function giving rise to a claim has been
allocated to the correspondent broker. If the correspondent is unable to
meet its obligations to its customers, however, dissatisfied customers
may attempt to obtain recovery from Fahnestock.
Floor Brokerage
In addition to transactions in which Fahnestock executes transactions
for itself or its own customers, Fahnestock acts as agent for the
accounts of other brokers. With its memberships on the various
exchanges, Fahnestock attempts to utilize excess execution
capacity by executing orders for other brokerage firms. Fahnestock
bills such other firms at prevailing rates which are set on a basis
competitive with rates charged by other brokerage firms performing
similar functions.
PRINCIPAL TRANASACTIONS
Market-Making
Fahnestock acts as both principal and as agent in the execution of its
customers' orders in the over-the-counter market. Fahnestock buys,
sells and maintains an inventory of a security in order to "make a
market" in that security. (To "make a market" in a security is to
maintain firm bid and offer prices by standing ready to buy or sell round
lots at publicly quoted prices. In order to make a market it is necessary
to commit capital to buy, sell and maintain an inventory of a security.)
As of December 31, 1997, Fahnestock made approximately 1,800
dealer markets in the common stock or other equity securities of
corporate issuers. In executing customer orders for over-the-counter
securities in which it does not make a market, Fahnestock generally
charges a commission and acts as agent or will act as principal by
marking the security up or down in a riskless transaction, working
with another firm which is a market-maker acting as principal.
However, when the buy or sell order is in a security in which
Fahnestock makes a market, Fahnestock normally acts as principal and
purchases from or sells to its customers at a price which is approximately
equal to the current inter-dealer market price plus or minus a mark-up or
mark-down. The stocks in which Fahnestock makes a market also include those
of issuers which are followed by Fahnestock's research department.
The U.S. Justice Department and the SEC have completed an
investigation of industry over-the-counter trading practices. As a result
of the investigation, the SEC issued "The 21a Report" detailing
industry practices, some of which were deemed anti-competitive. The
SEC has effected a "Firm Quote Rule", an "Order Exposure Rule" and
a "Best Execution Interpretation" (the "Rules"), all of which are
intended to correct the aforementioned practices and offer public
customers better executions. The Rules became effective on
January 10, 1997 and have negatively impacted the day to day
profitability of Fahnestock's OTC trading department. The impact of
the Rules has been to narrow the spread (the difference between the bid
and ask prices) on virtually all of the securities in which Fahnestock
makes markets, thus reducing potential profitability in day to day
transactions.
Trading profits or losses depend on (i) the skills of those employees
engaged in market-making activities, (ii) the capital allocated to holding
positions in securities and (iii) the general trend of prices in the
securities markets. Trading as principal requires the commitment of
capital and creates an opportunity for profits or an exposure to risk of
loss due to market fluctuations. Fahnestock takes both long and short
positions in those securities in which it makes a market.
The size of its securities positions on any one day may not be
representative of Fahnestock's exposure on any other day because
securities positions vary substantially based upon economic and market
conditions, allocations of capital, underwriting commitments and
trading volume. Also, the aggregate value of inventories of stocks
which Fahnestock may carry is limited by the Net Capital Rule. See
"Net Capital Requirements" and Item 7, "Management's Discussion
and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
To a lesser extent, Fahnestock also buys and sells municipal bonds,
Ginnie Maes, Unit Investment Trusts and U.S. Treasury Securities as
well as other fixed income securities for its own account in the
secondary market and maintains an inventory of municipal bonds
and other securities and resells bonds from its inventory to dealers as
well as to institutional and retail customers.
Other Trading Activities
Fahnestock and FOM hold positions in their trading accounts in over-
the-counter securities and in exchange-listed securities in which they do
not make a market, and may engage from time to time in other types of
principal transactions in securities. Fahnestock has several trading
departments including: a convertible bond department, a risk arbitrage
department, a corporate bond dealer department, a municipal bond
department, a government/mortgage backed securities department, a
department that underwrites and trades U.S. government agency issues
and a department that trades high yield securities (commonly referred
to as "junk bonds"). FOM has several trading departments including:
over-the-counter equities, taxable corporate bonds, municipal bonds,
UITs and US government bonds. These departments continually
purchase and sell securities and make markets in order to make a profit
on the inter-dealer spread. Although Fahnestock and FOM from time
to time holds an inventory of securities, more typically, they seek to
match customer buy and sell orders. Fahnestock and FOM do not carry
"bridge loans" (i.e., short-term loans made in anticipation of
intermediate-term or long-term financing). No substantial losses
relating to Fahnestock's risk arbitrage activities have been incurred.
Investment Income
Dividends and interest earned on securities held in inventory are treated
as investment income.
Principal transactions, including market-making and other trading and
investment activities, accounted for approximately 27%, 38% and
31%, respectively, of the Company's total revenues for the fiscal years
ended December 31, 1997, 1996 and 1995, respectively.
Risk Management
Fahnestock's and FOM's principal transactions and brokerage activities
expose them to credit and market risks. When Fahnestock or FOM
advances funds or securities to a counterparty in a principal transaction
or to a customer in a brokered transaction, it is subject to the risk that
the counterparty or customer will not repay such advances. If the
market price of the securities purchased or loaned has declined or
increased, respectively, Fahnestock or FOM may be unable to recover
some or all of the value of the amount advanced. A similar risk is also
present where a customer is unable to respond to a margin call and the
market price of the collateral has dropped. In addition, Fahnestock's
and FOM's securities positions are subject to fluctuations in market
value and liquidity.
Fahnestock and FOM monitor market risks through daily profit and
loss statements and position reports. Each trading department adheres
to internal position limits determined by senior management and
regularly reviews the age and composition of its proprietary
accounts. Positions and profits and losses of each trading department
are reported to senior management on a daily basis. Fahnestock or
FOM may from time to time attempt to reduce market risk through the
utilization of various derivative securities as a hedge to market
exposure.
In addition to monitoring the credit worthiness of its customers,
Fahnestock imposes more conservative margin requirements than those
of the NYSE. Generally, Fahnestock limits customer loans to an
amount not greater than 65% of the value of the securities (or 50% if
the securities in the account are concentrated in a limited number of
issues). In comparison, the NYSE permits loans of up to 75% of the
value of the securities in a customer's account.
INTEREST
Fahnestock derives net interest income from the financing of customer
margin loans and its securities lending activities. See "Customer
Financing" and "Securities Borrowed and Loaned."
Customer Financing
Customers' securities transactions are effected on either a cash or
margin basis. In margin transactions, Fahnestock extends credit to the
customer, collateralized by securities and/or cash in the customer's
account, for a portion of the purchase price, and receives income
from interest charged on such extensions of credit. The customer is
charged for such margin financing at interest rates based upon the
brokers call rate (the prevailing interest rate charged by banks on
collateralized loans to broker-dealers), to which is added an
additional amount of up to 2%.
In each of the last five years, financing activities conducted on behalf of
its customers has provided Fahnestock with a substantial source of
revenue. A substantial portion of these financing activities are
undertaken in connection with Fahnestock's securities clearance
business and its own retail business. See "Commissions." The amount
of Fahnestock's interest revenue is affected by the volume of customer
borrowing and by prevailing interest rates.
The primary source of funds to finance customers' margin account
borrowings are collateralized and uncollateralized bank borrowings,
funds generated by lending securities on a cash collateral basis in excess
of the amount of securities borrowed and free credit balances in
customers' accounts. Free credit balances in customers' accounts, to the
extent not required to be segregated pursuant to SEC rules, may be
used in the conduct of Fahnestock's business, including the extension of
margin credit. Subject to applicable regulations, interest is paid by
Fahnestock on most, but not all, of such free credit balances
awaiting reinvestment by customers. To the extent that the use of free
credit balances reduces borrowings, interest expense is reduced.
Margin lending by Fahnestock is subject to the margin rules of the
Board of Governors of the Federal Reserve System, NYSE margin
requirements and Fahnestock's internal policies. By permitting
customers to purchase on margin, Fahnestock takes the risk of a
market decline that would reduce the value of its collateral below the
customer's indebtedness before the collateral could be sold. Under
applicable NYSE rules, in the event of a decline in the market value of
the securities in a margin account, Fahnestock is obligated to require
the customer to deposit additional securities or cash in the account so
that at all times the loan to the customer for the purchase of marginable
securities is no greater than 75% of the market value of such securities
or cash in the account.
Securities Borrowed and Loaned
In connection with both its trading and brokerage activities, Fahnestock
borrows securities to cover short sales and to complete transactions in
which customers have failed to deliver securities by the required
settlement date, and lends securities to other brokers and dealers
for similar purposes. When borrowing securities, Fahnestock is
required to deposit cash or other collateral, or to post a letter of credit
with the lender and receives a rebate (based on the amount of cash
deposited) or pays a fee calculated to yield a negotiated rate of return.
When lending securities, Fahnestock receives cash or similar collateral
and generally pays a rebate (based on the amount of cash deposited) to
the other party to the transaction. Transactions in which stocks are
borrowed or loaned are generally executed pursuant to written
agreements with counterparties which require that the securities
borrowed be marked to market on a daily basis and that excess
collateral be refunded or that additional collateral be furnished in the
event of changes in the market value of the securities. Margin
adjustments are usually made on a daily basis through the facilities of
various clearing houses.
UNDERWRITING BUSINESS
Fahnestock and FOM manage the underwriting of both corporate and
municipal securities including the securitization of corporate and other
obligations, and participates as an underwriter in the syndicates of
issues managed by other securities firms. The corporate finance
department is responsible for originating and developing transactions
which include underwriting, mergers and acquisitions, private
placements, valuations, financial advisory work and other investment
banking matters.
The management of and participation in public offerings involve
significant risks. An underwriter may incur losses if it is unable to resell
at a profit the securities it has purchased. Under federal and state
securities and other laws, an underwriter is subject to substantial
liability for misstatements or omissions that are judged to be material in
prospectuses and other communications related to underwriting.
Underwriting commitments cause a charge against net capital.
Consequently, the aggregate amount of underwriting commitments at
any one time may be limited by the amount of net capital available. The
Company derived 4% of its revenues from underwriting in 1997, the
same as both 1996 and 1995. See "Net Capital Requirements" and
Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources."
INVESTMENT ADVISORY BUSINESS
Hudson Capital and Fahnestock (through its divisions Fahnestock
Asset Management and Newbold Investment Advisory) provide
investment advisory services for a fee to their respective clients. These
equity and debt management service fees are based on the value
of the portfolio under management. In addition to the management fee,
transactions executed for such accounts may be effected at standard
rates of commission or at discounts from Fahnestock's customary
commission schedule.
At December 31, 1997 Fahnestock and Hudson Capital together had
approximately $1.145 billion under management. The agreements
under which the portfolios are managed on behalf of institutions and
other investors generally provide for termination by either party at
any time.
ADMINISTRATION AND OPERATIONS
Administration and operations personnel are responsible for the
processing of securities transactions; the receipt, identification and
delivery of funds and securities; the maintenance of internal financial
controls; accounting functions; custody of customers' securities; the
handling of margin accounts for Fahnestock and its correspondents;
and general office services. Fahnestock employs approximately 180
persons in its administration and operations departments at its head
office and approximately 105 people in its administration and
operations departments in FOM's Detroit headquarters.
There is considerable fluctuation during any year and from year to year
in the volume of transactions Fahnestock must process. Fahnestock
records transactions and posts its books on a daily basis. Operations
personnel monitor day-to-day operations to assure compliance with
applicable laws, rules and regulations. Failure to keep current and
accurate books and records can render Fahnestock liable for
disciplinary action by governmental and self-regulatory organizations.
Fahnestock executes its own and certain of its correspondents'
securities transactions on all United States exchanges of which it is a
member and in the over-the-counter market. Fahnestock clears all of its
securities transactions (i.e., it delivers securities that it has sold,
receives securities that it has purchased and transfers related funds)
through its own facilities and through memberships in various clearing
corporations and custodian banks.
Fahnestock believes that its internal controls and safeguards are
adequate, although fraud and misconduct by customers and employees
and the possibility of theft of securities are risks inherent in the
securities industry. As required by the NYSE and certain other
authorities, Fahnestock carries a broker's blanket insurance bond
covering loss or theft of securities, forgery of checks and drafts,
embezzlement, fraud and misplacement of securities. This bond
provides coverage of up to an aggregate of $15,000,000 with a
self-insurance retention of $100,000.
COMPETITION
Fahnestock encounters intense competition in all aspects of the
securities business and competes directly with other securities firms, a
significant number of which have substantially greater resources and
offer a wider range of financial services. In addition, there has recently
been increasing competition from other sources, such as commercial
banks, insurance companies and certain major corporations which have
entered the securities industry through acquisition, and from other
entities. Additionally, foreign-based securities firms and commercial
banks regularly offer their services in performing a variety of
investment banking functions including: merger and acquisition advice,
leveraged buy-out financing, merchant banking, and bridge financing,
all in direct competition with U.S. broker-dealers. These developments
have led to the creation of a greater number of integrated financial
services firms that may be able to compete more effectively than
Fahnestock for investment funds by offering a greater range of financial
services.
Fahnestock believes that the principal factors affecting competition in
the securities industry are the quality and ability of professional
personnel and relative prices of services and products offered.
Fahnestock and its competitors employ advertising and direct
solicitation of potential customers in order to increase business and
furnish investment research publications in an effort to retain existing
and attract potential clients. Many of Fahnestock's competitors engage
in these programs more extensively than does Fahnestock.
There is substantial commission discounting by broker-dealers
competing for institutional and retail brokerage business. The
continuation of such discounting and an increase in the incidence
thereof could adversely affect Fahnestock. However, an increase in the
use of discount brokerages could be beneficial to Freedom.
REGULATION
The securities industry in the United States is subject to extensive
regulation under both federal and state laws. The SEC is the federal
agency charged with administration of the federal securities laws. Much
of the regulation of broker-dealers has been delegated to self-
regulatory organizations, principally the NASD and the national
securities exchanges such as the NYSE, which has been designated as
Fahnestock's primary regulator with respect to securities activities and
the National Futures Association which has been designated as
Fahnestock's primary regulator with respect to commodities activities.
The CBOE has been designated Fahnestock's primary regulator with
respect to options trading activities. These self-regulatory organizations
adopt rules (subject to approval by the SEC or the Commodities
Futures Trading Commission ("CFTC"), as the case may be) governing
the industry and conduct periodic examinations of Fahnestock's and
Freedom's operations. Securities firms are also subject to regulation by
state securities commissions in the states in which they do business.
Fahnestock is registered as a broker-dealer in 50 states and Puerto
Rico. FOM is registered as a broker-dealer in all 50 states except
Nebraska. FOM's primary regulator with respect to securities activities
has been designated as the NYSE.
The regulations to which broker-dealers are subject cover all aspects of
the securities business, including sales methods, trade practices among
broker-dealers, the use and safekeeping of customers' funds and
securities, capital structure of securities firms, record keeping and the
conduct of directors, officers and employees. The SEC has adopted
rules requiring underwriters to ensure that municipal securities issuers
provide current financial information and imposing limitations on
political contributions to municipal issuers by brokers, dealers and
other municipal finance professionals. Additional legislation, changes
in rules promulgated by the SEC, the CFTC and by self-regulatory
organizations, or changes in the interpretation or enforcement of
existing laws and rules may directly affect the method of operation and
profitability of broker-dealers. The SEC, self-regulatory organizations,
and state securities commissions may conduct administrative
proceedings which can result in censure, fine, issuance of cease and
desist orders or suspension or expulsion of a broker-dealer, its officers,
or employees. The principal purpose of regulating and disciplining
broker-dealers is to protect customers and the securities markets,
rather than to protect creditors and shareholders of broker-dealers.
Fahnestock and Hudson Capital are also subject to regulation by the
SEC and under certain state laws in connection with their businesses as
investment advisors.
Margin lending by Fahnestock is subject to the margin rules of the
Board of Governors of the Federal Reserve System and the NYSE.
Under such rules, Fahnestock is limited in the amount it may lend in
connection with certain purchases of securities and is also required
to impose certain maintenance requirements on the amount of
securities and cash held in margin accounts. In addition, Fahnestock
may (and currently does) impose more restrictive margin requirements
than required by such rules. See "Customer Financing."
NET CAPITAL REQUIREMENTS
As a registered broker-dealer and a member firm of the NYSE,
Fahnestock is subject to certain net capital requirements pursuant to
Rule 15c3-1 (the "Net Capital Rule") promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act"). The Net Capital Rule,
which specifies minimum net capital requirements for registered
brokers and dealers, is designed to measure the general financial
integrity and liquidity of a broker-dealer and requires that at least a
minimum part of its assets be kept in relatively liquid form.
Fahnestock elects to compute net capital under an alternative method
of calculation permitted by the Net Capital Rule. (FOM also elects to
compute net capital under an alternative method of calculation
permitted by the Net Capital Rule. Freedom computes net
capital under the basic formula as provided by the Net Capital Rule.)
Under this alternative method, Fahnestock is required to maintain a
minimum "net capital", as defined in the Net Capital Rule, at least equal
to 2% of the amount of its "aggregate debit items" computed in
accordance with the Formula for Determination of Reserve
Requirements for Brokers and Dealers (Exhibit A to Rule l5c3-3 under
the Exchange Act) or $250,000, whichever is greater. "Aggregate debit
items" are assets that have as their source transactions with customers,
primarily margin loans. Failure to maintain the required net capital may
subject a firm to suspension or expulsion by the NYSE, the SEC and
other regulatory bodies and ultimately may require its liquidation. The
Net Capital Rule also prohibits payments of dividends, redemption of
stock and the prepayment of subordinated indebtedness if net
capital thereafter would be less than 5% of aggregate debit items (or
7% of the funds required to be segregated pursuant to the Commodity
Exchange Act and the regulations thereunder, if greater) and payments
in respect of principal of subordinated indebtedness if net capital
thereafter would be less than 5% of aggregate debit items (or 6% of
the funds required to be segregated pursuant to the Commodity
Exchange Act and the regulations thereunder, if greater). The Net
Capital Rule also provides that the total outstanding principal amounts
of a broker-dealer's indebtedness under certain subordination
agreements (the proceeds of which are included in its net capital) may
not exceed 70% of the sum of the outstanding principal amounts of all
subordinated indebtedness included in net capital, par or stated value of
capital stock, paid in capital in excess of par, retained earnings and
other capital accounts for a period in excess of 90 days.
Net capital is essentially defined as net worth (assets minus liabilities),
plus qualifying subordinated borrowings minus certain mandatory
deductions that result from excluding assets that are not readily
convertible into cash and deductions for certain operating
charges. The Rule values certain other assets, such as a firm's positions
in securities, conservatively. Among these deductions are adjustments
(called "haircuts") in the market value of securities to reflect the
possibility of a market decline prior to disposition.
Compliance with the Net Capital Rule could limit those operations of
the brokerage subsidiaries of the Company that require the intensive
use of capital, such as underwriting and trading activities and the
financing of customer account balances, and also could restrict the
Company's ability to withdraw capital from its brokerage subsidiaries,
which in turn could limit the Company's ability to pay dividends, repay
debt and redeem or purchase shares of its outstanding capital stock.
Under the Net Capital Rule broker-dealers are required to maintain
certain records and provide the SEC with quarterly reports with
respect to, among other things, significant movements of capital,
including transfers to a holding company parent or other affiliate. The
SEC may in certain circumstances restrict the Company's brokerage
subsidiaries' ability to withdraw excess net capital and transfer it to
the Company or to other of the Operating Subsidiaries.
Item 2. PROPERTIES
The Company maintains offices at 20 Eglinton Avenue West, Toronto,
Ontario, Canada for general administrative activities. Most day-to-day
management functions are conducted at the executive offices of
Fahnestock at 125 Broad Street, New York, New York. This office
also serves as the base for most of Fahnestock's research, operations
and trading, investment banking and investment advisory services,
though other offices also have employees who work in these areas.
Generally, the offices outside of 125 Broad Street, New York serve as
bases for sales representatives who process trades and provide other
brokerage services in cooperation with Fahnestock's New York office
using the data processing facilities located there. Freedom conducts its
business from its offices located at 11422 Miracle Hills Dr., Omaha,
Nebraska. FOM conducts its business from its offices
located at 300 River Place, Detroit, Michigan. Management believes
that its present facilities are adequate for the purposes for which they
are used and have adequate capacity to provide for presently
contemplated future uses.
The Company and its subsidiaries own no real property, but occupy
office space totaling approximately 445,000 square feet in 75 locations
under standard commercial terms expiring between 1998 and 2013. If
any leases are not renewed, the Company believes it could obtain
comparable space elsewhere on commercially reasonable rental terms.
Item 3. LEGAL PROCEEDINGS
The Company is involved in certain litigation arising in the ordinary
course of business. Management believes, based upon discussion with
legal counsel, that the outcome of this litigation will not have a material
effect on the Company's financial position. The materiality of legal
matters to the Company's future operating results depends on the level
of future results of operations as well as the timing and ultimate
outcome of such legal matters.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Class B voting shares (the "Class B Shares"), the Company's only
class of voting securities, are not registered under the Exchange Act
and are not required to be registered. The Class B Shares have fewer
than 500 shareholders of record. Consequently, the Company is not
required under Section 14 of the Exchange Act to furnish proxy
soliciting material or an information statement to holders of the Class B
Shares. However, the Company is required under applicable Canadian
securities laws to provide proxy soliciting material, including a
management proxy circular, to the holders of its Class B Shares.
Pursuant to the Company's Articles of Incorporation, holders of Class
A non-voting shares (the "Class A Shares"), although not entitled to
vote thereat, are entitled to receive notices of shareholders' meetings
and to receive all informational documents required by law or
otherwise to be provided to holders of Class B Shares. In addition,
holders of Class A Shares are entitled to attend and speak at all
meetings of shareholders, except class meetings not including the Class
A Shares.
In the event of either a "take-over bid" or an "issuer bid", (as those
terms are defined in the Securities Act, (Ontario)) being made for the
Class B Shares and no corresponding offer being made to purchase
Class A Shares, the holders of Class A Shares would have no
right under the Articles of Incorporation of the Company or under any
applicable statute to require that a similar offer be made to them to
purchase their Class A Shares.
No matters were submitted to the Company's shareholders during the
fourth quarter of the Company's fiscal year.
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
The Company's Class A Shares are listed and traded on The New York
Stock Exchange (trading symbol "FVH") and on The Toronto Stock
Exchange (trading symbol "FHV.A"). The Class B Shares are not
traded on any stock exchange in Canada or the United States and,
as a consequence, there is only limited trading in the Class B shares.
The Company does not presently contemplate listing the Class B
Shares in the United States on any national or regional stock exchange
or on NASDAQ.
The following tables set forth the high and low sales prices of the Class
A Shares on The Toronto Stock Exchange and on The New York
Stock Exchange commencing August 28, 1996 and prior to August 28,
1996, the range of bid and asked quotations on NASDAQ National
Market System for the periods indicated. NASDAQ quotations reflect
inter-dealer prices without retail mark-up, mark-down or commission
and may not represent actual transactions. Prices provided are in
Canadian dollars or U.S. dollars as indicated and are based on data
provided by The Toronto Stock Exchange, The New York Stock
Exchange and NASDAQ
Class A Shares:
TSE NYSE NASDAQ
HIGH LOW HIGH LOW HIGH LOW
1997 (Cdn. Dollars) (U.S. dollars) (U.S. dollars)
1st Quarter $25.25 $19.25 $18.375 $14.00 n/a n/a
2nd Quarter 28.60 20.75 20.875 14.75 n/a n/a
3rd Quarter 28.75 24.00 21.00 17.625 n/a n/a
4th Quarter 29.55 25.00 21.50 17.0625 n/a n/a
1996
1st Quarter $14.50 $11.75 n/a n/a $10.88 $ 8.50
2nd Quarter 18.25 14.63 n/a n/a 13.44 10.63
3rd Quarter 19.60 15.60 $14.13 $11.75 14.50 11.25
4th Quarter 20.00 15.90 14.63 11.63 n/a n/a
The following table sets forth information about the Company's
shareholders as at December 31, 1997 as set forth in the records of the
Company's transfer agent and registrar:
Class A Shares:
Total issued and outstanding:12,408,760
Shareholders of record
having addresses in: Number Percentage Number of
of shares shareholders
Canada 6,197,987 49.9% 201
United States 6,210,741 50.1% 191
Other 32 - 2
Total 12,408,760 100% 394
Class B shares
Total issued and outstanding: 99,680
Shareholders of record
having addresses in: Number Percentage Number of
of shares shareholders
Canada (1) 98,135 98.5% 126
United States 1,537 1.5% 69
Other 8 - 2
Total 99,680 100% 197
(1)The Company has been informed that 50,098 Class B shares
held by Phase II Financial Limited, an Ontario corporation, are
beneficially owned by A.G. Lowenthal, a U.S. citizen and resident. See
Item 12, "Security Ownership of Certain Beneficial Owners and
Management".
Dividends
Type Declaration date Record date Payment date Amount per share
Annual Jan.25, 1996 Feb. 9, 1996 Feb. 23,1996 $0.20
Quarterly Apr.19, 1996 May 9, 1996 May 23, 1996 $0.05
Quarterly Jul.16, 1996 Aug.9, 1996 Aug.23, 1996 $0.05
Quarterly Oct.17, 1996 Nov.8, 1996 Nov.22, 1996 $0.05
Quarterly Jan.29, 1997 Feb.10, 1997 Feb.21, 1997 $0.06
Quarterly Apr.21, 1997 May 9, 1997 May 23, 1997 $0.06
Quarterly Jul.21, 1997 Aug.8, 1997 Aug.22, 1997 $0.06
Quarterly Oct.20, 1997 Nov.7, 1997 Nov.21, 1997 $0.06
Quarterly Jan.29, 1998 Feb.6, 1998 Feb.20, 1998 $0.07
Future dividend policy will depend upon the earnings and financial
condition of the Operating Subsidiaries, the Company's need for funds
and other factors. However, it is the present intention of the Company's
management to pay a quarterly dividend in the amount of U.S. $0.07
per Class A Share and Class B Share in May, August and November,
1998. Dividends may be paid to holders of Class A Shares and Class B
Shares (pari passu), as and when declared by the Company's Board of
Directors, from funds legally available therefor.
Certain Tax Matters
The following paragraphs summarize certain United States and
Canadian federal income tax considerations in connection with the
receipt of dividends paid on the Class A and Class B Shares of the
Company. These tax considerations are stated in brief and general
terms and are based on United States and Canadian law currently in
effect. There are other potentially significant United States and
Canadian federal income tax considerations and state, provincial or
local income tax considerations with respect to ownership and
disposition of the Class A and Class B Shares which are not discussed
herein. The tax considerations relative to ownership and disposition of
the Class A and Class B Shares may vary from taxpayer to taxpayer
depending on the taxpayer's particular status. Accordingly, prospective
purchasers should consult with their tax advisors regarding tax
considerations which may apply to the particular situation.
United States Federal Income Tax Considerations
Dividends on Class A and Class B Shares paid to citizens or residents
of the U.S. or to U.S. corporations (including any Canadian federal
income tax withheld) will be generally subject to U.S. federal ordinary
income taxation. Such dividends will not be eligible for the deduction
for dividends received by corporations (unless such corporation owns
by vote and value at least 10% of the stock of the Company, in which
case a portion of such dividend may be eligible for such exclusion).
U.S. corporations, U.S. citizens and U.S. residents will generally be
entitled, subject to certain limitations, to a credit against their U.S.
federal income tax for Canadian federal income taxes withheld from
such dividends. Taxpayers may claim a deduction for such taxes if they
do not elect to claim such tax credit. No deduction for foreign taxes
may be claimed by an individual taxpayer who does not itemize
deductions. Because the application of the foreign tax credit depends
upon the particular circumstances of each shareholder, shareholders are
urged to consult their own tax advisors in this regard. Under certain
limited circumstances, non-resident alien and foreign corporations will
be subject to U.S. federal income taxation at graduated rates from
dividends or gains with respect to their Class A and Class B Shares, if
such income or gain is treated as effectively connected with the
conduct of the recipient's trade or business within the United States,
and may be entitled to such tax credit or such deduction.
Canadian Federal Income Tax Considerations
Dividends paid on Class A and Class B Shares held by non-residents of
Canada will generally be subject to Canadian withholding tax. This
withholding tax is levied at the basic rate of 25%, although this rate
may be reduced by the terms of any applicable tax treaty. The Canada -
U.S. tax treaty provides that the withholding rate on dividends paid to
U.S. residents on Class A and Class B Shares is generally 15%.
Normal Course Issuer Bid
On June 27, 1997 the Company announced that commencing July 2,
1997 it intended to purchase up to 800,000 Class A Shares by way of a
Normal Course Issuer Bid through the facilities of The Toronto Stock
Exchange and/or The New York Stock Exchange, representing
approximately 8.3% of the public float of Class A Shares. For the year
ended December 31, 1997, through the currently outstanding Normal
Course Issuer Bid the Company purchased 27,000 Class A Shares.
Through the Normal Course Issuer Bid which expired June 24, 1997,
the Company did not purchase any Class A Shares. Any shares
purchased by the Company pursuant to the Normal Course Issuer Bid
will be canceled. Unless terminated earlier by the Company, it may
continue to purchase shares up to July 1, 1998. The Company may, at
its option, apply to extend the program for an additional year.
Item 6. SELECTED FINANCIAL DATA
The following table presents selected financial information derived
from the audited consolidated financial statements of the Company for
the five years ended December 31, 1997. The selected financial
information should be read in conjunction with, and is qualified
in its entirety by reference to, the Consolidated Financial Statements
and notes thereto included elsewhere in this report. In 1997, the
Company purchased FOM. The 1997 amounts include the operating
results of FOM for the period after July 17, 1997 and the assets and
liabilities of FOM as at December 31, 1997. See also Item 1, Business"
and Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
Year ended December 31,
1997 1996 1995 1994 1993
(In thousands of US dollars except share amounts)
Revenue $242,158 $213,988 $184,433 $157,253 $161,985
Profit before
extraordinary
item $26,731 $30,279 $20,899 $11,780 $19,022
Net profit $26,731 $30,279 $20,899 $11,780 $19,022
Profit before
extraordinary item
per share (1) $2.14 $2.46 $1.69 $0.96 $1.59
Net profit per
share (1)
- - basic $2.14 $2.46 $1.69 $0.96 $1.59
- - diluted $2.08 $2.41 $1.68 $0.95 $1.55
Total assets $835,146 $519,916 $623,466 $510,636 $428,315
Total current
liabilities $674,181 $384,009 $516,031 $421,818 $349,825
Subordinated
indebtedness,
including current
portion $30 $30 $30 $30 $30
Cash dividends
per Class A
Share and
Class B share $0.24 $0.35 $0.15 $0.15 $0.10
Shareholders'
equity $160,935 $135,877 $107,405 $88,788 $78,460
Book value per
share (1) $12.87 $10.99 $8.92 $7.34 $6.54
Number of shares
of capital stock
outstanding
(000s omitted) 12,508 12,365 12,040 12,094 11,997
(1) The Class A Shares and Class B Shares are combined because they
are of equal rank for purposes of dividends and in the event of a
distribution of assets upon liquidation, dissolution or winding up.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Business Environment
Fahnestock, the Company's principal operating subsidiary, provides
brokerage and related investment services. Fahnestock is engaged in
proprietary trading and offers other related financial services to
investors in fifteen states from 47 offices in the Northeastern United
States, the Midwest, Florida and California, and from two associated
offices in Caracas, Venezuela and Buenos Aires, Argentina. In
addition, since July 17, 1997, the Company operates in Michigan from
25 retail branch offices as FOM, a wholly-owned subsidiary of
Fahnestock. FOM is engaged in securities brokerage and trading and
investment banking. Client assets entrusted to the Company as at
December 31, 1997 totaled approximately $15 billion. Fahnestock is
licensed to offer brokerage and other financial services in all 50
States (FOM in all 50 States except Nebraska). The Company provides
investment advisory services through Hudson Capital and through
Fahnestock Asset Management and Newbold Investment Advisors,
operating as divisions of Fahnestock. Funds under management by the
asset management groups totaled $1.145 billion at December 31,
1997. The Company also operates a discount brokerage business based
in Omaha, Nebraska, through Freedom.
The securities industry is highly competitive and sensitive to many
factors and is directly affected by general economic and market
conditions, including the volatility and price level of securities markets;
the volume, size, and timing of securities transactions; the demand
for investment banking services and changes in interest rates, all of
which have an impact on commissions, trading and investment income
as well as on liquidity. In addition, a significant portion of the
Company's expenses are relatively fixed and do not vary with
market activity. Consequently, substantial fluctuations can occur in the
Company's revenues and net income from period to period due to these
and other factors.
The Company anticipates increasing competition from commercial
banks and thrift institutions as these institutions begin to offer
investment banking and financial services traditionally only provided by
securities firms. The Company also anticipates increasing regulation in
the securities industry, particularly affecting the over-the-counter
markets, making compliance with regulations more difficult and costly.
At present, the Company is unable to predict the extent of changes that
may be enacted, or the effect on the Company's business.
The Company's long-term plan is to continue to expand existing offices
by hiring experienced professionals, thus maximizing the potential of
each office and development of existing trading, investment banking,
investment advisory and other activities. Equally important is the search
for viable candidates for acquisition. As opportunities are presented,
it is the intention of the Company to pursue growth by acquisition
where a comfortable match can be found in terms of corporate goals
and personnel and at a price that would provide the Company's
shareholders with value.
Results of Operations
The investment environment remained favorable throughout 1997,
reflecting a strong U.S. economy and low inflation. Record low
unemployment, the prospect of a U.S. federal budget surplus, and
record inflows of investor dollars resulted in the third successive year
of popular stock averages rising over 20% per annum and interest rates
remaining at historically low levels. Turmoil in Asian currency and
stock markets is likely to impact the U.S. economy negatively, resulting
in lower growth, more market volatility and the prospect of a less
favorable investment environment.
The Company's revenues in fiscal 1997 increased by 13% compared to
fiscal 1996. The acquisition of First of Michigan on July 17, 1997 had a
major impact on the results for 1997. Approximately 77% of the
increase in commission income for the year was attributable to FOM
operations. Expenses increased by 22% in fiscal 1997 compared to
1996. Approximately 90% of this increase was attributable to FOM
operations. Net profit in 1997 was 12% lower than in 1996. This was
primarily due to the added costs of the FOM operations and acquisition
costs. During the fourth quarter of 1997, FOM was the target of
a "raid" by another investment firm. As a result of this destabilization,
FOM lost 65 investment executives. At December 31, 1997, 215 FOM
investment executives, from the original staff of 280 on the acquisition
date, remained with the Company in 26 branch offices (34 branch
offices on the acquisition date). This raid negatively impacted
operations, revenue and net profit in the fourth quarter of 1997.
The following table summarizes the changes in the major revenue and
expense categories from the consolidated statement of operations for
the past three fiscal years ended December 31, 1997, 1996 and 1995
Period to Period Change
Increase (Decrease)
1997 versus 1996 1996 versus 1995
Amount Percentage Amount Percentage
Revenues -
Commissions $29,331,000 39.6% $4,920,000 7.1%
Principal transactions, net (14,536,000) (18.1) 24,078,000 42.7
Interest 7,142,000 21.7 (3,252,000) (9.0)
Underwriting fees 2,370,000 27.3 2,132,000 32.6
Advisory fees 1,619,000 11.4 2,938,000 26.1
Other 2,244,000 61.5 (1,261,000) (25.7)
Total revenues 28,170,000 13.2 29,555,000 16.0
Expenses -
Compensation 17,726,000 17.4 15,008,000 17.2
Clearing and exchange fees 1,856,000 25.6 (249,000) (3.3)
Communications 2,877,000 19.2 (16,000) (0.1)
Occupancy costs 849,000 8.3 871,000 9.4
Interest 3,850,000 23.6 (5,216,000) (24.2)
Other 8,430,000 90.9 86,000 1.0
Total expenses 35,588,000 22.2 10,484,000 7.0
Profit before taxes (7,418,000) (13.8) 19,071,000 54.8
Income taxes (3,870,000) (16.4) 9,691,000 69.6
Net profit (3,548,000) (11.7)% $9,380,000 44.9%
Fiscal 1997 compared to Fiscal 1996
In fiscal 1997, the U.S. economy remained strong with stable interest
rates and record low unemployment levels. Investors continued their
commitment to the equity market, sending popular market averages
upward by over 20% per annum for the third successive year. In
July 1997, the Company purchased FOM, and at yearend had
approximately 215 registered representatives in 26 branch offices to
bring the total for the Company to 724 investment executives in 75
offices. Total revenues for 1997 were $242,158,000, an increase of
13% over $213,988,000 in 1996. Commission income (the income
realized in securities transactions for which the Company acts as agent)
in 1997 was $103,323,000, an increase of 40% over $73,992,000 in
1996. Of this increase, 77% can be attributed to the addition of FOM's
business. Principal transactions (revenues from transactions in which
the Company acts as principal in the secondary market trading of over-
the-counter equities and municipal, corporate and government bonds)
generated net revenue of $65,972,000 in 1997, a decrease of 18%
compared to $80,508,000 in 1996. Market volatility and an
uninterrupted and dramatic increase in equity prices created a difficult
trading environment. Underwriting fees in 1997 were $11,042,000, an
increase of 27% over $8,672,000 in 1996. The Company was able to
increase its underwriting business in both the public finance area and
the structured asset area. Advisory fees in 1997 were $15,808,000, an
increase of 11% over $14,189,000 in 1996 as a result of the addition of
assets under management in 1997.
Interest income was $40,123,000 in 1997, an increase of 22% over
$32,981,000 in 1996. Interest expense was $20,161,000 in 1997, an
increase of 24% over $16,311,000 in 1996. The increase is attributable
to the higher stock loan/stock borrow balances in 1997 compared to
1996 and higher customer debit balances as a result of the acquisition
of FOM. Net interest revenue (interest revenue less interest expense)
increased 20% in 1997 compared to 1996.
Expenses totaled $195,674,000 in 1997, an increase of 22% over
$160,086,000 in 1996. Approximately 90% of the increase in 1997 can
be attributed to the addition of the FOM operations effective July 17,
1997 and related acquisition costs. Compensation and related expenses
were $119,785,000 in 1997, an increase of 17% over $102,059,000 in
1996. Communications expenses were $17,879,000, an increase of
19% over $15,002,000 in 1996. Occupancy costs were $11,025,000 in
1997, an increase of 8% over $10,176,000 in 1996. These increases
can primarily be attributed to the increased size of the organization
after the acquisition of FOM. Clearing and exchange fees were
$9,118,000, an increase of 26% over $7,262,000 in 1996 and includes
a variable component which rises as commission income rises. Other
expenses were $17,706,000, an increase of 91% over $9,276,000 in
1996. This increase is due to several factors including: professional fees
incurred as a result of the acquisition of FOM and other matters,
depreciation and amortization on a much larger fixed asset base after
the acquisition, licensing and filing fees as a result of the acquisition,
and other acquisition-related costs.
Fiscal 1996 compared to Fiscal 1995
In fiscal 1996, a healthy U.S. economy with stable interest rates and
low inflation, sent the U.S. equity market to record-breaking highs.
Retail commission volumes broke 1995 record levels as the Dow Jones
Industrial average and all other major indices established new highs.
Total revenues for 1996 were $213,988,000, up 16% over
$184,433,000 in 1995. Commission income in 1996 was $73,992,000,
up 7% over $69,072,000 in 1995. Commission income increased
primarily due to a general increase in market volumes in 1996
compared to 1995. Principal transactions was $80,508,000, up 43%
from $56,430,000 in 1995. This increase was due primarily to higher
activity levels and profits from the Over-the-Counter equity department
and the convertible bond department. Underwriting fees in 1996 were
$8,672,000, an increase of 33% over $6,540,000 in 1995. With the
strong market in corporate Initial Public Offerings (IPOs) business in
1996, the Company was able to increase its underwriting business
compared to 1995. Public finance issuance improved from 1995's
depressed levels. Advisory fees in 1996 were $14,189,000, an increase
of 26% over $11,251,000 in 1995. The increase is attributable to the
increasing value of assets managed and the timing of receipts of fees
due for such management. In September, 1996 assets under
management were significantly reduced as a result of the retirement of
a key employee of the Hudson Capital Advisors division. Other
revenue was lower in 1996 than 1995 which included a life insurance
benefit which did not recur in 1996.
Interest income was $32,981,000, a decrease of 9% from $36,233,000
in 1995. Interest expense was $16,311,000, a decrease of 24% from
$21,527,000 in 1995. This decrease is primarily the result of lower
stock loan/stock borrow balances in 1996 compared to 1995. Net
interest revenue of $16,670,000 (interest revenue less interest expense)
increased 13% in 1996 compared to 1995.
Expenses totaled $160,086,000 in 1996, an increase of 7% over
$149,602,000 in 1995. Compensation and related expenses, which are
largely revenue-driven were $102,059,000 in 1996, an increase of 17%
over $87,051,000 in 1995. Clearing and exchange fees were
$7,262,000 in 1996, a decrease of 3% from $7,511,000 in 1995 due to
the redirection of many transactions away from Exchanges.
Communications costs of $15,002,000 in 1996 decreased slightly
compared to $15,018,000 in 1995. Occupancy costs were
$10,176,000, an increase of 9% compared to $9,305,000 in 1995. This
was due to an increase in the cost of leasing premises and equipment,
primarily due to the commencement of business of Freedom
Investments in late 1995.
Liquidity and Capital Resources
The increase in the Company's assets during the last three years has
been primarily the result of the expansion in its business and the growth
in earnings. Customer-related receivables and securities inventory are
highly liquid and represent a substantial percentage of total assets. The
principal sources of financing for the Company's assets are
stockholders' equity, customer free credit balances, proceeds from
securities lending, bank loans and other payables. The Company has
not utilized long-term financing. Cash generated from operations,
increased earnings, proceeds from stock purchased by employee stock
plans, and cash proceeds upon the exercise of employee stock options
supplemented bank borrowings during the past three years. At
December 31, 1997, Fahnestock had bank lines of credit and call loan
arrangements with outstanding borrowings thereunder of $26,005,000.
The Company paid cash dividends to its shareholders totaling
$3,002,000, during 1997, from internally-generated cash.
Because of the Company's strong financial condition, size and earnings
history, management believes adequate sources of credit would be
available to finance higher trading volumes, branch expansion, and
major capital expenditures, as needed.
Inflation
Because the assets of the Company's brokerage subsidiaries are highly
liquid, and because securities inventories are carried at current market
values, the impact of inflation generally is reflected in the financial
statements. However, the rate of inflation affects the Company's costs
relating to employee compensation, rent, communications and certain
other operating costs, and such costs may not be recoverable in the
level of commissions charged. To the extent inflation results in rising
interest rates and has other adverse effects upon the securities markets,
it may adversely affect the Company's financial position and results of
operations.
Year 2000 Disclosure
The Company's computer programs were originally designed to
recognize calendar years by their last two digits. Calculations based on
this system would not work properly from the year 2000 forward. The
Company has begun systems modifications to remedy this situation. In
certain areas, systems modifications and the testing thereof has already
been completed. The plan is that all programs will be corrected and
fully tested before the end of 1998. This work is being performed in-
house and the incremental costs will not have a material effect on the
Company's consolidated financial statements. Other modifications
required as a result of notifications from outside agencies such as
NSCC, DTC and others have been made upon receipt of such
notifications and are not outstanding.
Factors Affecting "Forward-Looking Statements"
From time to time, the Company may publish "Forward-looking
statements" within the meaning of Section 27A of the Securities Act of
1933, as amended ( the "Act"), and Section 21E of the Exchange Act
or make oral statements that constitute forward-looking statements.
These forward-looking statements may relate to such matters as
anticipated financial performance, future revenues or earnings, business
prospects, projected ventures, new products, anticipated market
performance, and similar matters. The Private Securities Litigation
Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, the
Company cautions readers that a variety of factors could cause the
Company's actual results to differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking
statements. These risks and uncertainties, many of which are beyond
the Company's control, include, but are not limited to: (i) transaction
volume in the securities markets, (ii) the volatility of the securities
markets, (iii) fluctuations in interest rates, (iv) changes in regulatory
requirements which could affect the cost of doing business, (v)
fluctuations in currency rates, (vi) general economic conditions, both
domestic and international, (vii) changes in the rate of inflation and the
related impact on the securities markets, (viii) competition from
existing financial institutions and other new participants in the securities
markets, (ix) legal developments affecting the litigation experience of
the securities industry, and (x) changes in federal and state tax laws
which could affect the popularity of products sold by the Company.
The Company does not undertake any obligation to publicly update or
revise any forward-looking statements.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required to be furnished in response to this Item is
submitted hereinafter following the signature pages hereto.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE None
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
General
Directors of the Company are elected annually by the holders of the
Class B Shares to serve until the next annual meeting of shareholders
or until their successors are appointed. Executive officers are appointed
annually by the directors or until their successors are appointed. Certain
information concerning the executive officers and directors of the
Company as at December 31, 1997 is set forth below.
Name /
Age /
Positions held
John L. Bitove
69
A Director of the Company since February 1980;
Chairman of The Bitove Corporation (a holding
company for subsidiaries engaged in food and
beverage services) since 1987.
- - Member of the Audit and Compensation and
Stock Option Committees
Richard Crystal
57
A Director of the Company since 1992; Partner,
Whitman Breed Abbott & Morgan LLP(Attorneys-at-
Law), U.S. counsel to the Company since 1985.
Albert G. Lowenthal
52
Chairman of the Board, Chief Executive Officer and
a Director of the Company since 1985;Chairman
of the Board and Chief Executive Officer of
Fahnestock since 1985; between March 1985 and
September 1985, Mr. Lowenthal was
self-employed; prior to March 1985, Mr. Lowenthal
was President of Cowen Securities Inc., a New
York stock brokerage firm and a general partner of
Cowen & Co., a New York brokerage firm.
Kenneth W. McArthur
62
A Director of the Company since 1996; President
and C.E.O. of Shurway Capital Corporation ( a
private corporation), since July1993; Senior Vice-
President Bank of Montreal Investment Counsel
between January 1992 and July 1993; Senior Vice-
President Nesbitt Thomson Inc. between July 1989
and January 1993.
- - Member of the Audit Committee
A. Winn Oughtred
55
A Director of the Company since 1979; a Director of
Fahnestock since 1983; Secretary of the
Company since June, 1992 and prior to June,
1991; Partner, Borden & Elliot (Law firm), Canadian
counsel to the Company since 1979.
Elaine K. Roberts
46
President, Treasurer and a Director of the
Company since 1977; Treasurer and a Director of
Fahnestock since 1983.
Burton Winberg
73
A Director of the Company since1979; President of
Rockport Holdings Limited (a real estate
development company) since 1959.
- - Member of the Audit and Compensation and
Stock Option Committees.
Compliance with Section 16(a) of the Securities Exchange Act of
1934.
Section 16(a) of the Exchange Act requires the Company's directors
and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file by specific
dates with the SEC initial reports of ownership and reports of
changes in ownership of equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a)
forms that they file. The Company is required to report in this
annual report on Form 10-K any failure of its directors and executive
officers and greater than ten percent stockholders to file by the relevant
due date any of these reports during the two preceding fiscal years.
To the Company's knowledge, based solely on review of copies of such
reports furnished to the Company during the two fiscal years ended
December 31, 1997, all Section 16(a) filing requirements applicable to
the Company's officers, directors and greater than ten percent
stockholders were complied with.
Item 11. EXECUTIVE COMPENSATION
General
The following table sets forth total annual compensation paid or
accrued by the Company to or for the account of the Company's chief
executive officer and each of the four most highly paid executive
officers of the Company whose total cash compensation for the fiscal
year ended December 31, 1997 exceeded $100,000.
SUMMARY COMPENSATION TABLE (part 1 of 2)
Annual Compensation
Name and $Other
Principal Annual
Occupation Year $Salary $Bonus Comp
A.G. Lowenthal, 1997 300,000 - 11,990
Chairman, CEO, 1996 300,000 400,000 10,400
and Director of 1995 300,000 300,000 10,350
the Company;
Chairman and
CEO of Fahnestock
Robert Neuhoff, 1997 230,000 175,000 0
Executive Vice 1996 230,000 175,000 0
President of 1995 230,000 125,000 0
Fahnestock
Eric Shames 1997 150,000 75,000 0
Secretary of 1996 150,000 75,000 0
Fahnestock 1995 115,000 50,000 0
Robert Maimone 1997 135,000 75,000 0
Senior Vice 1996 135,000 75,000 0
President of 1995 115,000 50,000 0
Fahnestock
E.K. Roberts, 1997 120,000 70,000 11,990
President,Treasurer 1996 120,000 70,000 10,400
and Director of the 1995 120,000 50,000 10,350
Company
SUMMARY COMPENSATION TABLE (part 2 of 2)
Long-Term Compensation
Name Year # of securities
under options/ $LTIP $All other
SARs granted payouts comp.
A.G. Lowenthal 1997 0 908,000 6,050
1996 0 386,694 6,730
1995 0 238,306 5,000
Robert Neuhoff 1997 0 0 6,050
1996 0 0 6,730
1995 0 0 5,000
Eric Shames 1997 0 0 6,050
1996 15,000 0 6,595
1995 0 0 0
Robert Maimone 1997 0 0 6,050
1996 25,000 0 6,730
1995 0 0 4,905
E.K. Roberts 1997 0 0 0
1996 0 0 0
1995 0 0 0
OTHER ANNUAL COMPENSATION - Includes Directors Fees of
Cdn$10,000 per year plus Cdn$600 per meeting attended and which
were converted to $US at the average rate prevailing during the year.
RESTRICTED STOCK AWARDS - The Company does not have a
plan for granting restricted stock awards.
LTIP PAYOUTS - See discussion under "Performance-Based
Compensation Agreement" and "Stock Appreciation Agreement",
described herein. LTIP payouts are paid in January following the year
for which they were accrued.
ALL OTHER COMPENSATION - This represents Company
contributions to the 401(k) Plan.
OPTION EXERCISES AND YEAR-END VALUE TABLE
$ Year-end
# of shares value of
Underlying unexercised
unexercised in-the-money
options/SARs options
exercisable/ exercisable/
Name (1) (2) unexercisable unexercisable
A.G. Lowenthal 0 0 225,000/75,000 $2,507,437/$665,812
R. Neuhoff 0 0 12,500/12,500 $110,969/$110,969
E. Shames 0 0 0/15,000 0/$96,862
R. Maimone 0 0 0/25,000 0/$161,437
E.K. Roberts 0 0 37,500/37,500 $332,906/$332,906
(1) Shares acquired on exercise
(2) $Value realized
Details of number of shares and value of exercisable and unexercisable
options are as follows:
These options are exercisable in $CDN and have been converted at the
exchange rate as at December 31, 1997.
# of Option Price at Value Total
shares Price Dec.31/97 Per Share Value
A.G. Lowenthal -
exercisable 150,000 $5.16 $17.4375 $12.2775 $1,841,625
exercisable 75,000 $8.56 $17.4375 $ 8.8775 $ 665,812
unexercisable 75,000 $8.56 $17.4375 $ 8.8775 $ 665,812
R. Neuhoff -
exercisable 12,500 $8.56 $17.4375 $ 8.8775 $ 110,969
unexercisable 12,500 $8.56 $17.4375 $ 8.8775 $ 110,969
E. Shames -
exercisable 0 n/a n/a n/a n/a
unexercisable 15,000 $10.98 $17.4375 $ 6.4575 $ 96,862
R. Maimone -
exercisable 0 n/a n/a n/a n/a
unexercisable 25,000 $10.98 $17.4375 $ 6.4575 $ 161,437
E.K. Roberts -
exercisable 37,500 $8.56 $17.4375 $ 8.8775 $ 332,906
unexercisable 37,500 $8.56 $17.4375 $ 8.8775 $ 332,906
OPTION/SAR GRANTS FOR THE YEAR ENDED DECEMBER 31, 1997.
None
Pension Plan
Fahnestock has no pension plans for its officers and employees other
than a savings plan qualified under Section 401(k) of the Internal
Revenue Code, pursuant to which the Company may make an annual
cash contribution based on compensation for each employee. Should
participants in the plan elect to receive their employer contribution in
the form of Class A Shares, the Company may make an additional
contribution of Class A Shares equal in market value to 15% of the
purchase price of the Class A Shares. On January 27 , 1995, with
respect to the 1994 fiscal year, the Company issued 92,000 Class
A Shares from Treasury at Cdn.$9.00 (US$6.75). On January 10,
1996, with respect to the 1995 fiscal year, the Company issued
113,000 Class A Shares from Treasury at Cdn.$12.24 (US$8.85) per
share to the Company's 401(k) plan. On January 14, 1997, with
respect to the 1996 fiscal year, the Company issued 70,000 Class A
Shares from Treasury at U.S.$14.375 per share to the Company's
401(k) plan. On January 14, 1998, with respect to the 1997 fiscal year,
the Company issued 42,000 Class A Shares from Treasury at
U.S.$17.6875 per share to the Company's 401(k) plan.
FOM has a savings plan qualified under Section 401(k) of the Internal
Revenue Code pursuant to which FOM makes regular defined cash
contributions based on the Plan document. In addition, FOM sponsors
an unfunded Supplemental Executive Retirement Program ("SERP"),
which is a non-qualified plan that provides certain current and former
officers additional retirement benefits.
In addition, U.S. employees of the Company and its subsidiaries are
entitled to group health benefits and group life insurance coverage
pursuant to plans which do not discriminate in scope, terms, or
operation in favor of officers or directors of the Company, and which
are generally available to all salaried U.S. employees.
Employee Stock Option Plans
In 1996, the Company established its 1996 Equity Incentive Plan (the
"EIP"). The 1986 Incentive Stock Option Plan (the "ISO") and the
1986 Employee Stock Option Plan (the "ESO") which were established
in 1986 expired in April 1996. (The EIP, the ISO and the ESO are
sometimes hereinafter collectively referred to as the "Plans".) The Plans
permit the compensation and stock option committee of the board of
directors of the Company to grant options to purchase Class A Shares
of the Company to officers and key employees of the Company and its
subsidiaries. Under an amendment to the ESO in June 1992 grants of
options are made to the Company's independent directors on a formula
basis. Options generally vest at the rate of 25% of the amount granted
for each year held. Under the provisions of the Internal Revenue Code,
options granted under the ISO qualify as "incentive stock options" and
options granted under the ESO do not qualify. The EIP was amended
in January 1997 to increase the authorized number of Class A Shares
that may be subject to options to 1,850,000. The EIP was further
amended on March 25, 1997 to limit the number of options granted to
any senior officer of the Company in any 60 month period to 500,000
Class A Shares.
The Compensation and Stock Option Committee of the board of
directors of the Company administers and interprets the provisions of
the Plans, except as the Plans relate to grants to independent directors
which are made pursuant to a formula. The committee's responsibilities
include determining (i) which employees are eligible for participation in
the Plans, (ii) when to grant options under the Plans, (iii) the number of
shares that may be subject to options, and (iv) the times at which
options may be exercised.
Performance-Based Compensation Agreement
In March 1997, the Company entered into a Performance-Based
Compensation Agreement (the "Comp Agreement") effective January
1, 1997 and expiring December 31, 2001 with Albert G. Lowenthal,
the Chairman and Chief Executive Officer of the Company and
Fahnestock, pursuant to the recommendation of the Company's
Compensation and Stock Option Committee and the approval of the
Board of Directors. The purpose of the Comp Agreement was to set
the terms under which Mr. Lowenthal's 1997 non-salary compensation
was to be calculated. The Comp Agreement provides for (1) a written
Performance Goal, the formula for which must be established by the
Committee within the first 90 days of the year and (2) a Stock
Appreciation Amount equal to the amount by which the market value
of the Company's Class A Shares at December 31 exceeds the base
price as at December 31 of the prior year multiplied by a number of
shares to be set each year by the Committee with in the first 90 days of
the year. The sum of all performance awards paid under the Comp
Agreement shall not exceed $5,000,000.
The Performance Goal established in March 1997 resulted in $908,000
payable to Mr. Lowenthal for fiscal 1997 based on the following
formula: (a) 3% of the excess of the Company's actual Return on
Equity over a Base Return on Equity of 15% (based on Shareholders'
Equity as at December 31, 1996), up to a 25% Return on Equity; (b)
plus 4% of the excess of the Company's actual Return on Equity over a
25% Return on Equity (based on Shareholders' Equity as at December
31, 1996). The Stock Appreciation Amount was set in March 1997 at
150,000 shares and resulted in $456,000 payable to Mr. Lowenthal for
fiscal 1997. Mr. Lowenthal and the Company agreed to accept the
amount payable under the Performance Goal, which was less than the
formula required, as the full performance-based compensation for fiscal
1997.
Stock Appreciation Agreement
In February, 1995 Fahnestock entered into a Stock Appreciation
Agreement (the "Stock Appreciation Agreement") with Albert G.
Lowenthal, the Chairman and Chief Executive Officer of the Company
and of Fahnestock, pursuant to the recommendation of the Company's
Compensation Committee and the approval of the Board of Directors.
The purpose of the Stock Appreciation Agreement is to provide
additional compensation to Mr. Lowenthal for his past services (so as
to bring Mr. Lowenthal's compensation more into line with the
compensation paid to chief executive officers of comparable companies
in the financial services industry) linked to the future market price of
the Company's stock.
Under the terms of the Stock Appreciation Agreement, Mr. Lowenthal
was entitled to receive a cash award in January 1996 of U.S.$238,306,
being the greater of (x) U.S.$150,000 or (y) the difference between
Cdn.$9.00 and the Market Value (as defined in the Stock Appreciation
Agreement) for the Company's Class A Shares on The Toronto
Stock Exchange as of December 31, 1995, multiplied by 100,000. Mr.
Lowenthal was entitled to additional payment of U.S.$386,694 in
January 1997 based upon this formula and restricted by the proviso that
the aggregate paid with respect to 1995 and 1996 not exceed
U.S.$625,000.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
(a) The following table sets forth information as of December 31, 1997
as to the only persons known to the Company which own beneficially
more than 5% of the Class B Shares (the only class of voting stock of
the Company). There are no outstanding rights to acquire beneficial
ownership of any Class B Shares.
Title of Class
Identity of Person or
Group/
Mailing Address
Amount Percent of
Owned Class
Class B
A.G. Lowenthal 50,098 (1) 50.2%
c/o Fahnestock & Co. Inc.
125 Broad St.
New York, NY 10004
O. Roberts 44,309 (2) 44.4%
c/o Fahnestock Viner
Holdings Inc.
Suite 1110, Box 2015
20 Eglinton Ave. W.
Toronto, Canada M4R 1K8
________________________________________
1. All shares are held of record by Phase II Financial Limited, an
Ontario corporation ("Phase II") wholly-owned by Mr. Lowenthal who
is Chairman of the Company.
2. Mrs. Roberts, who is the mother of Elaine Roberts, President of the
Company, owns 100 shares directly and 44,209 shares indirectly
through Elka Estates Limited, an Ontario corporation ("Elka") is
wholly-owned by Mrs. Roberts.
(b) The following table sets forth information as of December 31,
1997 as to the ownership of Class A Shares and Class B Shares, the
only classes of equity securities of the Company, by persons who are
directors of the Company, naming them, and as to directors and
officers of the Company as a group, without naming them.
Title of Class
Identity of Person or Group
Amount Owned
Percent of Class
Class A Shares A.G. Lowenthal 2,386,625 (1),(2) 18.7%
E.K. Roberts 111,944 (4) 0.9%
A.W. Oughtred 500 *
J.L. Bitove 25,580 0.2%
R. Crystal 10,500 (5) *
K.W. McArthur 35,000 0.3%
B. Winberg 700 *
Officers and
Directors as a
group (7 members) 2,570,849 (1),(2),(4),(5) 20.2%
Class B Shares A.G. Lowenthal 50,098 (3) 50.3%
E.K. Roberts 108 0.1%
A.W. Oughtred 0
J.L. Bitove 20 *
R. Crystal 0
K.W. McArthur 0
B. Winberg 0
Officers and
Directors as a
group (7 members) 50,226 50.4%
_____________________________________
(1) Mr. Lowenthal is the sole general partner of Phase II Financial L.
P., a New York limited partnership, ("Phase II L.P.") which is the
record holder of 2,150,900 Class A Shares. Mr. Lowenthal holds 9,475
Class A Shares through the Company's 401(k) plan and 1,250 Class A
Shares directly.
(2) 225,000 Class A Shares are beneficially owned in respect of Class
A Shares currently issuable upon exercise of options issued under the
Company's ISO and ESO.
(3) Phase II, an Ontario corporation wholly-owned by Mr. Lowenthal,
is the holder of record of all such shares.
(4) 37,500 Class A Shares are beneficially owned in respect of Class A
Shares currently issuable upon exercise of options issued under the
Company's ESO.
(5) 10,000 Class A Shares are beneficially owned in respect of Class A
Shares currently issuable upon exercise of options issued under the
Company's ESO.
* less than 1%
(c) There are no arrangements, known to the Company, the operation
of which may at a subsequent date result in a change of control of the
Company.
Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
None of the directors or officers of the Company or any associate of
any such director or officer was indebted to the Company or its
subsidiaries at any time during the last three years except as follows:
During the last three years Albert G. Lowenthal and Phase II L.P. have
maintained margin accounts with Fahnestock. Such margin accounts
are substantially on the same terms, including interest rates and
collateral, as those prevailing from time to time for comparable
transactions with non-affiliated persons and do not involve more than
the normal risk of collectability. The maximum amount of borrowings
outstanding during 1997 was nil ( nil and $178,000 in 1995 and 1996,
respectively). Mr. Robert Neuhoff also maintains a margin account
with Fahnestock. The maximum borrowings outstanding during 1997
was $876,000 (nil and $427,000 in 1995 and 1996, respectively).
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
AND REPORTS ON FORM 8-K.
(a) (i)Financial Statements
The response to this portion of Item 14 is submitted as a
separate section of this report. See pages F-1 to F-15
(ii)Financial Statement Schedules
Not Applicable
(iii)Listing of Exhibits
The exhibits which are filed with this Form 10-K or are
incorporated herein by reference are set forth in the Exhibit Index which
immediately precedes the exhibits to this report.
(b) Reports on Form 8-K
The Company was not required to file any reports on Form 8-K during
the last quarter of 1997 or thereafter to date.
(c) Exhibits
See the Exhibit Index included hereinafter.
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, in
the City of New York, State of New York, on the 23rd day of March, 1998.
FAHNESTOCK VINER HOLDINGS INC.
BY:/s/E.K. Roberts
E.K. Roberts, President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons in the capacities
and on the dates indicated.
Signature Title Date
/s/J.L. Bitove Director Mar.23, 1998
J.L. Bitove
/s/R. Crystal Director Mar.23, 1998
R. Crystal
/s/A.G. Lowenthal Chairman, Mar.23, 1998
A.G. Lowenthal Chief Executive
Officer, Director
/s/K.W. McArthur Director Mar.23, 1998
K.W. McArthur
/s/A.W. Oughtred Secretary, Director Mar.23, 1998
A.W. Oughtred
/s/E.K. Roberts President,Treasurer, Mar.23, 1998
E.K. Roberts Chief Financial Officer,
Director
/s/ B. Winberg Director Mar.23, 1998
B. Winberg
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
FAHNESTOCK VINER HOLDINGS INC.
Management's Responsibility for Consolidated Financial Statements
F-1
Independent Auditors' Report
F-2
Consolidated Balance Sheet as of December 31, 1997 and 1996
F-3
Consolidated Statement of Operations for the three years ended
December 31, 1997, 1996 and 1995
F-4
Consolidated Statement of Retained Earnings for the three years ended
December 31, 1997, 1996 and 1995
F-5
Consolidated Statement of Cash Flows for the three years ended
December 31, 1997, 1996 and 1995
F-6
Notes to Consolidated Financial Statements
F-7
MANAGEMENT'S RESPONSIBILITY FOR CONSOLIDATED
FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Fahnestock
Viner Holdings Inc. were prepared by management in accordance with
generally accepted accounting principles in the United States, which
conform in all material respects with accounting principles generally
accepted in Canada. The significant accounting policies of the
Company are described in Note 1 to the consolidated financial
statements.
Management is responsible for the integrity and objectivity of the
information contained in the consolidated financial statements. In order
to present fairly the financial position of the Company and the results of
its operations and the changes in its financial position, estimates which
are necessary are based on careful judgments and have been properly
reflected in the consolidated financial statements. Management has
established systems of internal control which are designed to provide
reasonable assurance that assets are safeguarded from loss or
unauthorized use and to produce reliable accounting records
for the preparation of financial information.
Coopers & Lybrand, the Company's independent auditors, conduct an
audit of the consolidated financial statements in accordance with
generally accepted auditing standards. Their audit includes a review
and evaluation of the Company's systems of internal control, and such
tests and procedures as they consider necessary in order to form
an opinion as to whether the consolidated financial statements are
presented fairly in accordance with accounting principles generally
accepted in the United States.
The Board of Directors is responsible for ensuring that management
fulfils its responsibilities for financial reporting and internal control.
The Board of Directors is assisted in this responsibility by its Audit
Committee, a majority of whose members are not officers of the
Company. The Audit Committee meets with management as well as
with the independent auditors to review the internal controls,
consolidated financial statements, and the auditor's report. The Audit
Committee reports its findings to the Board of Directors for its
consideration in approving the consolidated financial statements for
issuance to the shareholders.
Management recognizes its responsibility for conducting the
Company's affairs in compliance with established financial standards,
and applicable laws and regulations, and for maintaining proper
standards of conduct for its activities.
/s/A.G. Lowenthal /s/E.K. Roberts
A.G. Lowenthal, E.K. Roberts
Chairman of the Board President and Treasurer
and Chief Executive Officer
March 4, 1998 F-1
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS OF FAHNESTOCK VINER HOLDINGS INC.
We have audited the consolidated balance sheets of Fahnestock Viner
Holdings Inc. as at December 31, 1997 and 1996 and the consolidated
statements of operations, retained earnings and cash flows for the years
ending December 31, 1997, 1996 and 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 Canadian generally
accepted auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance 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
management, as well as evaluating the overall financial statement
presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at
December 31, 1997 and 1996 and the results of its operations and cash
flows for the years ended December 31, 1997, 1996 and 1995 in
accordance with accounting principles generally accepted in the United
States.
/s/Coopers & Lybrand
Chartered Accountants
Toronto, Canada
March 4, 1998. F-2
FAHNESTOCK VINER HOLDINGS INC.
CONSOLIDATED BALANCE SHEET
AS AT DECEMBER 31,
1997 1996
Expressed in thousands of U.S. dollars
ASSETS
Current assets
Cash and short-term deposits $ 10,784 $ 9,363
Restricted deposits (note 2) 1,537 1,902
Deposits with clearing organizations 4,734 3,701
Receivable from brokers and
clearing organizations (note 1) 359,205 186,543
Receivable from customers 350,807 266,142
Securities owned, at market
value (notes 3 and 5) 63,262 40,998
Demand notes receivable 30 30
Other 27,945 7,040
818,304 515,719
Other assets
Stock exchange seats (approximate
market value $5,592; $3,503 in 1996) 1,542 1,411
Fixed assets, net of accumulated
depreciation of $7,658; $3,853 in 1996 9,128 1,856
Goodwill, at amortized cost 6,172 930
16,842 4,197
$835,146 $519,916
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Drafts payable $ 18,507 $ 12,439
Bank call loans (note 5) 23,755 11,800
Payable to brokers and clearing
organizations (note 1) 422,173 193,965
Payable to customers 117,033 91,880
Securities sold, but not yet
purchased, at market value (note 3) 31,090 32,756
Accounts payable and other liabilities 45,571 29,366
Income taxes payable 16,052 11,803
674,181 384,009
Subordinated loans payable (note 4) 30 30
Commitments and contingencies (note 10)
Shareholders' equity
Share capital (note 6)
12,408,760 Class A non-voting
shares (1996-12,265,760 shares) 40,783 39,688
99,680 Class B voting shares 133 133
40,916 39,821
Contributed capital (note 7) 1,333 1,099
Retained earnings 118,686 94,957
160,935 135,877
$835,146 $519,916
The accompanying notes are an integral part of these consolidated
financial statements. F-3
FAHNESTOCK VINER HOLDINGS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31,
1997 1996 1995
Expressed in thousands of U.S. dollars, except per share amounts
REVENUE:
Commissions $103,323 $73,992 $69,072
Principal transactions, net 65,972 80,508 56,430
Interest 40,123 32,981 36,233
Underwriting fees 11,042 8,672 6,540
Advisory fees 15,808 14,189 11,251
Other 5,890 3,646 4,907
242,158 213,988 184,433
EXPENSES:
Compensation and related expenses 119,785 102,059 87,051
Clearing and exchange fees 9,118 7,262 7,511
Communications 17,879 15,002 15,018
Occupancy costs 11,025 10,176 9,305
Interest 20,161 16,311 21,527
Other 17,706 9,276 9,190
195,674 160,086 149,602
Profit before income taxes 46,484 53,902 34,831
Income tax provision (note 8) 19,753 23,623 13,932
NET PROFIT FOR YEAR $26,731 $30,279 $20,899
Profit per share (note 9)
- - basic $2.14 $2.46 $1.69
- - diluted $2.08 $2.41 $1.68
The accompanying notes are an integral part of these consolidated
financial statements. F-4
FAHNESTOCK VINER HOLDINGS INC.
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31,
1997 1996 1995
Expressed in thousands of U.S. dollars
Retained earnings,beginning of the year $94,957 $68,974 $49,902
Net profit for the year 26,731 30,279 20,899
Dividends paid (3,002) (4,296) (1,827)
Retained earnings,end of the year $118,686 $94,957 $68,974
The accompanying notes are an integral part of these consolidated
financial statements. F-5
FAHNESTOCK VINER HOLDINGS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,
1997 1996 1995
Expressed in thousands of U.S. dollars
Cash flows from operating activities:
Net profit for the year $26,731 $30,279 $20,899
Adjustments to reconcile net profit
to net cash provided by (used in)
operating activities:
Non-cash items included in net profit:
Depreciation and amortization 1,357 955 579
Decrease (increase) in operating
assets, net of effects of
acquisition of First of Michigan
Capital Corporation:
Restricted deposits 365 (660) (48)
Deposits with clearing organizations (1,033) (35) (980)
Receivable from brokers
and clearing organizations (165,787) 117,067 (85,412)
Receivable from customers 556 (12,958) (16,428)
Securities owned (17,693) (4,742) (6,483)
Other assets (13,919) 4,574 (4,954)
Increase (decrease) in operating
liabilities net of effects of
acquisition of First of Michigan
Capital Corporation:
Drafts payable 6,069 (4,382) 3,902
Payable to brokers and clearing
organizations 226,095 (125,878) 59,331
Payable to customers 5,055 12,386 1,527
Securities sold, but not yet purchased (2,024) 6,816 13,899
Accounts payable and other liabilities 3,010 5,739 3,069
Income taxes payable 3,708 2,697 7,110
Cash provided by (used in)
operating activities 72,490 31,858 (3,989)
Cash flows from investing and
other activities:
Purchase of First of Michigan
Capital Corporation, net
of cash acquired (note 12) (34,340) - -
Proceeds from sale of exchange seat 1,358 - 164
Purchase of exchange seat - - (7)
Purchase of fixed assets (5,152) (995) (597)
Cash used in investing and
other activities (38,134) (995) (440)
Cash flows from financing activities:
Cash dividends paid on Class A
non-voting and Class B shares (3,002) (4,296) (1,827)
Issuance of Class A non-voting shares 1,577 2,175 691
Repurchase of Class A non-voting
shares for cancelation (482) - (1,146)
Tax benefit from employee options exercised 234 314 -
(Decrease) increase in bank call loans (31,262) (29,400) 5,375
Cash provided by (used in)
financing activities (32,935) (31,207) 3,093
Net increase (decrease) in cash
and short-term deposits 1,421 (344) (1,336)
Cash and short-term deposits,
beginning of year 9,363 9,707 11,043
Cash and short-term deposits,
end of year $10,784 $ 9,363 $ 9,707
The accompanying notes are an integral part of these consolidated
financial statements. F-6
FAHNESTOCK VINER HOLDINGS INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
December 31, 1997
GENERAL
Fahnestock Viner Holdings Inc. (the "Company") is incorporated under
the laws of Ontario. The Company's principal subsidiaries, Fahnestock
& Co. Inc. ("Fahnestock") and First of Michigan Corporation
("FOM"), are members of the New York Stock Exchange, the
American Stock Exchange and several other regional exchanges in the
United States.
1. Summary of significant accounting policies
These consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States for the purpose of inclusion in the annual report on Form 10-K.
In all material respects, they conform with accounting principles
generally accepted in Canada which have been used to prepare the
consolidated financial statements for purposes of inclusion in the annual
report to shareholders, except the calculation of earnings per share.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The most significant estimates
are related to income taxes and contingencies. Actual results could be
materially different from these estimates.
Since operations are predominantly based in the United States, these
consolidated financial statements are presented in U.S. dollars.
The following is a summary of significant accounting policies followed
in the preparation of these consolidated financial statements:
(a) Basis of consolidation
The consolidated financial statements include the accounts of the
company and all subsidiaries. The major subsidiaries, wholly-owned
and operated in the U.S., are as follows:
Fahnestock & Co. Inc. - broker/dealer in securities
First of Michigan Corporation - broker/dealer in securities
Freedom Investments, Inc. - discount broker in securities
Hudson Capital Advisors Inc. - investment advisory services
Significant inter-company balances and transactions have been
eliminated upon consolidation.
(b) Brokerage operations
Transactions in proprietary securities and related revenues and
expenses are recorded on a trade date basis. Customers' securities and
commodities transactions are reported on a settlement date
basis which is generally three business days. Related commission
income and expense is recorded on a trade date basis. Securities owned
and securities sold but not yet purchased for trading purposes are
reported at market value based upon quoted prices. Realized and
unrealized changes in market value are recognized in net trading
revenues in the year in which the change occurs. Other financial
instruments are carried at fair value or amounts that approximate fair
value.
(c ) Cash and cash equivalents
The Company defines cash equivalents as highly liquid investments
with original maturities of less than 90 days that are not held for sale in
the ordinary course of business.
(d) Drafts payable
Drafts payable represent amounts drawn by the Company against a
bank.
(e) Goodwill
Goodwill, acquired upon the acquisition of Fahnestock, Fahnestock
International Inc. and First of Michigan Capital Corporation, is being
amortized to operations on a straight-line basis over twenty years.
Negative goodwill arising as a result of the acquisition of Hopper
Soliday Corporation and subsidiaries and Reich & Co., Inc. is being
amortized to operations on a straight-line basis over twenty years.
(f) Fixed assets
Fixed assets and stock exchange seats are stated at cost. Depreciation
of furniture and fixtures is provided on the straight-line method
generally over five to seven years. Leasehold improvements are
amortized on a straight-line basis over the shorter of the life of the asset
or the life of the lease.
(g) Foreign currency translations
Canadian currency balances have been translated into U.S. dollars as
follows: monetary assets and liabilities at exchange rates prevailing at
year end; revenue and expenses at average rates for the year; and non-
monetary assets and share capital at historic rates.
(h) Income taxes
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standard No. 109, "Accounting for Income
Taxes". Deferred income tax assets and liabilities arise from "temporary
differences" between the tax basis of an asset or liability and its
reported amount in the consolidated financial statements. Deferred tax
balances are determined by applying the enacted tax rates.
(i)Securities lending activities
Securities borrowed and securities loaned are carried at the amounts of
cash collateral advanced or received.
Securities borrowed transactions require the Company to deposit cash,
letters of credit, or other collateral with the lender. The Company
receives cash or collateral in an amount generally in excess of the
market value of securities loaned.
The Company monitors the market value of securities borrowed and
loaned on a daily basis and may require counterparties to deposit
additional collateral or return collateral pledged when appropriate.
Included in receivable from brokers and clearing organizations are
deposits paid for securities borrowed of $299,938,000 (1996-
$157,314,000). Included in payable to brokers and clearing
organizations are deposits received for securities loaned of
$411,089,000 (1996-$183,010,000).
2. Restricted deposits
Deposits of $1,537,000 (1996-$1,902,000) were held at year end in a
special reserve bank account for the exclusive benefit of customers in
accordance with regulatory requirements. To the extent permitted,
these deposits are invested in interest bearing accounts collateralized by
qualified securities.
3. Securities owned and sold, but not yet purchased (at market value)
1997 1996
Securities owned consist of:
Corporate equities $28,309,000 $22,846,000
Corporate debt 13,264,000 10,963,000
U.S. government and agency
and state and municipal
government obligations 10,029,000 5,184,000
Securities purchased to resell - 2,005,000
Money market funds 11,660,000 -
$63,262,000 $40,998,000
Securities sold, but not yet purchased consist of:
Corporate equities $26,706,000 $30,170,000
Corporate debt 3,266,000 512,000
U.S. government and agency
and state and municipal
government obligations 1,118,000 2,074,000
$31,090,000 $32,756,000
4. Subordinated loans payable
1997 1996
Due in 1999 at 5.5% $30,000 $30,000
5. Bank call loans
Bank call loans, primarily payable on demand, bear interest at various
rates but not exceeding the broker call rate, which was 7.25% at
December 31, 1997. These loans, collateralized by firm and customer
securities with market values of approximately $43,361,000 and
$83,939,000, respectively, are primarily with one money center bank.
Details of the bank call loans are as follows:
December 31,
1997 1996 1995
Year-end balance $23,755,000 $11,800,000 $41,200,000
Weighted interest rate 6.3125% 6.343% 7.250%
(at end of year)
Maximum balance $45,650,000 $23,150,000 $41,200,000
(at any month end)
Average amount
outstanding $23,779,000 $10,867,000 $17,446,000
(during the year) (2)
Weighted average
interest rate 4.16% 5.97 5.093%
(during the year) (1)
(1) The weighted average interest rate during the year was
computed by dividing the actual interest expense by the average bank
call loans outstanding.
(2) The average amount outstanding during the year was
computed by adding amounts outstanding at the end of each month and
dividing by twelve.
Aggregate interest paid by the Company on a cash basis during the
years ended December 31, 1997, 1996, and 1995 was $21,449,000,
$17,721,000 and $22,900,000, respectively.
6. Share capital
The Company's authorized share capital consists of (a) an unlimited
number of first preference shares issuable in series; (b) an unlimited
number of Class A non-voting shares; and (c) 99,680 Class B voting
shares.
The Class A non-voting and the Class B voting shares are equal in all
respects except that the Class A non-voting shares are non-voting.
All of the above-referenced classes of shares are without par value.
The Company's issued and outstanding share capital is as follows (no
first preference shares have been issued):
1997 1996 1995
12,408,760 (12,265,760 in
1996 and 11,940,410 in 1995)
Class A non-voting shares $40,783,000 $39,688,000 $37,513,000
99,680 Class B voting shares 133,000 133,000 133,000
$40,916,000 $39,821,000 $37,646,000
The Company has outstanding options with certain employees to
purchase a total of 1,120,030 Class A non-voting shares as follows:
Number Date
of shares of Issue Option price Expiration date
150,000 Jan.27, 1993 Cdn.$ 7.38 Jan.26,1998
100,000 Jan.28, 1994 Cdn.$12.50 Feb.28,1999
250,000 Mar.1, 1994 Cdn.$12.25 Feb.28,1999
100,000 Jun.6, 1994 Cdn.$ 9.00 Jun.5,1999
20,000 Jan.2, 1996 Cdn.$12.62 Jan.1, 2001
142,000 May29, 1996 Cdn.$15.70 May 28, 2001
125,000 Jul. 16, 1996 Cdn.$15.75 Jul.15, 2001
21,000 Dec.16, 1996 US $14.38 Dec.15, 2001
5,000 Dec.31, 1996 Cdn.$19.80 Dec.31, 2001
82,030 Jan.7, 1997 US $14.50 Jan.6, 2002
75,000 Feb.26, 1997 Cdn.$23.90 Feb.26, 2002
45,000 Oct.20, 1997 US $20.875 Oct.19, 2002
5,000 Dec.23, 1997 US $17.75 Dec.22, 2002
During 1997, options to purchase 100,000 Class A non-voting shares
(212,350 in 1996 and 21,875 in 1995) were exercised for cash totaling
$571,000 ($1,175,000 in 1996 and $70,000 in 1995). The number
of options vested at December 31, 1997 was 335,000 (223,750 in 1996
and 263,625 in 1995). The authorized number of Class A non-voting
shares that may be made subject to options under the Company's
employee stock option plans is 1,850,000.
The Company issued Class A non-voting shares from Treasury to the
Company's 401(k) plan as follows:
Number Date Issue Price
Year of shares of issue per share
1995 113,000 January 10, 1996 Cdn.$12.24
1996 70,000 January 14, 1997 US $14.375
1997 42,000 January 14, 1998 US $17.6875
In 1997, the Company paid cash dividends to holders of Class A non-
voting and Class B shares as follows (US$0.35 in 1996):
Dividend Record Date Payment Date
per share
US$0.06 February 10, 1997 February 21, 1997
US$0.06 May 9, 1997 May 23, 1997
US$0.06 August 8, 1997 August 22, 1997
US$0.06 November 7, 1997 November 21, 1997
The Company may purchase up to 800,000 Class A non-voting shares
by way of a Normal Course Issuer Bid through the facilities of The
Toronto Stock Exchange and/or the New York Stock Exchange.
During the year ended December 31, 1997, the Company purchased
27,000 Class A non-voting shares for a total consideration of $482,000
(nil in 1995 and 1996). Unless terminated earlier by the Company, it
may continue to purchase shares up to July 1, 1998.
7. Contributed capital
Contributed capital represents the tax benefit on the difference between
market price and exercise price on employee stock options exercised in
1992, 1994, 1996 and 1997.
8. Income taxes
The income tax provision shown in the consolidated statement of
operations is reconciled to amounts of tax that would have been
payable (recoverable) from the application of combined federal, state,
provincial and local tax rates to pre-tax profit as follows:
1997 1996 1995
Profit before income tax $46,484,000 $53,902,000 $34,831,000
U.S. federal tax at 35% $16,289,000 $18,876,000 $12,268,000
Canadian tax at 44% (25,000) (13,000) (97,000)
Combined state and local tax 6,558,000 7,378,000 4,564,000
Income taxes before under-noted 22,822,000 26,241,000 16,735,000
Tax effect of non-taxable
interest and dividends (88,000) (271,000) (269,000)
Tax effect of deductible state
and local taxes other
differences between accounting
and taxable income (2,981,000) (2,347,000) (2,534,000)
Income taxes $19,753,000 $23,623,000 $13,932,000
Profit before income tax provision
Canadian operations $ (56,000) $ (29,000) $ (220,000)
U.S. operations $46,540,000 $53,931,000 $35,051,000
The current U.S. income tax provision in 1997 is $19,753,000
($23,623,000 in 1996 and $13,932,000 in 1995). The current
Canadian income tax provision in 1997 is nil (nil in 1996 and 1995).
Aggregate deferred tax assets, which relate to fixed assets and acquired
net operating losses, are included in other assets and amounted to
$722,000.
On a cash basis, the Company paid income taxes for the years ended
December 31, 1997, 1996 and 1995 in the amounts of $15,588,000,
$19,467,000 and $6,731,000, respectively.
9. Profit per share
1997 1996 1995
Basic weighted average number
of shares outstanding 12,494,054 12,296,197 12,330,552
Net effect,treasury stock
method 383,887 287,039 107,880
Diluted common shares 12,877,941 12,583,236 12,438,449
Net profit $26,731,000 $30,279,000 $20,889,000
Basic profit per share $2.14 $2.46 $1.69
Diluted profit per share $2.08 $2.41 $1.68
Statement of Financial Accounting Standards No.128 - Earnings Per
Share ("FAS 128") requires a change in the method of calculation for
both primary and fully-diluted earnings per share for periods ended
after December 15, 1997. Earnings per share for the years ended
December 31, 1996 and 1995 have been restated to comply with FAS 128.
FASB Statement No.123 "Accounting for Stock-Based Compensation"
("SFAS 123") was issued in 1995, and if fully adopted, changes the method
for recognition of cost on stock compensation plans similar to those of
the Company.
Adoption of SFAS 123's fair value recognition method is optional. The
Company has chosen to continue to apply Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees, and
related interpretations in accounting for its stock compensation plans.
The unaudited proforma results if compensation expense for the
Company's 1997 grants for stock compensation had been determined in
accordance with SFAS 123 are as follows:
Dec.31, 1997 Dec.31, 1996
As reported Proforma As reported Proforma
Net profit $26,731,000 $26,409,000 $30,279,000 $30,117,000
Basic profit per share $2.14 $2.11 $2.46 $2.45
Diluted profit per share $2.08 $2.05 $2.41 $2.39
For purposes of the proforma presentation, the Company determined
fair value using an option pricing model with the following weighted
average assumptions for grants in 1997: risk-free interest rates
ranging from 5.68% to 6.37% (5.41% to 6.66% in 1996), expected
dividend yield of 1.4%, expected life of 5 years and expected
volatility ranging from 28% to 33% (25% in 1996). The weighted
average fair value of options granted during 1997 was $3,001,000
($958,000 in 1996). The fair value is being amortized over five years
on an after-tax basis, where applicable for purposes of proforma
presentation. Stock options generally expire five years after
the date of grant or three months after the date of retirement, if earlier.
Stock options generally vest over a five year period with 0% in year
one, 25% of the shares becoming exercisable on each of the next
three anniversaries of the grant date and the balance vesting in the last
six months of the option life. The vesting period is at the discretion of
the Compensation and Stock Option Committee and is determined
at the time of grant.
The effects of applying SFAS 123 in this proforma presentation are not
indicative of future amounts because it does not take into consideration
future grants, any difference between actual and assumed forfeitures,
and only reflects grants subsequent to December 15, 1994.
10. Commitments and contingencies
(a) The Company and its subsidiaries are obligated under lease
agreements expiring at various dates through 2013 to pay the following
future minimum rentals:
1998 $ 6,155,000
1999 $ 4,869,000
2000 $ 3,699,000
2001 $ 3,269,000
2002 and thereafter $25,287,000
Total $43,279,000
Certain of the leases contain provisions for rent escalation based on
increases in costs incurred by the lessor.
(b) The Company's rent expense for the years ended December 31,
1997, 1996 and 1995 was $6,689,000, $5,566,000 and $5,411,000,
respectively.
(c) The Company, through its subsidiaries, maintains contribution
based retirement plans covering substantially all full-time U.S.
employees. The Fahnestock plan provides that the Company
may make discretionary contributions. The FOM plan contributions are
made in accordance with the terms of the Plan document. FOM also
sponsors an unfunded Supplemental Executive Retirement Program,
which is a non-qualified plan that provides certain current and former
officers additional retirement benefits. The Company made
contributions to the plans of $2,207,000, $1,922,000 and $1,600,000
in 1997, 1996 and 1995, respectively.
(d) The Company's bankers have issued letters of credit for
$31,430,000 deposited with two clearing organizations of which
$27,800,000 is collateralized by securities owned. No amounts have
been drawn on the letters of credit at December 31, 1997.
(e) The Company is involved in certain litigation arising in the ordinary
course of business. Management believes, based upon discussion with
legal counsel, that the outcome of this litigation will not have a
material effect on the Company's financial position. The materiality of
legal matters to the Company's future operating results depends on the
level of future results of operations as well as the timing and
ultimate outcome of such legal matters.
(f) The Company's principal subsidiaries, Fahnestock and FOM , are
subject to the uniform net capital requirements of the Securities and
Exchange Commission ("SEC") under Rule 15c3-1 (the "Rule").
Fahnestock and FOM compute their net capital requirements under the
alternative method provided for in the Rule which requires that
Fahnestock and FOM maintain net capital equal to two percent
of aggregate customer related debit items, as defined in SEC Rule
15c3-3. At December 31, 1997, Fahnestock had net capital of
$94,435,000 which was $85,503,000 in excess of the $8,932,000
required to be maintained at that date. At December 31, 1997, FOM
had net capital of $7,499,000 which was $7,249,000 in excess of the
$250,000 required to be maintained at that date.
11. Comparative figures
Certain 1995 and 1996 figures have been reclassified in order to
conform with the financial statement presentation adopted for 1997.
12. Acquisitions.
On July 17, 1997, a subsidiary of the Company acquired approximately
99.4% of the outstanding common stock of First of Michigan Capital
Corporation by way of a tender offer for cash consideration.
On July 31, 1997, the Company acquired the remaining outstanding
shares. The total purchase price was $37,609,000. The acquisition was
accounted for by the purchase method as follows:
Cash $ 3,269,000
Receivable from brokers and others, net 69,885,000
Fixed assets 3,140,000
Assets subsequently sold 264,000
Other assets 11,713,000
88,271,000
Deduct:
Loans and notes payable (43,217,000)
Other liabilities (12,990,000)
Fair value of assets acquired 32,064,000
Purchase price paid 37,609,000
Excess of cost over fair value allocated to goodwill $ 5,545,000
Presented below are the unaudited proforma consolidated results of
operation. Amounts presented for 1997 and 1996 give effect to the
acquisition of FOM as if the transaction was consummated at the
beginning of each of the periods presented. The proforma information
is for comparative purposes only and is not necessarily indicative either
of the actual results that would have occurred if the acquisition had
been consummated at the beginning of the period presented, or of
future operations of the combined companies.
Year ended December 31,
1997 1996
Revenues $282,988,000 $286,433,000
Profit before tax $ 51,656,000 $ 56,335,000
Net profit $ 28,936,000 $ 32,670,000
Basic profit per share $2.32 $2.66
Diluted profit per share $2.25 $2.60
13. Financial instruments with off-balance sheet risk and concentration
of credit risk. In the normal course of business, the Company's
securities activities involve execution, settlement and financing of
various securities transactions for customers. These activities may
expose the
Company to risk in the event customers, other brokers and dealers,
banks, depositories or clearing organizations are unable to fulfill their
contractual obligations.
The Company is exposed to off-balance sheet risk of loss on unsettled
transactions in the event customers and other counterparties are unable
to fulfill their contractual obligations. It is the Company's policy to
review, as necessary, the credit standing of each counterparty with
which it conducts business.
Securities sold, but not yet purchased represent obligations of the
Company to deliver the specified security at the contracted price and
thereby create a liability to repurchase the security in the market at
prevailing prices. Accordingly, these transactions result in off-balance-
sheet risk, as the Company's ultimate obligation to satisfy the sale of
securities sold, but not yet purchased may exceed the amount
recognized on the balance sheet. Inventory positions are monitored on
a daily basis to minimize the risk of loss.
The Company's customer financing and securities lending activities
require the Company to pledge customer securities as collateral for
various collateralized financing sources such as bank loans and
securities loaned. At December 31, 1997, approximately $133,900,000
of securities loaned are collateralized by customer securities. Included
in receivable from brokers and clearing organizations are receivables
from four major broker-dealers totaling $135,026,000.
The Company monitors the market value of collateral held and the
market value of securities receivable from others. It is the Company's
policy to request and obtain additional collateral when exposure to loss
exists. In the event the counterparty is unable to meet its contractual
obligation to return the securities, the Company may be exposed to off-
balance sheet risk of acquiring securities at prevailing market prices.
As part of its trading strategy, the Company uses derivative financial
instruments. Principal transactions revenue, including derivatives, for
the year ended December 31, 1997 included revenue from trading
equities of $53,828,000 and revenue from trading fixed income
securities of $12,144,000.
Futures contracts, comprised mainly of stock index futures, represent
commitments to purchase or sell securities at a future date and at a
specified price. Credit risk and market risk exist with respect to these
instruments. Credit risk associated with the contracts is limited to
amounts recorded in the balance sheet. Notional or contractual
amounts are used to express the volume of these transactions, and do
not represent the amounts potentially subject to market risk. At
December 31, 1997, the Company had open stock index futures
contracts with notional values of approximately $19,582,000. The fair
value of these derivative financial instruments included in assets at
December 31, 1997 was approximately $71,125, and the monthly
average fair values of the instruments during the year were assets of
$133,000 and liabilities of $379,000.
Cash is deposited to satisfy initial margin requirements for open futures
contracts and is included in receivable from brokers and clearing
organizations with any gain or loss from the unsettled futures
transactions.
At December 31, 1997 the Company had outstanding commitments to
buy $2,000,000 of U.S. Government agency securities on a when
issued basis. These commitments have off-balance sheet risks
similar to those described above.
14. Impact of Recently Issued Accounting Standards
New accounting standards issued but not effective would not have a
material impact on the Company's financial statements.
15. Subsequent event
On January 29, 1998, a cash dividend of U.S.$0.07 per share (totaling
$889,000) was declared payable on February 20, 1998 to holders of
Class A non-voting and Class B shares of record on February 6, 1998.
EXHIBIT INDEX
Unless designated by an asterisk indicating that such document has
been filed herewith, the Exhibits listed below have been heretofore filed
by the Company pursuant to Section 13 or 15(d) of the Exchange Act
and are hereby incorporated herein by reference to the pertinent prior
filing.
Number/
Description/
Page
3 (a)
Articles of Incorporation, as amended, of Fahnestock Viner
Holdings Inc. (previously filed as exhibits to Form 20-F for the
fiscal year ended December 31, 1986 and 1988).
3(b)
By-Laws, as amended, of Fahnestock Viner Holdings Inc.
(previously filed as an exhibit to Form 20-F for the fiscal year
ended December 31, 1987).
10(a)
Lease documentation for the premises at 110 Wall St., New York, NY
including Lease Modification Agreement dated January 25, 1991
between The 110 Wall Company and Fahnestock & Co. Inc.
(previously filed as an exhibit to Form 10-K for the fiscal year ended
December 31, 1990) and the Lease Agreement dated January 5, 1987
between The 110 Wall Company and Fahnestock & Co. Inc. and the
Lease Agreement dated November 18, 1980 between The 110 Wall
Company and Fahnestock & Co. Inc. (previously filed as exhibits to
Form 20-F for the fiscal year ended December 31, 1988).
10(b)
Supplemental Legend to 1986 Incentive Stock Option Plan
(previously filed as an exhibit to the registrant's registration
statement on Form S-8 (file no. 33-38134)
10(c)
Supplemental Legend to 1986 Employee Stock Option Plan
(previously filed as an exhibit to the registrant's registration
statement on Form S-8 (file no. 33-38134)
10(d)
Fahnestock Viner Holdings Inc. 1986 Incentive Stock Option Plan ,
Amended and Restated as at April 26, 1991 (previously filed as an
exhibit to Form 10-K for the year ended December 31, 1992)
10(e)
Fahnestock Viner Holdings Inc. 1986 Employee Stock Option
Plan, Amended and Restated as at April 26, 1991 (previously filed
as an exhibit to Form 10-K for the year ended December 31, 1992)
10(f)
Fahnestock Viner Holdings Inc. 1996 Equity Incentive Plan,
Amended and Restated as at January 7, 1997 (previously filed as
an exhibit to Form 10-K for the year ended December 31, 1996)
10(g)
Fahnestock Viner Holdings Inc. 1996 Equity Incentive Plan
Amendment No. 1 dated March 25, 1997 (filed herewith) *
10(h)
Lease document for the premises at 125 Broad Street, New York,
NY dated May 27, 1997 between NY Broad Holdings, Inc. and
Fahnestock & Co. Inc. (filed herewith) *
10(i)
Lease document for the premises at 300 River Place, Detroit, MI
dated February 28, 1997 between The Stroh Companies, Inc. and
First of Michigan Corporation (filed herewith) *
10(j)
Stock Appreciation Agreement between Fahnestock & Co. Inc. and
Albert G. Lowenthal dated February 15, 1995 (filed herewith) *
10(k)
Performance-Based Compensation Agreement between
Fahnestock Viner Holdings Inc. and Albert G. Lowenthal dated
March 25, 1997 (filed herewith) *
10(l)
Securities Purchase Agreement dated June 11, 1997, between
1888 Limited Partnership and DST Systems Inc. and Purchaser
(previously filed as an exhibit to Schedule 14D-1 and Schedule
13D for First of Michigan Capital Corporation dated June 18, 1997)
21
Subsidiaries of the registrant (filed herewith) *
23 (a)
Consent of Coopers & Lybrand (filed herewith) *
27
Financial Data Schedule, as required by Item 601(c)(2)(1) of
Regulations S-K and S-B (filed herewith) *
E-1
[DESCRIPTION] EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
AS AT DECEMBER 31, 1997
FAHNESTOCK VINER HOLDINGS INC. (Ontario)
Registrant
- -E.A. VINER INTERNATIONAL CO.
(Delaware)
-HUDSON CAPITAL ADVOSIRS INC.
(New York)
-NEWSON INC.
(Pennsylvania)
-VINER FINANCE INC.
(Delaware)
-FAHNESTOCK & CO. INC.
(New York)
-PACE SECURITIES, INC.
(New York)
-REICH & CO. INC.
(Alabama)
-FREEDOM INVESTMENTS, INC.
(Delaware)
-FIRST OF MICHIGAN CAPITAL CORPORATION (Delaware)
-FIRST OF MICHIGAN CORPORATION (Delaware)
-FIRST OF MICHIGAN VENTURE CAPITAL ASSOCIATES , INC. (Michigan)
-FIRST OF MICHIGAN INSURANCE AGENCY, INC. (Michigan)
-CRANBROOK CAPITAL MANAGEMENT, INC. (Michigan)
-FOM ADVISERS, INC.(Michigan)
-FIRST OF MICHIGAN REAL ESTATE, INC. (Michigan)
-FIRST OF MICHIGAN LEASING, INC. (Michigan)
-FIRST OF MICHIGAN COMMODITIES, INC. (Michigan)
[DESCRIPTION] EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
[letterhead of Coopers & Lybrand]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the use of our report dated March 4, 1998 with respect to the
consolidated balance sheets of Fahnestock Viner Holdings Inc. for the years
ended December 31, 1997 and 1996 and the consolidated statements of
operations, cash flows and retained earnings for each of the years in the
three year period ended December 31, 1997 included in the 1997 Annual Report
on Form 10-K.
/s/Coopers & Lybrand
Chartered Accountants
Toronto, Canada
March 30, 1998.
<TABLE> <S> <C>
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 10784000
<RECEIVABLES> 438049000
<SECURITIES-RESALE> 0
<SECURITIES-BORROWED> 299938000
<INSTRUMENTS-OWNED> 63262000
<PP&E> 9128000
<TOTAL-ASSETS> 835146000
<SHORT-TERM> 23755000
<PAYABLES> 208247000
<REPOS-SOLD> 0
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<INSTRUMENTS-SOLD> 31090000
<LONG-TERM> 30000
0
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<COMMON> 40916000
<OTHER-SE> 120019000
<TOTAL-LIABILITY-AND-EQUITY> 835146000
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<INTEREST-DIVIDENDS> 40123000
<COMMISSIONS> 103323000
<INVESTMENT-BANKING-REVENUES> 11042000
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<INCOME-PRE-EXTRAORDINARY> 46484000
<EXTRAORDINARY> 0
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<TABLE> <S> <C>
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<RESTATED>
<S> <C> <C> <C>
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<INSTRUMENTS-SOLD> 52807000 38559000 19198000
<LONG-TERM> 30000 30000 30000
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<COMMON> 41398000 41398000 40827000
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<COMPENSATION> 37630000 22112000 24453000
<INCOME-PRETAX> 12671000 8109000 12734000
<INCOME-PRE-EXTRAORDINARY> 12671000 8109000 12734000
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 7417000 4506000 7069000
<EPS-PRIMARY> 0.60 0.37 0.57
<EPS-DILUTED> 0.57 0.35 0.55
</TABLE>
<TABLE> <S> <C>
<ARTICLE> BD
<RESTATED>
<S> <C> <C> <C> <C>
<C>
<PERIOD-TYPE> YEAR 3-MOS 3-MOS 3-MOS
YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996 DEC-31-1996 DEC-31-1996
DEC-31-1995
<PERIOD-END> DEC-31-1996 SEP-30-1996 JUN-30-1996 MAR-31-1996
DEC-31-1995
<CASH> 11265000 19041000 10145000 9688000
10949000
<RECEIVABLES> 305544000 307862000 501500000 337560000
305749000
<SECURITIES-RESALE> 2005000 888000 973000 1809000
1016000
<SECURITIES-BORROWED> 157314000 204868000 224085000 192353000
265761000
<INSTRUMENTS-OWNED> 39591000 34758000 37753000 34446000
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<PP&E> 1855000 1620000 1596000 1557000
1595000
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<PAYABLES> 147004000 134999000 149585000 109075000
128189000
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<SECURITIES-LOANED> 183010000 245085000 290166000 293957000
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<INSTRUMENTS-SOLD> 32756000 23447000 15196000 19017000
25940000
<LONG-TERM> 30000 30000 30000 30000
30000
0 0 0 0
0
0 0 0 0
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<COMMON> 39821000 39780000 39656000 39262000
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<TRADING-REVENUE> 80508000 15895000 33300000 23592000
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<INTEREST-DIVIDENDS> 32981000 7831000 8345000 8425000
35399000
<COMMISSIONS> 73992000 14760000 17340000 17483000
62543000
<INVESTMENT-BANKING-REVENUES> 8672000 1464000 3251000 1903000
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<FEE-REVENUE> 14189000 3656000 3483000 2614000
10934000
<INTEREST-EXPENSE> 16311000 3924000 4502000 4795000
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<COMPENSATION> 102059000 22616000 31439000 26686000
88260000
<INCOME-PRETAX> 53902000 9612000 20907000 14177000
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<INCOME-PRE-EXTRAORDINARY> 53902000 9612000 20907000 14177000
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<EXTRAORDINARY> 0 0 0 0
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<NET-INCOME> 30279000 5554000 11657000 7891000
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<EPS-PRIMARY> 2.46 0.45 0.95 0.65
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</TABLE>
[DESCRIPTION] EXHIBIT 10(g)
AMENDMENT NO. 1
(MARCH 25, 1997)
TO
FAHNESTOCK VINER HOLDINGS INC.
1996 EQUITY INCENTIVE PLAN
AMENDED AND RESTATED
AS AT JANUARY 7, 1997
Effective March 25, 1997, the Fahnestock Viner Holdings Inc.
1996 Equity Incentive Plan (Amended and Restated as at January
7, 1997) be further amended by adding the following subsection
to Section 3 of the Plan:
"(e) The Corporation shall, in granting options to purchase, or
in issuing Class A Shares, to any Senior Officer under the
Plan, assure that the aggregate of the number of Class A
Shares issuable under options held by such Senior Officers
and issued to such Senior Officer in any 60 month period
not exceed 500,000 Class A Shares (subject to adjustment
pursuant to Section 15). For the purposes of this
subsection (e) "Senior Officer" shall mean the chief
executive officer of the Corporation and the four other
most highly compensated executive officers of the
Corporation and its subsidiaries for the purposes of
reporting executive compensation in the Corporation's
annual report on Form 10-K."
The foregoing amendment was approved by the Board of
Directors of the Corporation on March 25, 1997, and by
resolution passed by the holders of Class B voting shares of the
Corporation at the Annual and Special Meeting of Shareholders
of the Corporation held on June 2, 1997.
" A.W. Oughtred"
A.Winn Oughtred, Secretary
Fahnestock Viner Holdings Inc.
[DESCRIPTION] EXHIBIT 10(h)
EXECUTION COPY
OFFICE SPACE LEASE
between
NY BROAD HOLDINGS, INC.,
Landlord
- and -
FAHNESTOCK & CO. INC.
Tenant
of
15th and 16th Floors
in
COMMERCIAL UNIT C
THE 125 BROAD CONDOMINIUM
125 Broad Street
New York, New York
Dated: As of May 27, 1997
OFFICE SPACE LEASE
THIS OFFICE SPACE LEASE (this "Lease") is made as of May 27,
1997 between NY BROAD HOLDINGS, INC., a Delaware
corporation, as landlord ("Landlord"), having an office for the conduct
of business at the Address of Landlord set forth in Section 16.13 and
FAHNESTOCK & CO. INC., a New York corporation, as tenant
("Tenant"), having an office for the conduct of business at the Address
of Tenant set forth in Section 16.13.
W I T N E S S E T H
The parties hereto, for themselves, their successors and permitted
assigns, hereby covenant as follows:
ARTICLE I
BASIC LEASE PROVISIONS
SECTION I.1 Basic Lease Provisions.
ALLOWANCE: An amount of $40.00 per square foot
of Premises Area which totals $2,760,320.00, to be paid or credited in
accordance with Paragraph 6 of Exhibit D.
PREMISES: The entire rentable area of the 15th and
16th floors of the Building shown cross-hatched on the floor plan
attached hereto as Exhibit A.
PREMISES AREA: 69,008 rentable square feet, which is
the total rentable area of the Premises as of the date of this Lease. The
Premises Area may be reduced or expanded during the Term as
provided in Article X, Article XIV, Article XVIII or Article XIX of
this Lease. References in this Lease to the Premises Area shall mean
the Premises Area existing at the time of the particular reference.
TERM: Approximately 16 years, beginning on the
Commencement Date and ending on the Expiration Date, subject to the
terms of Article XX of this Lease.
COMMENCEMENT
DATE: The Landlord's Delivery Date (as defined in
Exhibit B).
EXPIRATION
DATE: The first to occur of (a) September 30, 2013,
unless extended as provided in Article XVII, and (b) such earlier date
upon which the Term may expire or be terminated pursuant to this
Lease or pursuant to Law.
BASE RENT:
From To (and including) Monthly Amount Base
Rent per
square foot
per annum
Commencement Date September 30, 2003 $129,390.00 $22.50
October 1, 2003 September 30, 2008 $138,016.00 $24.00
October 1, 2008 September 30, 2013 $152,392.67 $26.50
The Base Rent during the Renewal Term, if the Renewal Option is
exercised, shall be determined pursuant to Article XVII. The Base
Rent for the First Expansion Space and the Second Expansion Space, if
the First Expansion Option or the Second Expansion Option is
exercised, shall be determined pursuant to Article XVIII and Article
XIX, respectively.
BASE RENT
COMMENCEMENT DATE: October 8, 1998, unless extended as provided
in Section 3.7.
PERMITTED USE: General office use (including use of the
Premises as a securities brokerage firm) and related uses incident
thereto, but in no event for a Prohibited Use.
TENANT'S SHARE: 33.66%, subject to adjustment as
provided in Article X, Article XIV, Article XVIII, and Article XIX of
this Lease.
SECURITY DEPOSIT: None, except in connection with
Article XXIV and Paragraph 6.3 of Exhibit D.
SECTION I.2 Other Definitions. All capitalized terms used in this
Lease shall have the meanings given to them in either Section 1.1 or
Exhibit B attached hereto.
ARTICLE II
PREMISES AND TERM
SECTION II.1 Lease of Premises. Landlord hereby leases to Tenant,
and Tenant hereby hires from Landlord, the Premises for the duration
of the Term, for the rents herein reserved, and upon and subject to the
covenants, terms and conditions of this Lease. Landlord and Tenant
hereby conclusively agree as to the Premises Area set forth in Section
1.1 and the Unit Area set forth in Exhibit B, notwithstanding any
subsequent remeasurements.
SECTION II.2 Term; Commencement Date. The Term shall
commence on the Commencement Date and shall end at noon on the
Expiration Date.
SECTION II.3 Tenant's Waiver. Tenant expressly waives (a) any
right to rescind this Lease under Section 223-a of the Real Property
Law of the State of New York (or any other law of like import, now or
hereafter in force) and (b) the right to recover any damages resulting
from Landlord's failure to deliver possession of the Premises on any
fixed date for any reason whatsoever. No such failure shall (i) affect
the validity of this Lease or the obligations of Tenant hereunder, (ii) be
construed to extend the Term or (iii) give rise to any claim by Tenant
for damages or for rescission of this Lease; provided, however, that the
rent payable hereunder shall be abated in accordance with Section 3.7
below.
SECTION II.4 Delivery of Premises. Tenant agrees that (a) Tenant is
leasing the Premises in "AS IS" condition, subject to the following
clause, (b) Landlord shall have no obligation to perform any work or to
supply any materials whatsoever to prepare the Premises for Tenant's
occupancy (including, without limitation, the making of any
improvements or repairs to the Premises or any other portion of the
Unit) other than Landlord's Work which shall be performed in
accordance with and subject to the provisions of the Work Letter
attached hereto as Exhibit D (the "Work Letter"), and (c) except as
disclosed in Exhibit N attached hereto, Landlord and Landlord's agents
have made no representations, warranties or promises whatsoever with
respect to the Premises, the Unit, the Building, the land underlying the
Building, the rents, leases, Taxes, Operating Expenses or any other
matter or thing, except as herein expressly set forth, and no rights,
easements or licenses are acquired by Tenant by implication or
otherwise except as expressly set forth in this Lease. Tenant represents
and warrants that it is familiar with the Premises, the Common
Elements of the Building and the utilities and other services servicing
the Building and has inspected same. The taking of occupancy of the
whole or any part of the Premises by Tenant shall be conclusive
evidence, as against Tenant, that, subject to Landlord's completion of
the punch list items to be completed by Landlord in accordance with
Paragraph 10 of Exhibit D, (i) the Premises were substantially as shown
on Exhibit A, (ii) Tenant accepts possession of the same, (iii) the
Premises and the Building were in good and satisfactory condition at
the time such occupancy was so taken and (iv) Landlord's Work has
been performed in accordance with Exhibit D.
ARTICLE III
RENTS
SECTION III.1 Base Rent. Subject to Section 3.7, beginning on the
Commencement Date and continuing thereafter during the Term,
Tenant shall pay to Landlord as Base Rent for the Premises the
amounts stated in Section 1.1 under the definition of "Base Rent".
Tenant shall pay the Base Rent in equal monthly installments in
advance on the first day of each calendar month of the Term.
SECTION III.2 Additional Rent. Subject to Section 3.7, beginning on
the Commencement Date, Tenant shall pay to Landlord as additional
rent ("Additional Rent") all sums payable by Tenant under the
provisions of this Lease other than Base Rent including, without
limitation, all interest and penalties that may accrue thereon in the event
of Tenant's failure to pay such amounts when due, and all damages,
costs and expenses which Landlord may incur by reason of any default
of Tenant or failure on Tenant's part to comply with the terms of this
Lease, all of which shall be due and payable within 10 days of demand
therefor unless another time is expressly provided for in this Lease.
Landlord shall have the same remedies for failure to pay Additional
Rent as for non-payment of Base Rent.
SECTION III.3 Payment of Base Rent and Additional Rent. Tenant
shall pay the Base Rent and Additional Rent (collectively, the "Rents")
when due, without notice or demand, and without any abatement,
deduction or set-off, except for any notices, demands, abatements,
deductions or set-offs expressly provided for elsewhere in this Lease.
Tenant shall pay the Rents to Landlord in lawful money of the United
States by check or other method of payment so that in any case the
funds are "available" on the due date for payment thereof at the
Address of Landlord or such other place in The City of New York as
Landlord may designate by notice to Tenant.
SECTION III.4 Rent for a Partial Month. The Rent for any portion of
a calendar month included in the Term shall be prorated in the ratio that
the number of days in such portion bears to the actual number of days
in such month.
SECTION III.5 Interest. If any payment of Rent is not paid on or
before the due date thereof, interest shall commence to accrue on such
payment at a rate per annum (the "Interest Rate") equal to the lesser of
(a) the LIBOR Rate plus 3% or (b) the maximum rate of interest
chargeable under Law, from and after the due date thereof without
reference to any grace periods, until fully paid.
SECTION III.6 Government Rent Restrictions. If the amount of the
Rents payable under this Lease exceeds that allowed by the terms of
any valid government restriction that limits the amount of rent or other
charges that a commercial lessor may charge or collect, the amount of
Rents payable under this Lease shall be the maximum permitted by
such restriction for the period of time during which such restriction
remains in effect, but in no event shall the amount of Rents payable to
the Landlord exceed the amount of Rents that would otherwise have
been payable to Landlord under this Lease absent said government rent
restriction. All increases in Rents provided for in this Lease shall,
however, to the extent permitted by Law, be calculated upon the
amount of the Rents that would have been payable in the absence of
such restriction, and, effective as of the expiration of such restriction
(but only if such restriction expires on or prior to September 30, 2013
or, September 30, 2018, if this Lease is extended pursuant to Article
XVII), the Rents payable hereunder shall be increased to the amount
that would have prevailed had such restriction never been in effect.
Moreover, to the fullest extent permitted by Law, on the first due date
for an installment of Base Rent following expiration of such restriction,
Tenant shall pay to Landlord, as Additional Rent, an amount equal to
the difference between the amount of Rents that Tenant would have
paid if such restriction had not been in force and the amount of Rents
actually paid by Tenant during the period in which such restriction
remained in effect. In the event that such Additional Rent (computed
in accordance with the preceding sentence) exceeds an amount equal to
the product of (A) four (4) multiplied by (B) the then monthly amount
of Base Rent, Tenant shall be entitled to pay to Landlord any such
Additional Rent due under this Section 3.6 only over a twelve (12)
month period.
SECTION III.7 Free Rent Period. (a) Notwithstanding the provisions
of Section 3.1 hereof, the Base Rent and any Additional Rent due as a
result of Taxes, Operating Expenses and the Storage Premises shall be
fully abated for the period from the Commencement Date through the
Base Rent Commencement Date (the "Free Rent Period"); provided
that, notwithstanding the foregoing, if at any time from the
Commencement Date through and including the five (5) year
anniversary of the Base Rent Commencement Date a Material
Recapture Event shall occur (beyond the expiration of any applicable
grace, notice and cure periods) then the Rent so abated shall be due
and payable to Landlord within 10 Business Days of Landlord's notice
thereof; provided that, in the case of a Material Recapture Event
relating to the non-payment of Rent, Landlord provides Tenant with
written notice and five (5) Business Days opportunity to cure such
event. As used herein, "Material Recapture Event" shall mean defaults
pursuant to Sections 15.1.4, 15.1.5, 15.1.6, 15.1.7 and 15.1.8 or if a
default under Section 15.1.1 has occurred and is continuing for three
months or more and such default remains uncured as of the date
Landlord intends to recapture such free rent.
(b) The Base Rent Commencement Date shall be extended one (1) day
for each day from May 13, 1997 until the Landlord's Delivery Date has
occurred and an additional day (for a total of two (2) days) for each
day from August 15, 1997 until the Landlord's Delivery Date has
occurred.
(c) The Base Rent Commencement Date shall also be extended in
accordance with Section 16.16(c), if applicable.
ARTICLE IV
TAX AND OPERATING EXPENSE ADJUSTMENTS
SECTION IV.1 Tax and Operating Expense Definitions. For the
purposes of this Lease, the following terms shall have the indicated
meanings:
IV.1.1 "Tax Year" means any period of 12 consecutive calendar
months, commencing July 1, all or any part of which falls within the
Term.
IV.1.2 "Taxes" for any Tax Year, means the aggregate amount of all
(a) real property taxes imposed by The City of New York, and each
and every installment thereof, which shall during such Tax Year be
levied, assessed, imposed, or become due and payable, or a lien upon,
or arise in connection with, the ownership, use, occupancy or
possession of the Taxable Property; (b) general or specific assessments
assessed against the Taxable Property; (c) other taxes, governmental
impositions, duties, charges and levies of every kind, character and
nature whatsoever, extraordinary and ordinary, foreseen and
unforeseen, and each and every installment thereof, which shall during
such Tax Year be levied, assessed, imposed, or become due and
payable, or a lien upon, or arise in connection with, the ownership, use,
occupancy or possession of the Taxable Property; (d) any reasonable
expenses incurred by Landlord, including in each case, attorneys' fees
and disbursements, payments to appraisers and fees to experts and
other witnesses, in contesting any of the items referred to in clauses (a),
(b) and (c) above or in contesting the assessed valuation of all or any
part of the Taxable Property in respect of such Tax Year, regardless of
when such expenses are actually incurred; and (e) Landlord's Share of
any fee, tax or charge imposed for such Tax Year by any governmental
authority for any vaults, vault space or other properties within or
outside the boundaries of the Land; provided, however, that (A) Base
Taxes and Taxes for each Tax Year thereafter shall be adjusted, if
necessary, to reflect 95% occupancy in the Unit and Building,
respectively and (B) Taxes shall exclude the following: (i) all penalties,
fines, late payment charges and interest thereon (except interest on
Taxes which may by law be paid in installments); (ii) any water rates
and charges, sewer rental and utility taxes to the extent any of the same
are included in Operating Expenses; (iii) any inheritance, estate,
succession, transfer, gains, mortgage recording, gift, franchise,
corporation, income or profit tax or capital levy that is imposed upon
Landlord so long as none of the foregoing exclusions are substitutes for
real property taxes otherwise imposed in connection with the
ownership, use, occupancy or possession of the Taxable Property; and
(iv) the effect of any real estate tax exemption, abatement or deferral
program which may apply to the Unit or the Building.
Notwithstanding the foregoing, if, at any time during the Term, the
methods of taxation prevailing on the date hereof shall be altered so
that in lieu of, in addition to, or as a substitute for, the whole or any
part of the Taxes now levied, assessed or imposed on real estate or
upon Landlord with respect to the Taxable Property, there shall be
levied, assessed or imposed any other tax, fee, charge, imposition,
license fee or assessment, however denominated, including any tax,
assessment, fee, imposition, charge or levy (A) based upon, allocable to
or measured by the area of the Premises, the Unit, the Taxable
Property or any portion thereof, any rents or other income generated
thereby or received in connection therewith (whether gross or net or
otherwise or whether in addition to or in lieu of other Taxes) or
otherwise based upon the possession, leasing, operation, management,
maintenance, alteration, repair, use or occupancy of the Premises, the
Unit, the Taxable Property, or any portion thereof, (B) related to the
provision of governmental or quasi-governmental services such as fire
protection, street, sidewalk and road maintenance, conservation,
environmental protection, refuse removal or any other service formerly
provided for no charge or for a lesser or different charge, including
assessments, contributions or the like under governmental or private
cost-sharing arrangements or agreements for the purpose or
augmenting or improving the quality of such services, and (C) related
to the pursuit of community, neighborhood or local goals such as
educational, traffic, transit, arts, environmental, housing, welfare or
similar objectives.
IV.1.3 "Base Taxes" means, subject to the provisions of Section 4.1.9,
Section 4.2, and Section 17.1, Taxes for the period commencing on
July 1, 1997 and ending on June 30, 1998 (the "Base Tax Year").
IV.1.4 "Tax Statement" means a statement which Landlord may
render to Tenant at any time during or after the Term showing the
Tenant's Tax Payment for any Tax Year after the Base Tax Year.
IV.1.5 "Taxable Property" means the Unit, the Common Elements
appurtenant thereto (but only to the extent of the Landlord's Share with
respect thereto), any other interest of Landlord as owner of the Unit in
the Building and the Land, and all rights, privileges and interests
appurtenant thereto.
IV.1.6 "Lease Year" means any calendar year all or any part of which
falls within the Term; the first Lease Year under this Lease shall
commence on the Commencement Date and shall end on the 31st day
of December following the Commencement Date.
IV.1.7 "Operating Expenses" for each Lease Year, means all costs,
expenses and disbursements of every kind and nature actually paid or
incurred during such Lease Year by or on behalf of Landlord (directly
or by way of reimbursement by Landlord to its agents or contractors)
with respect to the ownership, operation, repair, replacement, cleaning,
safety, maintenance, management and security of the Unit and, to the
extent such costs, expenses and disbursements are allocable to
Landlord and actually paid or payable by Landlord, of the Building and
the Common Elements, including, without limitation, the following
categories of expense; provided that Operating Expenses shall not
include (i) any reserves for any such costs, expenses or disbursements,
(ii) any such costs, expenses and disbursements incurred by and not
actually paid by or on behalf of Landlord (it being understood and
agreed that costs and expenses properly billed to Landlord as Common
Expenses by the Condominium Board and otherwise properly
includable in Operating Expenses may be included in Operating
Expenses when billed) and (iii) any such costs, expenses and
disbursements that are specifically excluded below:
(a) salaries, wages, fringe benefits of every kind and nature,
bonuses and the cost of any hospitalization, medical, surgical, union
and general welfare, pension, retirement or life insurance plans,
disability or other benefits imposed by law or otherwise with respect to
employees and social security, unemployment and other payroll taxes
paid or incurred by Landlord (directly or by way of reimbursement by
Landlord to its agents or contractors) relating to the employees of
Landlord, the Board of Managers or their respective agents or
contractors (but excluding therefrom executives and officers above the
level of Building Manager) engaged in the operation, repair,
replacement, cleaning, safety, maintenance, management or security of
the Unit or the Common Elements (to the extent allocable to
Landlord); provided that if any such employees of Landlord or the
Board of Managers (or their agents or contractors) provide services for
more than one building or for property other than the Building, then a
prorated portion of the foregoing costs shall be included in Operating
Expenses, based on the portion of their working time devoted to the
Building, the Unit or the Common Elements, as the case may be;
(b) the cost of electricity (except to the extent specifically excluded
by the last paragraph of Section 4.1.7), gas, steam or other fuel;
operation of elevators and security systems; heating, cooling, air
conditioning and ventilating; hot and cold water, sewer and other
utilities; utility taxes, water rates and charges and sewer rental;
(c) Common Expenses and Unit Expenses for the cost of cleaning
in accordance with Building Standards and Exhibit G (including
windows), cleaning goods and supplies, painting, janitorial, trash
removal, security and other services and replacement of tubes, bulbs,
and lamps required for building standard lighting located in the Unit
and the Common Elements (to the extent allocable to Landlord);
(d) the cost of all insurance, including Worker's Compensation,
property, casualty, liability and fidelity insurance and the fees and
charges of insurance consultants;
(e) the cost of repairs to, and maintenance of, the Unit and the
Common Elements (to the extent allocable to Landlord) and their
respective systems;
(f) Common Expenses for the cost of landscaping Common
Elements (to the extent allocable to Landlord);
(g) the cost of (including interest charges paid by, or allocable to,
Landlord), or rental charges for, machinery, equipment, tools,
maintenance facilities or systems used in the operation, repair, cleaning,
safety, maintenance, management or security of the Unit or the
Common Elements (to the extent allocable to Landlord);
(h) Common Expenses for the cost of uniforms and dry cleaning
for on-site employees;
(i) Common Expenses for management fees for the Building (to
the extent allocable to Landlord), or if no management fee is being
charged for the Building, an imputed management fee not in excess of
the amount that would be paid to a property manager for managing a
Comparable Building;
(j) Common Expenses for fees and charges payable under service
agreements on equipment and other service contracts;
(k) telephone, telegraph, telecopy (or other telecommunication)
costs incurred by Landlord or its agents;
(l) legal, accounting and professional fees and disbursements
incurred in connection with the operation, repair, cleaning,
maintenance, management and security of the Unit and Common
Elements;
(m) annual amortization of costs on a straight-line basis over a
depreciable life selected by Landlord consistent with GAAP, for any
equipment, device or capital improvement installed by Landlord or the
Board of Managers in or to the Unit, the Building or the Common
Elements or the respective facilities and systems of each that are
intended to reduce Operating Expenses, together with the actual costs
of financing or leasing the same, provided that, notwithstanding the
foregoing, the amount included in Operating Expenses for any Lease
Year on account of any capital expenditure intended to reduce
Operating Expenses shall not exceed the amount by which the
Operating Expenses for such Lease Year are actually reduced as a
result of such capital expenditure;
(n) fees for and costs of licenses, permits and inspections;
(o) [Intentionally Deleted.]
(p) costs of contesting the validity or applicability of any Law if a
successful contest is likely to reduce Operating Expenses;
(q) those taxes, duties, charges, levies and assessments that are
expended as a part of the Unit's operation, repair, cleaning, safety,
maintenance, management or security, but that are not included within
Taxes, such as sales, use and utility taxes, it being understood that if
such items are expressly excluded from determination of Taxes in
Section 4.1.2 (such as, by way of illustration only, the 95% occupancy
adjustment and the effect of any abatement or deferral program), such
items shall also be excluded from Operating Expenses;
(r) [Intentionally Deleted];
(s) all charges, taxes, surcharges, assessments or penalties imposed
by any government agency or public utility as a means of conserving or
controlling the consumption of water, gas, electricity, energy sources
or products, natural resources, or other products or services; and
(t) common charges and other costs and expenses imposed on or
required to be performed by Landlord by the Board of Managers or
otherwise under the Condominium Documents in connection with the
operation, repair, cleaning, safety, maintenance, management or
security of the Common Elements, the Unit, the Premises or the
Building, including, without limitation, Common Charges, but
excluding therefrom any amounts allocable to payments of ground rent
pursuant to the Ground Lease. To the extent that any such common
charges or other costs and expenses included in Operating Expenses by
virtue of this clause (t) relate (x) to Taxes, then such common charges,
costs and expenses shall be subject to the same adjustments as Taxes
under Section 4.1.2, or (y) to items which are excluded pursuant to a
limitation or exception in clauses (a) through (s) above or by the
following paragraph, then such common charges, costs and expenses
shall be excluded from Operating Expenses but only to the extent of
such exclusion, limitation or exception.
Notwithstanding the foregoing, the following costs and expenses shall
be excluded from Operating Expenses: (i) expenses relating to leasing
space in the Unit or Building (including tenant improvements, lease
takeover costs and other tenant inducements, leasing and brokerage
commissions and advertising expenses); (ii) legal, accounting and other
professional fees and disbursements incurred for collection of tenant
accounts or negotiation of leases, or relating to disputes between
Landlord and tenants and occupants of the Unit or relating to the
financing or sale of the Unit (or any portion thereof) or to any other
excluded items; (iii) the cost of electricity furnished to any leasable
space in the Building (whether for operation, alterations or otherwise);
(iv) capital expenditures not specifically included in Section 4.1.7 (m)
and (t) above (it being understood and agreed that capital expenditures
included in Operating Expenses by virtue of Section 4.1.7(t) above
shall only be included to the extent such expenditures would otherwise
be included in Section 4.1.7 (m) above); (v) Taxes; (vi) expenses which
would be included in Operating Expenses but which were paid with the
proceeds of insurance or payments from tenants or Unit Owners; (vii)
the cost of repairs and replacements incurred by reason of fire or other
casualty or condemnation; (viii) payments of principal and interest on
any mortgages upon the Unit, the Land or the Building and other costs
arising from such mortgage; (ix) any payments or costs of discharging
any obligations pursuant to any ground lease covering the Unit, the
Land or the Building and any legal, accounting or other professional
fees relating to the foregoing; (x) the costs of gas, steam or other fuel;
operation of elevators and security systems; heating, cooling, air
conditioning and ventilating; chilled water, hot and cold water, sewer
and other utilities (including the cost of any electricity charges therefor)
or any other service or facility, or level or amount thereof, provided to
any other tenant or occupant in the Building which either (A) is not
supplied or furnished to Tenant in comparable amounts or (B) is
supplied or furnished to Tenant pursuant to the terms of this Lease
with separate or additional charge; (xi) the cost of any work performed
for any other tenant or occupant in the Building which either (A) is not
performed for Tenant or (B) is performed for Tenant pursuant to the
terms of this Lease with separate or additional charge; (xii) payments
made by Landlord to a company or other entity affiliated with Landlord
for goods and services to the extent that such payments exceed the
amounts that would have been paid to independent third parties for
goods and services of like kind; (xiii) the cost of any Landlord's Work,
(xiv) the cost of the purchase of the fee interest in the Land or
Building; and (xv) any expenses and costs incurred by Landlord as a
result of complying, or in order to comply, with Laws which are the
responsibility of Landlord hereunder.
IV.1.8 "Base Operating Expenses" means, subject to the provisions of
Section 4.1.9, the Operating Expenses for the period commencing on
January 1, 1998 and ending on December 31, 1998 (the "Base Year").
IV.1.9 Additional Adjustments to Defined Terms.
(a) If, during all or part of any Lease Year (including the Base
Year), (i) less than 95% of the leasable space of the Unit (and/or where
appropriate as reasonably determined by Landlord, the Building) is
occupied by tenants or occupants and/or (ii) a tenant or occupant of
any leasable space of the Unit or the Building, in lieu of having
Landlord or the Board of Managers perform any work or service, the
cost of which, if performed by Landlord or the Board of Managers,
would have been includable in Operating Expenses, itself performs the
same or causes the same to be performed, then the Operating Expenses
for such Lease Year shall be increased to reflect the Operating
Expenses that would have been payable had the Unit or the Building
been 95% occupied throughout such Lease Year or had Landlord or
the Board of Managers performed such work or services, as the case
may be.
(b) When calculating the Operating Expenses or the Base
Operating Expenses, as the case may be (or, to the extent applicable,
the Taxes or the Base Taxes, as the case may be), such Operating
Expenses or Base Operating Expenses (or Taxes or Base Taxes) shall
not include any Operating Expenses or Base Operating Expenses, as
the case may be (or Taxes or Base Taxes, as the case may be)
otherwise attributable to an unusual or extraordinary event which is
expected to have a disproportionate impact on such Year or Base
Year, (or Tax Year or Base Tax Year), such as, by way of illustration
only, special Operating Expenses due to strikes, boycotts or
embargoes, or special Taxes due to one-time special assessments or
fees.
(c) If, at any time during the Term, a separate tax lot for the Unit
shall cease to exist, "Taxes" shall include an amount equal to
Landlord's Percentage of the aggregate amount of all taxes,
assessments, impositions, charges, duties, levies, fees and similar
amounts which, when applied to the Taxable Property under Section
4.1.2, would constitute "Taxes", which are levied, assessed, or imposed
upon or in connection with the ownership, use, occupancy, value,
rents, income and/or possession of the Building as a whole, and all
properties, easements, rights and privileges appurtenant thereto. As
used in the preceding sentence, "Landlord's Percentage" means
Landlord's share of such Taxes imposed on the Building as a whole
based not upon Landlord's pro rata share of leasable space in the
Building but upon the economic value of such space relative to the
economic value of the total leasable space in the Building.
SECTION IV.2 Payment of Tenant's Share of Taxes. Tenant shall
pay to Landlord as Additional Rent for each full or partial Tax Year
following the Base Tax Year, all or any portion of which shall be within
the Term, an amount ("Tenant's Tax Payment") equal to Tenant's Share
of the amount by which the Taxes payable for such Tax Year exceed
the Base Taxes. In the event that only a portion of any Tax Year shall
be within the Term, Tenant's Tax Payment, if any, for such Tax Year
shall be prorated, based upon the number of calendar days of such Tax
Year within the Term and a 365 day year.
IV.2.1 The Tax Statement; Adjustments and Revisions.
(a) At any time after the Base Tax Year, if a Tenant's Tax Payment
is owed by Tenant for any particular Tax Year following the Base Tax
Year, Landlord shall deliver to Tenant a Tax Statement for such Tax
Year. The Taxes in such Tax Statement shall be computed and payable
on the basis of the assessed valuation (and the Taxes) for the Taxable
Property in effect at the time the Tax Statement is delivered to Tenant,
regardless of any then pending proceeding for reduction of such
assessed valuation.
(b) At any time after the Base Tax Year, Landlord shall deliver to
Tenant a revised Tax Statement for any particular Tax Year following
the Base Tax Year, if (i) the Base Taxes or any subsequent Taxes have
been reduced, (ii) any additional Taxes are imposed or assessed with
respect to such Tax Year or (iii) the previous Tax Statement for such
Tax Year was in error in any respect. Any additional Tenant's Tax
Payment for a particular Tax Year indicated on any such revised Tax
Statement is sometimes referred to herein as an "Additional Tax
Payment." Neither Landlord's failure to deliver to Tenant a Tax
Statement or a revised Tax Statement for any particular Tax Year
during such Tax Year, or within any period whatsoever, nor any other
failure of Landlord to make demand for any Taxes payable by Tenant
hereunder (including, without limitation, any Additional Tax Payment)
shall in any way prejudice Landlord's right to deliver a Tax Statement
or any revised Tax Statement (on one or more occasions) with respect
to such Tax Year (and to make demand for any Taxes indicated as
payable therein) during any subsequent period and shall not eliminate
or reduce in any way Tenant's obligation to pay Tenant's Tax Payment
for such Tax Year or act as a waiver of any kind; provided such Tax
Statement or revised Tax Statement, as the case may be, is delivered
within two (2) years from the end of such particular Tax Year.
(c) Only Landlord shall be eligible to institute tax reduction or
other proceedings to contest or reduce the assessed valuation of (or all
or any portion of the Taxes applicable to) the Taxable Property. Upon
the written request of Tenant, Landlord shall institute and prosecute tax
reduction or other proceedings to contest or reduce the assessed
valuation of (or all or any portion of the Taxes applicable to) the
Taxable Property unless Landlord has determined, acting reasonably
and good faith, that any such proceeding is not permitted or would not
result in a reduction, or would result in an increase, in Taxes. In the
event Landlord receives a refund of Taxes attributable to a Tax Year
during the Term (excluding the Base Tax Year) in which Tenant made
a Tenant's Tax Payment, Tenant shall receive a credit equal to the
lesser of (i) Tenant's Tax Payment for such Tax Year and (ii) Tenant's
Share of such refund of Taxes, which credit shall be reflected on a
revised Tax Statement as set forth in Section 4.2.1(b)(i) and shall be
reduced by any expenses actually incurred in obtaining the same to the
extent such expenses were not previously included in the definition of
Taxes set forth in Section 4.1.2(d).
IV.2.2 Payment by Tenant.
(a) Tenant's Tax Payment for each Tax Year following the Base
Tax Year (as reflected on the latest Tax Statement or revised Tax
Statement received by Tenant) shall be payable in two equal
installments, with the first such installment due and payable on the June
1 immediately preceding the commencement of such Tax Year and the
second such installment due and payable on the December 1
immediately preceding the commencement of the second half of such
Tax Year; provided, however, that in the event Tenant receives for the
first time a Tax Statement, which indicates a particular Tenant's Tax
Payment is due, less than 10 days prior to the date such payment would
otherwise be due pursuant to the provisions of this Section 4.2.2(a),
such payment shall not be due and payable by Tenant until the 10th day
following receipt of such Tax Statement.
(b) In the event that following the date or dates that the Tenant's
Tax Payment installments payable for a particular Tax Year pursuant to
Section 4.2.2(a) are due, Landlord delivers to Tenant a revised Tax
Statement pursuant to Section 4.2.1 indicating that an Additional Tax
Payment with respect to such Tax Year is payable by Tenant, such
Additional Tax Payment shall be due and payable 20 days following
receipt by Tenant of such revised Tax Statement.
SECTION IV.3 Payment of Tenant's Share of Operating Expenses.
Tenant shall pay to Landlord as Additional Rent for each Lease Year
following the Base Year an amount ("Tenant's Operating Payment")
equal to Tenant's Share of the amount by which Operating Expenses
for such Lease Year exceed Base Operating Expenses.
IV.3.1 Estimated Operating Statement. At the election of Landlord,
either prior to or after the commencement of each Lease Year
following the Base Year, Landlord may submit to Tenant a statement
(the "Estimated Operating Statement") setting forth Landlord's
estimate of Operating Expenses for such Lease Year and Tenant's
Operating Payment based on such estimate; provided that, upon
Tenant's request therefor, Landlord shall deliver to Tenant the detailed
budgets it receives from the Board of Managers relating to the Unit
Expenses and the Common Charges, and in the event that the
aggregate amount of Operating Expenses described in such Estimated
Operating Statement is greater than one hundred ten percent (110%) of
the Operating Expenses for the previous Lease Year, then Landlord
shall use all reasonable efforts to include in the Estimated Operating
Statement a detailed description of the calculations used to derive such
Estimated Operating Statement, but only to the extent that such
information is reasonably available to Landlord after reasonable efforts
to obtain such information (it being understood that Landlord's inability
or failure to deliver such detailed descriptions shall in no way affect
Tenant's obligations to pay any amounts otherwise due hereunder). In
addition, if, during any Lease Year following the Base Year, it shall
appear to Landlord that the last-issued Estimated Operating Statement
for such Lease Year is or will become inaccurate, Landlord shall issue a
revised Estimated Operating Statement.
IV.3.2 Estimated Statement Payments. On the first day of the month
following Tenant's receipt of an Estimated Operating Statement,
Tenant shall pay to Landlord an amount equal to (a) the product of (i)
one-twelfth (1/12th) of Tenant's Operating Payment based on such
Estimated Operating Statement multiplied by (ii) the number of months
(and any fraction thereof), to and including the then current month, that
have elapsed or commenced since the commencement of such Lease
Year less (b) the aggregate of any payments made on account of
Additional Rent in respect of Operating Expenses for such Lease Year
pursuant to this Section 4.3. On the first day of each month thereafter
until rendition of the next succeeding Estimated Operating Statement,
Tenant shall pay to Landlord an amount equal to one-twelfth (1/12th)
of Tenant's Operating Payment based on the most recent Estimated
Operating Statement; provided, however, that if a new Estimated
Operating Statement is issued for such Lease Year, the monthly
amount shall be changed as provided in this Section 4.3.2.
IV.3.3 Actual Operating Statement; Reconciliation; Subsequent
Revisions.
(a) Subject to the provisions of this Section 4.3.3, on or prior to
the October 1 next following the end of any Lease Year following the
Base Year, Landlord shall submit to Tenant a statement (the
"Operating Statement") setting forth (i) a reasonably detailed statement
of the actual Operating Expenses for such Lease Year, (ii) the excess of
such Operating Expenses over the Base Operating Expenses, (iii) the
aggregate payment made by Tenant in respect of Tenant's Operating
Payment pursuant to this Section 4.3 or otherwise, and (iv) the amount
of any overpayment or underpayment. Tenant shall pay the amount of
any underpayment to Landlord within 20 days after receipt of the
Operating Statement. Landlord shall pay the amount of any
overpayment to Tenant in accordance with Section 4.5.
(b) Landlord shall deliver any Operating Statement or any revision
thereto at any time during any Lease Year following the Base Year, or
during any subsequent period for any reason, including, without
limitation, to correct any inaccuracy of any Operating Statement, and
Landlord covenants and agrees to use all reasonable efforts to deliver a
revised Operating Statement as soon as practicable in order to correct
any material inaccuracy of any Operating Statement previously
delivered to Tenant, as determined by Landlord in the exercise of its
reasonable judgment. Tenant shall pay any amount indicated on any
revised Operating Statement as payable by Tenant within 20 days of
Landlord's delivery of any such revised Operating Statement.
Notwithstanding anything to the contrary contained in this Section
4.3.3, Landlord's failure to deliver to Tenant any such Operating
Statement, or revision thereto during any Lease Year or during any
subsequent period, shall not prejudice Landlord's right to do so during
any later period and shall not operate to eliminate, reduce or waive
Tenant's obligations to make any payment indicated thereon.
SECTION IV.4 Tenant's Objection to Tax Statement or Operating
Statement.
(a) Each Tax Statement and Operating Statement shall be
conclusively binding upon Tenant unless (i) Tenant shall send Landlord
a notice (an "Objection Notice") within 30 days of receipt thereof
stating that Tenant objects to Landlord's determination therein of
Tenant's Tax Payment or Tenant's Operating Payment, as the case may
be, which Objection Notice shall include a statement that Tenant
desires to audit the books and records of Landlord, and (ii) within 10
Business Days after completion of its audit (but in no event later than
the period permitted for such audits in Section 4.4(b)), Tenant shall
give Landlord a subsequent notice that it still disputes Landlord's
determination of such Tenant's Tax Payment or Tenant's Operating
Payment, as the case may be, specifying the reasons for such objection
with reference to the particular books and records of Landlord, the
particular respects in which such Tax Statement or Operating
Statement is claimed to be inaccurate and that it requests that such
dispute be determined by arbitration pursuant to Section 16.21 of this
Lease. No dispute by Tenant shall excuse or abate Tenant's obligation
to make the payments required by this Article IV pending resolution of
Tenant's objection. With respect to the Operating Statement, it shall be
conclusively deemed acceptable to Tenant if it consists solely of
Tenant's Share of Common Charges allocable to the Unit under the
Declaration.
(b) For a period of 60 days commencing on the date of the
Objection Notice (it being understood and agreed that such 60 day
period shall be extended to 210 days if, as a result of Landlord's lack of
cooperation, Tenant reasonably needs such extra time to reasonably
complete its audit, and Tenant has been diligently pursuing such audit
during the initial 60 day period and thereafter during the subsequent
210 day period), Landlord shall afford Tenant or its representatives the
right (following, in each case, reasonable advance notice) on as many
occasions as shall be reasonably necessary to examine (and, at Tenant's
expense, make extracts from and copies of) at Landlord's business
office in the City of New York during normal business hours
Landlord's books and records relating to the Base Year and Base Tax
Year and the Lease Year or Tax Year in question. Tenant shall
maintain all information obtained in the course of such examination in
strict confidence. Such examination and audit shall be at Tenant's sole
cost and expense.
(c) If, after reviewing Landlord's books and records as provided in
Section 4.4(b), Tenant still disputes Landlord's determination of
Tenant's Tax Payment or Tenant's Operating Payment, and gives
Landlord notice thereof as provided in Section 4.4(a), such dispute
shall be determined by arbitration pursuant to Section 16.21. If
Tenant's Tax Payment for a Tax Year or Tenant's Operating Payment
for a Lease Year, as determined by such arbitration (or settlement), is
more or less than the amount thereof indicated in the Tax Statement or
the Operating Statement, as the case may be, Tenant shall pay to
Landlord any difference in Landlord's favor within 20 days, or
Landlord shall pay to Tenant any difference in Tenant's favor in
accordance with Section 4.5, as the case may be.
SECTION IV.5 Landlord Payments. Wherever in this Lease Landlord
is obligated to refund any excess payments of Additional Rent made to
Landlord by Tenant, upon Tenant's written request, Landlord shall pay
such excess directly to Tenant within 20 days of Tenant's demand
therefor; provided, however, that (a) if any Rents are due and owing to
Landlord under this Lease, Landlord may offset the amount of any
such Rents against such excess and (b) in the event Tenant's
overpayment of Additional Rent during any Lease Year exceeds 125%
of the actual amount of Additional Rent due as indicated in the
Operating Statement for such Lease Year, Landlord shall pay to
Tenant interest (at the Interest Rate) on such overpayment until
Landlord refunds such excess to Tenant.
ARTICLE V
USE AND COMPLIANCE WITH LAW
SECTION V.1 Use. Tenant shall use and occupy the Premises for the
Permitted Use and for no other purpose. Tenant shall not at any time
use or occupy or allow any Person to use or occupy the Premises, or
do or permit anything to be done or kept in or about the Premises, the
Unit, or the Building that constitutes a Prohibited Use. Tenant, at its
expense, shall procure and at all times comply with the terms and
conditions of any license or permit required for the conduct of the
Permitted Use in the Premises. Tenant shall pay to any taxing authority
any fee, tax or other charge levied or assessed by any governmental
authority in connection with Tenant's use and/or occupancy of the
Premises, including the New York City commercial occupancy tax.
SECTION V.2 Hazardous Materials. Neither Tenant nor any of its
officers, partners, employees, agents, subtenants, contractors or
invitees shall cause or permit any Hazardous Material (including
asbestos or asbestos containing materials) to be used, stored, released,
handled, produced or installed in, on or from the Premises or the
Building, other than customary amounts of office and cleaning supplies
for which no special governmental permit, approval or license is
required and only so long as the same are stored, used and disposed of
in strict compliance with all Laws.
SECTION V.3 Compliance with Law. Except to the extent the same
constitutes Landlord's Work, Tenant shall, at Tenant's expense, comply
with all Laws now or hereafter existing, whether or not such
compliance requires work which is structural or non-structural,
ordinary or extraordinary, foreseen or unforeseen, that impose any
obligation, order or duty on Landlord or Tenant, but only: (a) with
respect to Tenant's Work, any Improvement or Tenant's Property; or
(b) with respect to the Building or any part thereof (including the
Premises) if such obligation, order or duty arises from: (i) the particular
manner of conduct of Tenant's business or operation of its equipment
therein, but excluding any use of the Premises merely as general office
space and for the conduct of a securities brokerage business; (ii) any
cause or condition created by or at the instigation of Tenant, including,
without limitation, any Improvement or Alteration; (iii) the breach of
any of Tenant's obligations hereunder; or (iv) any Hazardous Material
brought into the Building by Tenant, any subtenant of Tenant or any of
their agents, contractors or invitees. Tenant shall promptly forward to
Landlord any notice it receives of the violation of any Law involving
the Premises. Tenant shall pay, within 20 days after demand therefor,
all the costs, expenses, fines, penalties and damages that may be
imposed upon Landlord by reason of or arising out of Tenant's failure
to comply with the provisions of this Section 5.3, including, without
limitation, all costs and expenses for Landlord to cure Tenant's failure
to comply hereunder as set forth in Section 15.5 below; it being agreed
that all such costs, expenses, fines, penalties and damages shall be
deemed Additional Rent due hereunder. Notwithstanding the
foregoing, Tenant shall not be obligated to comply with any Laws
which (i) relate to any Hazardous Materials (unless such Hazardous
Material has been installed or placed in the Premises or the Building by
Tenant or otherwise in violation of Section 5.2 above) or (ii) are of
building-wide application in office buildings in Manhattan, unless such
Law relates to Tenant's particular manner or conduct of use of the
Premises (other than the use of the Premises merely as general office
space and for the conduct of a securities brokerage business), and
Landlord agrees to comply with such Laws and any other Laws that
are not Tenant's responsibility pursuant to (a) or (b) above if the failure
to comply would interfere (beyond a de minimis effect) with Tenant's
right to occupy, or adversely affect (beyond a de minimis effect)
Tenant's use of, the Premises or its ability to perform Tenant's Work or
scheduled Alterations.
SECTION V.4 ADA Compliance. Except to the extent that the same
constitutes Landlord's Work, Tenant shall promptly comply with all
requirements relating to the Americans with Disabilities Act, 42 U.S.C.
12,101 et seq., and the regulations promulgated thereunder as in
effect from time to time ("ADA Requirements") with respect to the
Premises. Except to the extent such constitutes Landlord's Work,
Tenant shall have exclusive responsibility for compliance with ADA
Requirements pertaining to the interior of the Premises, including for
the design and construction of the access thereto and egress therefrom.
Landlord shall have responsibility for compliance with ADA
Requirements which affect the Unit other than the Premises, the
Common Elements of the Building, subject to Tenant's obligation to
pay for its share of the expense of such compliance pursuant to Section
4.3 of this Lease. Tenant shall comply with any reasonable plan
adopted by Landlord which is designed to comply with ADA
Requirements.
SECTION V.5 Rules and Regulations. Tenant shall observe and
comply with the Building Standards and the Building Rules and
Regulations and the Landlord's Building Rules and Regulations as set
forth in Exhibit E and Exhibit F, respectively, attached hereto
(collectively, the "Rules and Regulations"), and any and all revisions,
supplements, amendments, modifications or additions thereto as may
be adopted from time to time by the Board of Managers and/or the
Landlord, as the case may be. Neither Landlord nor the Board of
Managers shall be responsible or liable to Tenant for violations of the
Rules and Regulations by other tenants and occupants of the Unit or
the Building. Landlord shall use all reasonable efforts to enforce the
Rules and Regulations against occupants of the Unit in a non-
discriminatory manner.
ARTICLE VI
SERVICES AND UTILITIES
SECTION VI.1 Electricity.
VI.1.1 Submetering. On and after the Commencement Date, Landlord
shall supply electricity to the Premises on a submetered basis in
accordance with this Section 6.1.1. Tenant shall purchase from
Landlord, at Landlord's actual out-of-pocket cost therefor, all
electricity consumed or to be consumed in the Premises and shall pay
to Landlord or a meter company designated by Landlord (a) the actual
out-of-pocket cost of the electricity consumed on those floors of the
Building on which the Premises (or portions thereof) are located, as
determined by a meter or meters (measuring both consumption and
demand) and related equipment installed (or, if existing, retrofitted) by
Landlord in accordance with Landlord's specifications, (b) the actual
out-of-pocket cost of keeping the meter(s) and related equipment in
good working order and repair and (c) any other actual out-of-pocket
costs incurred by Landlord in providing such electricity to Tenant (it
being understood that Landlord shall pay for all costs and expenses
incurred in connection with the installation of such meters or related
equipment). With respect to a multiple-tenant floor, the cost of
electricity, installation and maintenance to be paid by Tenant shall be
determined by multiplying Tenant's percentage of the total Rentable
Area of such floor by the sum of (i) the total amount of the electricity
consumed by all tenants or occupants of such floor as measured by the
meter on such floor, and (ii) the cost of keeping the meter(s) and
related equipment in good working order and repair; provided,
however, that if Tenant requests Landlord to install a separate meter to
measure Tenant's actual consumption of electricity, Landlord shall
install such meter, at Landlord's sole cost and expense, and Tenant shall
pay (A) for the cost of Tenant's actual consumption of electricity as
measured by such separate meter, (B) the full cost of any maintenance
of any separate meter performed by Landlord, and (C) tenant's
percentage of the Rentable Area of the floor multiplied by (y) the cost
of the electricity consumed in the common areas of Tenant's floor. In
determining the actual cost of the electricity consumed in the Premises,
Landlord shall take into account any special abatements or rebates, but
only to the extent that such abatements or rebates actually decrease the
actual cost to Landlord of such electricity, and such special abatements
or rebates shall be deducted from Tenant's Costs. In no event shall the
Electricity Additional Rent for submetered electricity supplied to the
Premises be more or less than Landlord's actual cost to purchase and
distribute such electricity. If any tax is imposed upon the Electricity
Additional Rent received by Landlord from the sale or resale of
electricity to Tenant, Tenant agrees that to the extent permitted by
Law, Tenant shall reimburse such taxes to Landlord as Additional Rent
within 20 days after demand therefor. Bills for the cost of electricity,
installation and maintenance shall be rendered at such times as
Landlord may elect, and such amounts shall be paid by Tenant as
Additional Rent within 20 days of Tenant's receipt of bills therefor.
Landlord covenants to use all reasonable efforts to provide such bills to
Tenant promptly and in any event at least once every three (3) months.
If there is more than one meter for the Premises, the electricity
rendered through each meter may be computed and billed separately.
VI.1.2 Alternative Methods for Providing Electricity. If, at any time
during the Term, Landlord is prohibited by Law or the requirements of
the New York State Public Service Commission from supplying and
charging for electricity on a submetered basis strictly in accordance
with the provisions of Section 6.1.1., including by reason of the
imposition of any tax, tariff or other cost on Landlord which under
applicable Laws Landlord is not permitted to pass through in full on the
basis contemplated by Section 6.1.1., Landlord shall supply electricity
to the Premises and, at Landlord's election, may charge for the
electricity on a rent inclusion basis or a direct supply basis, as selected
by Landlord.
VI.1.2.1 During any period in which electricity is to be supplied to the
Premises on a rent inclusion basis, the Base Rent shall be increased by
an amount (the "Electric Inclusion Amount") equal to the actual
amount required to be paid hereunder by Tenant under Section 6.1.1
for electricity supplied to the Premises during the 365 day period
immediately prior to such period, including all sales and use taxes
thereon. Thereafter and from time to time during the Term (but in no
event more frequently than once every three (3) months), Landlord
may cause surveys of Tenant's electricity usage to be made (at
Landlord's sole cost and expense) by a reputable electrical consultant
selected by Landlord ("Landlord's Electrical Consultant") (which
survey shall be done in such a manner as to minimize any unreasonable
interference with the conduct of Tenant's business and upon reasonable
prior notice to Tenant) and, if such survey shall determine that the then
Electric Inclusion Amount does not accurately reflect the amount
and/or cost of electricity consumed in the Premises, the then Electric
Inclusion Amount shall be adjusted by Landlord's Electrical Consultant
in accordance with such survey to reflect the actual cost to Landlord of
the electricity consumed by Tenant based on Tenant's usage of
electricity as indicated by such survey. Landlord may also cause the
Electric Inclusion Amount to be adjusted without survey from time to
time in accordance with calculations by Landlord's Electrical
Consultant to reflect changes in the fuel adjustment component of the
utility company's charge or other changes in the charges by the utility
company supplying electricity to Landlord. Notwithstanding the
preceding two sentences, Tenant shall have the opportunity to
challenge any adjustments to the Electrical Inclusion Amount and to
hire, at its sole cost and expense, its own reputable electrical consultant
("Tenant's Electrical Consultant"). In the event that Tenant's Electrical
Consultant's determines that (x) the Electrical Inclusion Amount should
be reduced in an amount more than ten percent (10%) of the amount
that Landlord's Electrical Consultant determines, then the matter shall
be referred to arbitration according to the provisions of Section 16.21
or (y) the Electrical Inclusion Amount should be reduced in an amount
equal to or less than ten percent (10%) of the amount that Landlord's
Electrical Consultant determines, then the Electrical Inclusion Amount
shall be adjusted by an amount equal to the average of the amounts
determined by Landlord's Electrical Consultant and Tenant's Electrical
Consultant. Tenant shall pay the amount of any increase in the Electric
Inclusion Amount retroactively from the date of the survey of Tenant's
electricity usage and/or from the date when the increased charges to
Landlord from the utility company became effective, as the case may
be, such amount to be paid within 20 days upon billing therefor by
Landlord. An appropriate credit against Rents shall be allowed to
Tenant to the extent such survey evidences a decrease in Landlord's
cost resulting from Tenant's electricity usage.
VI.1.2.2 During any period in which electricity is to be supplied to the
Premises on a direct supply basis, Tenant shall obtain and pay for
electricity directly from the public utility company furnishing electricity
to the Unit. Notwithstanding anything contained in this Section 6.1 to
the contrary, if use of the Building's or the Unit's wires, risers, conduits,
feeders and switchboards would be required for the Premises to receive
electricity directly from the public utility company, then all meters and
all additional panel boards, feeders, risers, wiring and other conductors
or equipment that may be required to obtain such electricity shall be
installed by Landlord at Tenant's expense.
VI.1.3 Electrical Capacity. (a) Tenant shall be entitled to receive the
electrical capacity described in Exhibit C (the "Basic Capacity").
Tenant covenants that its use of electricity will not exceed the Basic
Capacity furnished to the Premises pursuant to the provisions of this
Section 6.1.3. If Tenant requests electricity in addition to the Basic
Capacity or if Tenant is drawing electricity in excess of the Basic
Capacity, Landlord shall provide such excess capacity to Tenant at
Tenant's expense so long as such additional electricity is available for
use by Tenant without resulting in material alterations in or damage to
Building or Unit systems and Tenant is not then in default hereunder
beyond any applicable notice, grace and cure period.
(b) If Tenant fails to use 12 watts or more per usable square foot in the
Premises within two years of Tenant's occupancy of the Premises on a
full-time basis, Landlord shall be entitled to reduce the Basic Capacity
in excess of 115% of Tenant's peak demand load for the previous two
year period plus one additional watt per usable square foot. Tenant
shall not be entitled to any compensation in connection with the
foregoing reduction of the Basic Capacity. In the event that Tenant
requires additional power during the term of this Lease in excess of the
then provided for Basic Capacity, Landlord shall use all reasonable
efforts to provide Tenant with such additional power at the actual out-
of-pocket cost incurred by Landlord for such electricity.
SECTION VI.2 Water. At no charge to Tenant, Landlord shall
provide (or cause the Board of Managers to provide) hot and cold
water for ordinary lavatory, drinking, kitchenette and cleaning purposes
in accordance with the Condominium Documents.
SECTION VI.3 Elevators. Tenant shall be entitled to receive without
charge non-exclusive passenger elevator service, freight elevator
service (subject to the provisions set forth in Paragraph 7.4 of Exhibit J
relating thereto) and loading dock service on a first-come, first-serve
basis on Business Days during Business Hours and have at least four
(4) passenger elevators capable of servicing the Premises subject to call
at all other times, in each case subject to the procedures in the
Condominium Documents relating to such elevator and loading dock
service. Subject to the preceding sentence, Landlord and/or the Board
of Managers shall have the right to change the operation or manner of
operating any of the elevators or the loading dock in the Building and
shall have the right to discontinue, temporarily or permanently, the use
of any one or more cars in any of the banks of elevators. The Board of
Managers imposes a minimum of four (4) hours for freight elevators
and loading dock service outside of Business Hours, and Tenant shall
pay to Landlord as Additional Rent the actual out-of-pocket expenses
incurred by Landlord for such service (which shall include all costs and
expenses charged by the Board of Managers to Landlord under the
Condominium Documents with respect to such service). As of January
1, 1997, the Board of Managers charges $60.00 per hour for freight
service porter charges and $46.00 per hour for guard charges (except
on union holidays which are charged at a higher rate).
SECTION VI.4 Cleaning. Landlord shall remove (or cause the Board
of Managers to remove) without charge Tenant's ordinary office refuse
and rubbish, and Landlord shall provide (or cause the Board of
Managers to provide) office and window cleaning services in
accordance with the cleaning specifications attached hereto as Exhibit
G (the "Cleaning Specifications"). Landlord shall not be required to
provide janitorial services for portions of the Premises used for storage.
SECTION VI.5 Heating and Air Conditioning. Tenant shall be
entitled to receive heat, air conditioning and ventilation to the floor on
which the Premises are located in accordance with the specifications
and subject to the design criteria set forth in Exhibit B to the
Declaration (which specifications are hereby incorporated herein by
reference) (a) at all times, without charge, for base building heating,
ventilation, or air conditioning service during Business Hours, (b)
during Business Hours for heating or air conditioning service to any
supplemental HVAC unit installed by Tenant, at Landlord's actual out-
of-pocket cost, if any (but without duplication of any charge allocable
to Tenant by reason of Section 6.8 below), and (c) at other times upon
Tenant's request, subject in each case, to the terms and at the rates and
charges set forth in Exhibit H attached hereto, and Landlord agrees to
provide (or to use all reasonable efforts to cause the Board of
Managers to provide) such heating, air conditioning and ventilation is
provided to Tenant. Tenant acknowledges and agrees that Landlord
shall have no liability or responsibility for any deviation in temperature,
humidity or related conditions if such deviation arises from (a) Tenant's
effectuation of the distribution throughout the Premises of HVAC
service from the point(s) on each floor of the Premises at which the
Building or Unit HVAC systems meet the HVAC distribution systems
of the Premises, (b) Tenant's interior partitioning, existing
Improvements or covering of convector units, or (c) any material
deviation by Tenant from the assumptions upon which the design
specifications set forth in the Building Standards are based to the extent
set forth therein. Tenant acknowledges that all requests for overtime
HVAC are to be made to the Board of Managers in accordance with
the Condominium Documents and Exhibit H to this Lease.
SECTION VI.6 Service Interruption; Limitation of Liability.
VI.6.1 Service Interruption. Notwithstanding any provision of this
Lease to the contrary, Landlord reserves the right (for itself and the
Board of Managers) to interrupt, curtail, stop or suspend service or
operation of any of the Building Service Systems or any of the services
to be delivered to Tenant under this Lease (a) when Landlord is
required to do so by Law or to adhere to a recognized energy, water or
other resource conservation program or guidelines, laws or
recommendations promulgated by any Federal, state, municipal or
other governmental or quasi-governmental agency, bureau, board,
commission, department, office or other sub-division thereof, or the
American Society of Heating, Refrigeration and Air Conditioning
Engineers (or its successor) (it being understood and agreed that the
term "recognized" as used in this sentence shall be defined by reference
to whether other Comparable Buildings are adhering to such programs,
guidelines, and recommendations, unless such program, guideline or
recommendation is required by Law in which case no such reference to
Comparable Buildings shall be necessary) or (b) when necessary, by
reason of accident, or emergency, or for repairs, alterations,
replacements, improvements, maintenance or testing desirable or
necessary in the judgment of Landlord or the Board of Managers to be
made, until such repairs, alterations, replacements or improvements,
maintenance or testing shall have been completed. With respect to
service interruptions necessary for non-emergency repairs, alterations,
replacements, improvements, maintenance or testing, Landlord shall
deliver to Tenant not less than 7 days' written notice specifying the date
and times (which shall be before or after Business Hours) on which
such service interruption shall occur. Landlord shall use all reasonable
efforts to perform or cause the Board of Managers to perform any such
repairs, alterations, replacements or improvements, to the extent
possible (which shall include the incurrence of overtime or other
premium pay labor), with reasonable diligence and in a manner
designed to minimize interference with, or disruption of, the conduct of
Tenant's normal business operations at the Premises, and Landlord shall
diligently prosecute same to completion.
VI.6.2 Limitation of Liability. Landlord shall have no responsibility or
liability for (a) failure to supply any service provided by the Building
Service Systems during any period referred to in Section 6.6.1 or (b)
any loss, damage or expense that Tenant may sustain or incur by reason
of any failure, inadequacy or defect in the character, quantity, quality or
supply of services or utilities furnished to the Premises, the Unit or the
Building for any reason except for actual damage suffered by Tenant by
reason of any such failure, inadequacy or defect but only to the extent
caused by the negligence or willful misconduct of Landlord or its
agents, employees or contractors, and then only after actual notice
thereof to Landlord and Landlord's failure to cure within a reasonable
time; it being understood and agreed that if Tenant shall be entitled to
any such damages, the calculation of the amount of such damages shall
begin accruing from the date of Tenant's notice to Landlord.
VI.6.3 Condominium Documents Control. If there is a right in the
Condominium Documents for the Board of Managers to interrupt,
curtail, stop or suspend service or operation of any of the Building
Service Systems or any of the services to be delivered to Tenant under
this Lease, Tenant acknowledges that, notwithstanding anything in this
Lease to the contrary, the terms and provisions of the Condominium
Documents shall control with respect to such right; provided that such
right is exercised in a non-discriminatory manner.
SECTION VI.7 Access to Premises. Subject to the terms of this
Lease, Tenant shall be entitled to access to the Premises 365 days per
year, 7 days per week and 24 hours per day.
SECTION VI.8 Chilled Water. Subject to and in accordance with the
Chilled Water Agreement (as such term is defined in the Declaration),
Landlord shall provide (or use all reasonable efforts to cause the Board
of Managers to provide) (i) an amount of approximately 65 tons of
chilled water for the entire Premises (or such lesser amount as
reasonably determined by Tenant's engineer) for each entire floor of the
Building on which the Premises are located for use of supplemental air
conditioning units to be installed in the Premises by Tenant at its sole
expense (and for each partial floor of the Building within the Premises,
additional tonnage equal to a pro rata amount of an additional 32.5
tons of chilled water which shall be made available to such floor) and
(ii) that such chilled water shall be chilled to a temperature which shall
not be higher than 42.5 degrees Fahrenheit at the Metering Station (as
such term is defined in the Chilled Water Agreement) located on or
near the 16th floor. During the Term, Tenant shall pay to Landlord for
chilled water supplied to the Premises for supplemental air-conditioning
an amount equal to the actual out-of-pocket expenses incurred by
Landlord for such chilled water (which shall include all costs and
expenses due to be paid by Landlord under the Chilled Water
Agreement). As of calendar year 1996, the cost of chilled water to
Landlord is $33.83 per hour for 25 tons. Such charges shall be
adjusted from time to time to account for changes in the actual out-of-
pocket cost to Landlord of furnishing chilled water. Tenant shall pay
such charges within 10 days after bills are rendered therefor. Tenant
acknowledges that chilled water is presently provided by 1 New York
Plaza 24 hours/day and 365 days/year in accordance with the Chilled
Water Agreement (a copy of which has been previously delivered to
Tenant).
SECTION VI.9 Building Security. Landlord covenants and agrees to
provide (or to cause the Board of Managers to provide), and Tenant
shall be entitled to receive, without charge, building security in
accordance with Section 16.20 below.
SECTION VI.10 Actual Out-of-Pocket Expenses of Landlord.
Notwithstanding anything in this Lease to the contrary, except to the
extent expressly provided for, the cost to Tenant for services or
materials to be provided by Landlord at Tenant's expense under this
Lease, shall include only the actual out-of-pocket expenses paid by
Landlord to the Board of Managers or any independent third party
provider of such services or materials without any increase by way of
overhead charge or other mark-up.
ARTICLE VII
INSURANCE AND INDEMNIFICATION
SECTION VII.1 Use of Premises. Tenant shall not do or permit
anything to be done in or about the Premises that might: (a) result in
insurance companies of good standing refusing to insure the Premises,
the Unit or the Building in amounts reasonably satisfactory to Landlord
or the Board of Managers, as applicable, (b) result in the assertion of
any defense by the insurer in whole or in part to claims under any of
such policies, or (c) result in the cancellation of any insurance policy
covering or relating to the Premises, the Unit or the Building. If by
reason of any default by Tenant under this Lease, or any Improvement
or Tenant's Property in the Premises, or the use or occupancy of the
Premises by Tenant for other than the Permitted Use, (i) any such
insurance shall be canceled by the insurance carrier, then, in addition to
any other rights or remedies that Landlord may have under this Lease,
Tenant shall indemnify, defend and hold harmless the Landlord Parties
against any loss that would have been covered by such insurance, and
(ii) the premiums for any insurance on the Unit or the Building
(including rent insurance) are higher than they otherwise would be,
Tenant shall reimburse Landlord for the increase attributable to
Tenant's default, within 20 days after demand, as Additional Rent.
SECTION VII.2 Insurance Requirements. At all times during the
Term, Tenant shall comply, at Tenant's expense, with the Insurance
Requirements attached hereto as Exhibit I.
SECTION VII.3 Indemnity. Tenant shall defend, indemnify and hold
harmless the Landlord Parties from and against any and all claims,
demands, liability, loss, damage, costs and expenses (including
reasonable attorneys' fees and disbursements) arising from: (a) any
breach or default by Tenant in the full and prompt payment and
performance of Tenant's obligations under this Lease (beyond the
expiration of any applicable grace, cure and notice periods); (b) the use
or occupancy or manner of use or occupancy of the Premises by
Tenant or any Person claiming under Tenant in violation of the
provisions of this Lease; (c) any act, omission or negligence in violation
of the Lease by Tenant or any of its subtenants or licensees or its or
their partners, principals, directors, officers, agents, invitees, employees
or contractors, during the Term (or after the expiration of the Term,
but only if Tenant is still occupying the Premises); (d) any accident,
injury or damage whatsoever occurring in or about the Premises or the
Building during the Term (or after the expiration of the Term, but only
if Tenant is still occupying the Premises), but excluding therefrom any
accident, injury or damage caused by the negligence or wilful
misconduct of Landlord or by a default by Landlord of any of its
obligations hereunder (after 3 Business Days' prior written notice to
Landlord); (e) the performance of any Alteration in the Premises
including, without limitation, Tenant's failure to obtain any permit,
authorization or license or failure to pay in full any contractor,
subcontractor or materialmen performing work on such Alteration
(unless such failure is due to Landlord not disbursing the Allowance in
accordance with Paragraph 6 of Exhibit D); and (f) any Mechanics Lien
filed, claimed or asserted in connection with any Alteration or any other
work, labor, services or materials done for or supplied to Tenant, or
any Person claiming through or under Tenant (unless such failure is due
to Landlord not disbursing the Allowance in accordance with
Paragraph 6 of Exhibit D). In any claim, action or proceeding brought
against any of the Persons indemnified under this Section 7.3 for a
matter covered by this indemnity, Tenant, upon notice from the
indemnified Person, shall defend such claim, action or proceeding by
counsel reasonably satisfactory to Landlord and the indemnified
Person, provided such indemnified Person has timely notified Tenant of
such action and cooperates in the defense thereof.
ARTICLE VIII
ALTERATIONS, REPAIRS AND MAINTENANCE
SECTION VIII.1 Alterations by Tenant. Tenant may from time to
time, so long as Tenant is not in default hereunder (beyond the
expiration of any applicable grace, cure and notice periods), at its
expense, make such Alterations in and to the Premises as Tenant may
desire so long as:
(a0 The Alteration (i) does not affect the outside appearance of the
Unit or the Building and is not visible from the outside of the Unit or
the Building; (ii) does not affect the certificate of occupancy for the
Building or for the Unit, or any portion thereof should a separate
certificate of occupancy for the Unit or any portion thereof be issued;
(iii) is not of a structural nature and does not negatively impair or
adversely affect the strength or structural integrity of the Unit or the
Building or any structural component thereof (including, without
limitation, its exterior walls, supporting beams, columns, floor slabs,
foundations or elevator systems or the Building Service Systems); (iv)
does not affect the proper functioning of the Building Service Systems
or facilities of the Unit or the Building or any portion thereof; (v) does
not affect the quiet enjoyment of, or otherwise materially adversely
affect, the other tenants or occupants of the Building or the Unit and
(vi) does not result in the violation of any Law;
(b0 Tenant shall, prior to commencement of any Alteration, comply
with Paragraphs 1-4, inclusive, of the Alteration Requirements attached
hereto as Exhibit J; and
(c0 Tenant shall comply with all other Alteration Requirements set
forth on Exhibit J as and when such compliance is required.
SECTION VIII.2 Tenant's Property. All office equipment that is
installed in the Premises by or for the account of Tenant without
expense to Landlord (other than from the Allowance), whether or not
attached to or built into the Premises, and that may be removed
without substantial damage to the Premises or the Unit, and all
furniture, furnishings and other articles of movable personal property
owned by Tenant and located in the Premises shall remain the property
of Tenant ("Tenant's Property") and may be removed by Tenant at any
time during the Term so long as Tenant is not in Material Default
hereunder beyond the expiration of any applicable cure, notice and/or
grace period. Tenant shall repair, at its sole expense, any damage to
the Premises or shall reimburse Landlord for the costs of repairing any
damage to the Unit, the Common Elements or the Building resulting
from the installation or removal of Tenant's Property.
SECTION VIII.3 Taxes on Tenant's Property and Improvements.
Except as provided herein, Tenant shall pay when due any taxes
measured by or attributable to the cost or value of Tenant's Property or
any Improvements made by or for Tenant (other than Tenant's Work)
regardless of whether title to such Improvements shall be vested in
Landlord or Tenant and, if Tenant shall fail to pay such taxes or if such
taxes shall be required to be paid by Landlord, Tenant shall reimburse
Landlord, as Additional Rent, upon demand for any such taxes paid by
Landlord.
SECTION VIII.4 Landlord's Repair and Maintenance Obligations.
Subject to the provisions of Article IX and Section 8.5, Landlord shall
maintain (or, in the case of the Common Elements and the Building
Service Systems, shall maintain or use all reasonable efforts to cause
the Board of Managers to maintain) in good condition, order and repair
(a) the roof, shell, exterior and load bearing walls and other structural
elements of the Unit, (b) the Building Service Systems serving the
Premises and (c) all Common Elements, public corridors, lobbies and
public areas of the Building available for use by Tenant. Landlord shall
not be responsible for the maintenance or repair of any portion, area,
component or element of the Unit, the Building, or the Premises other
than as expressly provided in this Section 8.4. Landlord shall have no
obligation to make any repair or undertake any maintenance activity
described in this Section until a commercially reasonable period
consistent with other Comparable Buildings following receipt of
written notice from Tenant or Landlord's actual notice of the need for
the same. Tenant shall accept performance by the Board of Managers
(or its agents and contractors) on behalf of Landlord of any obligation
on Landlord's part to be performed under this Lease, including repair
and maintenance obligations, provided, however, that the failure of the
Board of Managers (or its agents and contractors, as the case may be)
to timely complete such repairs (after the expiration of any applicable
grace, cure and notice provisions) shall be a breach of Landlord's
covenants under this Section 8.4.
SECTION VIII.5 Tenant's Obligations. Subject to the provisions of
Article IX and Section 8.4, at all times during the Term, Tenant at its
expense (a) shall maintain in good order, condition and repair the
Premises, the Improvements and all fixtures or facilities contained
therein which do not constitute part of the Common Elements or the
Building Service Systems, including, without limitation, any
distribution conduits for the HVAC system serving the Premises, any
supplemental air conditioning units, any private lavatory and any public
lavatories located on floors leased entirely to Tenant, shower, toilet,
washbasin and kitchen facilities, and all plumbing serving or connected
to such systems or facilities and (b) shall be responsible for all
maintenance and repairs, interior and exterior, structural and non-
structural, ordinary and extraordinary, of the Premises (including all
fixtures, installations and equipment therein), the Unit, the Unit's
facilities and systems, the Building and the Building's facilities and
systems, made necessary, in whole or in part, by: (i) the performance
of any Alteration or the existence of any Improvement; (ii) the
installation or use of Tenant's Property in the Premises; (iii) the moving
of Tenant's Property into or out of the Building; (iv) any act or
omission of Tenant, any subtenant of Tenant or any officer, partner,
principal, employee, agent, contractor or invitee thereof; (v) Tenant's
use or occupancy of the Premises (other than use or occupancy of the
Premises in the ordinary course of Tenant's business); or (vi) the use or
removal by Tenant of any Improvement; provided, however, that any
repairs and maintenance outside of the Premises or to the Common
Elements for which Tenant is responsible pursuant to the foregoing
provisions of this Section 8.5 shall be performed by Landlord or the
Board of Managers in a commercially reasonably manner after notice
to Tenant, at Tenant's cost and expense. Tenant, at its expense, shall
promptly replace all scratched, damaged or broken doors and interior
glass in the Premises if such scratch, damage or break is visible from
any passenger elevator lobby on any floor of the Premises. Tenant shall
be responsible for the cost of all repainting and all repairs, maintenance
and replacement of wall, ceiling and floor coverings in the Premises.
ARTICLE IX
DAMAGE OR DESTRUCTION
SECTION IX.1 Restoration. (a0 If the Building, the Unit or the
Premises is partially or totally damaged by fire or other casualty, then
so long as neither Landlord nor Tenant has duly exercised any right to
terminate this Lease under this Article IX and subject to the terms and
conditions of the Declaration and the rights of Senior Interest Holders,
if any:
(i) Landlord shall repair, or shall use all reasonable efforts to cause the
Board of Managers to repair, the damage and restore or rebuild the
Building, the Unit or the Premises (including the Improvements but
excluding Tenant's Property), as the case may be (but only to the extent
otherwise required under this Article IX, including, without limitation,
Section 9.1(c) below) to the extent necessary for Tenant to occupy and
reasonably conduct business throughout the Premises as conducted
prior to the damage or destruction (such repairs and restoration being
herein called "Landlord's Casualty Restoration Work"), with reasonable
dispatch (including an obligation to incur overtime or premium pay
labor rates) after the collection of substantially all of the insurance
proceeds receivable on account of the fire or other casualty; and
(ii) once commenced, Landlord shall diligently prosecute Landlord's
Casualty Restoration Work in order to complete the same within the
shortest time reasonably possible (including an obligation to incur
overtime or premium pay labor rates), except as expressly provided in
Article 9.
(b0 Whenever in this Article 9, reference is made to the Premises,
such reference shall include all Improvements (and Landlord's Casualty
Restoration Work shall include the repair of all damage to, and the
restoration of, all such Improvements) but shall not include any
Tenant's Property (and Landlord shall have no obligation to repair or
restore any Tenant's Property).
(c0 Notwithstanding anything in this Section 9.1 to the contrary,
nothing in this Article IX shall require Landlord or the Board of
Managers, as the case may be, to expend on such restoration amounts
in excess of the total insurance proceeds (net of the costs of collection)
collected and deposited with Landlord on account of such casualty, and
in no event shall Landlord be required to repair or restore the Building,
the Unit or the Premises (or to cause the Board of Managers to repair
or restore) in the event the Board of Managers determines not to so
repair or restore the same pursuant to the Condominium Documents.
Tenant shall give prompt notice to Landlord of any fire or other
casualty in the Premises.
(d0 Landlord, upon Tenant's request from time to time, shall keep
Tenant informed with regard to, and meet with Tenant to discuss, the
planning for and the prosecution of Landlord's Casualty Restoration
Work.
(e0 Within fifteen (15) Business Days of the date on which the Unit
or the Premises or any portion thereof is damaged by fire or other
casualty such that Tenant is thereby "deprived of the beneficial
enjoyment of any portion of the Premises", (as such phrase is
hereinafter defined), Landlord, by written notice to Tenant, shall state
the date by which, in the opinion of a reputable contractor selected by
Landlord, Landlord will have substantially completed Landlord's
Casualty Restoration Work to the extent necessary for Tenant to
occupy and reasonably conduct business throughout the Premises as
conducted prior to the damage or destruction, including, without
limitation, (a) restoration of substantially all services under Article 6
and (b) compliance with all Laws compliance with which is required for
such occupancy and conduct of business (such date being referred to as
the "Estimated Casualty Restoration Work Completion Date").
(f0 Within 5 Business Days after Landlord delivers to Tenant the
notice required under clause (e) above, Landlord, by written notice to
Tenant, shall state Landlord's determination to complete Landlord's
Casualty Restoration Work by the Estimated Casualty Restoration
Work Completion Date.
(g0 The inadequacy of any insurance proceeds or any delay in
receiving same shall not limit any rights of Tenant to terminate this
Lease in accordance with Section 9.4.2.
IX.1.1 Insurance Proceeds. The proceeds of all policies providing
coverage for the Improvements but not Tenant's Property shall be paid
in accordance with the terms of the Condominium Documents. In the
event this Lease is terminated on account of a casualty event, Landlord
shall pay all insurance proceeds (net of collection costs) attributable to
Tenant's Improvements to Tenant upon the later to occur of (i) 10
Business Days after such proceeds are collected and (ii) 30 days
following termination of this Lease. All claims under such insurance
shall be adjusted and settled by Landlord alone, all proceeds of such
insurance shall be applied to Landlord's Casualty Restoration Work,
and any balance remaining after the completion thereof may be retained
by Landlord without accountability to Tenant; provided that (i) with
respect to Tenant's Property, (ii) with respect to the Improvements in
the case of termination of this Lease by Landlord or Tenant under
Section 9.4.1 or Section 9.4.2, or (iii) as otherwise provided herein,
Tenant may participate in the adjustment and settlement of such
insurance, and Tenant shall be entitled to receive insurance proceeds
with respect to the foregoing matters.
SECTION IX.2 Rent Abatement. Subject to the provisions of Section
9.3, if fire or other casualty damages, destroys or renders the Premises
or any portion thereof untenantable or deprives Tenant of reasonable
access to the Premises or any portion thereof and Tenant actually
vacates such portion of the Premises, then the Base Rent and
Additional Rent payable under Article IV shall be abated (if all of the
Premises is untenantable) or reduced (if only a portion of the Premises
is untenantable) by the proportion that the Rentable Area of such
portion of the Premises bears to the Premises Area, for the period
beginning on the date of the damage or destruction and ending on the
earlier of (a) the date on which Landlord will have substantially
completed Landlord's Casualty Restoration Work to the extent
necessary for Tenant to occupy and reasonably conduct business
throughout the Premises as conducted prior to the damage or
destruction and Tenant has reasonable access to the Premises or (b) the
date on which Tenant reoccupies such portion of the Premises for the
conduct of its business.
SECTION IX.3 Exception to Abatement. Tenant shall not receive
any abatement or reduction of Base Rent or Additional Rent if: (a)
Landlord provides other comparable space in the Unit reasonably
suited for the temporary conduct of Tenant's business within 3 Business
Days of the date of such fire or casualty, Tenant has reasonable access
to such substitute space, and Landlord reimburses Tenant for its actual
out-of-pocket expenses incurred in connection with any such relocation
(but Landlord shall have no obligation to provide such other space); or
(b) by reason of some act or omission on the part of Tenant, its
subtenant or assignee, or its or their partners, directors, officers,
employees, agents, invitees or contractors, Landlord (or the Board of
Managers or any Senior Interest Holder) is unable to collect
substantially all of the insurance proceeds (including, without limitation,
rent insurance proceeds) for damage or destruction of the Premises, the
Unit or the Building, as the case may be, arising out of such fire or
other casualty. The collection of rent by Landlord under the
circumstances described in clause (b) of this Section 9.3 shall not
preclude Landlord from seeking damages from Tenant or exercising
other remedies it may have under this Lease, under Law or in equity.
SECTION IX.4 Termination Rights.
9.4.1 Landlord's Termination Rights. (a) If the Building, the Unit or
the Premises is damaged or destroyed by fire or other casualty, and
either:
(i) (x) the Building is so damaged (whether or not the Premises or the
Unit is damaged or destroyed) that the owners of the condominium
units in the Condominium are not required to restore the Building and
elect not to restore the Building and (y) Tenant is deprived of
reasonable access to the Premises and Landlord terminates all other
leases in the Unit;
(ii) less than one year remains in the Term at the time of the fire or
other casualty and the Estimated Casualty Restoration Work
Completion Date is more than 90 days from the date of such damage
or destruction; or
(iii) Landlord is required under Section 9.2 to abate or reduce the Base
Rent and Additional Rent for all or substantially all of the Premises for
a period in excess of nine (9) months if rebuilding or repairs were
undertaken,
then, in any of such cases, Landlord may terminate this Lease by giving
Tenant notice to such effect within 100 days after the date of the
casualty. This Lease shall terminate on the 30th day after the date that
such termination notice from Landlord is given, and the Rents shall be
prorated as of such termination date.
(b) If Landlord elects to terminate this Lease pursuant to Section
9.4.1(a)(iii) above, Landlord shall pay to Tenant an amount equal to
50% of the Net Reletting Profits, if any. Any such payments shall be
paid within ten (10) days after Landlord's actual receipt of any such Net
Reletting Profits. This obligation shall survive termination of this
Lease, but in no event shall Landlord have any obligation to pay to
Tenant any Net Reletting Profits allocated to periods after September
30, 2013. As used herein, "Net Reletting Profits" shall mean an
amount equal to (A) the sum of all rent, additional charges and other
consideration paid to Landlord by a tenant for or in connection with the
reletting of the Premises (but excluding therefrom any sums received as
a security deposit under any such lease) during the term of the relevant
lease which shall be pro-rated over the term of the Lease in equal
monthly payments less (B) Reletting Expenses incurred in connection
with this Lease or with such reletting. As used herein, "Reletting
Expenses" shall mean (i) all unamortized costs of Landlord with respect
to this Lease (including, without limitation, brokerage commissions,
free rent and tenant work allowance) and (ii) brokerage commissions,
legal, accounting and other professional fees, marketing and advertising
costs, takeover expenses, cash contributions or alteration expenses and
any other costs and expenses (hard and soft costs) incurred, or to be
incurred, by Landlord (including, without limitation, lease takeover and
moving expenses and the cost of all tenant improvements and other
tenant inducements) in each case, in connection with such reletting.
9.4.2 Tenant's Termination Rights. If the Building (including the
Building Service Systems), the Unit, or the Premises or any portion
thereof is damaged by fire or other casualty such that Tenant is thereby
"deprived of the beneficial enjoyment of all or a substantial portion of
the Premises", and either
(i) the Estimated Casualty Restoration Work Completion Date is later
than the date 180 days after such fire or other casualty;
(ii) on the date which is 180 days after such fire or other casualty
Landlord (or the Board of Managers, if such restoration is the Board of
Manager's responsibility under the Condominium Documents) has not
substantially completed Landlord's Casualty Restoration Work to the
extent necessary for Tenant to occupy and reasonably conduct business
throughout the Premises as conducted prior to the damage or
destruction;
(iii) Landlord (or the Board of Managers, if such restoration is the
Board of Manager's responsibility under the Condominium
Documents) has not commenced negotiations to settle its claim for
insurance with its insurance carriers within 15 Business Days of the
date of the damage or destruction;
(iv) Landlord (or the Board of Managers, if such restoration is the
Board of Managers' responsibility under the Condominium
Documents) has not settled its claim for insurance and given Tenant
notice, within sixty (60) days after the date of the damage or
destruction, of its agreement to perform Landlord's Casualty
Restoration Work;
(v) Landlord (or the Board of Managers, if such restoration is the
Board of Manager's responsibility under the Condominium
Documents) has not commenced Landlord's Casualty Restoration
Work within sixty (60) days after the date of the damage or
destruction; or
(vi) Landlord has not given Tenant the notice required to be given
under Section 9.1(e) with respect to the Estimated Casualty
Restoration Work Completion Date or under Section 9.1(f) with
respect to Landlord's intention to complete Landlord's Casualty
Restoration Work (after written notice by Tenant and 3 Business Days
opportunity for Landlord to provide such notice),
then, in any of such cases, Tenant may terminate this Lease by giving
Landlord notice to such effect within thirty (30) days after the
occurrence of any of the events specified in Section 9.4.2(i)-(vi) above.
This Lease shall terminate on the date specified in Tenant's termination
notice given pursuant to this Section 9.4.2 (unless such notice is
nullified by the Landlord or the Board of Managers, if such restoration
is the Board of Manager's responsibility under the Condominium
Documents, substantially completing Landlord's Casualty Restoration
Work prior to the date of termination specified in Tenant's termination
notice) which shall be no earlier than thirty (30) days and no later than
one hundred eighty (180) days after the date of such notice, and the
Rents shall be prorated and adjusted as of such termination date; any
prepaid Rents shall be promptly refunded and any unpaid Rents shall be
promptly paid.
As used in this Article IX, Tenant shall be deemed "deprived of the
beneficial enjoyment of all or a substantial portion of the Premises", if
(i) twenty percent (20%) or more of the Rentable Area of the Premises
is destroyed or damaged and, as a result, Tenant is unable to reasonably
conduct its business in the Premises, (ii) a substantial portion of
Tenant's trading floor is destroyed or damaged, (iii) a substantial
portion of Tenant's computer installation is destroyed or damaged and
Tenant is unable to reasonably conduct its business in the Premises, or
(iv) Tenant is deprived of reasonable access to the Premises for a
period of time in excess of seven (7) Business Days.
SECTION IX.5 Business Interruption. Except as provided in Section
9.4.2 and Section 9.4.3, 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 Premises, the Unit or of
the Building pursuant to this Article IX. Subject to Section 9.1,
Landlord shall exert reasonable efforts to make (or to cause to be
made) such repair or restoration promptly and in such manner as not to
interfere unreasonably with Tenant's use and occupancy of the
Premises.
SECTION IX.6 Waiver. This Article IX constitutes an express
agreement governing damage or destruction of the Premises, the Unit
or the Building by fire or other casualty, and neither Section 227 of the
Real Property Law of the State of New York, which provides for such
contingency in the absence of an express agreement, nor any other
Laws of similar import now or hereafter in effect shall have any
application in any such case.
ARTICLE X
EMINENT DOMAIN
SECTION X.1 Complete Taking. If all or substantially all of the
Premises is taken by condemnation, sale in lieu of condemnation, or in
any other manner for any public or quasi-public use or purpose
("Eminent Domain"), this Lease and the term and estate hereby granted
shall terminate as of the date of vesting of title on such taking or the
date that the condemning or purchasing authority takes possession,
whichever is earlier ("Date of the Taking"), and the Rents shall be
prorated and adjusted as of such date.
SECTION X.2 Partial Taking. If part of the Building, the Unit or the
Premises is taken by Eminent Domain (but not substantially all of the
Premises), this Lease shall be unaffected by such taking, except that:
(a0 if more than 75% of the gross floor area of the Building or
more than 25% of the Unit Area shall be taken, whether or not any
portion of the Premises shall be affected thereby, or if so much of the
Unit, the Common Elements or the Building shall be taken that the
Board of Managers determines that the Unit or the Common Elements
cannot be restored, reconstructed or replaced in a suitable manner so
that the Unit may continue to be used for the purposes intended or that
it would be economically or operationally impractical to operate the
portion of the Building remaining after the taking, Landlord may, at its
option, terminate this Lease by giving Tenant notice to that effect
within 10 days after the Date of the Taking, and
(b0 if 25% or more of the Premises Area of the Premises (prior to
the taking) shall be so taken and the Premises Area of the Premises
remaining after such taking shall not be reasonably sufficient for Tenant
to continue the operation of its business at the Premises, or if, by
reason of such acquisition or condemnation, Tenant no longer has
reasonable means of access to the Premises, Tenant may, at its option,
terminate this Lease by giving Landlord notice to that effect within 10
days after the Date of the Taking.
This Lease shall terminate no later than the Date of the Taking, and the
Rents shall be prorated and adjusted as of such termination date. Upon
a partial taking, where this Lease continues in force as to any part of
the Premises, (i) the Base Rent shall be reduced by an amount equal to
the Base Rent attributable to the portion of the Premises taken and
Tenant's Share shall be adjusted to equal the percentage that the
Rentable Area of the portion of the Premises left to Tenant bears to the
Unit Area after the taking, and (ii) Landlord shall, or shall use
reasonable efforts to cause the Board of Managers to, repair or restore
the remaining portions of the Premises, the Unit or the Building, as the
case may be, with reasonable dispatch after collection of substantially
all of the award attributable to the taking by Eminent Domain;
provided, however, that neither Landlord nor the Board of Managers,
as the case may be, shall be required to expend on such repair or
restoration amounts in excess of the total awards (net of the costs of
collection) collected by it on account of the taking.
SECTION X.3 Award. Landlord shall be entitled to receive the entire
award or payment in connection with any taking of the Premises
without deduction for any estate vested in Tenant by this Lease.
Tenant hereby expressly assigns to Landlord all of its right, title and
interest in and to every such award or payment. Tenant shall be
entitled to claim and receive any award or payment from the
condemning authority expressly granted for the taking of Tenant's
Property, the interruption of its business or moving expenses, but only
if such award or payment shall be actually made and if Tenant's claim
does not adversely affect or result in any reduction of Landlord's award
or the Condominium's award or interfere with the prosecution of a
claim for the taking by Landlord or the Condominium. If Tenant
intervenes in a condemnation proceeding in which Landlord is a party,
Landlord and Landlord's counsel shall manage and control the
proceeding for Landlord and Tenant.
SECTION X.4 Temporary Taking. If all or any portion of the
Premises is taken by Eminent Domain for a limited period of time (it
being agreed that a taking for a period of time of six months or more
shall be treated as a permanent taking pursuant to the preceding
sections), this Lease shall remain in full force and effect except that
Tenant's obligations to pay Rents hereunder shall abate for the period
of time of such taking, but only with respect to the Base Rent and
Additional Rent attributable to the portion of the Premises taken.
Tenant shall be entitled to claim and receive that portion of the award
or payment from the condemning authority expressly granted (a) for
any such temporary taking of the Premises attributable to any period
within the Term, (b) for any damage to Tenant's Property, and (c) if
such temporary taking terminates prior to the expiration of the Term,
for the cost of restoration of the Premises. Landlord shall be entitled to
receive that portion of the award that is made for any such temporary
taking of the Premises attributable to the period after the expiration of
the Term or that is allocable to the Unit, other than the Premises, or,
except as provided above, to the cost of restoration of the Premises or
that is made for any other purpose. If any such temporary taking
terminates prior to the expiration of the Term, Tenant shall restore the
Premises and the Improvements as nearly as possible to their condition
prior to the taking, at Tenant's sole cost and expense.
ARTICLE XI
SURRENDER OF PREMISES
SECTION XI.1 Surrender. On the last day of the Term, upon any
earlier termination of this Lease, or upon any re-entry by Landlord
upon the Premises pursuant to Article XV, all of Tenant's right, title
and interest, if any, in the Premises, the Improvements, the Unit or the
Building, including any possessory interest, shall cease, and Tenant
shall (a) quit and surrender the Premises to Landlord "broom clean"
and in good order, condition and repair (ordinary wear and tear
excepted), (b) remove all of Tenant's Property and repair, at its
expense, any damage to the Premises caused by such removal and (c)
remove all Improvements installed by or on behalf of Tenant and
repair, at its expense, any damage to the Premises caused by such
removal. Landlord may consider items of Tenant's Property that
remain in the Premises after the expiration or earlier termination of the
Term to have been abandoned. In that event, Landlord may, at its
option either (i) retain such items as its property or dispose of them
without accountability in such manner as Landlord shall determine, all
at Tenant's expense, or (ii) remove and store such items for Tenant.
Tenant shall reimburse Landlord for the reasonable expenses incurred
in connection with such disposal or removal and storage within 20 days
after receipt for an invoice therefor. The provisions of this Section
11.1 shall survive the expiration of the Term.
SECTION XI.2 Acceptance of Surrender. Prior to the expiration or
earlier termination of this Lease in accordance with the terms hereof,
no act or thing done by Landlord or its agents (including accepting the
keys or similar access devices to the Premises) shall be deemed an
acceptance of surrender of the Premises, and no agreement to accept
such surrender shall be valid unless in writing and signed by Landlord.
SECTION XI.3 Assignment of Subleases. The surrender by Tenant
of, or termination of, this Lease prior to the last day of the Term shall,
at the option of Landlord, operate as an assignment to Landlord of any
subleases of the Premises. Landlord, in its sole and absolute discretion,
may accept the assignment of all or any part of any subleases of the
Premises free of any claims, defenses or offsets by any sublessee against
Tenant by giving notice to the sublessee or sublessees to such effect.
SECTION XI.4 No Holding Over. There shall be no holding over by
Tenant after the expiration or earlier termination of this Lease and the
failure by Tenant to deliver possession of the Premises to Landlord
shall be an unlawful holdover. During any period in which Tenant so
holds over, at Landlord's option, the rental value of the Premises,
payable from the date immediately following the date on which Tenant
was to deliver the Premises through and including the last day of the
calendar month in which Tenant so delivers the Premises, shall be
deemed to be equal to 200% of the greater of (a) the Rents payable
immediately preceding the expiration or earlier termination of this
Lease, or (b) the then fair market rental value of the Premises.
Acceptance by Landlord of any such Rent during the period in which
Tenant so holds over shall not cure or waive Tenant's default, nor
prevent Landlord from exercising, before or after such acceptance, any
of the remedies provided by this Lease or at law or in equity. Payment
of any such Rent and other sums during any period in which Tenant
holds over shall not excuse Tenant's obligation to vacate and surrender
the Premises on the date, and in the manner and condition, required
under this Lease. If the Premises are not surrendered upon the
expiration or earlier termination of this Lease with respect to all or any
portion of the Premises, Tenant hereby indemnifies Landlord against
loss, cost, injury, damage, claim, expense, or liability (including
attorneys' fees and disbursements) resulting from delay by Tenant in so
surrendering the same, including any claims made by any succeeding
tenant or prospective tenant founded upon such delay excluding
however claims made with respect to any delays caused solely by Force
Majeure. Tenant waives any rights under Section 2201 of the Civil
Practice Law and Rules of the State of New York in connection with
any holdover proceedings that Landlord may institute against Tenant.
ARTICLE XII
EXCULPATION AND CERTAIN LANDLORD RIGHTS
SECTION XII.1 Exculpation. Notwithstanding anything to the
contrary in this Lease but subject to Section 12.5 which shall not be
affected by this Section 12.1, none of the Landlord Parties shall be
liable to Tenant or its partners, principals, directors, officers,
contractors, agents, employees, invitees, sublessees, licensees or any
other Person claiming through or under Tenant, for any loss, injury or
damage to Tenant or to any other Person, or to its or their property, or
for any inconvenience, annoyance, interruption or injury to business
arising from Landlord (or the Board of Managers) performing any
maintenance, repairs, alterations, additions or improvements in or to
any portion of the Building, the Unit or the Premises or in or to the
fixtures, equipment or appurtenances of the Building, the Unit or the
Premises (nor shall Tenant or any other Person be entitled to any
abatement or suspension of its obligation to pay Rents except as
specifically set forth herein or be construed to be constructively or
otherwise evicted on account of the foregoing), irrespective of the
cause of such loss, injury, damage, inconvenience, annoyance,
interruption or injury unless caused by or resulting from the gross
negligence (active or passive) or willful misconduct of Landlord or its
agents or employees in the operation or maintenance of the Premises or
the Unit; provided, however, that Tenant waives, to the full extent
permitted by Law, any claim for any indirect, consequential or punitive
damages, including loss of profits in connection therewith (it being
agreed that the foregoing waiver shall be ineffective if the cause of such
loss, injury, damage, inconvenience, annoyance, interruption or injury is
caused by or results from the bad faith, gross negligence or the willful
misconduct of Landlord or its agents or employees.
SECTION XII.2 Transfers of Landlord's Interest. In the event of (a) a
sale or transfer of all or any part of the Unit which includes the
Premises (by operation of law or otherwise), (b) the making of a lease
of all or substantially all of the Unit, or (c) a sale or transfer (by
operation of law or otherwise) of the leasehold estate under any such
lease, (i) except as otherwise expressly provided, the seller, transferor
or lessor, as the case may be, shall be and hereby is (to the extent of the
interest or portion of the Unit or leasehold estate sold, transferred or
leased) automatically and entirely released and discharged, from and
after the date of such sale, transfer or lease, of all liability in respect of
the performance of any of the terms of this Lease on the part of
Landlord thereafter to be performed; and (ii) the term "Landlord" shall
thereafter mean only the purchaser, transferee or lessee, as the case
may be, and the covenants and agreements of Landlord shall thereafter
be binding upon such purchaser, transferee or lessee; provided assignee
or lessee has assumed all of Landlord's obligations under this Lease. If
Landlord's interest in the Unit shall be sold, assigned or otherwise
transferred to any Person pursuant to foreclosure of the Condominium
lien or upon the exercise of any remedy provided in the Condominium
Documents, that Person shall not be: (A) liable for any act or omission
of Landlord under this Lease occurring prior to such sale, assignment
or other transfer; (B) subject to any offset, defense or counterclaim
accruing prior to such sale, assignment or other transfer; and (C) bound
by any payment prior to such sale, assignment or other transfer of Rent
for more than one month in advance (one year in the case of Tenant's
Tax Payment) or Estimated Operating Expense payment; except those
obligations described in Section 12.3.
SECTION XII.3 Recourse Limited to Unit; Limited Guaranty of
Payment. (a) Except with respect to any claims related to the failure of
Landlord to (i) pay the Allowance in accordance with the terms and
provisions of this Lease, (ii) comply with the terms and provisions of
Article XXII, and (iii) deliver the First Expansion Space or the Second
Expansion Space in the manner and in the time periods specified in
Article XVIII or Article XIX, as the case may be, in each case, after
the expiration of any applicable grace, notice and cure periods, which
claims shall not be limited by this Section 12.3, Tenant shall look solely
to Landlord's estate and interest in the Unit for the satisfaction of any
right of Tenant for the collection of a judgment or other judicial
process or arbitration award requiring the payment of money by
Landlord, and no other property or assets of Landlord, Landlord's
agents, incorporators, subscribers, shareholders, officers, directors,
partners, principals (disclosed or undisclosed) or affiliates, whether
directly or through Landlord or through any receiver, assignee, trustee
in bankruptcy or through any other Person, shall be subject to levy,
lien, execution, attachment, or other enforcement procedure for any
liability of Landlord to Tenant under this Lease or under law.
(b) Landlord acknowledges that any claims by Tenant relating to
the failure of Landlord to pay the Allowance in accordance with the
terms and provisions of this Lease are guaranteed by that certain
Limited Guaranty of Payment, dated as of the date hereof, by Canadian
Imperial Bank of Commerce for the benefit of Tenant, a form of which
is attached hereto as Exhibit W.
SECTION XII.4 Landlord Default. Landlord shall in no event be in
default in the performance of any of Landlord's obligations hereunder
unless and until it has failed to perform such obligation within 5
Business Days for any monetary defaults (unless a longer period of
time is specified herein for Landlord's obligations, in which case such
longer period shall apply) and 30 days for non-monetary defaults
(unless a longer period of time is specified herein for Landlord's
obligations, in which case such longer period shall apply) after receipt
of written notice of such failure from Tenant; provided, however, that
if the nature of such failure is such that more than 30 days are required
for its cure, Landlord shall not be in default hereunder if Landlord
commences to cure such default within such 30 day period and
thereafter prosecutes such cure to completion with reasonable
diligence. In any event, but subject to Section 12.1, Tenant's sole
remedy for breach of this Lease by Landlord shall be an action for
damages, injunction or specific performance. Except as expressly
provided herein, Tenant shall have no right to terminate this Lease on
account of any breach or default by Landlord.
SECTION XII.5 Withholding Consent. In no event shall any
Landlord Party be liable for any loss, injury or damage (including
indirect, consequential or punitive damages) claimed by Tenant or any
Person claiming through or under Tenant in connection with the failure
or refusal by any Landlord Party to grant its consent or approval with
respect to any matter as to which any of them are entitled to give their
consent or approval pursuant to this Lease, unless, with respect to the
liability of Landlord only, such loss, injury or damage was due to
Landlord's acts of failure to act in contravention of this Lease (but even
in such event, Tenant shall not be entitled to any indirect, consequential
or punitive damages unless Landlord withheld or delayed its consent in
bad faith, willfully or for no good business purpose). If any Landlord
Party withholds or delays its consent or conditions its consent and
Tenant believes that any such party did so unreasonably, Tenant may
prosecute an action for declaratory relief to determine if such party
properly withheld, delayed or conditioned its consent, but Tenant
waives and discharges (except to the extent set forth in the first
sentence of Section 12.5) any claims it may have against such party for
damages arising from such party's withholding, delaying or
conditioning its consent. In any such action, each party shall bear its
own attorneys' fees.
SECTION XII.6 Reservation of Certain Rights by Landlord.
Landlord reserves the right, and Tenant shall permit Landlord (or the
Board of Managers with respect to Common Elements), without any
of the same constituting an eviction and without incurring liability to
Tenant therefor, (a) to install, erect, use and maintain, repair and
replace pipes, ducts and conduits in and through the Premises;
provided, however, that Landlord shall disguise, conceal or camouflage
all work that is not a repair or replacement and with respect to all
repairs and replacements, Landlord shall, to the extent commercially
practicable (and Landlord shall use all reasonable efforts to cause the
Board of Managers to), disguise, conceal or camouflage the pipes,
ducts and conduits; (b) to change the arrangement and/or location of
public entrances, passageways, doors, doorways, corridors, elevators,
stairs, toilets or other public parts of the Unit or the Common Areas of
the Building; (c) to change the Building name or address; and (d) to
impose such controls as it deems reasonably prudent with respect to
access to the Building by visitors generally; provided that with respect
to the preceding clauses (b) and (d), Landlord agrees to take (and to
use all reasonable efforts to cause the Board of Managers to take) any
such actions in a uniform and non-discriminatory manner with respect
to the occupants of the Building.
SECTION XII.7 Entry by Landlord.
(a0 Landlord, the Board of Managers and their respective agents
and contractors shall have the right to enter or pass through the
Premises: (i) to examine and show Premises to actual and prospective
lenders, Senior Interest Holders and purchasers and, during the last 18
months of the Term, prospective lessees of the Unit, (ii) to conduct
such activities as are incidental to the operation and maintenance of,
and to make repairs and alterations in, the Premises, the Unit and/or the
Building and their respective systems, facilities and equipment, (iii) to
remove any violation of Law noted or issued against the Building, the
Unit, the Premises or any part thereof and (iv) to read and maintain
utility meters located therein; provided, however, that any such entry
pursuant to clauses (i) and (ii) above shall be during Business Hours.
Any entry by Landlord shall be made on reasonable advance oral notice
and, at Tenant's request, Landlord shall be accompanied by an agent of
Tenant, except in emergency situations where no such notice and/or
supervision shall be required. In exercising its rights under this Section
12.7, Landlord shall use, and shall use reasonable efforts to cause the
Board of Managers to use, reasonable efforts to avoid unreasonable
interference with the normal conduct of Tenant's business in the
Premises. Landlord and the Board of Managers each shall have a pass
key (or similar entry device) to the Premises which may only be used
with Tenant's permission, except in the case of an emergency, and shall
be allowed to bring materials and equipment into the Premises as
required in connection with maintenance, repairs and alterations,
without any liability to Tenant and without any reduction of Tenant's
obligations.
(b0 If, during the last month of the Term, Tenant has removed all
or substantially all of Tenant's Property from the Premises, Landlord,
without notice to Tenant, may immediately enter the Premises and
alter, renovate and decorate the same, without liability to Tenant and
without reducing or otherwise affecting Tenant's obligations hereunder.
SECTION XII.8 Obstructions of Light or View; Closures. If at any
time (a0 any windows of the Building or the Unit (including the
Premises) are temporarily darkened, or the light, air or view therefrom
is obstructed temporarily by reason of any repairs, improvements,
maintenance or cleaning in or about the Building or permanently by
reason of a requirement of Law or the construction of any structure
that may be erected on lands in the vicinity of the Building or (b) any
part of the Building, other than the Premises and any part of the
Building required for reasonable access to the Premises or required for
Landlord to perform any of its obligations hereunder, is temporarily or
permanently closed or inoperable, the same shall be without liability to
Landlord or the Board of Managers and without any reduction or
diminution of Tenant's obligations under this Lease and shall not be
deemed to constitute an eviction, except to the extent such obstruction
and/or closure prevents Tenant from reasonably conducting its business
at the Premises. To the extent such is within Landlord's control,
Landlord covenants to use all reasonable efforts to (or to cause the
Board of Managers to) minimize any such obstruction or closure and
to minimize any interference with the conduct of Tenant's business at
the Premises.
ARTICLE XIII
SUBORDINATION; ESTOPPEL CERTIFICATES
SECTION XIII.1 Subordination. Subject to the provisions of that
certain Subordination, Nondisturbance and Attornment Agreement
executed and delivered by and among Landlord, Tenant and the Board
of Managers in connection with the execution of this Lease (the
"Nondisturbance Agreement"), the form of which is attached as Exhibit
K hereto, this Lease, and all rights of Tenant under it, are subordinate
and subject to the Condominium Documents, the Ground Lease, and
all present and future ground, master or operating leases, but excluding
any leases of the Unit (including the Premises), and any and all present
and future mortgages, security interests or other security documents
upon or affecting the Unit including the Premises and to all advances
thereunder and all renewals, replacements, modifications, amendments,
consolidations and extensions thereof (all of the foregoing, collectively,
the "Senior Interests," and holders of Senior Interests shall be referred
to as "Senior Interest Holders"), unless any Senior Interest Holder
elects, by written notice to Tenant, that this Lease shall be superior to
such Senior Interest; provided that with respect to any mortgage,
security interest or security document affecting the Unit and including
the Premises, and any renewals, replacements, modifications,
amendments, consolidations and extensions thereof, such Senior
Interest Holder delivers to Tenant a nondisturbance and recognition
agreement which shall be reasonably acceptable to Tenant and such
Senior Interest Holder (it being agreed that such agreement shall be
deemed reasonable if it contains such terms and provisions as are
customary for similar tenants of Comparable Buildings). This Section
13.1 shall be self-operative and no further instrument of subordination
shall be required. In confirmation of such subordination, Tenant shall
within 20 days of demand therefor and after the execution of the
nondisturbance agreement, execute, acknowledge and deliver any
instrument that Landlord, the Board of Managers, any Senior Interest
Holder or any of their respective successors in interest may (in the form
required by the Senior Interest Holder requesting the same) request to
evidence such subordination; provided that such instrument is in a form
customarily delivered in connection with effectuating subordination
provisions, does not increase Tenant's Base Rent or Additional Rent
hereunder and does not materially adversely affect any of Tenant's
rights hereunder or materially increase any of Tenant's obligations or
decrease any of Tenant's remedies under this Lease.
SECTION XIII.2 Attornment. The Board of Managers (as agent for
the unit owners in the Condominium), any other unit owners in the
Condominium or any Senior Interest Holder who succeeds to the rights
of Landlord under this Lease, whether through exercise of remedies or
by operation of law, is sometimes referred to herein as a "Successor
Landlord". Upon a Successor Landlord's succession to the rights of
Landlord under this Lease, at the option of the Successor Landlord,
Tenant shall, subject to the provisions of any nondisturbance or other
agreement which may have been previously executed and delivered
between the Successor Landlord and Tenant, attorn to and recognize
the Successor Landlord as Tenant's landlord under this Lease and shall
promptly execute and deliver any additional instrument that such
Successor Landlord may reasonably request to evidence the
attornment. Upon attornment, this Lease shall continue in full force
and effect and 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.
SECTION XIII.3 Rights and Requirements of Senior Interest Holders.
If any Senior Interest Holder requires any modification of this Lease,
Tenant shall, at Landlord's request, promptly execute, acknowledge
and deliver to Landlord instruments in form satisfactory to Landlord
effecting such modification, provided that such modification does not
increase Tenant's Base Rent or Additional Rent hereunder or materially
adversely (a) affect any of Tenant's rights hereunder or (b) increase any
of Tenant's obligations or decrease any of Tenant's remedies under this
Lease. If any act or omission of Landlord would give Tenant the right,
immediately or after the giving of notice and/or a lapse of time, to
cancel or terminate this Lease, or to claim a partial or total eviction,
Tenant shall not exercise such right until: (i) it has given written notice
of the act or omission to Landlord, the Board of Managers (at its
address specified in Section 16.13) and each Senior Interest Holder
whose name and address had been furnished to Tenant, which notice
shall specifically refer to this Section 13.3 and shall describe Landlord's
default with reasonable detail, specifying the section of this Lease as to
which Landlord is in default, and (ii) either (A) a reasonable period for
remedying the act or omission shall have elapsed following the giving
of such notice and no remedy shall have been commenced or (B) a cure
having been timely commenced ceases to be prosecuted with diligence
and continuity; provided, however, that in no event will such time
exceed the time period, if any, provided in this Lease. If within such
reasonable period, the Board of Managers or such Senior Interest
Holder gives Tenant notice of its intention to remedy the act or
omission and promptly thereafter commences and diligently prosecutes
the required remedial action to completion within the prescribed time
period, Tenant shall have no right to terminate this Lease on account of
the act or omission.
SECTION XIII.4 Estoppel Statements. Tenant shall, within 10 days
following receipt of Landlord's request to do so, execute, acknowledge
and deliver to Landlord a statement in writing certifying to those facts
for which certification has been requested by Landlord or any current
purchaser or Senior Interest Holder, including without limitation, that
(a) 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 describing all such modifications), (b) the dates to which Rent,
Additional Rent and other charges payable hereunder have been paid, if
any, and (c) whether or not to the best knowledge of Tenant, Landlord
is in default in the performance of any covenant, agreement, obligation
or condition contained in this Lease and, if so, specifying in reasonable
detail each such default of which Tenant may have knowledge. The
form of the statement attached hereto as Exhibit L is hereby approved
by Tenant for use pursuant to this Section; provided, however, at
Landlord's option, Landlord shall have the right to use any other form
for such purpose. Any statement delivered by Tenant pursuant to this
Section may be relied upon by any current or prospective purchaser of
the Unit or the Building, any Senior Interest Holder and any assignees
thereof. At Tenant's written request, Landlord shall provide Tenant an
estoppel statement in form and content reasonably satisfactory to
Landlord and Tenant, which shall contain such statements and
reservations as may be customary in estoppel statements of landlords of
Comparable Buildings.
ARTICLE XIV
ASSIGNMENTS AND SUBLEASES
SECTION XIV.1 Prohibition. Tenant shall not mortgage, pledge,
encumber or otherwise hypothecate this Lease or the Premises or any
part thereof in any manner whatsoever without complying with the
provisions of this Article XIV, and any attempt to do so shall be void
and a material breach of this Lease. Tenant shall not, whether
voluntarily, involuntarily, by operation of law or otherwise: (a) assign
or otherwise transfer this Lease; or (b) sublet the Premises or any part
thereof, without in each instance complying with the requirements of
this Article XIV. Any attempt by Tenant to assign or transfer this
Lease (or its term and estate), or sublet the Premises or any part
thereof, without complying with the requirements of this Article XIV
shall be void and a material breach of this Lease. Use or occupancy of
the Premises by a licensee, concessionaire, or any Person other than
Tenant is a sublease subject to this Article XIV. Notwithstanding the
foregoing, Tenant shall have the right without Landlord's consent or
otherwise complying with this Article XIV at any time and from time
to time to assign this Lease or sublease all or a portion of the Premises
to an Affiliate of Tenant in accordance with Section 14.8 or to an
Occupant pursuant to Section 14.9.
SECTION XIV.2 Corporate and Partnership Transactions. If Tenant
is a corporation, a dissolution of Tenant or Tenant's merger or
consolidation with or into another Person shall be deemed an
assignment of this Lease subject to this Article XIV, unless the
successor has a Net Worth in an amount no less than the Minimum Net
Worth or Tenant provides a letter of credit as contemplated in Article
XXIV immediately prior to and after such merger or consolidation;
provided, however, that a principle purpose of such merger or
consolidation is not the assignment of this Lease in contravention of
this Article XIV. Proof satisfactory to Landlord of such net worth shall
be delivered to Landlord at least 30 days prior to the effective date of
any such transaction. If Tenant is a partnership, a dissolution of the
partnership or a transfer of the controlling interest in Tenant (including
the admission of new partners or withdrawal of existing partners having
a controlling interest) shall be deemed an assignment of this Lease
subject to the provisions of this Article XIV, regardless of whether the
transfer is made by one or more transactions, or whether one or more
Persons hold the controlling interest prior to the transfer or afterwards.
Landlord expressly agrees that, if Tenant is a corporation, a transfer of
the voting stock of Tenant or the parent corporation of Tenant by one
or more Persons (whether in a single transaction or in a series of related
or unrelated transactions) shall not be deemed an assignment of this
Lease subject to this Article XIV.
SECTION XIV.3 Landlord's Recapture Rights.
XIV.3.1 Sublease of Part of Premises. Whenever Tenant desires to
sublease less than All or Substantially All of the Premises (for purposes
of this Article XIV "All or Substantially All of the Premises" shall, at
any time, mean any space in excess of 75% of the Premises Area at
such time) for any period of time, Tenant shall give notice thereof to
Landlord, which notice shall comply with the provisions of Section
14.4 and shall be accompanied by a floor plan of the portion of the
Premises to be sublet and a statement of the proposed commencement
date of such sublease (the "Target Date"). The notice shall constitute
an offer from Tenant (the "Offer") for Landlord, at Landlord's option,
exercisable in Landlord's sole discretion, to terminate this Lease with
respect to the space covered by the Offer. Landlord may exercise this
option by notice to Tenant at any time within 10 Business Days after
receipt of the Offer, and during this 10 Business Day period, Tenant
shall not sublet the space covered by the Offer to any Person. The
Target Date shall be not earlier than 45 days and not later than 365
days after the date of the Offer. If Landlord exercises its option to
terminate this Lease with respect to the space covered by the Offer,
then this Lease shall terminate, as to that space, on the Target Date set
forth in such Offer but Landlord, as a continuing obligation, shall pay
Tenant the Net Sublease Profits in accordance with the provisions of
Section 14.6 hereunder and this provision shall survive any whole or
partial termination of this Lease. The Rents shall be prorated and paid
through the termination date. Thereafter the Base Rent shall be
reduced by the amount of Base Rent attributable to the space covered
by the Offer, and Tenant's Share shall be reduced in the proportion that
the Rentable Area of the space covered by the Offer bears to the
Premises Area. If Landlord does not exercise its option to terminate
this Lease with respect to the space covered by the Offer, Tenant may
sublease the space covered by such Offer; provided, however, that (a)
Tenant must obtain Landlord's consent (or deemed consent in
accordance with Section 14.4 below) pursuant to Section 14.4, (b) the
commencement date of such sublease shall not be earlier than the
Target Date set forth in such Offer, (c) Tenant must comply with the
applicable provisions of this Article XIV, including Section 14.5.2, and
(d) Net Sublease Profits shall be split as set forth in Section 14.6.
XIV.3.2 Sublease of All of Premises; Assignment. Whenever (a)
Tenant desires to sublease All or Substantially All of the Premises for
any period of time, or (b) Tenant desires to assign this Lease, Tenant
shall give notice thereof to Landlord, which notice shall comply with
the provisions of Section 14.4 and shall be accompanied by a statement
of the proposed commencement date of such sublease or the proposed
effective date of such assignment, as the case may be (in either case, the
"Target Date"). The notice shall constitute an offer from Tenant (the
"Offer") for Landlord, at Landlord's option, exercisable in Landlord's
sole discretion, to terminate this Lease.
XIV.3.2.1 Landlord may exercise this option by notice to Tenant at
any time within 10 Business Days after receipt of the Offer, and during
this 10 Business Day period Tenant shall not assign this Lease or sublet
the space covered by the Offer to any Person. The Target Date shall
be not earlier than 45 days and not later than 365 days after the date of
the Offer.
XIV.3.2.2 If Tenant proposes in the Offer either to assign this Lease
or to sublet All or Substantially All of the Premises, and Landlord
elects to terminate this Lease, then this Lease shall terminate on the
Target Date set forth in such Offer, and the Rents shall be prorated and
paid through the termination date, except that Landlord, as a
continuing obligation, shall pay the Net Sublease Profits and Net
Assignment Profits in accordance with the provisions of Section 14.6
hereunder.
XIV.3.2.3 If the Offer was made under clause (a) of Section 14.3.2
and Landlord does not exercise its option to terminate this Lease,
Tenant may sublease All or Substantially All of the Premises; provided
however, that (a) Tenant must obtain Landlord's consent pursuant to
Section 14.4 (or deemed consent in accordance with Section 14.4
below), (b) the commencement date of such sublease shall not be
earlier than the Target Date set forth in such Offer, (c) Tenant must
comply with the applicable provisions of this Article XIV, including
Section 14.5.2 and (d) Net Sublease Profits shall be split as set forth in
Section 14.6.
XIV.3.2.4 If the Offer was made under clause (b) of Section 14.3.2
and Landlord does not exercise its option to terminate this Lease,
Tenant may assign this Lease; provided, however, that (a) Tenant must
obtain Landlord's consent pursuant to Section 14.4 and (b) the effective
date of such assignment is no earlier than the Target Date set forth in
such Offer.
SECTION XIV.4 Consent by Landlord. Tenant may not enter into
any sublease or assignment without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, delayed or
conditioned. Landlord's consent shall be deemed to have been given if
Landlord does not accept Tenant's offer pursuant to Section 14.3.1 or
Section 14.3.2 unless Landlord sets forth in reasonable detail the
reasons why the proposed subtenant or assignee was rejected within
the 10 Business Day period provided by Section 14.3.1 and Section
14.3.2.1 above; provided that the 10 Business Day period shall not
commence until Landlord has received all of the materials and
information required in accordance with the last paragraph of this
Section 14.4 but only if Landlord's request is promptly made after
initial delivery. By way of example but not as a limitation, withholding
such consent shall be deemed reasonable if one or more of the
following conditions apply:
(a) The business of the proposed assignee or subtenant or its use
of the Premises, or the relevant portion thereof, is not consistent with
the Permitted Use or, in Landlord's reasonable judgment, in keeping
with the standards of Comparable Buildings; or
(b) The proposed assignee or subtenant is not a reputable Person
of good character and, as to an assignee, with sufficient assets and
income, in Landlord's reasonable judgment, to bear the financial
responsibilities under the proposed assignment or Landlord has not
been furnished with reasonable proof thereof; or
(c) The proposed assignee or sublessee, or any Person who
directly or indirectly, controls, is controlled by, or is under common
control with, the proposed assignee or sublessee, is an occupant of any
part of the Building at the time Tenant requests such consent; or
(d) The proposed assignee or sublessee negotiated with Landlord
to lease space in the Unit (or with other unit owners to lease any other
space in the Building) within 6 months prior to the time Tenant
requests such consent; or
(e) The form of the proposed sublease does not comply with the
applicable provisions of this Article XIV; or
(f) Excluding Occupants pursuant to Section 14.9 below, there
would be more than two (2) Persons per floor occupying the Premises
with separate ingress and egress, including Tenant and the proposed
subtenant, but in any event in accordance with the Condominium
Documents; provided that in the event more than two (2) Persons per
floor are permitted by the Condominium Documents to occupy the
Premises, Landlord agrees to enforce its rights under the Condominium
Documents in accordance with Section 16.25 below and, in any event,
to seek the approval of the Condominium Board.
Whenever Tenant seeks Landlord's consent under this Section 14.4,
Tenant shall request the consent of Landlord in writing; and such
request shall be accompanied by, in addition to those items required by
Section 14.3, (i) an executed copy of the proposed sublease or
assignment as to which Landlord's consent is sought and, in the case of
an assignment, an executed copy of the assumption agreement required
by Section 14.5.1, (ii) a statement setting forth in reasonable detail the
identity of the proposed sublessee or assignee, as the case may be, and
the nature of its business, (iii) financial statements or other evidence,
reasonably satisfactory to Landlord, of the financial condition of the
proposed assignee and all other current financial information with
respect to the proposed assignee in Tenant's possession, and (iv) any
other information reasonably requested by Landlord.
SECTION XIV.5 Miscellaneous.
XIV.5.1 Miscellaneous. No assignment of this Lease shall be valid or
binding on Landlord unless and until the assignee executes and delivers
to Landlord an agreement in form and substance satisfactory to
Landlord, whereby the assignee assumes and agrees to be bound by all
of the provisions of this Lease and to perform all of the obligations of
Tenant hereunder. Notwithstanding any assignment or sublease to any
other Person, Tenant shall remain fully liable for the payment of Rents
and for the performance of all the other obligations of Tenant contained
in this Lease. Any act or omission of an assignee or subtenant or any
Person claiming under or through any of them that violates this Lease
shall be deemed a violation of this Lease by Tenant. The consent by
Landlord to any assignment or sublease shall not relieve Tenant or any
Person claiming through or under Tenant of the obligation to obtain the
consent of Landlord, pursuant to the provisions of this Article XIV, to
any future assignment or sublease. If Landlord declines to give its
consent as required under this Lease to any proposed assignment or
sublease under circumstances where Landlord is entitled to do so under
this Lease, or if Landlord exercises any of its options under Section
14.3, Tenant shall indemnify, defend (with counsel reasonably
satisfactory to Landlord) and hold Landlord harmless against and from
any and all loss, liability, damages, costs and expenses (including
reasonable attorneys' fees and disbursements) resulting from any claims
that may be made against Landlord by any Person that claims it was
damaged by Landlord's actions, including any proposed assignee or
sublessee, or any broker or other Person claiming a commission or
similar compensation in connection with the proposed assignment or
sublease.
XIV.5.2 General Sublease Provisions. With respect to each and every
sublease authorized by Landlord under the provisions of this Article
XIV, it is further agreed that:
(a) The term of the sublease must end no later than one day prior
to the last day of the Term;
(b) Each sublease shall provide that (i) it is subject and subordinate
to this Lease and all interests to which this Lease is subordinate
(including, without limitation, the Ground Lease); (ii) Landlord may
enforce the provisions of the sublease, including collection of rents; (iii)
on termination of this Lease or surrender of this Lease with Landlord's
written consent or re-entry or repossession of the Premises by
Landlord, Landlord may, at its option, take over all of the right, title
and interest of Tenant, as sublessor, under such sublease, and such
sublessee shall, at Landlord's option, attorn to Landlord but that
nevertheless Landlord shall not be: (A) liable for any previous act or
omission of Tenant under such sublease; (B) subject to any defense or
offset previously accrued in favor of the sublessee against Tenant; (C)
bound by any previous modification of such sublease made without
Landlord's written consent or by any previous prepayment of more
than 1 month's rent; or (D) liable for the return of any deposit, rental
security or any other sums deposited by such sublessee with Tenant
except to the extent such sums have been paid over to Landlord; and
(c) Each sublease shall include a provision (i) requiring the
subtenant thereunder to waive its right of recovery against Landlord,
Tenant and the Board of Managers in substantially the same manner as
Landlord and Tenant have waived such right pursuant to Paragraph 5
of Exhibit I, (ii) requiring the subtenant thereunder to secure an
appropriate clause in, or an endorsement upon, each property insurance
policy insuring the Improvements in the subleased premises or such
subtenant's property therein pursuant to which the insurance company
agrees that such subtenant's waiver of its and its insured's right of
recovery against Landlord, Tenant and the Board of Managers shall not
affect the validity or enforceability of the subtenant's insurance
coverage and (iii) providing that if such a clause or endorsement is
obtainable only upon payment of an additional premium, the subtenant
shall obtain such clause or endorsement and pay such additional
premium.
Any material modification or amendment to a sublease of the Premises
shall be deemed a proposed sublease subject to the terms of this Article
XIV. Tenant shall reimburse Landlord on demand for any reasonable
costs that Landlord may incur in connection with any proposed
assignment or sublease, including, without limitation, the costs of
making investigations as to the acceptability of the proposed assignee
or subtenant, and legal fees and expenses incurred in connection with
any request for consent. Tenant shall not include the rent at which the
Premises or any portion thereof is being offered in any advertisement of
such space, unless the rent being offered by Tenant for the Premises (or
any portion thereof) is greater than the then current Rent of the
Premises (including, without limitation, any Base Rent and Additional
Rent due hereunder).
SECTION XIV.6 Additional Charges.
(a) If Landlord shall consent to any assignment or subletting of
this Lease, Tenant shall, in consideration therefor, pay to Landlord, as
Additional Rent, an amount equal to 50% of the Net Assignment
Profits (in the case of an assignment) or 50% of the Net Sublease
Profits (in the case of a sublet), which amount shall be paid to Landlord
within 10 days of Tenant's receipt thereof.
(b) If Landlord elects to exercise its right to recapture pursuant to
Section 14.3, Landlord shall pay to Tenant an amount equal to 50% of
the Net Assignment Profits (in the case of an assignment) or 50% of
the Net Sublease Profits (in the case of a sublet). Any such payments
shall be made within ten (10) days after Landlord's receipt of any such
Net Assignment Profits and/or Net Sublease Profits. This obligation
shall survive termination of this Lease.
(c) The "Net Assignment Profits" shall mean an amount equal to
(a) all sums and other consideration paid to Tenant (or paid to
Landlord in the case of Landlord's recapture; it being understood that
in the case of a recapture by Landlord, the Net Sublease Profits or Net
Assignment Profits, as the case may be, shall be the Net Sublease
Profits or Net Assignment Profits had Tenant gone forward with its
proposed assignment and/or sublet) by an assignee for or in connection
with such assignment (including sums paid for the purchase or rent of
Tenant's Property and all or any part of the Improvements less, in the
case of a sale thereof, an amount equal to the fair market value of
Tenant's Improvements) less (b) Expenses incurred in connection with
such assignment (for purposes of this Article XIV, "Expenses" in
connection with an assignment or sublease shall mean all brokerage
commissions, legal, accounting and other professional fees, marketing
and advertising costs, takeover expenses and cash contributions or
alteration expenses incurred, or to be incurred, by Tenant (or incurred
by Landlord in the case of Landlord's recapture) (including, without
limitation, lease takeover and moving expenses and the cost of all
subtenant improvements and other tenant inducements, to the extent
same are actually paid by Tenant or Landlord, as the case may be) in
connection with such assignment or sublease). The "Net Sublease
Profits" shall mean the excess for any period during the term of the
relevant sublease (but in no event later than September 30, 2013) of (i)
the sum of (A) all rent, additional charges and other consideration paid
to Tenant (or paid to Landlord in the case of Landlord's recapture; it
being understood that in the case of a recapture by Landlord, the Net
Sublease Profits or Net Assignment Profits, as the case may be, shall be
the Net Sublease Profits or Net Assignment Profits had Tenant gone
forward with its proposed assignment and/or sublet) by a subtenant for
or in connection with such subletting (including consideration paid for
the purchase or rent of Tenant's Property and all or any part of the
Improvements less, in the case of a sale thereof, an amount equal to the
fair market value of Tenant's Improvements) (but excluding therefrom
any sums received as a security deposit under any such sublease) less
(B) Expenses incurred in connection with such subletting over (ii) the
Rents paid for the subleased space.
SECTION XIV.7 Acceptance of Rent. If this Lease is assigned,
whether or not in violation of the provisions of this Lease, Landlord
may collect rent from the assignee. If the Premises or any part thereof
are sublet, whether or not in violation of this Lease, Landlord may,
after default by Tenant and expiration of Tenant's time to cure such
default, collect rent from the sublessee. In either event, Landlord may
apply the net amount collected to payment of Rents, but no such
assignment, subletting, or collection shall be deemed a waiver of any of
the provisions of this Lease, an acceptance of the assignee or sublessee
as a lessee, or a release of Tenant from the performance by Tenant
under this Lease.
SECTION XIV.8 Affiliates and Successors. Notwithstanding
anything to the contrary contained in this Article XIV, Tenant may
assign this Lease and sublease all or any part of the Premises to any
Affiliate of Tenant without obtaining Landlord's consent but subject to
all of the other provisions of this Article XIV except for Section 14.3
and Section 14.6 which shall not apply. For purposes of this Article
XIV, "Affiliate of Tenant" shall mean (a) any Person directly or
indirectly controlling, controlled by, or under common control with,
Tenant, or (b) any Person in which Tenant owns at least 51% of the
equity and voting interests (for purposes of this definition "control"
(including with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the legal right to
direct or cause the direction of the management and policies of that
Person, whether through the ownership of voting securities, by
contract, or otherwise).
SECTION XIV.9 Desk Space Arrangements. Notwithstanding
anything to the contrary contained in this Article XIV, Tenant shall
have the right, without obtaining the Landlord's or the Board of
Managers' consent, to permit the use or occupancy of desk space in no
more than 25 % of the usable square footage of the Premises (exclusive
of the First Expansion Space and the Second Expansion Space, if any)
by persons or entities (collectively defined as the "Occupants") without
such arrangement being deemed a sublet or assignment or otherwise
subject to the provisions in this Article XIV (it being agreed that if
Tenant exercises the First Expansion Option or the Second Expansion
Option, such Occupants may be located on the 14th floor); provided,
that
(i) such arrangement will terminate upon termination of this Lease
by Landlord for Tenant's default under this lease beyond notice and
time to cure;
(ii) no Occupant's use of the Premises shall be a Prohibited Use;
(iii) except for the right permitted in this Section 14.9, in no event
shall the use of any portion of the Premises by an Occupant create or
be deemed to create any right, title or interest in or to the Premises;
(iv) while the portion of the Premises occupied by an Occupant
may be separated by demising walls of a temporary or permanent
nature, ingress and egress to such space must be through the Premises
only and not directly to the elevator lobby;
(v) Tenant uses all reasonable efforts to assure that all Occupants
shall be of similar appearance and demeanor to those occupying the
Premises as employees or Affiliates of Tenant;
(vi) there shall be no separate identification of any Occupant in the
lobby of the Building (other than listings in the Building Directory and
in the elevator lobby);
(vii) each Occupant (a) shall be either a member of the financial
service industry or a provider of services to the financial service
industry, and (b) shall be receiving services from or deriving economic
benefit from, or rendering services to or supplying economic benefit to,
Tenant, including brokers clearing their securities transactions through
Tenant;
(viii) the primary business relationship between Tenant and each
Occupant shall relate to the financial services industry and not the use
or occupancy of desk space; and
(ix) Occupant will satisfy the leasing standards set forth in Section
18(b) 1-3 and 5 of the Declaration.
SECTION 14.11 Transaction with the IDA. (a) The Landlord
acknowledges that in order to receive Further Benefits (as defined
below), Tenant is planning to sublease the Premises to The Industrial
Development Agency of the City of New York (the "IDA") and the
IDA will then sub-sublease the Premises to Tenant. Tenant covenants
that the sublease to the IDA will not give the IDA any right to occupy
the Premises at any time.
(b) Before entering into the sublease or sub-sublease transaction
described above, Tenant will obtain the consent of Landlord, which
consent shall not be unreasonably withheld or delayed. Landlord
agrees (i) to deliver evidence of its consent to such sublease and sub-
sublease in the form required by the IDA subject to such terms and
conditions as are reasonably satisfactory to Landlord and Tenant and
(ii) to waive the applicability of Section 14.2, Section 14.3, Section
14.4(a),(b),(e) and (f) (including item (iii) in the last paragraph of
Section 14.4), Section 14.5.2(b)(ii)-(iii), Section 14.5.2(c), Section
14.6, and Section 14.7 of the Lease to such sublease and sub-sublease
between Tenant and the IDA; provided that (a) the consent
contemplated in the first sentence of this Section 14.11(b) is given and
(b) Tenant delivers to Landlord an indemnity in form and substance
reasonably satisfactory to Landlord and Tenant which shall indemnify
and hold harmless Landlord and its officers, directors, agents,
principals, and employees against any loss, cost, liability, claims,
damages and expenses incurred in connection with or arising from the
sublease or sub-sublease between Tenant and the IDA.
ARTICLE XV
CONDITIONAL LIMITATIONS
SECTION XV.1 Conditional Limitations. The Lease and the estate
hereby granted are subject to the limitations that (each of the following
being hereinafter referred to as an "event of default," a "default," an
"Event of Default," or a "Default," as the context so requires):
XV.1.1 If Tenant shall fail to pay any portion of Base Rent or
Additional Rent when due and such failure shall continue for 5
Business Days after notice thereof by Landlord to Tenant;
XV.1.2 If Tenant shall fail to observe and perform any provision of
this Lease (other than those specifically mentioned in this Section 15.1)
to be observed or performed by Tenant and such failure continues for
30 days after notice thereof by Landlord to Tenant, unless, if the nature
of such failure is such that it cannot reasonably be cured within such 30
day period, (a) within that aforesaid 30 day period Tenant notifies
Landlord that it intends to cure such failure and actually commences to
cure such failure, and (b) Tenant thereafter diligently proceeds to
complete such cure within a reasonable time not to exceed 90 days;
XV.1.3 [Intentionally Deleted.]
XV.1.4 If Tenant shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due;
XV.1.5 If Tenant shall commence or institute any case, proceeding or
other action (a) seeking relief on its behalf as debtor or to adjudicate it
a bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts under any existing or future Law of
any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, or (b) seeking
appointment of a receiver, trustee, custodian or other similar official for
it or for any part of its property;
XV.1.6 If Tenant shall make a general assignment for the benefit of
creditors;
XV.1.7 If any case, proceeding or other action shall be commenced or
instituted against Tenant (a) seeking to have an order for relief entered
against Tenant as debtor or to adjudicate it a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts under any existing or future Law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief
of debtors, or (b) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any part of its property, which
(i) results in any such entry of an order for relief, adjudication of
bankruptcy or insolvency or such an appointment or the issuance or
entry of any other order having a similar effect, or (ii) is not contested,
in good faith, by Tenant within 14 Business Days of the date such case,
proceeding or other action is instituted (or such shorter time period as
may be prescribed by local bankruptcy rule, the bankruptcy court or
other applicable law) or (iii) remains undismissed for a period of 60
days;
XV.1.8 If Tenant shall take any action in furtherance of, or indicating
its consent to, or approval of, any of the acts set forth in Section
15.1.7;
XV.1.9 If, in violation of Article XIV, this Lease shall be hypothecated
or assigned or if the Premises shall be sublet;
XV.1.10 If Tenant shall fail to execute, acknowledge and deliver to
Landlord (a) any statement required under Section 13.4 within the time
periods specified therein or (b) any documents or instruments required
under either Section 13.1 or Section 13.2 within the time periods
specified therein after 10 day written notice to Tenant and 5 Business
Days to cure such failure; or
XV.1.11 If the Premises shall become deserted or abandoned for a
period of 30 consecutive days other than for reasons beyond Tenant's
reasonable control such as Force Majeure or if Tenant fails to take
occupancy of the Premises within 180 days after Substantial
Completion of Landlord's Work, it being agreed that the fact that any
of Tenant's Property remains in the Premises shall not be evidence that
Tenant has not vacated or abandoned the Premises;
then, in any of such events, Landlord may, at any time thereafter, give
notice to Tenant stating that this Lease and the Term shall
automatically expire and terminate on the date specified in such notice,
which date shall be 5 Business Days after the giving of such notice, and
upon the expiration of such 5 Business Day period, this Lease and the
Term and all rights of Tenant under this Lease shall automatically
expire and terminate as if the date on which such 5 Business Day
period expires were the Expiration Date herein definitely fixed, and
Tenant immediately shall quit and surrender the Premises to Landlord.
Notwithstanding anything to the contrary contained herein, if such
automatic termination shall be stayed by operation of law or by order
of any court having jurisdiction over any proceeding described in
Section 15.1.5 or 15.1.7, or by Federal or state statute, then, such
automatic termination shall be effective upon the expiration or lifting of
any such stay, and, if such automatic termination shall not be given
effect (by order of a court having jurisdiction over such proceeding or
otherwise), then, Landlord, to the extent permitted by law or by leave
of such court, shall have the right to terminate this Lease on 5 Business
Days' notice to such trustee or Tenant or Tenant as debtor-in-
possession. Upon the expiration of such 5 Business Day period, this
Lease shall expire as aforesaid.
SECTION XV.2 Remedies and Damages.
XV.2.1 Surrender and Re-Entry. If (a) Tenant shall fail to pay Base
Rent or Additional Rent when due and such failure shall continue for
the number of days specified in Section 15.1 after notice thereof from
Landlord to Tenant or (b) this Lease shall expire and terminate as
provided in Section 15.1, then, in either such case, Tenant shall
immediately quit and peacefully surrender the Premises to Landlord,
and Landlord and its agents may immediately, or at any time thereafter,
without further notice, re-enter the Premises, either by summary
proceedings or by any other applicable action or proceeding or
otherwise, and remove all Persons and property from the Premises.
The removed property may be stored in a public warehouse or
elsewhere at the cost of and for the account of Tenant. The terms "re-
enter," "re-entry" or "re-entered" as used in this Lease shall not be
deemed to be restricted to their technical legal meanings.
If (a) Landlord shall have re-entered the Premises as provided in
Section 15.2.1 or (b) this Lease shall have terminated and expired as
provided in Section 15.1, then, in either such case, Landlord may relet
the Premises from time to time, either in the name of Landlord or
otherwise, to such tenant or tenants, for such term or terms ending
before, on or after the then next succeeding Expiration Date, at such
rental or rentals and upon such other conditions (that may include
concessions and free rent periods) as Landlord may determine;
provided, however, that Landlord shall not be liable for refusal or
failure to relet the Premises, or, in the event of any such reletting, for
refusal or failure to collect any rent due upon any such reletting, and no
such refusal or failure shall operate to relieve Tenant of any liability
under this Lease or otherwise affect any such liability. Landlord may
make such repairs, replacements, alterations, additions, improvements,
decorations and other physical changes in and to the Premises as
Landlord, in its sole discretion, considers advisable or necessary in
connection with any such reletting or proposed reletting, without
relieving Tenant of any liability under this Lease or otherwise affecting
any such liability.
XV.2.2 Waiver of Notice and Redemption. Tenant hereby waives (a)
the service of any notice of intention to reenter; and (b) all rights of
Tenant to redeem the Premises or to restore the operation of this Lease
after Tenant shall have been dispossessed or ejected therefrom by
process of law or under the terms of this Lease or after any expiration
or termination of this Lease, whether such dispossess, ejection,
expiration or termination shall be by operation of law or pursuant to the
provisions of this Lease.
XV.2.3 Damages. If this Lease and the Term shall terminate as
provided in Section 15.1 or if Landlord shall re-enter the Premises as
provided in Section 15.2.1 hereof, then, in either such event:
(a) Tenant shall pay to Landlord all Base Rent and Additional Rent
to the date upon which this Lease and the Term shall have expired or
to the date of re-entry upon the Premises by Landlord, as the case may
be;
(b) Tenant also shall pay to Landlord, as damages, any deficiency
(a "Deficiency") between the Rents for the period that otherwise would
have constituted the unexpired portion of the Term and the net
amount, if any, of rents collected under any reletting effected pursuant
to the provisions of Section 15.2.1 for any part of such period (first
deducting from the rents collected under any such reletting all of
Landlord's expenses in connection with the termination of this Lease,
Landlord's re-entry upon the Premises and such reletting including all
repossession costs, brokerage commissions, attorneys' fees and
disbursements, alteration costs and other expenses of preparing the
Premises for such reletting, without duplication and only to the extent
such expenses have not already been paid to Landlord through prior
court proceedings or otherwise); any such Deficiency shall be paid in
monthly installments by Tenant on the days specified in this Lease for
payment of installments of Base Rent, and Landlord shall be entitled to
recover from Tenant each monthly Deficiency as the same shall arise,
and no suit to collect the amount of the Deficiency for any month shall
prejudice Landlord's right to collect the Deficiency for any subsequent
month by a similar proceeding; and
(c) whether or not Landlord shall have collected any monthly
Deficiency as aforesaid, Landlord shall be entitled to recover from
Tenant, and Tenant shall pay to Landlord on demand in lieu of any
further Deficiency as and for liquidated damages, a sum equal to the
amount by which the Rents for the period that otherwise would have
constituted the unexpired portion of the Term exceeds the then fair
market rental value of the Premises for the same period (first deducting
from such fair market rental value all of Landlord's expenses in
connection with the termination of this Lease, Landlord's re-entry upon
the Premises and reletting costs, if any, including all repossession costs,
brokerage commissions, attorney's fees and disbursements, alteration
costs and other expenses of preparing the Premises for reletting, but
only to the extent such expenses have not already been paid to
Landlord through prior court proceedings or otherwise), both
discounted to present value at the rate of 6% per annum, less the
aggregate amount of Deficiencies theretofore collected by Landlord for
the same period; provided, however, that if, before presentation of
proof of such liquidated damages to any court, commission or tribunal,
the Premises, or any part thereof, shall have been relet by Landlord for
the period that otherwise would have constituted the unexpired portion
of the Term, or any part thereof, the amount of rent reserved upon
such reletting shall be deemed, prima facie, to be the fair market rental
value for the part of the Premises so relet during the term of the
reletting. For purposes of the preceding sentence, the amount of rent
reserved shall be the average of all Rent reserved under the new lease
divided by the number of months of such lease, as discounted to
present value at the rate of 6% per annum.
XV.2.4 Rents from Reletting. If the Premises shall be relet together
with other space in the Unit, the rents collected or reserved under any
such reletting and the expenses of any such reletting shall be equitably
apportioned. Tenant shall not be entitled to any rents collected or
payable under any reletting, whether or not such rents shall exceed the
Rents reserved in this Lease. Nothing contained in this Article XV
shall be deemed to limit or preclude the recovery by Landlord from
Tenant of the maximum amount allowed to be obtained as damages by
any Laws, or of any sums or damages to which Landlord may be
entitled in addition to the damages set forth in Section 15.2.
XV.2.5 Monies Received. Any monies received by Landlord from or
on behalf of Tenant during the pendency of any proceedings between
Landlord and Tenant shall be deemed paid as compensation for the use
and occupation of the Premises, and the acceptance of any such
compensation by Landlord shall not be deemed an acceptance of Rents
or a waiver on the part of Landlord of any rights hereunder.
XV.2.6 Equitable Remedies. Following a breach or threatened breach
by Tenant of any of the provisions hereof, Landlord shall have the right
to seek injunctive relief and the right to invoke any remedy allowed at
law or in equity as if re-entry, summary proceedings and other
remedies were not herein provided.
SECTION XV.3 Waiver of Trial by Jury and Counterclaims.
Landlord and Tenant each waive trial by jury in any action, proceeding
or counterclaim brought by either of them against the other on any
matters arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant or Tenant's use or occupancy of
the Premises or the operation, maintenance or control of the Building.
Tenant shall not interpose any counterclaim it may otherwise assert in
any summary proceeding whether such summary proceeding is based
on nonpayment of Rents or on Tenant's holding over after expiration of
the Term or on any other basis pursuant to Article 7 of the Real
Property Actions and Proceedings Law of the State of New York,
unless by not interposing such counterclaim Tenant would be barred
from asserting such counterclaim in a separate action or proceeding.
SECTION XV.4 Partial Payment; No Waiver. No payment by Tenant
or receipt or acceptance by Landlord of a lesser amount than the full
Rents due hereunder shall be deemed to be other than a payment on
account, nor shall any endorsement or statement on any check or any
letter accompanying any check or payment be deemed an accord and
satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance, treat such partial
payment as a default or pursue any other remedy provided in this Lease
or at law or in equity. If at any time Tenant shall pay Landlord less
than the full amount of Rents then due, Landlord shall have the right to
apply such payment to any item or items of Rents that Landlord, in its
discretion, deems appropriate. No consent or waiver, express or
implied, by Tenant or Landlord of any breach of any obligation of the
other party shall be construed as a consent or waiver to or of any other
breach of the same or any other obligation. The failure of Landlord at
any time to insist upon the strict performance of any obligation of
Tenant or to exercise any right or remedy herein contained (including
the right to make any demand upon Tenant for payment of any
Additional Rent due hereunder) shall not be construed as a waiver or
relinquishment of the performance of such obligation or of the right to
exercise any right or remedy in the future. The receipt or acceptance
by Landlord of Rents or the payment by Tenant of Rents with
knowledge of a breach by the other party of any term of this Lease
shall not be deemed a waiver of such breach. The rights and remedies
of Landlord provided in this Lease for a breach by Tenant are
cumulative and not exclusive, and the exercise by Landlord of any
other right or remedy it may have shall not preclude the concurrent or
subsequent exercise of any other right or remedy it may have pursuant
to this Lease, at law or in equity.
SECTION XV.5 Landlord's Right to Cure. Landlord may, but shall
not be obligated to, cure any default by Tenant under this Lease at any
time after notice and the lapse of any cure period included within the
conditional limitation to which such default relates, without giving
further notice. Whenever Landlord so elects, all costs and expenses
incurred by Landlord in curing any such default, including attorneys'
fees and disbursements and, in the case of a default under Section 5.2,
investigation and remediation costs, together with interest at the
Interest Rate on the amount of costs and expenses so incurred
commencing on the day such costs are paid by Landlord, shall be paid
by Tenant to Landlord as Additional Rent within 20 days of demand.
SECTION XV.6 Effect of Re-Entry. The mere re-entry or taking
possession of the Premises by Landlord shall not be construed as an
election to terminate this Lease.
SECTION XV.7 Payment of Landlord's Expenses. All costs and
expenses, including attorneys' fees (whether or not legal proceedings
are instituted), involved in collecting Rents or enforcing the obligations
of Tenant under this Lease, including the cost and expense of
instituting and prosecuting legal proceedings or recovering possession
of the Premises after breach by Tenant or upon expiration or earlier
termination of this Lease, to the extent such costs and expenses have
not already been paid as a Deficiency or as liquidated damages under
Section 15.2.3, shall be due and payable by Tenant as Additional Rent
within 20 days of demand; provided, however, Tenant shall not be
obligated to pay any cost or expense to the extent such dispute is
resolved favorably to Tenant.
SECTION XV.8 Waiver of Bankruptcy Provisions. Tenant hereby
waives on behalf of its partners, shareholders or any Person having a
direct or indirect interest in Tenant including, without limitation, any
guarantor of Tenant's obligations hereunder, any and all rights which
may be available to such Person under Section 502(b)(6) of the United
States Bankruptcy Code or any other provision of any similar state or
federal bankruptcy law providing for the limitation or reduction of
damages which would otherwise be recoverable from such Person or
rights or remedies available against such Person under this Lease, at
law or in equity, in the event any case, proceeding or other action of
the type referred to in Section 15.1.5 or Section 15.1.7 hereof shall be
commenced by or against Tenant.
ARTICLE XVI
MISCELLANEOUS
SECTION XVI.1 Quiet Enjoyment. So long as Tenant timely pays all
the Rents and performs all of Tenant's other obligations hereunder
within the time periods required under this Lease, Tenant shall
peaceably and quietly hold and enjoy the Premises during the Term
without hindrance or ejection by Landlord or any person lawfully
claiming through or under Landlord, subject, nevertheless, to the
provisions of this Lease. This covenant is a covenant running with the
land and is subject to Section 12.2.
SECTION XVI.2 Broker. Each of Landlord and Tenant represents to
the other that it has dealt with no broker in connection with this Lease
other than Landlord's Broker and Tenant's Broker. Commissions, if
any, due to Landlord's Broker and/or Tenant's Broker shall be paid by
Landlord pursuant to a separate agreement. Each of Landlord and
Tenant agrees to indemnify, defend and hold harmless the other from
and against any claims, based or alleged to be based upon the acts or
omissions of the indemnifying party, for any brokerage commission or
finder's fee with respect to this Lease by persons other than Landlord's
Broker or Tenant's Broker, and for all costs, expenses and liabilities
incurred in connection with such claims, including attorneys' fees and
disbursements arising out of a breach of the foregoing representation.
SECTION XVI.3 Recording. Simultaneous with the execution and
delivery of this Lease, Landlord and Tenant have executed and
delivered to each other, a Memorandum of Lease (the
"Memorandum") substantially in the form of Exhibit R annexed hereto.
At any time after this Lease is released from escrow under the Lease
Escrow Agreement, Tenant may, at its sole cost and expense
(including, without limitation, all recording fees and taxes), record the
Memorandum, provided that (a) prior to such recordation (i) Tenant
has delivered a fully-executed Termination of Memorandum of Lease
(the "Termination") substantially in the form of Exhibit S annexed
hereto and otherwise satisfactory to Landlord, which Termination shall
be held in escrow by Sidley & Austin, or such other firm of attorneys
generally representing Landlord ("Escrow Agent"), under an escrow
agreement (the "Escrow Agreement") substantially in the form of
Exhibit T annexed hereto and otherwise satisfactory to Landlord and
(ii) any consents required to be obtained from the Board of Managers
in accordance with the Condominium Documents relating to this
Lease, the Memorandum or otherwise shall have been previously
obtained and, (b) after such recordation, Tenant shall deliver to
Landlord a copy of the Memorandum with the recording information
contained therein, and (c) Escrow Agent shall be authorized pursuant
to the Escrow Agreement, without further authorization from Tenant,
to record the Termination, at Tenant's sole cost and expense (including,
without limitation, all recording fees and taxes) on any date after the
Expiration Date. Landlord and Tenant shall, at either party's request,
execute all instruments, including, without limitation, tax forms and
affidavits, which are required by law to be signed by Landlord and/or
Tenant in order to record the Memorandum and/or the Termination.
Tenant shall not record this Lease or any memorandum thereof (other
than the Memorandum in accordance with this Section 16.3). In the
event that Landlord transfers its interest in the Unit (including the
Premises) to another Person in accordance with Section 12.12 prior to
the recordation of the Memorandum, such transfer shall be contingent
on the transferee assuming the obligations of Landlord under this
Section 16.3, and delivering to Tenant a Memorandum of Lease in
recordable form.
SECTION XVI.4 Entire Agreement. This Lease (including the
Exhibits attached hereto, whether executed or not) contains all of the
agreements and understandings between the parties related to the
leasing of the Premises and the respective obligations of Landlord and
Tenant in connection therewith. All prior agreements and
understandings between the parties have merged into this Lease and
such other documents referred to in this Section 16.4.
SECTION XVI.5 Amendments. No agreement shall be effective to
amend, 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.
SECTION XVI.6 Successors. Except as otherwise expressly
provided herein, the obligations of this Lease shall bind and benefit the
successors and assigns of the parties hereto; provided, however, that
no assignment, sublease or other transfer in violation of the provisions
of Article XIV shall operate to vest any rights in any putative assignee,
sublessee or transferee of Tenant.
SECTION XVI.7 Force Majeure. Landlord shall have no liability
whatsoever to Tenant on account of the inability of Landlord to timely
fulfill any of Landlord's obligations under this Lease by reason of any
strike, lockout or other labor trouble; inability to obtain labor,
materials, coal, oil, or other suitable fuel or reasonable substitutes
therefor or the failure of the supply of any thereof; acts of God, fire or
other casualty; governmental preemption of priorities or other controls
in connection with a public emergency; governmental restrictions or
requirements of Laws; enemy or hostile governmental action; civil
commotion; or any other cause, whether similar or dissimilar to the
above, beyond Landlord's reasonable control (the foregoing events are
collectively referred to as "Force Majeure"). If this Lease specifies a
time period for performance of an obligation of Landlord, that time
period shall be extended by the period of any delay in Landlord's
performance caused by any of the events of Force Majeure. To the
extent the term "Force Majeure" is used in connection with any
obligation of Tenant under this Lease, the definition of "Force
Majeure" shall apply, mutatis mutandis, to Tenant.
SECTION XVI.8 Post-Termination Obligations. Upon the expiration
or earlier termination of this Lease, neither party shall have any
obligation or liability to the other in respect of any period after such
expiration or termination (except as otherwise expressly provided in
this Section 16.8 or elsewhere in this Lease), but all obligations and
liabilities under this Lease in respect of any period prior to such
expiration or termination shall survive such termination or expiration.
Notwithstanding the foregoing, (a) in case of any termination or
expiration under Article XV, Tenant shall remain liable as provided
therein, and (b) Tenant's accrued liability or obligations, as the case
may be, under this Lease shall in all events survive the expiration or
earlier termination of the Term.
SECTION XVI.9 Construction on Adjacent Premises. If any
excavation or other construction shall be made on any premises
adjoining or above or below the Unit or the Building, Tenant shall
permit Landlord, the Board of Managers or the adjoining owner, and
their respective agents, employees, licensees and contractors to enter
upon the Premises and to shore the walls thereof and to erect
scaffolding and/or protective barricades around the Building (but not
so as to preclude entry thereto) and to do any act or thing necessary for
the safety or preservation of the Unit or the Building. Tenant's
obligations under this Lease shall not be affected by any such
construction or excavation work, shoring-up, scaffolding or
barricading. Neither Landlord nor the Board of Managers shall be
liable for any inconvenience, disturbance, loss of business or any other
annoyance arising from such construction, excavation, shoring-up,
scaffolding or barricades, but Landlord shall use reasonable efforts,
consistent with commonly accepted construction practices in the
vicinity, to cause (or to use reasonable efforts to cause the Board of
Managers to cause) as little inconvenience to Tenant as possible and to
expeditiously complete (or to use reasonable efforts to cause the Board
of Managers to expeditiously complete) the work.
SECTION XVI.10 Interpretation.
XVI.10.1 Governing Law; Consent to Jurisdiction. (a) This Lease
shall be governed by, and be construed in accordance with, the laws of
the State of New York without regard to the principles of conflicts of
laws. To the fullest extent permitted by law, Tenant hereby
unconditionally and irrevocably waives any claims to assert that the law
of any other jurisdiction governs this Lease and agrees that this Lease
shall be governed by and construed in accordance with the laws of the
State of New York pursuant to 5-1401 of the New York General
Obligations Law.
(b) Any legal suit, action or proceeding against Tenant or Landlord
arising out of or relating to this Lease may be instituted in any federal
or state court in New York, New York, pursuant to 5-1402 of the
New York General Obligations Law, and Tenant hereby waives any
objection which it may now or hereafter have to the laying of venue of
any such suit, action or proceeding including, without limitation, any
claim of forum non convenience pursuant to any rule of common law
and/or any applicable federal or state statute, law or provision, and
Tenant hereby irrevocably submits to the jurisdiction of any such court
in any suit, action or proceeding.
XVI.10.2 Invalidity. If any provision of this Lease or the application
thereof to any Person or circumstance shall be invalid or unenforceable,
the remainder of this Lease and the application of that provision to
other Persons or circumstances shall not be affected but rather shall be
enforced to the fullest extent permitted by law.
XVI.10.3 Independent Covenants. Except where specifically provided
to the contrary, each 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
or covenant.
XVI.10.4 Number and Gender. All words used or defined in this
Lease or the Exhibits hereto, 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.
XVI.10.5 Exhibits. All exhibits, schedules and riders appended to this
Lease are incorporated herein and by this reference made a part hereof.
References to "Exhibits" or "Schedules" shall be to Exhibits and
Schedules attached to this Lease except where the context requires
otherwise.
XVI.10.6 Other Interpretational Provisions. References to "Articles"
and "Sections" shall be to Articles and Sections, respectively, of this
Lease unless otherwise specifically provided. The Table of Contents,
captions, headings and titles of this Lease are solely for convenience of
reference and shall not affect its interpretation. The terms "hereto",
"herein", "hereof", and "hereunder" and words of similar import refer
to this Lease generally, rather than to the Article or Section in which
such terms are used, unless otherwise specifically provided. This Lease
shall be construed without regard to any presumption or other rule
requiring construction against the party drafting a document. It shall be
construed neither for nor against Landlord or Tenant, but shall be given
a reasonable interpretation in accordance with the plain meaning of its
terms and the intent of the parties. References to agreements and other
contractual instruments shall be deemed to include all subsequent
amendments, restatements, supplements and other modifications
thereto, but only to the extent such amendments, restatements,
supplements and other modifications are not prohibited by the terms of
this Lease. References to the Building, the Common Elements, the
Unit, the Premises, any Lease Year, and similar references (including
references to any item included within any of the foregoing terms) shall
be construed as if such references were followed by the words "or any
part thereof or interest therein", except where the context requires
otherwise. The term "including" shall mean "including, but not limited
to," except where the context requires otherwise.
SECTION XVI.11 Joint and Several Liability. If at any time during
the Term, Tenant comprises more than one Person, all such Persons
shall be jointly and severally liable for payment of Rents and for
performance of every obligation of Tenant under this Lease.
SECTION XVI.12 Submission of Lease. The submission of this
Lease to Tenant or its broker, agent or attorney for review or signature
does not constitute an offer to Tenant to lease the Premises or the
granting of an option to do so. This instrument shall have no binding
force or effect until its execution and unconditional delivery by both
Landlord and Tenant.
SECTION XVI.13 Notices, Consents and Approvals. In order to be
effective, any notice, demand, consent or approval (a "Notice")
hereunder shall be in writing (except as otherwise expressly stated
herein) and signed by the party giving such Notice. Any Notice in
writing shall be personally delivered, sent by a nationally recognized
courier service or mailed by registered or certified mail, return receipt
requested, addressed as follows:
If to Landlord (such address, the "Address of Landlord"):
NY Broad Holdings, Inc.
c/o Canadian Imperial Bank
of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Marc A. Bilbao
With a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: Alan S. Weil, Esq.
If to Tenant (such address, the "Address of Tenant"):
Fahnestock & Co. Inc.
110 Wall Street
New York, NY 10005
Attention: Albert G. Lowenthal
With a copy to:
Whitman Breed Abbott &
Morgan
200 Park Avenue
New York, New York 10166
Attention: Richard Crystal, Esq.
If to the Board of Managers:
Board of Managers of The Condominium
c/o The Galbreath
Company, L.P.
437 Madison Avenue
New York, New York 10022
Attention: Joseph Syslo
provided, however, that (i) any delivery to be made to Landlord shall
be made to the address of Landlord specified above and (ii) the
Address of Tenant shall be to Tenant at the address of the Building
after Tenant occupies the Premises for the conduct of its business.
Notices in writing shall be deemed given when personally delivered or
upon receipt (or refusal of receipt) if mailed or sent by a courier
service. Any party hereto shall have the right to change its notice
address by giving notice to all of the other parties listed in this Section
16.13.
SECTION XVI.14 Lease Escrow Agreement. This Lease shall be
held in escrow pursuant to the terms and provisions of the Lease
Escrow Agreement (the "Lease Escrow Agreement"), dated as of the
date hereof, between Landlord, Tenant, and Sidley & Austin, as
Escrow Agent, the form of which is attached hereto as Exhibit V.
SECTION XVI.15 Certain Provisions Relating to the Condominium
Ownership. (a) As long as the Building shall be owned in a
condominium form of ownership, Landlord shall furnish to Tenant
copies of any material statements, documents and information relating
to the Premises which are provided to Landlord by the Board of
Managers or that it otherwise receives pursuant to the Condominium
Documents with respect to the Premises. Landlord agrees it will, upon
the reasonable request of Tenant, exercise on Tenant's behalf, (and at
Tenant's sole cost and expense if the obligation is not a duty of
Landlord under this Lease), any rights, powers, privileges and remedies
reserved to Landlord under the Condominium Documents (i) to review
and inspect records and otherwise obtain information from the
Condominium Board, (ii) to challenge any Common Charges, Unit
Expenses, or Taxes (to the extent allocable to the Landlord), and (iii)
to cause the Board of Managers to consent to any subleasing or
assignment otherwise in accordance with Article 14 above (but only if
Landlord has otherwise consented to such assignment and/or sublease),
but in each case only to the extent of Landlord's rights under such
Condominium Documents.
(b) Landlord shall (i) timely pay all common charges and other
sums required to be paid by Landlord, as Unit Owner under and
pursuant to the provisions of the Condominium Documents, (ii)
diligently perform and observe all of the terms, covenants and
conditions of the Condominium Documents on the part of Landlord, as
Unit Owner thereunder, to be performed and observed, unless (x) such
performance or observance shall be waived or not required by the
Board of Managers or (y) Tenant has agreed to perform or observe
such terms, covenants or conditions under this Lease, and (iii) promptly
notify Tenant of the giving of any notice by the Board of Managers
under the Condominium Documents to Landlord of any default by
Landlord in the performance or observance of any of the terms,
covenants or conditions of the Condominium Documents on the part of
Landlord, as Unit Owner thereunder, to be performed or observed and
deliver to Tenant a true copy of each such notice.
(c) If the Building shall no longer be owned in a condominium
form of ownership, this Lease shall remain in full force and effect,
Tenant shall continue to pay Rents, and Landlord and Tenant shall
perform their respective obligations hereunder. If either party
reasonably believes that it is necessary to clarify the terms of this Lease
as a result of such conversion in the form of ownership, then Landlord
and Tenant shall promptly execute an agreement clarifying their
respective obligations under this Lease; provided, however, neither
party shall be required to execute any such instrument which would
diminish or detract from the rights of such party or expand or enhance
the obligations of such party, in either case under this Lease, including
the first sentence of this Section 16.15. Subject to the foregoing, such
agreement shall reflect the change in the form of ownership and amend
the Lease accordingly, redacting terminology relating to condominium
ownership.
(d) Landlord agrees not to consent to any Major Decision (as
defined in the Declaration) if the effect of such Major Decision is
reasonably likely to impair or interfere with Tenant's rights or increase
Tenant's obligations under the Lease.
SECTION XVI.16 Directory Listings. (a) Landlord agrees to install,
at no cost to Tenant, two (2) separate Building Directories meeting the
specifications set forth in this Section 16.16 in the lobby of the Building
and to ensure that both Building Directories are fully functional and in
working order on or prior to the date Tenant commences business in
the Premises on a full-time basis. Landlord, at Tenant's request, shall
maintain on such Building Directory located in the lobby of the
Building, listings of the name of Tenant, Tenant's officers and
employees, permitted subtenants, permitted assignees and Affiliates of
Tenant and Occupants pursuant to Section 14.9 (and their respective
officers and employees); provided that the total number of names
allocated to Tenant and listed on such Building Directory shall not be
less than 138 names, which number shall not exceed the same
proportion of the Building Directory as Tenant's pro rata share of the
Building.
(b) One Building Directory shall be located in a free standing
console unit on the left side of the Broad Street lobby between the
present location of the guard desk and the Broad Street entrance, and
the other Building Directory shall be located in a free standing console
unit to the right side of the Vietnam Veterans Memorial Park entrance;
it being understood and agreed that the exact location of the Building
Directories shall be subject to the reasonable approval of the Board but
in any case shall be in accordance with the general spefications set forth
in this Section. Landlord covenants that Tenant's visitors and guests
shall have reasonable access to the Building Directories (it being
understood that such visitors and guests will not be required to ask for
the assistance of the Building's guards or doormen to use such
directories). The controls to the Building Directories will be
reasonably accessible to persons using such directories. In addition, the
Building Directories will be clearly identified as directories and will
contain instructions as to their proper use. Tenant acknowledges that,
as of the date hereof, the Building Directories have not been designed
and that minor changes to the placement and design of such Building
Directories may be necessary or advisable. Notwithstanding the
foregoing however, the Building Directories (including the computer
screens and the console unit) will be generally consistent with other
computerized building directories in Comparable Buildings; it being
understood and agreed that the design of the Building Directories shall
be subject to the reasonable approval of the Board but in any case shall
be in accordance with the general spefications set forth in this Section.
(c) Landlord agrees that the Base Rent Commencement Date shall
be extended one (1) day for each day from the date Tenant occupies
the Premises for the conduct of its business on a regular and full-time
basis until the Building Directories have been installed and are fully
functional in accordance with this Section.
SECTION XVI.17 Signage. Tenant shall have the right to install
appropriate Signage identifying Tenant, any Affiliate of Tenant or any
subtenant permitted under Article XIV or any Occupant pursuant to
Section 14.9, in keeping with the first class nature of the Unit, in the
elevator lobbies on the floors on which the Premises are located, and
on the doors to the Premises.
SECTION XVI.18 Certain Provisions Relating to Tenant's Share and
the Unit Area. (a) In the event that Landlord's interest in the Unit or
the Units share of the Building changes as a result of any sale,
acquisition, transfer, assignment or disposition of any portion of the
Unit (other than the Premises) to another Person (other than an affiliate
of Landlord), in accordance with Section 18 of the Declaration,
Landlord and Tenant agree to recalculate "Tenant's Percentage Share",
"Tenant's Share" and the "Unit Area" in a fair and equitable manner to
reflect such sale, acquisition, transfer, assignment or disposition; it
being understood that such recalculation shall be on such terms and in
such manner as shall be mutually agreeable to Landlord and Tenant.
When the Tenant's Percentage Share, Tenant's Share and the Unit Area
have been recalculated (in accordance with the previous sentence),
Landlord and Tenant shall execute and deliver an agreement setting
forth such recalculation and confirming the Tenant's Percentage Share,
Tenant's Share and the Unit Area.
(b) Any dispute under this Section 16.18 shall be determined by
arbitration conducted in New York, New York in accordance with the
rules of the AAA for commercial arbitration by one arbitrator. The
arbitrator shall be an independent real estate appraiser or consultant
having at least 15 years substantially continuous experience in the
business of leasing office space in Comparable Buildings and shall be
reasonably satisfactory to both Landlord and Tenant. Landlord and
Tenant shall execute all documents and do all other things necessary to
submit the dispute to arbitration pursuant to this Section 16.18. The
provisions of Section 16.21.3 with respect to disputes under Section
4.4 (Tax Payment or Operating Payment dispute) shall apply, mutatis
mutandis, with respect to any disputes under this Section 16.18.
SECTION XVI.19 Financial Statements. Within 10 Business Days
after Landlord's written request, Tenant shall promptly furnish
Landlord, from time to time, with the most recent annual (audited) and
quarterly (unaudited) consolidated financial statements for Tenant
prepared in accordance with GAAP (except as noted therein), certified
by an independent auditor as to the annual statement to be true and
correct and reflecting Tenant's then current financial condition.
SECTION XVI.20 Building Security. Landlord shall be the sole
determinant of the type and amount of security services to be provided
in the Unit, if any; Landlord covenants and agrees to provide (or shall
use all reasonable efforts to cause the Board of Managers to provide),
and Tenant shall be entitled to receive, building security as is consistent
with other Comparable Buildings. Without limiting the generality of
the foregoing, Landlord represents that, as of the date hereof, the
Board of Managers maintains a lobby concierge desk which is manned
twenty-four (24) hours a day, three hundred and sixty-five (365) days a
year. Subject to the Declaration and the first and second sentences
hereof, Landlord (for itself and the Board of Managers) reserves the
right to change the operation or manner of operating any of the
security systems currently in place. In all events and notwithstanding
any provision of this Lease to the contrary, Landlord and the Landlord
Parties shall not be liable to Tenant and Tenant hereby waives any
claim against Landlord, for (a) any unauthorized or criminal entry of
third parties into the Premises, the Unit or the Building or (b) any
damage to persons or property in or about the Premises, the Unit or the
Building by or from any unauthorized or criminal acts of third parties,
provided same does not arise out of the inaction, failure, breakdown,
malfunction of the security services provided unless caused by a default
or negligence on the part of Landlord or any Landlord Party.
SECTION XVI.21 Arbitration. Any dispute under Section 4.4 (Tax
Payment or Operating Payment dispute) or Section 6.1.2.1 (Electrical
Inclusion Amount dispute) or Section 17.4 (Renewal FMRV dispute)
or Section 18.4 (First Expansion FMRV dispute) or Section 19.4
(Second Expansion FMRV dispute) or Section 20.2 (Interest Factor
dispute) shall be determined by arbitration conducted in New York,
New York in accordance with the rules of the AAA for commercial
arbitration by a panel of two or three arbitrators (as specified below).
Each arbitrator shall be (a) an independent certified public accountant
who is an employee or member of a national accounting firm of
institutional reputation for determinations under Section 4.4 and (b) an
independent real estate appraiser or consultant having at least 15 years
substantially continuous experience in the business of appraising or
determining the value of office space in Comparable Buildings in
Manhattan for a determination under Section 17.4, 18.4, 19.4 or 20.2,
in each case whose compensation shall not in any case be based in any
measure on the results of the arbitration or Tenant's objection. No
arbitrator shall be employed by or affiliated with a firm which audits
leases or other accounts on a contingency fee basis. Landlord and
Tenant shall execute all documents and do all other things necessary to
submit the dispute to arbitration pursuant to this Section 16.21.
XVI.21.1 Designation Procedure for Tax and Operating Payment
Disputes and Other Disputes. In connection with any dispute under
Section 4.4 or Section 6.1.2.1, Tenant shall designate an arbitrator
meeting the requirements set forth above in its written notice
requesting arbitration. Landlord shall, by written notice to Tenant,
designate a second arbitrator meeting such requirements within 30 days
after receipt of Tenant's notice. Within 30 days after Landlord's notice
to Tenant, the two arbitrators so designated shall select a third
arbitrator meeting such requirements, and if they do not do so, the third
arbitrator shall be selected by the AAA.
XVI.21.2 Designation Procedure for FMRV Disputes. If Landlord
and Tenant shall fail to agree upon the Renewal FMRV, the First
Expansion FMRV, the Second Expansion FMRV, the Interest Factor,
as the case may be, within 15 days of the date of Landlord's receipt of
Tenant's Renewal Response Notice or Tenant's First Expansion
Response Notice, or Tenant's Second Expansion Response Notice (or,
with respect to the Interest Factor, within thirty days after Tenant
provides Landlord with its termination notice), as the case may be,
then, within 10 days thereafter, Landlord and Tenant each shall give
notice to the other setting forth the name and address of an arbitrator
designated by the party giving such notice meeting the requirements set
forth above. If either party shall fail to give notice of such designation
within such 10 day period, then the arbitrator chosen shall make the
determination alone. If two arbitrators have been designated, such two
arbitrators may consult with each other and shall, not later than the
45th day after Landlord's receipt of Tenant's Renewal Response
Notice, Tenant's First Expansion Response Notice, or Tenant's Second
Expansion Response Notice, as the case may be, make their
determinations of the Renewal FMRV, the First Expansion FMRV, or
the Second Expansion FMRV, as the case may be, in writing and give
notice thereof to each other and to each of Landlord and Tenant;
provided that the arbitrators' only decision shall be to choose (i) with
respect to the Renewal FMRV, either the Renewal FMRV set forth
either in Landlord's Renewal Rent Notice or Tenant's Renewal
Response Notice (and no other), (ii) with respect to the First
Expansion FMRV, the First Expansion FMRV set forth either in
Landlord's First Expansion Rent Notice or in Tenant's First Expansion
Response Notice (and no other), (iii) with respect to the Second
Expansion FMRV, the Second Expansion FMRV set forth either in
Landlord's Second Expansion Rent Notice or Tenant's Second
Expansion Response Notice (and no other), or (iv) with respect to the
Interest Factor, the Interest Factor set forth in Tenant's termination
notice or in Landlord's response. Such two arbitrators shall have 15
days after the receipt of notice of each other's determination to confer
with each other and to attempt to reach agreement as to the
determination of the Renewal FMRV, the First Expansion FMRV, or
the Second Expansion FMRV, as the case may be. If such two
arbitrators shall concur as to the determination of the Renewal FMRV,
the First Expansion FMRV, or the Second Expansion FMRV, as the
case may be, such determination shall be final and binding upon
Landlord and Tenant, subject however to Section 17.4.2.3, Section
18.4.2.3 or Section 19.4.2.3, If such two arbitrators shall fail to concur
within such 15 day period, then such two arbitrators shall, within the
next 10 days, designate a third arbitrator meeting the above
requirements. If the two arbitrators shall fail to agree upon the
designation of such third arbitrator within such 10 day period, then
either party may apply to the AAA for the designation of such
arbitrator. The third arbitrator shall conduct such hearings and
investigations on an expedited basis as such arbitrator may deem
appropriate and shall, within 10 business days after its designation,
choose one of the determinations (and no other) of the two arbitrators
originally selected by the parties by simultaneously delivering to
Landlord and Tenant signed and acknowledged original counterparts of
his or her determination within 5 days thereof.
XVI.21.3 Miscellaneous. The costs and expenses of an arbitration and
each of the arbitrators for a determination under Section 4.4 but not
under any other provision unless specifically provided herein shall be
paid by Tenant, unless it is determined that Landlord's determination of
Taxes or Operating Expenses for the period in question was in error by
more than 5%, in which case Landlord shall bear such costs and
expenses but each party shall be responsible for all of its other costs
and expenses and the fees and expenses of its own witnesses and
counsel. The costs and expenses of the arbitration and of the third
arbitrator for a determination under Section 17.4 or Section 18.4 or
Section 19.4 shall be shared equally by Landlord and Tenant and each
party shall be responsible for the costs and expenses of its designated
arbitrator and its own witnesses and counsel; provided that in the event
Tenant elects to rescind its Renewal Notice, First Expansion Notice
and/or Second Expansion Notice in accordance with any other
provision including Section 16.18, Section 17.4.2.3 or Section 18.4.2.3
or Section 19.4.2.3, as the case may be, Tenant shall promptly
reimburse Landlord for all of the reasonable costs and expenses
incurred by Landlord in connection with such arbitration (including,
without limitation, the arbitrator, witnesses and counsel). The
arbitrators shall have the right to consult experts in the matter under
arbitration; provided, however, that any such consultation shall be
made only after 10 days' prior notice to Landlord and Tenant and only
in their presence, with full right on their part to cross-examine such
experts. The arbitrators' final decision and award shall be in writing,
shall be binding on Landlord and Tenant and shall be non-appealable,
and counterpart copies thereof shall be delivered to Landlord and
Tenant. A judgment or order based upon such award may be entered
in any court of competent jurisdiction. In rendering their decision and
award, the arbitrators shall have no power to vary, modify or amend
any provision of this Lease.
SECTION XVI.22 Waiver Regarding Development Rights. Tenant
irrevocably waives any and all right(s) it may have in connection with
any zoning lot merger or subdivision or transfer of development rights
with respect to the Unit, the Building or the land underlying the
Building including, but not limited to, any rights it may have to be a
party to or to execute or to contest any Declaration of Restrictions (as
such term is defined in Section 12-10 of the Zoning Resolution of the
City of New York effective December 15, 1961, as amended) with
respect to the Unit, the Building or the land underlying the Building
that would cause the Premises to be merged with or unmerged from
any other zoning lot pursuant to such Zoning Resolution or to any
document of a similar nature and purpose. This Lease shall be subject
and subordinate to any Declaration of Restrictions or any other
document of similar nature and purpose now or hereafter affecting the
Unit, the Building or the land underlying the Building provided same
does not increase Tenant's Base Rent or Additional Rent hereunder and
does not materially adversely affect any of Tenant's rights hereunder or
materially increase any of Tenant's obligations or decrease any of
Tenant's remedies under this Lease. In confirmation of such
subordination and waiver, Tenant shall execute and deliver promptly
any waiver document or other certificate or instrument that Landlord
may reasonably request.
SECTION XVI.23 Messenger Desk. Landlord covenants and agrees
to provide (or to cause the Board of Managers to provide) a "bonded"
individual (in an amount equal to at least $1,000,000) to be available in
the lobby of the Building or in the Building's messenger center in order
to receive deliveries for Tenant.
SECTION XVI.24 Certain Provisions Relating to the Ground Lease.
Tenant covenants and agrees that if by reason of a default under the
Ground Lease (including any underlying lease through which Landlord
derives its leasehold estate in the Premises), such Ground Lease and/or
underlying lease and the leasehold estate of the Landlord in the
Premises is terminated, Tenant will attorn to the then holder of the
reversionary interest in the Premises demised by this Lease and will
recognize such holder as Tenant's landlord under this Lease, unless the
lessor under such Ground Lease and underlying lease shall, in any
proceeding to terminate such Ground Lease or underlying lease, elect
to terminate this Lease and the rights of the Tenant hereunder. Tenant
agrees to execute and deliver, at any time and from time to time, upon
the request of the Landlord or of the lessor under the Ground Lease,
any instrument which may be necessary or appropriate to evidence
such attornment and Tenant hereby appoints Landlord (or such lessor
under such underlying lease) as the irrevocable attorney-in-fact of
Tenant to execute and deliver for and on behalf of Tenant any such
instrument. Tenant further waives the provision of any statute or rule
of law now or hereafter in effect which may give or purport to give
Tenant any right of election to terminate this Lease or to surrender
possession of the Premises in the event any proceeding is brought by
the lessor under such Ground Lease and/or underlying lease to
terminate the same, and agrees that unless and until any such lessor, in
connection with any such proceeding, shall elect to terminate this Lease
and the rights of the tenant hereunder, this Lease shall not be affected
in any way whatsoever by any such proceeding.
SECTION XVI.25 Landlord General Covenant. (a) Notwithstanding
any other provisions of this Lease, if any obligation or covenant by
Landlord to Tenant made pursuant to this Lease or otherwise is
contingent upon an obligation or covenant or right of the Board of
Managers or Unit Owners under the Condominium Documents,
Landlord shall use all "reasonable efforts" to have the Board of
Managers or Unit Owners promptly discharge or perform the same.
The term "reasonable efforts" shall include, without limitation, the
following:
(i) the prompt institution and diligent prosecution of legal
proceedings to cause the Board of Managers to discharge or perform
such obligation or covenant;
(ii) the settlement or arbitration of unresolved issues with respect
to the matters described in clause (i) above under a settlement
stipulation or an arbitration proceeding providing for the Board of
Managers or Unit Owners to discharge or perform such obligation or
covenant; and
(iii) such other reasonable efforts (which shall include the
expenditure of funds but only to the extent such expenditures are
reasonably necessary to carry out the foregoing) to enforce Landlord's
rights under the Condominium Documents, and to induce the Board of
Managers to cooperate and cause the Condominium to perform or
allow Landlord to perform Landlord's obligations under the Lease.
In addition, if Landlord has agreed under any covenant or obligation
under this Lease to use all "reasonable efforts" to cause the Board of
Managers to discharge or perform such obligation or covenant, the
term "reasonable efforts" shall be defined by reference to this Section
16.25.
In the event Landlord fails to undertake such reasonable efforts as are
required to be taken in accordance with this Lease and such efforts are
reasonably necessary to cause the Board of Managers or Unit Owners
to discharge or perform such duty or obligation, then, after prior
written notice to Landlord and 5 Business Days opportunity to cure,
Tenant may take any action described in this Section 16.25 (including,
without limitation, to prosecute any legal proceeding), with Landlord's
cooperation, at Landlord's sole cost and expense and in Landlord's
name.
(b) No later than five (5) Business Days after the release of this
Lease from the Lease Escrow Agreement, Landlord shall execute and
deliver to the Board of Managers the notice letter set forth in Exhibit X
attached hereto.
ARTICLE XVII
RENEWAL OPTION
SECTION XVII.1 Grant of Option. Tenant shall have one option (the
"Renewal Option") to extend the Term of this Lease for an additional
term of five (5) years (the "Renewal Term"), subject to and upon the
terms and conditions contained in this Article XVII. The Renewal
Term shall commence upon the day immediately following the first
scheduled Expiration Date and shall end at noon on the day preceding
the fifth (5th) anniversary of the commencement of the Renewal Term.
The Renewal Term shall be upon the same terms and conditions as are
provided for in this Lease, except that (a) there shall be no further
option to renew pursuant to this Section 17.1 or otherwise; (b) Tenant
shall not be entitled to any credit against Rent or any other rent
concession or rent allowance or abatement of Rent; (c) the provisions
of Exhibit D (excluding Schedule D-1) shall not apply; (d) the Base
Rent payable for the Renewal Term shall be the Base Rent set forth in
Section 17.3; (e) Landlord shall be under no obligation to perform any
work, make any installations, or provide any services by virtue of such
renewal, or in order to prepare the Premises for Tenant's occupancy; (f)
the Base Operating Expenses shall be the Operating Expenses for the
Lease Year in which such Renewal Term shall commence; and (g) the
Base Taxes shall be the Taxes for the period commencing on July 1,
2013 and ending on June 30, 2014.
SECTION XVII.2 Exercise. Subject to the provisions of Section
17.5, the Renewal Option may be exercised only by Tenant giving
written notice (the "Renewal Notice") to Landlord thereof on or before
a date that is sixteen (16) months prior to the first scheduled Expiration
Date.
SECTION XVII.3 Renewal Term Base Rent. The Base Rent per
annum for the Premises during the Renewal Term (the "Renewal Term
Base Rent") shall be an amount equal to the greater of (a) 95% of (i)
the Rentable Area of the Premises, multiplied by (ii) the Renewal
FMRV of the Premises as of the first day of the Renewal Term, as
determined in accordance with Section 17.4 and (b) the Base Rent
payable by Tenant on the Expiration Date, together with all Additional
Rent (on a per annum basis) payable by Tenant pursuant to Article 4 as
of the date of determination of the Renewal FMRV.
SECTION XVII.4 Renewal FMRV.
XVII.4.1 Definition. The "Renewal FMRV" of the Premises
shall be the rental value of the Premises in the Renewal Market (as
hereinafter defined) during a term that most closely matches the length
of the Renewal Term (the "Renewal Market Term") if such term
commenced on the commencement of the Renewal Term or, if such
amount is greater, the amount specified in Section 17.3(b). Such rental
value shall be expressed as an amount of money per square foot of
Rentable Area adjusted to remain constant over the entire Renewal
Market Term. "Renewal Market" shall mean the rental market during
the Renewal Market Term for tenants in comparable spaces in
Comparable Buildings seeking to renew their leases in such spaces
taking into account the following factors and additional assumptions:
(a) the lease will be for the Renewal Market Term;
(b) Tenant will pay with respect to the Premises its proportionate
share of Taxes over the Base Taxes for the first year of the Renewal
Term;
(c) Tenant will pay with respect to the Premises its proportionate
share of Operating Expenses over the Base Operating Expenses for the
first year of the Renewal Term;
(d) to the extent the Premises shall be compared with other space,
the rentable area of such other space shall be measured in accordance
with Exhibit M;
(e) Tenant will be leasing the Premises "AS IS";
(f) the Renewal FMRV shall be calculated based on Landlord's
actual expense for brokerage commission, if any to the Brokers, for the
Premises for the Renewal Term;
(g) the Renewal FMRV shall be calculated as if Tenant will be
leasing the Rentable Area of the Premises;
(h) the Renewal FMRV shall be calculated assuming that Landlord
has had a reasonable time to locate a tenant who rents with knowledge
of the uses to which the Premises can be adapted, that neither Landlord
nor the prospective tenant is under any compulsion to rent, and that
Landlord and the prospective tenant negotiate at arm's length and in
good faith; and
(i) that Landlord will not be obligated to perform any work in the
Premises for the Renewal Term (other than any such work as may be
specifically described in this Lease) in order to prepare the same for the
prospective tenant's occupancy, or to contribute or loan any money on
account thereof, whether in the form of a tenant fund, tenant loan, rent
credit or concession, leasing inducement or otherwise and these factors
shall be taken into consideration as a savings to Landlord and serve to
reduce the Renewal FMRV for the Renewal Term Base Rent.
XVII.4.2 Procedure for Determining Renewal FMRV. For
purposes of determining the Renewal FMRV, the following procedure
shall apply:
XVII.4.2.1 If Tenant has timely given the Renewal Notice, Landlord
shall within 15 days deliver to Tenant a written notice of Landlord's
determination of what the Renewal FMRV would be during the
Market Term ("Landlord's Renewal Rent Notice").
XVII.4.2.2 Within 15 days after Tenant's receipt of Landlord's
Renewal Rent Notice, Tenant shall give Landlord notice ("Tenant's
Renewal Response Notice") electing either (a) to accept the Renewal
FMRV set forth in Landlord's Renewal Rent Notice, in which case the
Renewal FMRV shall be the Renewal FMRV set forth in Landlord's
Renewal Rent Notice, or (b) not to accept Landlord's determination of
the Renewal FMRV, in which case (i) Tenant's Renewal Response
Notice shall set forth Tenant's estimate of what the Renewal FMRV
would be during the Market Term and (ii) Landlord and Tenant shall
endeavor to agree upon the Renewal FMRV on or before the date that
is 15 days after Landlord's receipt of Tenant's Renewal Response
Notice. If Landlord and Tenant are unable to agree upon the Renewal
FMRV within such 15-day period, then the Renewal FMRV shall be
determined by arbitration pursuant to Section 16.21. If Tenant fails to
deliver Tenant's Renewal Response Notice within the 15-day period
following its receipt of Landlord's Renewal Rent Notice, Tenant shall
be conclusively deemed to have accepted Landlord's determination of
the Renewal FMRV as set forth in Landlord's Renewal Rent Notice.
XVII.4.2.3 In the event that the Renewal FMRV is determined in
accordance with arbitration pursuant to Section 16.21 to be the
Renewal FMRV set forth in Landlord's Renewal Rent Notice, then
Tenant shall have the right to rescind Tenant's Renewal Notice given in
accordance with Section 17.2; provided that, no later than 10 days after
such determination, Tenant provides written notice ("Tenant's Renewal
Rescission Notice") to Landlord exercising the aforesaid recision right.
In the event Tenant timely delivers Tenant's Renewal Rescission Notice
to Landlord, time being of the essence, then Tenant shall be deemed
not to have timely delivered the Renewal Notice pursuant to the
provisions of this Article XVII, and the terms and provisions of Section
17.6 shall thereafter apply.
XVII.4.3 [Intentionally Deleted.]
XVII.4.4 Memorializing Instrument. After a determination of the
Renewal FMRV for the Renewal Term has been made, the parties shall
execute and deliver to each other an instrument setting forth the
amount of Base Rent for the Renewal Term, but the failure to do so
shall not affect Tenant's obligation to pay such Base Rent.
SECTION XVII.5 Conditions to Exercise of Renewal Option.
Notwithstanding the foregoing provisions of this Article XVII, Tenant
may not exercise the Renewal Option on any date on which Tenant is
in Material Default under this Lease beyond any applicable grace,
notice and cure period and any exercise of such Renewal Option shall
be deemed null and void and of no force and effect if on the
commencement of the Renewal Term Tenant is in default under this
Lease after the giving of any required notice and the expiration of any
required grace or cure period.
SECTION XVII.6 Failure to Exercise Renewal Option. If Tenant
does not timely send the Renewal Notice pursuant to the provisions of
this Article XVII within the applicable time period, time being of the
essence, then (a) Tenant shall have forever waived and relinquished its
right to renew the Term, any other options or rights to renew or extend
the Term effective after the expiration of this Renewal Option shall
terminate, (b) Landlord shall at any time thereafter be entitled to lease
the Premises to others at such rental and upon such terms and
conditions as Landlord in its sole discretion may desire, and (c) Tenant,
upon Landlord's request, shall promptly deliver to Landlord (and any
other Person designated by Landlord) a notice acknowledging that
Tenant has forever waived and relinquished its right to exercise the
Renewal Option.
SECTION XVII.7 Renewal Option is Part of Lease. The termination
of this Lease shall also terminate and render void the Renewal Option
contained in this Article XVII whether or not it shall have been
exercised. This Renewal Option may not be severed from this Lease or
separately sold, assigned or transferred.
ARTICLE XVIII
FIRST EXPANSION OPTION
SECTION XVIII.1 Grant of First Expansion Option. Subject to and
in accordance with the provisions of this Article XVIII, Tenant shall
have an option (the "First Expansion Option") to lease the First
Expansion Space (as defined below) for a term to commence as
provided in Section 18.2. Subject to the provisions of Section 18.8,
Tenant may elect to lease the First Expansion Space pursuant to the
following procedure:
XVIII.1.1 Not later than sixteen (16) months prior to the First
Expansion Space Scheduled Commencement Date, Landlord shall give
Tenant a notice (the "First Expansion Space Availability Notice")
setting forth (a) the date (the "First Expansion Space Scheduled
Commencement Date") upon which Landlord determines the First
Expansion Space will be available for lease by Tenant, which shall be a
date selected by Landlord in its sole discretion between October 1,
2003 and September 30, 2004 and (b) a description in reasonable detail
of the space in the Building which shall be available for lease by Tenant
pursuant to this First Expansion Option on the First Expansion Space
Scheduled Commencement Date which shall consist of approximately
17,000 rentable square feet on the eastern portion of the fourteenth
(14th) floor of the Building; provided that Landlord shall use all
reasonable efforts so that such space shall be contiguous and
reasonably demised for Tenant's use thereof (the "First Expansion
Space") and (c) Landlord's estimate of what the First Expansion
FMRV would be for the First Expansion Space. If Landlord shall fail
or be unable to give the First Expansion Space Availability Notice on
or before March 30, 2003, Tenant shall deliver written notice to
Landlord stating such failure and demanding that Landlord deliver such
notice, and Landlord shall promptly respond in writing to Tenant's
demand, setting forth in reasonably sufficient detail the reasons for
Landlord's failure or inability to deliver the First Expansion Space
Availability Notice. If Landlord has not, in good faith, delivered such
First Expansion Space Availability Notice by May 30, 2003, Tenant
may deliver such First Expansion Space Availability Notice and seek all
legal remedies, including an action for declaratory or injunctive relief or
for any loss, injury or damage claimed by Tenant in connection with the
failure or refusal by Landlord to deliver such notice (except that
Landlord shall incur no liability whatsoever if the inability to deliver
such notice is due to Force Majeure, but Force Majeure shall not
include any rights or circumstances arising out of Landlord's acts or
failings to act or of any rights granted to any tenant or occupant),
which failure shall be considered to be an anticipatory breach by
Landlord of this Article XVIII.
XVIII.1.2 Not later than fifteen Business Days after Tenant's receipt of
the First Expansion Space Availability Notice, Tenant shall give
Landlord a notice ("First Expansion Notice") exercising the First
Expansion Option.
SECTION XVIII.2 Inclusion of First Expansion Space. Subject to the
provisions of Section 18.8, if Tenant timely commits to exercise the
First Expansion Option, then the First Expansion Space shall be added
to and included in the Premises for the period (the "First Expansion
Space Term") (a) commencing on the date (the "First Expansion Space
Inclusion Date") which is the later to occur of (i) the date on which
Tenant shall take exclusive possession of the First Expansion Space for
purposes of construction or the conduct of business, (ii) the date on
which Landlord shall have delivered exclusive possession of the First
Expansion Space to Tenant, and (iii) the First Expansion Space
Scheduled Commencement Date, and (b) ending on the Expiration
Date.
XVIII.2.1 Terms of Inclusion. The inclusion of the First Expansion
Space shall be upon all the terms and conditions of this Lease, except
as otherwise stated in this Article XVIII.
XVIII.2.2 Tenant's Share. As of the First Expansion Space Inclusion
Date, Tenant's Share shall be increased by a percentage equal to (a) the
First Expansion Space Rentable Area divided by (b) the Unit Area.
XVIII.2.3 Rentable Area. The Rentable Area of the First Expansion
Space (the "First Expansion Space Rentable Area") shall be the
rentable square feet measured in accordance with Exhibit M and set
forth in Landlord's First Expansion Space Availability Notice, or such
other number reasonably agreed upon by Landlord and Tenant,
notwithstanding any subsequent remeasurements.
XVIII.2.4 Condition of First Expansion Space. Tenant shall accept
the First Expansion Space in its "AS IS" condition and state of repair
existing as of the First Expansion Space Inclusion Date, except that
Landlord will provide and install demising walls in the First Expansion
Space and be responsible for the elevator lobby and other common
areas on that floor. Furthermore, Landlord shall not be required to
perform any work, supply any materials or incur any expense (including
the granting of any allowance to Tenant with respect thereto) to
prepare the First Expansion Space for Tenant's occupancy.
XVIII.2.5 Rent Abatement. Tenant shall not be entitled to a credit
against Rent or any other rent concession or abatement of Rent, or
allowance, with respect to the First Expansion Space.
SECTION XVIII.3 First Expansion Space Base Rent. The Base Rent
per annum for the First Expansion Space during the First Expansion
Space Term ("First Expansion Space Base Rent") shall be an amount
equal to the greater of (a) 95% of the product of (i) the First Expansion
Space Rentable Area, multiplied by (ii) the First Expansion FMRV as
of the First Expansion Space Scheduled Commencement Date, as
determined in accordance with Section 18.4 and (b) (i) the First
Expansion Space Rentable Area, multiplied by (ii) the Adjusted
Escalated Rent, as of the First Expansion Space Scheduled
Commencement Date, as determined in accordance with Section
18.3.1.
18.3.1 Adjusted Escalated Rent. (a)(i) In the event that Landlord has
entered into a valid, binding and effective lease with another occupant
or otherwise receives payment for the use and occupancy of the First
Expansion Space with respect to the First Expansion Space prior to the
date of determination of the First Expansion FMRV, the term
"Adjusted Escalated Rent" shall mean an amount equal to (x) the
Escalated Rent minus (y) $9.12 per square foot plus (z) the Future
Value Amount (as hereinafter defined) amortized over the then
remaining term of this Lease; provided that in no event shall the
Adjusted Escalated Rent exceed the Escalated Rent. Nothing herein
shall limit Landlord's obligations under Section 18.7.
(ii) In the event that Landlord has not entered into a valid, binding
and effective lease or otherwise receives payment for the use and
occupancy of the First Expansion Space with respect to the First
Expansion Space prior to the date of determination of the First
Expansion FMRV, the term "Adjusted Escalated Rent" shall mean an
amount equal to the Escalated Rent
(b) As used herein, the following terms shall have the following
meanings:
(i) "Applicable Period" shall mean the period commencing on the
Commencement Date and ending on the First Expansion Space
Commencement Date.
(ii) "Escalated Rent" shall mean the base rent payable by Tenant on
the First Expansion Space Scheduled Commencement Date, together
with all additional rent (on a per annum basis) payable by Tenant
pursuant to Article 4 as of the date of determination of the First
Expansion FMRV, which amount shall be expressed as an amount of
money per square foot in respect of the Premises.
(iii) "Future Value Amount" shall mean an amount equal to the
future value, determined as of the First Expansion Space
Commencement Date of (x) $14.22 per square foot minus (y) the
annualized "net effective rent" (as hereinafter defined) for such lease,
determined with respect to the Applicable Period and using an imputed
interest rate equal to eight percent (8%) per annum discounted monthly
for the Applicable Period.
(iv) "net effective rent" shall mean, with respect to any lease
entered into for all or any portion of the First Expansion Space, the rent
provided for in such lease and other consideration to Landlord adjusted
to give effect to any rent offsets or abatements, improvement funds,
concessions, bonuses, free or reduced rental, rebates, cash
contributions, tenant work allowances or the like; it being the intent of
the parties hereto, that the "net effective rent" shall reflect the rent for
such space under the lease and other consideration received by
Landlord with respect to such lease after taking into account the
foregoing factors, which amount shall be expressed as an amount of
money per square foot per annum in respect of the premises demised
under such lease and amortized over the Applicable Period.
(c) As an example of the method of calculating the Adjusted Escalated
Rent, the parties agree that the following example sets forth the
mechanics for determining the Adjusted Escalated Rent and the "net
effective rent". The assumptions of this example are as follows:
(i) Landlord enters into a 78 month lease for 16,000 square feet of
space on the fourteenth floor commencing on the Commencement
Date and expiring on the 78 month anniversary of the Commencement
Date.
(ii) The First Expansion Space Scheduled Commencement Date is
the 78 month anniversary of the Commencement Date.
(iii) The stated base rent of such lease is $20.00 per square foot,
and Landlord provides the tenant of such space with concessions and
tenant work allowances in an amount equal to $25.00 per square foot.
In addition, the real estate brokerage commission is equal to $5.85 per
square foot and the tenant is entitled to 12 months free rent.
(iv) As of the determination of the First Expansion FMRV, Base
Rent is $24.00 per square foot.
(d) Based on the assumptions described above, the "net effective
rent" in this example is $10.15 per square foot . This amount reflects
the stated rent (i.e., $20.00 per square foot) after deducting therefrom
the present value of the concessions, free rent, and tenant work
allowances (i.e., $25.00 per square foot) and brokerage commissions
($5.85 per square foot), as such amount is amortized over the
Applicable Period.
(e) Based on the assumptions described above, the "Adjusted
Escalated Rent" in this example is $19.90 per square foot plus the
accrued escalations under this Lease.
SECTION XVIII.4 First Expansion FMRV.
XVIII.4.1 Definition. The "First Expansion FMRV" shall be the
rental value of the First Expansion Space in the First Expansion Market
(as hereinafter defined) during a term that most closely matches the
length of the First Expansion Space Term (the "First Expansion Market
Term") if such term commenced on the First Expansion Space
Scheduled Commencement Date or, if such amount is greater, the
amount specified in Section 18.3(b). Such rental value shall be
expressed as an amount of money per square foot of Rentable Area
adjusted to remain constant over the entire First Expansion Market
Term. "First Expansion Market" shall mean the rental market during
the First Expansion Market Term for tenants in Comparable Buildings
seeking comparable unencumbered expansion space in their respective
Comparable Buildings taking into account the following factors and
additional assumptions:
(a) the lease will be for the First Expansion Market Term;
(b) Tenant will pay with respect to the First Expansion Space its
proportionate share of Taxes over the Base Taxes set forth in Section
18.5;
(c) Tenant will pay with respect to the First Expansion Space its
proportionate share of Operating Expenses over the Base Operating
Expenses set forth in Section 18.5;
(d) to the extent the First Expansion Space shall be compared with
other space, the rentable area of such other space shall be measured in
a similar manner as the Premises are measured herein;
(e) Tenant will be leasing the First Expansion Space "As Is" in
accordance with Section 18.2.4. All costs and expenses Tenant may
incur in order to bring the First Expansion Space into compliance with
Laws, including, but not limited to, compliance with ADA
Requirements and abatement or removal of any ACM or to perform
demolition in the space shall be taken into consideration as a savings to
Landlord and serve to reduce the First Expansion FMRV in the First
Expansion Space.
(f) the First Expansion FMRV shall be calculated based on
Landlord's actual expense for brokerage commission, if any, to the
Brokers for the First Expansion Space for the First Expansion Market
Term;
(g) the First Expansion FMRV shall be calculated as if Tenant will
be leasing an aggregate of (i) the Rentable Area of the First Expansion
Space plus (ii) the Rentable Area of the balance of the Premises;
(h) the First Expansion FMRV shall be calculated assuming that
Landlord has had a reasonable time to locate a tenant who rents with
knowledge of the uses to which the First Expansion Space can be
adapted, that neither Landlord nor the prospective tenant is under any
compulsion to rent, and that Landlord and the prospective tenant
negotiate at arm's length and in good faith; and
(i) that Landlord will not be obligated to perform any work in the
First Expansion Space for the First Expansion Space Term in order to
prepare the same for the prospective tenant's occupancy, or to
contribute or loan any money on account thereof, whether in the form
of a tenant fund, tenant loan, rent credit or concession, leasing
inducement or otherwise and these factors shall be taken into
consideration as a savings to Landlord and serve to reduce the First
Expansion FMRV in the First Expansion Space.
XVIII.4.2 Procedure for Determining First Expansion FMRV.
For purposes of determining the First Expansion FMRV, the following
procedure shall apply:
XVIII.4.2.1 [Intentionally Deleted.]
XVIII.4.2.2 Within 15 Business Days after Tenant's receipt of
Landlord's First Expansion Space Availability Notice, Tenant shall give
Landlord written notice ("Tenant's First Expansion Response Notice")
electing either (a) to accept the First Expansion FMRV set forth in
Landlord's First Expansion Space Availability Notice, in which case the
First Expansion FMRV shall be the First Expansion FMRV set forth in
Landlord's First Expansion Space Availability Notice, or (b) not to
accept Landlord's determination of the First Expansion FMRV, in
which case (i) Tenant's First Expansion Response shall set forth
Tenant's estimate of what the First Expansion FMRV would be for the
First Expansion Space and (ii) Landlord and Tenant shall endeavor to
agree upon the First Expansion FMRV on or before the date that is 15
days after Landlord's receipt of Tenant's First Expansion Response
Notice. If Landlord and Tenant are unable to agree upon the First
Expansion FMRV within such 15-day period, then the First Expansion
FMRV shall be determined by arbitration pursuant to Section 16.21. If
Tenant fails to deliver Tenant's First Expansion Response Notice within
the 15-day period following its receipt of Landlord's First Expansion
Space Availability Notice, Tenant shall be conclusively deemed to have
accepted Landlord's determination of the First Expansion FMRV as set
forth in Landlord's First Expansion Space Availability Notice.
XVIII.4.2.3 In the event that the First Expansion FMRV is determined
in accordance with arbitration pursuant to Section 16.21 to be the First
Expansion FMRV set forth in Landlord's First Expansion Space
Availability Notice, then Tenant shall have the right to rescind Tenant's
First Expansion Notice given in accordance with Section 18.1.2;
provided that, no later than 10 days after such determination, Tenant
provides written notice ("Tenant's First Expansion Rescission Notice")
to Landlord exercising the aforesaid recision right. In the event Tenant
timely delivers Tenant's First Expansion Rescission Notice to Landlord,
time being of the essence, then Tenant shall be deemed not to have
timely delivered the First Expansion Notice pursuant to the provisions
of this Article XVIII, and the terms and provisions of Section 18.9 shall
thereafter apply.
XVIII.4.3 [Intentionally Deleted.]
XVIII.4.4 Memorializing Instrument. After a determination of the
First Expansion FMRV has been made, the parties shall execute and
deliver to each other an instrument setting forth the amount of Base
Rent for such First Expansion Space Term, but the failure to do so
shall not affect Tenant's obligation to pay such Base Rent.
SECTION XVIII.5 Tax and Operating Expense Payments. Tenant
shall pay to Landlord Additional Rent with respect to the First
Expansion Space from and after the First Expansion Space Inclusion
Date in accordance with all of the terms and conditions of Article IV,
except that:
(a) Tenant's Share shall be increased as set forth in Section 18.2.2
to reflect such First Expansion Space;
(b) the Base Taxes with respect to such First Expansion Space
shall be the Taxes for the Tax Year in which the First Expansion Space
Inclusion Date occurs; and
(c) the Base Operating Expenses with respect to such First
Expansion Space shall be the Operating Expenses for the Lease Year in
which the First Expansion Space Inclusion Date occurs.
SECTION XVIII.6 Improvements. Any work performed by Tenant
in any First Expansion Space shall be subject to the terms, conditions
and provisions of Section 8.1 of this Lease. All Alterations permitted
to be made to any First Expansion Space shall be at Tenant's sole cost
and expense.
SECTION XVIII.7 Landlord's Inability to Deliver First Expansion
Space.
XVIII.7.1 Generally. Once Tenant has delivered the First
Expansion Notice, Landlord shall take all actions necessary or desirable
to deliver possession of the First Expansion Space to Tenant on or
prior to the First Expansion Space Scheduled Commencement Date,
which efforts shall include the actions set forth in clause (iii) below. In
connection therewith and without limiting the generality of the
foregoing, Landlord agrees that any lease or other right relating to the
fourteenth (14) floor of the Building (x) shall be expressly subject to
Tenant's rights under this Lease, including Articles XVIII and XIX, (y)
shall expire no later than forty-five (45) days prior to the First
Expansion Space Scheduled Commencement Date, and (z) shall
include such lease terms and provisions as are necessary or proper in
order to effectuate the delivery of the First Expansion Space to Tenant
on or prior to the First Expansion Space Scheduled Commencement
Date, but only if such lease terms and provisions are customarily found
in leases of Comparable Buildings. In connection with the matters
described in clause (z) of the preceding sentence, Landlord shall include
in any such lease for the First Expansion Space all remedies relating to
the holdover of such tenant and increased holdover rent, as are
customarily found in leases of Comparable Buildings. If Landlord fails
to cause the First Expansion Space Inclusion Date to occur on or prior
to such First Expansion Space Scheduled Commencement Date and
such failure is due to (a) the holding over or retention of possession by
any tenant or occupant in the applicable First Expansion Space, and/or
(b) any other reason outside of Landlord's control, then provided
Landlord has complied with the provisions of this Section 18.7.1,
including (x), (y) and (z) above and the following two (2) sentences, (i)
Landlord shall not be subject to any liability for failure to give
possession on such date, and (ii) Tenant waives the right to rescind its
lease of the original Premises leased hereunder or to recover any
damages that may result from the failure of Landlord to deliver
possession of the First Expansion Space and agrees that the provisions
of this Section 18.7 shall constitute an "express provision to the
contrary" within the meaning of Section 223-a of the New York Real
Property Law. In order to timely deliver the First Expansion Space,
Landlord covenants and agrees that, if the then current occupant of the
First Expansion Space has not vacated the First Expansion Space at
least 40 days prior to the First Expansion Space Scheduled
Commencement Date, Landlord shall promptly institute and thereafter
diligently prosecute holdover or other appropriate proceedings (or
settle the same under a settlement stipulation providing for the
occupant to vacate the First Expansion Space on a date which
Landlord reasonably believes is a date earlier than the date on which
Landlord would obtain possession of the First Expansion Space if
Landlord were to continue to diligently prosecute such holdover or
other appropriate proceeding) against any occupant of the First
Expansion Space. Without limiting the generality of the foregoing, if
as a result of a non-appealable order of a court of competent
jurisdiction, such current occupant is not obligated to vacate the First
Expansion Space because of any act or failure to act on Landlord's
part, Landlord shall use its best efforts and take such action and pay
such sums as may be reasonably necessary to cause such holdover
tenant to vacate the First Expansion Space. Notwithstanding the
foregoing and notwithstanding Tenant's exercise of its right to cancel
its lease of the First Expansion Space in accordance with Section
18.7.2, Landlord shall be liable to Tenant for damages (including any
consequential or punitive damages) arising from Landlord's failure to
perform, including the reasonable out-of-pocket costs and expenses of
Tenant in relocating and occupying other space and for the reasonable
moving costs and other charges in connection therewith and for the
costs of operating from separate locations, it being understood that it is
a material part and element of this Lease that, upon the exercise of the
First Expansion Space Option and/or the Second Expansion Space
Option, Tenant shall be able to occupy three (3) contiguous floors of
the Building.
If Landlord fails to prosecute holdover proceedings against a holdover
tenant of the First Expansion Space to the extent and in the manner
such proceedings are required to be prosecuted in accordance with this
Lease and such holdover proceedings are reasonably necessary to
cause the delivery of the First Expansion Space on or prior to the First
Expansion Space Scheduled Commencement Date, then, after prior
written notice and 3 Business Days opportunity to cure, Tenant may
prosecute such holdover proceeding and/or an action for declaratory
relief, with Landlord's cooperation, at Landlord's sole cost and expense
and in Landlord's name.
XVIII.7.2 Cancellation Option. Notwithstanding Tenant's waiver
pursuant to Section 18.7.1(ii), if Landlord shall be unable to cause the
First Expansion Space Inclusion Date to occur on or prior to the date
which is 365 days after the First Expansion Space Scheduled
Commencement Date, then Tenant shall, at Tenant's option, have the
right to cancel its lease of the First Expansion Space by giving notice
(an "First Option Cancellation Notice") to Landlord within 30 days
after the expiration of such 365 day period, which cancellation shall be
effective as of the date on which Landlord receives the First Option
Cancellation Notice; provided, however, that if Landlord causes the
First Expansion Space Inclusion Date to occur on or prior to the date
on which Landlord receives Tenant's First Option Cancellation Notice,
such notice shall be null and void, and Tenant's lease of the First
Expansion Space shall continue in full force and effect in accordance
with the provisions of this Section 18.7, as if such Cancellation Notice
was never delivered.
SECTION XVIII.8 Conditions to Exercise of Option.
Notwithstanding the foregoing provisions of this Article XVIII, Tenant
may not exercise the First Expansion Option on any date on which
Tenant is in Material Default under this Lease beyond any applicable
grace, notice and cure period, and any exercise of such First Expansion
Option shall be deemed null and void and of no force and effect if on
the First Expansion Space Inclusion Date Tenant is in Material Default
under this Lease after the giving of any required notice and the
expiration of any required grace or cure period.
SECTION XVIII.9 Failure to Exercise First Expansion Option. If
Tenant does not elect to exercise the First Expansion Option in
accordance with this Article XVIII and within the applicable time
period, time being of the essence, then (a) Tenant shall have forever
waived and relinquished its right to exercise the First Expansion
Option, (b) Landlord shall at any time thereafter be entitled to lease the
space covered by the First Expansion Option in question to others at
such rental and upon such terms and conditions as Landlord in its sole
discretion may desire, and (c) Tenant, upon Landlord's request, shall
promptly deliver to Landlord (and any other Person designated by
Landlord) a notice acknowledging that Tenant has forever waived and
relinquished its right to exercise the First Expansion Option.
SECTION XVIII.10 First Expansion Option is Part of Lease. The
termination of this Lease shall also terminate and render void the First
Expansion Option whether or not the First Expansion Option shall
have been exercised. The First Expansion Option may not be severed
from this Lease or separately sold or transferred.
SECTION XVIII.11 [Intentionally Deleted.]
SECTION XVIII.12 Notice with Respect to Certain Leasing
Activities. Not later than thirty (30) days after Tenant makes a written
request to Landlord, and, in any event, no later than 10 days after
Landlord enters into any leasing activities with respect to any portion
of the 14th floor, Landlord shall advise Tenant (to the best of
Landlord's knowledge) of any leasing activities, and the lease terms
materially relevant to Tenant (such as demised space, lease term,
default, remedies and holdover provisions) being negotiated with
respect to compliance with this Article XVIII and the manner in which
the lease complies with the requirements of this Article XVIII, in each
case, with respect to the 14th floor only. As used herein, "leasing
activities" shall mean (i) any lease actually entered into between
Landlord and a tenant or other occupant with respect to the First
Expansion Space or (ii) any material lease negotiations then being
undertaken or about to be undertaken by Landlord or any Landlord
Party (such determination to be made by Landlord in the exercise of its
reasonable judgment), in each case, with respect to the 14th floor only.
Landlord shall deliver a copy of such lease to Tenant no later than 10
days after the execution of such lease; it being understood that
Landlord may redact out of the copy of such lease any portions of such
lease that are inapplicable to Tenant (such as, by way of illustration
only, the amount of rent or other amounts due thereunder or such other
material terms and provisions (other than such terms and provisions
relating to the term of the Lease, the conformity with Article XVIII and
the default, remedy and the holdover provisions)). Tenant agrees to
hold any such information it receives under this Section 18.12 in strict
confidence, but may use such information in order to enforce its rights
hereunder.
SECTION XVIII.13 Miscellaneous. If Landlord enters into any
written lease agreement with respect to the 14th floor with any person
(other than Tenant), Landlord agrees to include as an exhibit to such an
agreement a copy of or a summary of the relevant portions of this
Article 18.
ARTICLE XIX
SECOND EXPANSION OPTION
SECTION XIX.1 Grant of Second Expansion Option. Subject to and
in accordance with the provisions of this Article XIX, Tenant shall have
an option (the "Second Expansion Option") to lease the Second
Expansion Space (as defined below) for a term to commence as
provided in Section 19.2. Subject to the provisions of Section 19.8,
Tenant may elect to lease the Second Expansion Space pursuant to the
following procedure:
XIX.1.1 Not later than sixteen (16) months prior to the Second
Expansion Space Scheduled Commencement Date, Landlord shall give
Tenant a notice (the "Second Expansion Space Availability Notice")
setting forth (a) the date (the "Second Expansion Space Scheduled
Commencement Date") upon which Landlord determines the Second
Expansion Space will be available for lease by Tenant, which shall be a
date selected by Landlord in its sole discretion between October 1,
2008 and September 30, 2009 and (b) Landlord's estimate of what the
Second Expansion FMRV would be for the Second Expansion Space.
The "Second Expansion Space" shall consist of the balance of the
fourteenth (14th) floor of the Building which shall consist of
approximately 17,000 rentable square feet (after Tenant's exercise of
the Second Expansion Option or if Tenant didn't exercise such Second
Expansion Option, any portion of the fourteenth (14th) floor containing
approximately 17,000 rentable square feet). If Landlord shall fail or be
unable to give the Second Expansion Space Availability Notice on or
before March 30, 2008, Tenant shall deliver written notice to Landlord
stating such failure and demanding that Landlord deliver such notice,
and Landlord shall promptly respond in writing to Tenant's demand,
setting forth in reasonably sufficient detail the reasons for Landlord's
failure or inability to deliver the Second Expansion Space Availability
Notice. If Landlord has not, in good faith, delivered such Second
Expansion Space Availability Notice by May 30, 2008, Tenant may
deliver such First Expansion Space Availability Notice and seek all
legal remedies, including an action for declaratory or injunctive relief or
for any loss, injury or damage claimed by Tenant in connection with the
failure or refusal by Landlord to deliver such notice (except that
Landlord shall incur no liability whatsoever if the inability to deliver
such notice is due to Force Majeure, but Force Majeure shall not
include any rights or circumstances arising out of Landlord's previous
acts or failings to act or of any rights granted to any tenant or
occupant), which failure shall be considered to be an anticipatory
breach by Landlord of this Article XIX.
XIX.1.2 Not later than fifteen Business Days after Tenant's receipt of
the Second Expansion Space Availability Notice, Tenant shall give
Landlord a notice ("Second Expansion Notice") exercising the Second
Expansion Option.
SECTION XIX.2 Inclusion of Second Expansion Space. Subject to
the provisions of Section 19.8, if Tenant timely commits to exercise the
Second Expansion Option, then the Second Expansion Space shall be
added to and included in the Premises for the period (the "Second
Expansion Space Term") (a) commencing on the date (the "Second
Expansion Space Inclusion Date") which is the later to occur of (i) the
date on which Tenant shall take exclusive possession of the Second
Expansion Space for purposes of construction or the conduct of
business, (ii) the date on which Landlord shall have delivered exclusive
possession of the Second Expansion Space to Tenant, and (iii) the
Second Expansion Space Scheduled Commencement Date, and (b)
ending on the Expiration Date.
XIX.2.1 Terms of Inclusion. The inclusion of the Second Expansion
Space shall be upon all the terms and conditions of this Lease, except
as otherwise stated in this Article XIX.
XIX.2.2 Tenant's Share. As of the Second Expansion Space Inclusion
Date, Tenant's Share shall be increased by a percentage equal to (a) the
Second Expansion Space Rentable Area divided by (b) the Unit Area.
XIX.2.3 Rentable Area. The Rentable Area of the Second Expansion
Space (the "Second Expansion Space Rentable Area") shall be the
rentable square feet measured in accordance with Exhibit M and set
forth in Landlord's Second Expansion Space Availability Notice, or
such other number reasonably agreed upon by Landlord and Tenant,
notwithstanding any subsequent remeasurements.
XIX.2.4 Condition of Second Expansion Space. Tenant shall accept
the Second Expansion Space in its "AS IS" condition and state of
repair existing as of the Second Expansion Space Inclusion Date,
except that Landlord will provide and install demising walls in the
Second Expansion Space and be responsible for the elevator lobby and
other common areas on that floor. Furthermore, Landlord shall not be
required to perform any work, supply any materials or incur any
expense (including the granting of any allowance to Tenant with
respect thereto) to prepare the Second Expansion Space for Tenant's
occupancy.
XIX.2.5 Rent Abatement. Tenant shall not be entitled to a credit
against Rent or any other rent concession or abatement of Rent, or
allowance, with respect to the Second Expansion Space.
SECTION XIX.3 Second Expansion Space Base Rent. The Base
Rent per annum for the Second Expansion Space during the Second
Expansion Space Term ("Second Expansion Space Base Rent") shall
be an amount equal to the greater of (a) 95% of the product of (i) the
Second Expansion Space Rentable Area, multiplied by (ii) the Second
Expansion FMRV as of the Second Expansion Space Scheduled
Commencement Date, as determined in accordance with Section 19.4
and (b) (i) the Second Expansion Space Rentable Area, multiplied by
(ii) the Adjusted Escalated Rent, as of the Second Expansion Space
Scheduled Commencement Date, as determined in accordance with
Section 19.3.1.
19.3.1 Adjusted Escalated Rent. (a)(i) In the event that Landlord has
entered into a valid, binding and effective lease with another occupant
or otherwise receives payment for the use and occupancy of the
Second Expansion Space with respect to the Second Expansion Space
prior to the date of determination of the Second Expansion FMRV, the
term "Adjusted Escalated Rent" shall mean an amount equal to (x) the
Escalated Rent minus (y) $9.12 per square foot plus (z) the Future
Value Amount (as hereinafter defined) amortized over the then
remaining term of this Lease; provided that in no event shall the
Adjusted Escalated Rent exceed the Escalated Rent. Nothing herein
shall limit Landlord's obligations under Section 19.7.
(ii) In the event that Landlord has not entered into a valid, binding
and effective lease or otherwise receives payment for the use and
occupancy of the Second Expansion Space with respect to the Second
Expansion Space prior to the date of determination of the Second
Expansion FMRV, the term "Adjusted Escalated Rent" shall mean an
amount equal to the Escalated Rent
(b) As used herein, the following terms shall have the following
meanings:
(i) "Applicable Period" shall mean the period commencing on the
Commencement Date and ending on the Second Expansion Space
Commencement Date.
(ii) "Escalated Rent" shall mean the base rent payable by Tenant on
the Second Expansion Space Scheduled Commencement Date,
together with all additional rent (on a per annum basis) payable by
Tenant pursuant to Article 4 as of the date of determination of the
Second Expansion FMRV, which amount shall be expressed as an
amount of money per square foot in respect of the Premises.
(iii) "Future Value Amount" shall mean an amount equal to the
future value, determined as of the Second Expansion Space
Commencement Date of (x) $14.22 per square foot minus (y) the
annualized "net effective rent" (as hereinafter defined) for such lease,
determined with respect to the Applicable Period and using an imputed
interest rate equal to eight percent (8%) per annum discounted monthly
for the Applicable Period.
(iv) "net effective rent" shall mean, with respect to any lease
entered into for all or any portion of the Second Expansion Space, the
rent provided for in such lease and other consideration to Landlord
adjusted to give effect to any rent offsets or abatements, improvement
funds, concessions, bonuses, free or reduced rental, rebates, cash
contributions, tenant work allowances or the like; it being the intent of
the parties hereto, that the "net effective rent" shall reflect the rent for
such space under the lease and other consideration received by
Landlord with respect to such lease after taking into account the
foregoing factors, which amount shall be expressed as an amount of
money per square foot per annum in respect of the premises demised
under such lease and amortized over the Applicable Period.
(c) As an example of the method of calculating the Adjusted Escalated
Rent, the parties agree that the example in Section 18.3.1(c) sets forth
the mechanics for determining the Adjusted Escalated Rent and the
"net effective rent".
SECTION XIX.4 Second Expansion FMRV.
XIX.4.1 Definition. The "Second Expansion FMRV" shall be
the rental value of the Second Expansion Space in the Second
Expansion Market (as hereinafter defined) during a term that most
closely matches the length of the Second Expansion Space Term (the
"Second Expansion Market Term") if such term commenced on the
Second Expansion Space Scheduled Commencement Date or, if such
amount is greater, the amount specified in Section 19.3(b). Such rental
value shall be expressed as an amount of money per square foot of
Rentable Area adjusted to remain constant over the entire Second
Expansion Market Term. "Second Expansion Market" shall mean the
rental market during the Second Expansion Market Term for tenants in
Comparable Buildings seeking comparable unencumbered expansion
space in their respective Comparable Buildings taking into account the
following factors and additional assumptions:
(a) the lease will be for the Second Expansion Market Term;
(b) Tenant will pay with respect to the Second Expansion Space its
proportionate share of Taxes over the Base Taxes set forth in Section
19.5;
(c) Tenant will pay with respect to the Second Expansion Space its
proportionate share of Operating Expenses over the Base Operating
Expenses set forth in Section 19.5;
(d) to the extent the Second Expansion Space shall be compared
with other space, the rentable area of such other space shall be
measured in a similar manner as the Premises are measured herein;
(e) Tenant will be leasing the Second Expansion Space "As Is" in
accordance with Section 19.2.4. All costs and expenses Tenant may
incur in order to bring the Second Expansion Space into compliance
with Laws, including, but not limited to, compliance with ADA
Requirements and abatement or removal of any ACM or to perform
demolition in the space shall be taken into consideration as a savings to
Landlord and serve to reduce the Second Expansion FMRV in the
Second Expansion Space.
(f) the Second Expansion FMRV shall be calculated based on
Landlord's actual expense for brokerage commission, if any, to the
Brokers for the Second Expansion Space for the Second Expansion
Market Term;
(g) the Second Expansion FMRV shall be calculated as if Tenant
will be leasing an aggregate of (i) the Rentable Area of the Second
Expansion Space plus (ii) the Rentable Area of the balance of the
Premises;
(h) the Second Expansion FMRV shall be calculated assuming that
Landlord has had a reasonable time to locate a tenant who rents with
knowledge of the uses to which the Second Expansion Space can be
adapted, that neither Landlord nor the prospective tenant is under any
compulsion to rent, and that Landlord and the prospective tenant
negotiate at arm's length and in good faith; and
(i) that Landlord will not be obligated to perform any work in the
Second Expansion Space for the Second Expansion Space Term in
order to prepare the same for the prospective tenant's occupancy, or to
contribute or loan any money on account thereof, whether in the form
of a tenant fund, tenant loan, rent credit or concession, leasing
inducement or otherwise and these factors shall be taken into
consideration as a savings to Landlord and serve to reduce the Second
Expansion FMRV in the Second Expansion Space.
XIX.4.2 Procedure for Determining Second Expansion FMRV.
For purposes of determining the Second Expansion FMRV, the
following procedure shall apply:
XIX.4.2.1 [Intentionally Deleted.]
XIX.4.2.2 Within 15 Business Days after Tenant's receipt of
Landlord's Second Expansion Space Availability Notice, Tenant shall
give Landlord written notice ("Tenant's Second Expansion Response
Notice") electing either (a) to accept the Second Expansion FMRV set
forth in Landlord's Second Expansion Space Availability Notice, in
which case the Second Expansion FMRV shall be the Second
Expansion FMRV set forth in Landlord's Second Expansion Space
Availability Notice, or (b) not to accept Landlord's determination of the
Second Expansion FMRV, in which case (i) Tenant's Second
Expansion Response shall set forth Tenant's estimate of what the
Second Expansion FMRV would be for the Second Expansion Space
and (ii) Landlord and Tenant shall endeavor to agree upon the Second
Expansion FMRV on or before the date that is 15 days after Landlord's
receipt of Tenant's Second Expansion Response Notice. If Landlord
and Tenant are unable to agree upon the Second Expansion FMRV
within such 15-day period, then the Second Expansion FMRV shall be
determined by arbitration pursuant to Section 16.21. If Tenant fails to
deliver Tenant's Second Expansion Response Notice within the 15-day
period following its receipt of Landlord's Second Expansion Space
Availability Notice, Tenant shall be conclusively deemed to have
accepted Landlord's determination of the Second Expansion FMRV as
set forth in Landlord's Second Expansion Space Availability Notice.
XIX.4.2.3 In the event that the Second Expansion FMRV is
determined in accordance with arbitration pursuant to Section 16.21 to
be the Second Expansion FMRV set forth in Landlord's Second
Expansion Space Availability Notice, then Tenant shall have the right
to rescind Tenant's Second Expansion Notice given in accordance with
Section 19.1.2; provided that, no later than 10 days after such
determination, Tenant provides written notice ("Tenant's Second
Expansion Rescission Notice") to Landlord exercising the aforesaid
recision right. In the event Tenant timely delivers Tenant's Second
Expansion Rescission Notice to Landlord, time being of the essence,
then Tenant shall be deemed not to have timely delivered the Second
Expansion Notice pursuant to the provisions of this Article XIX, and
the terms and provisions of Section 19.9 shall thereafter apply.
XIX.4.3 [Intentionally Deleted.]
XIX.4.4 Memorializing Instrument. After a determination of the
Second Expansion FMRV has been made, the parties shall execute and
deliver to each other an instrument setting forth the amount of Base
Rent for such Second Expansion Space Term, but the failure to do so
shall not affect Tenant's obligation to pay such Base Rent.
SECTION XIX.5 Tax and Operating Expense Payments. Tenant shall
pay to Landlord Additional Rent with respect to the Second Expansion
Space from and after the Second Expansion Space Inclusion Date in
accordance with all of the terms and conditions of Article IV, except
that:
(a) Tenant's Share shall be increased as set forth in Section 19.2.2
to reflect such Second Expansion Space;
(b) the Base Taxes with respect to such Second Expansion Space
shall be the Taxes for the Tax Year in which the Second Expansion
Space Inclusion Date occurs; and
(c) the Base Operating Expenses with respect to such Second
Expansion Space shall be the Operating Expenses for the Lease Year in
which the Second Expansion Space Inclusion Date occurs.
SECTION XIX.6 Improvements. Any work performed by Tenant in
any Second Expansion Space shall be subject to the terms, conditions
and provisions of Section 8.1 of this Lease. All Alterations permitted
to be made to any Second Expansion Space shall be at Tenant's sole
cost and expense.
SECTION XIX.7 Landlord's Inability to Deliver Second Expansion
Space.
XIX.7.1 Generally. Once Tenant has delivered the Second
Expansion Notice, Landlord shall take all actions necessary or desirable
to deliver possession of the Second Expansion Space to Tenant on or
prior to the Second Expansion Space Scheduled Commencement Date,
which efforts shall include the actions set forth in clause (iii) below. In
connection therewith and without limiting the generality of the
foregoing, Landlord agrees that any lease or other right relating to the
fourteenth (14) floor of the Building (x) shall be expressly subject to
Tenant's rights under this Lease, including Articles XIX and XIX, (y)
shall expire no later than forty-five (45) days prior to the Second
Expansion Space Scheduled Commencement Date, and (z) shall
include such lease terms and provisions as are necessary or proper in
order to effectuate the delivery of the Second Expansion Space to
Tenant on or prior to the Second Expansion Space Scheduled
Commencement Date, but only if such lease terms and provisions are
customarily found in leases of Comparable Buildings. In connection
with the matters described in clause (z) of the preceding sentence,
Landlord shall include in any such lease for the Second Expansion
Space all remedies relating to the holdover of such tenant and increased
holdover rent, as are customarily found in leases of Comparable
Buildings. If Landlord fails to cause the Second Expansion Space
Inclusion Date to occur on or prior to such Second Expansion Space
Scheduled Commencement Date and such failure is due to (a) the
holding over or retention of possession by any tenant or occupant in
the applicable Second Expansion Space, and/or (b) any other reason
outside of Landlord's control, then provided Landlord has complied
with the provisions of this Section 19.7.1, including (x), (y) and (z)
above and the following two (2) sentences, (i) Landlord shall not be
subject to any liability for failure to give possession on such date, and
(ii) Tenant waives the right to rescind its lease of the original Premises
leased hereunder or to recover any damages that may result from the
failure of Landlord to deliver possession of the Second Expansion
Space and agrees that the provisions of this Section 19.7 shall
constitute an "express provision to the contrary" within the meaning of
Section 223-a of the New York Real Property Law. In order to timely
deliver the Second Expansion Space, Landlord covenants and agrees
that, if the then current occupant of the Second Expansion Space has
not vacated the Second Expansion Space at least 40 days prior to the
Second Expansion Space Scheduled Commencement Date, Landlord
shall promptly institute and thereafter diligently prosecute holdover or
other appropriate proceedings (or settle the same under a settlement
stipulation providing for the occupant to vacate the Second Expansion
Space on a date which Landlord reasonably believes is a date earlier
than the date on which Landlord would obtain possession of the
Second Expansion Space if Landlord were to continue to diligently
prosecute such holdover or other appropriate proceeding) against any
occupant of the Second Expansion Space. Without limiting the
generality of the foregoing, if as a result of a non-appealable order of a
court of competent jurisdiction, such current occupant is not obligated
to vacate the Second Expansion Space because of any act or failure to
act on Landlord's part, Landlord shall use its best efforts and take such
action and pay such sums as may be reasonably necessary to cause such
holdover tenant to vacate the Second Expansion Space.
Notwithstanding the foregoing and notwithstanding Tenant's exercise
of its right to cancel its lease of the Second Expansion Space in
accordance with Section 19.7.2, Landlord shall be liable to Tenant for
damages (including any consequential or punitive damages) arising
from Landlord's failure to perform, including the reasonable out-of-
pocket costs and expenses of Tenant in relocating and occupying other
space and for the reasonable moving costs and other charges in
connection therewith and for the costs of operating from separate
locations, it being understood that it is a material part and element of
this Lease that, upon the exercise of the Second Expansion Space
Option and/or the Second Expansion Space Option, Tenant shall be
able to occupy three (3) contiguous floors of the Building.
If Landlord fails to prosecute holdover proceedings against a holdover
tenant of the Second Expansion Space to the extent and in the manner
such proceedings are required to be prosecuted in accordance with this
Lease and such holdover proceedings are reasonably necessary to
cause the delivery of the Second Expansion Space on or prior to the
Second Expansion Space Scheduled Commencement Date, then, after
prior written notice and 3 Business Days opportunity to cure, Tenant
may prosecute such holdover proceeding and/or an action for
declaratory relief, with Landlord's cooperation, at Landlord's sole cost
and expense and in Landlord's name.
XIX.7.2 Cancellation Option. Notwithstanding Tenant's waiver
pursuant to Section 19.7.1(ii), if Landlord shall be unable to cause the
Second Expansion Space Inclusion Date to occur on or prior to the
date which is 365 days after the Second Expansion Space Scheduled
Commencement Date, then Tenant shall, at Tenant's option, have the
right to cancel its lease of the Second Expansion Space by giving notice
(an "Second Option Cancellation Notice") to Landlord within 30 days
after the expiration of such 365 day period, which cancellation shall be
effective as of the date on which Landlord receives the Second Option
Cancellation Notice; provided, however, that if Landlord causes the
Second Expansion Space Inclusion Date to occur on or prior to the
date on which Landlord receives Tenant's Second Option Cancellation
Notice, such notice shall be null and void, and Tenant's lease of the
Second Expansion Space shall continue in full force and effect in
accordance with the provisions of this Section 19.7, as if such
Cancellation Notice was never delivered.
SECTION XIX.8 Conditions to Exercise of Option. Notwithstanding
the foregoing provisions of this Article XIX, Tenant may not exercise
the Second Expansion Option on any date on which Tenant is in
Material Default under this Lease beyond any applicable grace, notice
and cure period, and any exercise of such Second Expansion Option
shall be deemed null and void and of no force and effect if on the
Second Expansion Space Inclusion Date Tenant is in Material Default
under this Lease after the giving of any required notice and the
expiration of any required grace or cure period.
SECTION XIX.9 Failure to Exercise Second Expansion Option. If
Tenant does not elect to exercise the Second Expansion Option in
accordance with this Article XIX and within the applicable time period,
time being of the essence, then (a) Tenant shall have forever waived
and relinquished its right to exercise the Second Expansion Option, (b)
Landlord shall at any time thereafter be entitled to lease the space
covered by the Second Expansion Option in question to others at such
rental and upon such terms and conditions as Landlord in its sole
discretion may desire, and (c) Tenant, upon Landlord's request, shall
promptly deliver to Landlord (and any other Person designated by
Landlord) a notice acknowledging that Tenant has forever waived and
relinquished its right to exercise the Second Expansion Option.
SECTION XIX.10 Second Expansion Option is Part of Lease. The
termination of this Lease shall also terminate and render void the
Second Expansion Option whether or not the Second Expansion
Option shall have been exercised. The Second Expansion Option may
not be severed from this Lease or separately sold or transferred.
SECTION XIX.11 [Intentionally Deleted.]
SECTION XIX.12 Notice with Respect to Certain Leasing Activities.
Not later than thirty (30) days after Tenant makes a written request to
Landlord, and, in any event, no later than 10 days after Landlord enters
into any leasing activities with respect to any portion of the 14th floor,
Landlord shall advise Tenant (to the best of Landlord's knowledge) of
any leasing activities, and the lease terms materially relevant to Tenant
(such as demised space, lease term, default, remedies and holdover
provisions) being negotiated with respect to compliance with this
Article XIX and the manner in which the lease complies with the
requirements of this Article XIX, in each case, with respect to the 14th
floor only. As used herein, "leasing activities" shall mean (i) any lease
actually entered into between Landlord and a tenant or other occupant
with respect to the Second Expansion Space or (ii) any material lease
negotiations then being undertaken or about to be undertaken by
Landlord or any Landlord Party (such determination to be made by
Landlord in the exercise of its reasonable judgment), in each case, with
respect to the 14th floor only. Landlord shall deliver a copy of such
lease to Tenant no later than 10 days after the execution of such lease;
it being understood that Landlord may redact out of the copy of such
lease any portions of such lease that are inapplicable to Tenant (such
as, by way of illustration only, the amount of rent or other amounts due
thereunder or such other material terms and provisions (other than such
terms and provisions relating to the term of the Lease, the conformity
with Article XIX and the default, remedy and the holdover
provisions)). Tenant agrees to hold any such information it receives
under this Section 19.12 in strict confidence, but may use such
information in order to enforce its rights hereunder.
SECTION XIX.13 Miscellaneous. If Landlord enters into any written
lease agreement with respect to the 14th floor with any person (other
than Tenant), Landlord agrees to include as an exhibit to such an
agreement a copy of or a summary of the relevant portions of this
Article 19.
ARTICLE XX
TENANT TERMINATION OPTION
SECTION XX.1 Termination Option. Provided Tenant is not then in
Material Default hereunder beyond the expiration of applicable grace
and cure periods at the time of the exercise of the termination option
and on the effective date of termination, Tenant shall have the option to
terminate this Lease with respect to the entire Premises only effective
upon January 31, 2008 or September 30, 2008; provided Tenant
provides Landlord with irrevocable written notice of such election to
terminate this Lease no less than twelve (12) months prior and no
earlier than twenty-four (24) months prior to the effective date of such
termination; and provided further that Tenant pays to Landlord the
Cancellation Fee, such Cancellation Fee to be due and payable upon
the giving of such notice of termination. In the event Tenant terminates
this Lease as provided herein, Tenant will surrender possession of the
Premises to Landlord on or prior to the effective date of termination in
accordance with the provisions of this Lease, as if the termination date
were the Expiration Date of this Lease. Upon written request by the
Landlord or Tenant, the other shall execute and deliver a surrender
agreement in form and substance satisfactory to them confirming the
exercise of Tenant's option to terminate this Lease.
SECTION XX.2 Cancellation Fee. (a) Landlord and Tenant agree
that the Cancellation Fee shall be determined as follows: (x)
$2,813,359.00 minus the Interest Factor (as hereinafter defined), if this
Lease is terminated effective as of January 30, 2008 and (y)
$2,542,428.00 minus the Interest Factor, if this Lease is terminated
effective as of September 30, 2008.
(b) As used herein, "Interest Factor" shall mean, as of the date Tenant
pays to Landlord the Cancellation Fee:
(i) an amount equal to the product of (x) $2,813,359.00 multiplied
by (y) the AAA corporate interest rate for a one year maturity then
available and publicly reported plus 2%, as such rate is reasonably
determined by Tenant in its notice of exercise in the event the
termination of the Lease is effective as of January 30, 2008;
(ii) an amount equal to the product of (x) $2,542,428.00 multiplied
by (y) the AAA corporate interest rate for a one year maturity then
available and publicly reported plus 2%, as such rate is reasonably
determined by Tenant in its notice of exercise in the event the
termination of the Lease is effective as of September 30, 2008.
(c) Tenant's payment of the Cancellation Fee using Tenant's Interest
Factor shall be deemed timely even if Landlord disagrees with the
Tenant's Interest Factor and the Interest Factor is subsequently
recalculated. Landlord may object to Tenant's Interest Factor and any
dispute, if not resolved within 15 days, shall be submitted to arbitration
pursuant to Section 16.21.
ARTICLE XXI
PARKING
SECTION XXI.1 Parking Space. Landlord hereby grants to Tenant a
non-exclusive right to use the parking areas established by the Board of
Managers and Landlord, as the case may be, for the use of the Unit
which shall be provided by Landlord for the accommodation and
parking of vehicles of tenants, their employees, invitees, or visitors.
These areas are shown on the Parking Plan annexed hereto as Exhibit
P. Tenant will be allocated 2 interior parking spaces and such interior
spaces will be on a non-reserved basis. Tenant, its employees, agents,
and invitees shall comply with all the rules and regulations, including
days and hours of operation, speed limits, parking allocations and any
other rules and regulations which are or may be hereafter promulgated
by Landlord or its garage concessionaire, if any, with respect to
parking of motor vehicles in said garage.
SECTION XXI.2 Limitation of Liability. Landlord shall have no
liability on account of any damage or loss to any vehicle or its contents,
regardless of cause, except Landlord's willful misconduct or gross
negligence, and Tenant hereby agrees to indemnify, hold harmless and
defend Landlord from and against any and all causes, claims, suits,
damages, and expenses (including reasonable attorneys' fees) arising
from the use of the parking areas in the Building by Tenant or by
anyone claiming by, through or under Tenant's privileges granted
hereunder.
SECTION XXI.3 Certain Rights of Landlord. At any time and from
time to time Landlord shall have the following rights:
(a) to move the location of the parking areas and change the layout
of the parking spaces therein provided; provided that the number and
size of parking spaces allocated to Tenant shall not be reduced;
(b) if required to do so by the Building Managers, to require
Tenant to reserve or otherwise identify Tenant's parking spaces or to
require Tenant's employees to identify their vehicles in a manner
reasonably determined by Landlord; and
(c) if required to do so by the Building Managers, to tow
unidentified or unmarked visitor or employee cars and to tow marked
cars of Tenant's employees and/or visitors in the event that Tenant's
employees or visitors are using more than Tenant's designated number
of parking spaces.
SECTION XXI.4 Tenant Obligations. Throughout the Term of this
Lease, Tenant shall comply in all respects with the reasonable rules and
regulations with regard to the parking system established by Landlord
and the Board of Managers, as the same may be modified from time to
time.
ARTICLE XXII
THE LOWER MANHATTAN PLAN
SECTION XXII.1 Certain Definitions.
(a) For purposes of this Article XXII, unless otherwise defined in
this Lease, all terms used herein shall have the meanings ascribed to
them in Title 4 of Article 4 of the New York Real Property Tax Law
(herein called the "Lower Manhattan Plan").
(b) For purposes of the Lower Manhattan Plan, Tenant's
Percentage Share (as such term is used in the Lower Manhattan Plan)
shall mean Tenant's Share, or if the Lower Manhattan Plan requires or
permits a different percentage and Tenant elects to use that percentage,
then, or such other percentage amount as may be required or permitted
pursuant to the provisions of the Lower Manhattan Plan.
SECTION XXII.2 LMP Abatement Benefits.
(a) For so long as Tenant continues to be eligible (or would
continue to be eligible but for Landlord's failure to comply with its
obligations under this Article XXII) for the real estate tax abatement
benefits of the Lower Manhattan Plan (herein called the "LMP
Abatement Benefits") with respect to the Premises, Landlord, at its sole
cost and expense, agrees to comply promptly with the provisions and
requirements of the Lower Manhattan Plan and the rules promulgated
thereunder (and to file such documents, certifications and statements as
may be required in order to obtain such LMP Abatement Benefits) as
the same relate to the Premises and to Landlord (in connection with
Tenant's eligibility for the LMP Abatement Benefits). After Tenant's
written request therefor, Landlord shall provide Tenant with notice
evidencing its payment of real estate taxes due on the Unit no later than
three (3) days prior to the due date of such taxes (the "Tax Notice").
(b) Tenant shall indemnify and hold harmless Landlord and all
Senior Interest Holders and its and their respective partners, directors,
officers, principals, shareholders, agents and employees from and
against any and all claims arising from or in connection with Tenant's
failure to comply with the provisions and requirements of the Lower
Manhattan Plan and the rules promulgated thereunder as same relate to
the Premises, together with all costs, expenses and liabilities incurred in
connection with each such claim or action or proceeding brought
thereon, including, without limitation, all attorneys' fees and expenses.
SECTION XXII.3 Certain Rent Abatements.
(a) In accordance with the Lower Manhattan Plan and
notwithstanding anything to the contrary contained in this Lease,
Landlord agrees to allow Tenant a credit against the Base Rent and
Additional Rent (including, without limitation, Tenant's Tax Payment
and Tenant's Operating Payment) payable by Tenant hereunder in an
amount that, in the aggregate, equals the full amount of any abatement
of real estate taxes granted for the Premises pursuant to the Lower
Manhattan Plan and actually received by Landlord (herein called the
"Actual LMP Benefits"). Landlord shall, within thirty (30) days after
its receipt of the Actual LMP Benefits, credit the full amount thereof
against the next installment(s) of Base Rent and/or Additional Rent
(including, without limitation, Tenant's Tax Payment and Tenant's
Operating Payment) becoming due hereunder.
(b) Tenant shall, within 15 days after Landlord provides Tenant
with notice thereof, promptly pay to Landlord, as Additional Rent
hereunder, the amount of all or any portion of the Actual LMP Benefits
that have been credited against Base Rent and/or Additional Rent
(including, without limitation, Tenant's Tax Payment and Tenant's
Operating Payment) becoming due hereunder, and which are thereafter
revoked, together with any interest and/or penalties imposed against
Landlord in connection with such revocation of such Actual LMP
Benefits; provided that no such payment shall be due by Tenant to the
extent such revocation is due to Landlord's failure to comply with the
Lower Manhattan Plan, the rules promulgated thereunder or the
provisions of this Article 22.
SECTION XXII.4 Notice to Tenant.
(a) In accordance with Section 499-c(5) of the Lower Manhattan
Plan, Landlord agrees and informs Tenant that:
(1) an application for abatement of real property taxes pursuant to
Title 4 of Article 4 of the New York Real Property Tax Law will be
made timely for the Premises;
(2) the rent, including amounts payable by Tenant for real property
taxes, will accurately reflect any abatement of real property taxes
granted pursuant to Title 4 of Article 4 of the New York Property Tax
Law for the Premises;
(3) at least thirty-five dollars per square foot must be spent on
improvements to the Premises and the common areas; and
(4) all abatements granted with respect to the Unit pursuant to
Title 4 of Article 4 of the New York Real Property Law will be
revoked if, during the Benefit Period, real estate taxes or water or
sewer charges or other lienable charges are unpaid for more than one
year, unless such delinquent amounts are paid as provided in
subdivision four of section four hundred ninety-nine-f of Title 4 of the
New York Real Property Law.
The provisions of this Section 22.4(a) shall not reduce Tenant's rights
or Landlord's obligation under this Article XXII.
(b) Except as expressly provided in this Lease and its Exhibits,
nothing contained herein (including, without limitation, the provisions
of subsection 22.4(a)(3) hereof), shall be construed to impose any
obligation on Landlord to perform any improvements to the Premises
and/or the common areas to establish Tenant's eligibility for the LMP
Abatement Benefits. Landlord hereby acknowledges and agrees that
Tenant may apply all or any portion of the Allowance toward satisfying
the requirement of the Lower Manhattan Plan that at least thirty-five
dollars per square foot must be spent on improvements to the Premises
and the common areas.
SECTION XXII.5 Certain Covenants of Landlord.
(a) Landlord covenants and agrees as follows:
(i) Landlord shall timely pay all real estate taxes, water and sewer
charges and other lienable charges that become due and payable during
the period for which Tenant is entitled to receive the LMP Abatement
Benefits.
(ii) There shall be no real estate taxes, water and sewer charges or
other lienable charges due and owing with respect to the Real Property
or the Unit on the date the Abatement Application (as hereinafter
defined) is filed with the Department, unless such real property taxes or
charges are being paid in timely installments pursuant to a written
agreement with the Department or other appropriate agency.
(iii) Landlord shall, provided Tenant has complied with Section 22.8
(a) below, timely make all filings required to be made by Landlord in
order to obtain the LMP Abatement Benefits and Further Benefits.
(b) Landlord shall indemnify and hold harmless Tenant and its
partners, directors, officers, principals, shareholders, agents and
employees and their successors and assigns from and against any loss
of benefits under the Lower Manhattan Plan or Further Benefits arising
from Landlord's failure to comply with the provisions and requirements
of the Lower Manhattan Plan or relating to Further Benefits, and the
rules promulgated thereunder as same relate to the Premises (it being
understood and agreed that, except as expressly provided in this Lease
and its Exhibits, nothing contained herein (including, without limitation,
the provisions of subsection 22.4(a)(3) hereof), shall be construed to
impose any obligation on Landlord to perform any improvements to
the Premises and/or the common areas to establish Tenant's eligibility
for the LMP Abatement Benefits). .
SECTION XXII.6 Abatement Application.
(a) Landlord agrees to cooperate with Tenant and to execute,
deliver and file, the Abatement Application (as hereinafter defined),
together with the affidavit required by Section 499-c(7) of the Lower
Manhattan Plan and such other applications as Tenant reasonably
believes is necessary to enable Tenant to receive benefits under the
Lower Manhattan Plan tax abatement and energy programs or Further
Benefits within 10 Business Days after Tenant delivers to Landlord the
Abatement Application, affidavit and such other applications completed
and ready for filing.
(b) Landlord agrees to cooperate with Tenant and to execute,
deliver and file in a timely manner, an application (the "Abatement
Application") for a certificate of abatement in accordance with Section
499-d of the Lower Manhattan Plan; provided that Tenant delivers to
Landlord the form of Abatement Application (and such application is
completed as to Tenant, but not as to Landlord) that is needed for
filing. Landlord further agrees to provide all other information required
by the New York City Department of Finance pursuant to Section 499-
d of the Lower Manhattan Plan and to otherwise comply with the
provisions of said Section 499-d.
(c) For so long as Tenant continues to be eligible (or would
continue to be eligible but for Landlord's failure to comply with its
obligations under this Article XXII) for the LMP Abatement Benefits
with respect to the Premises, Landlord, upon not less than ten (10)
Business Days advance written notice from Tenant, agrees to
cooperate with Tenant to annually execute, deliver and file in a timely
manner a certificate of continuing eligibility in accordance with Section
499-f of the Lower Manhattan Plan.
(d) Landlord shall be responsible for all costs incurred by Landlord
in connection with the performance of Landlord's obligations pursuant
to this Article XXII, including, without limitation, the amount of any
administrative charges or fees imposed by the Department in
connection with such compliance.
SECTION XXII.7 Further Cooperation; Further Benefits.
Upon Tenant's written request therefor, Landlord hereby agrees to
provide Tenant with such further cooperation (herein called "Further
Cooperation"), at Landlord's sole cost and expense, as may reasonably
be requested by Tenant (including, without limitation, such actions as
may be required by applicable local, state or federal law, and Landlord
shall use all reasonable efforts to cause the Board of Managers to take
any actions which are required to be taken by them) to assist Tenant in
obtaining any incentives, subsidies, refunds or payments (herein called
"Further Benefits") made available to Tenant by (i) any modification to
or amendment of the Lower Manhattan Plan, (ii) any program of the
New York City Industrial Development Agency or any other
governmental agency, including but not limited to the Empire State
Development Organization and the New York City Economic
Development Corporation or (iii) any public utility; provided and on
condition that:
(i) the receipt by Tenant of such Further Benefits would not reduce or
otherwise adversely affect the eligibility of Landlord or any other tenant
of the Unit to receive any incentives, subsidies, refunds or payments;
and
(ii) Tenant shall indemnify and hold harmless Landlord and all Senior
Interest Holders and its and their respective partners, directors, officers,
principals, shareholders, agents and employees, and Landlord shall
indemnify and hold harmless Tenant and its respective partners,
directors, officers, principals, shareholders, agents and employees, in
each case, from and against any and all claims arising from or in
connection with the other party's negligence or willful misconduct with
respect to the matters in this Section 22.7 and the receipt by Tenant of
such Further Benefits, together with all costs, expenses and liabilities
incurred in connection with each such claim or action or proceeding
brought thereon, including, without limitation, all attorneys' fees and
expenses.
In furtherance of the foregoing, with respect to Tenant's Allowance
hereunder, upon Tenant's prior written request therefor, Landlord
agrees to use any certificate of exemption provided to Landlord to
exclude, to the extent legally permissible therefor, sales and use tax on
Tenant's behalf.
SECTION XXII.8 Certain Covenants by Tenant.
(a) Tenant shall deliver to Landlord a reminder notice of any
document, certification, statement or similar instrument that is required
to be filed by Landlord in order to obtain LMP Abatement Benefits (or
is otherwise reasonably necessary to obtain the tax benefits
contemplated by this Article XXII) or Further Benefits at least 15
Business Days prior to the deadline for such filing; it being understood
and agreed that such reminder notice shall describe in reasonably
sufficient detail the nature and purpose of such filing and shall contain a
copy of such filing (which shall be completed as to Tenant, if
applicable).
(b) Notwithstanding anything in this Lease to the contrary,
Landlord shall not be liable for any losses, costs or expenses arising
from Tenant's failure to comply with the provisions and requirements
of Section 22.4(a)(3) and Section 22.8(a).
SECTION XXII.9 Tenant's Right to Cure. In the event that (i)
Landlord fails to comply with the covenants contained in Section
22.5(a)(i) with respect to the payment of real estate taxes, water and
sewer charges and other lienable charges, after 15 Business Days prior
written notice, and (ii) as a result of such failure to pay, Tenant is likely
to lose its LMP Abatement Benefits, then Tenant shall be permitted, in
the name of Landlord, to make any such payments and Tenant shall be
entitled to an appropriate credit against Rent to the extent of any
payments actually made by Tenant with respect to such taxes, water
and sewer charges and other lienable charges.
ARTICLE XXIII
STORAGE SPACE
SECTION XXIII.1 Demise of Storage Space. Tenant hereby leases
from Landlord, and Landlord hereby leases to Tenant for the Term of
this Lease approximately 1,000 square feet of storage space located in
the basement of the Building on Sublevel C-3, as more particularly
identified on Exhibit U (the "Storage Premises"), which Storage
Premises shall be separately partitioned by Landlord, at Landlord's sole
cost and expense; it being agreed that metal fencing would be
acceptable partitioning. Tenant shall pay to Landlord monthly
additional Base Rent for the Storage Premises as follows: (a) Twelve
Thousand and 00/100 Dollars ($12,000.00) per annum for the period
commencing on the Base Rent Commencement Date and ending on the
day immediately preceding the tenth (10th) anniversary of the
Commencement Date; and (b) Fourteen Thousand and 00/100 Dollars
($14,000.00) per annum for the period commencing on the tenth (10th)
anniversary of the Commencement Date and ending on the Expiration
Date. In the event that this Lease shall be extended pursuant to Article
XVII hereof, Landlord and Tenant shall mutually agree on the rent to
be paid for the Storage Premises during such renewal term.
SECTION XXIII.2 Manner of Payment. Tenant agrees to pay the
additional Base Rent for the Storage Premises set forth above in the
same manner as provided in Article 3.1 of this Lease for the payment of
Base Rent.
SECTION XXIII.3 Use. Tenant shall use the Storage Premises only
as storage space, printing, photocopying, multilith or offset printing in
connection with the business conducted by Tenant at the Premises
pursuant to this Lease and for no other purpose. Except as expressly
set forth herein, the Storage Premises (and Tenant's use thereof) shall
be subject to all of the terms and provisions of this Lease applicable to
the Premises, as well as all other reasonable rules and regulations as
may, from time to time, be established by Landlord regarding use of the
Storage Premises.
SECTION XXIII.4 No Hazardous Materials. Tenant shall not place
or store in the Storage Premises any Hazardous Materials. Tenant shall
not place or store any materials store in the Storage Premises directly in
contact with the floor of the Storage Premises.
SECTION XXIII.5 Surrender of Storage Premises. Upon the
expiration or termination of this Lease, Tenant shall surrender the
Storage Premises to Landlord vacant and broom clean and in
substantially the same condition as originally delivered to Tenant
(reasonable wear and tear and damage by casualty excepted).
SECTION XXIII.6 Right of First Offer for Additional Storage Space.
(a) As used herein, the following terms shall have the following
meanings:
(i) "Available for Lease" means, as of any date, with respect to
any First Offer Storage Space, that Landlord is then prepared to offer
such First Offer Storage Space for lease in the general leasing market
(including, without limitation, to other occupants of the Building,
subject to the immediately following sentence), regardless of the
proposed commencement date of such lease. Space shall not be
deemed to be "Available for Lease" if it is subject to any rights of first
offer, first refusal, renewal or expansion rights granted to other existing
tenants in the Building.
(ii) "First Offer Storage Space" means any storage space located in the
sub-basement areas of the Building and otherwise allocable to
Landlord.
(iii) "First Offer Storage Period" means the six (6) month period after
Tenant has irrevocably exercised the First Expansion Option and the
six (6) month period after Tenant has irrevocably exercised the Second
Expansion Option.
(b) If at any time during the First Offer Storage Period, Tenant shall
send to Landlord a notice that Tenant desires to lease additional
storage space in the Building and, at the time Landlord receives such
notice, any First Offer Storage Space shall be Available for Lease,
Landlord shall notify Tenant (a "First Offer Storage Space Availability
Notice") describing such First Offer Storage Space and its anticipated
date of availability. If Tenant shall deliver to Landlord a notice (a "First
Offer Storage Space Acceptance") accepting such First Offer Storage
Space within 10 Business Days of receipt of the First Offer Storage
Space Availability Notice, then the First Offer Storage Space shall be
added to the Storage Premises on all of the terms and provisions of this
Lease; provided the Rent for such First Offer Storage Space shall be
the greater of (x) the then escalated Rent (on a per square foot basis)
applicable to the balance of the Storage Premises and (y) 95% of the
fair market rent for the First Offer Storage Space as reasonably
determined by Landlord.
(c) If Tenant does not timely deliver to Landlord a First Offer Storage
Space Acceptance in response to a First Offer Storage Space
Availability Notice in accordance with this Section 23, time being of
the essence, then Tenant shall have waived and relinquished its rights
under this Section 23 with respect to the First Storage Space described
in such First Offer Storage Space Availability Notice and Landlord
shall at any time thereafter be entitled to offer, show, market and lease
such First Offer Storage Space to others at such rental rates and upon
such terms as Landlord in its sole discretion may desire.
ARTICLE XXIV
NET WORTH OF TENANT
SECTION XXIV.1 Net Worth Definitions. For the purposes of this
Lease, the following terms shall have the indicated meanings:
XXIV.1.1 "Net Worth" means the consolidated net worth of
Tenant as set forth in the annual audited consolidated financial
statement of Tenant prepared in accordance with GAAP.
XXIV.1.2 "Minimum Net Worth" means, except as modified by
Section 24.4 hereof, a Net Worth no less than the following amounts
during the following periods:
Amount From To (and including)
$30,000,000 Commencement Date March 31, 1997
$27,000,000 April 1, 1997 March 31, 1998
$24,000,000 April 1, 1998 March 31, 1999
$21,000,000 April 1, 1999 March 31, 2000
$18,000,000 April 1, 2000 March 31, 2001
$10,000,000 April 1, 2001 March 31, 2002
$ 9,000,000 April 1, 2002 March 31, 2003
$ 8,000,000 April 1, 2003 March 31, 2004
$ 7,000,000 April 1, 2004 March 31, 2005
$ 6,000,000 April 1, 2005 March 31, 2006
$ 5,000,000 April 1, 2006 March 31, 2007
$ 4,000,000 April 1, 2007 March 31, 2008
$ 3,000,000 April 1, 2008 March 31, 2009
$ 2,000,000 April 1, 2009 March 31, 2010
$ 1,000,000 April 1, 2010 September 30, 2013
SECTION XXIV.2 Maintenance of Net Worth. From the
Commencement Date through and including the earlier to occur of (i)
September 30, 2013 and (ii) the expiration or sooner termination of this
Lease and, in either case, the payment in full of all of Tenant's
obligations hereunder, Tenant covenants and agrees to maintain
Tenant's Net Worth in an amount in excess of the Minimum Net
Worth.
SECTION XXIV.3 Letter of Credit. In lieu of complying with the
provisions of Section 24.2 hereof, Tenant may, at any time during the
term of this Lease, deliver to Landlord a letter of credit (in form and
content reasonably satisfactory to Landlord) or deposit with Landlord a
cash security deposit, in each case, in an amount no less than the
amounts specified below, which letter of credit or security deposit shall
be used as security for any defaults or other amounts due to Landlord
under the Lease.
Amount Lease Year
$5,000,000 Commencement Date through 1st year anniversary of
the Rent Commencement Date
$4,500,000 1st year anniversary of the Rent Commencement Date
through 2nd year anniversary of Rent Commencement Date
$4,000,000 2nd year anniversary of the Rent Commencement Date
through 3rd year anniversary of Rent Commencement Date
$3,500,000 3rd year anniversary of the Rent Commencement Date
through 4th year anniversary of Rent Commencement Date
$3,000,000 4th year anniversary of the Rent Commencement Date
through 5th year anniversary of Rent Commencement Date
$2,500,000 5th year anniversary of the Rent Commencement Date
through 6th year anniversary of Rent Commencement Date
$2,000,000 6th year anniversary of the Rent Commencement Date
through 7th year anniversary of Rent Commencement Date
$1,500,000 7th year anniversary of the Rent Commencement Date
through 8th year anniversary of Rent Commencement Date
$1,000,000 8th year anniversary of the Rent Commencement Date
through 9th year anniversary of Rent Commencement Date
$ 500,000 9th year anniversary of the Rent Commencement Date
through September 30, 2013
SECTION XXIV.4 Certain Provisions Relating to the Renewal Term.
(a) With respect to the Renewal Term, but only to the extent required
in Section 14.2 relating to certain corporate or partnership transactions,
notwithstanding anything herein to the contrary, Minimum Net Worth
shall mean a Net Worth no less than the following amounts during the
following periods:
Amount From To (and including)
$ 5,000,000 October 1, 2013 September 30, 2014
$ 4,000,000 October 1, 2014 September 30, 2015
$ 3,000,000 October 1, 2015 September 30, 2016
$ 2,000,000 October 1, 2016 September 30, 2017
$ 1,000,000 October 1, 2017 September 30, 2018
(b) With respect to the Renewal Term only, Tenant may elect, in lieu
of complying with the Minimum Net Worth provisions of Section 14.2
hereof relating to certain corporate or partnership transactions, to
deliver to Landlord a letter of credit (in form and content reasonably
satisfactory to Landlord) or deposit with Landlord a cash security
deposit, in each case, in an amount no less than the amounts specified
below, which letter of credit or security deposit shall be used as
security for any defaults or other amounts due to Landlord under the
Lease.
Amount From To (and including)
$ 500,000 October 1, 2013 September 30, 2014
$ 400,000 October 1, 2014 September 30, 2015
$ 300,000 October 1, 2015 September 30, 2016
$ 200,000 October 1, 2016 September 30, 2017
$ 100,000 October 1, 2017 September 30, 2018
SECTION XXIV.5 Reporting Requirements. Tenant shall deliver to
Landlord, no later than ten (10) Business Days after Landlord's written
request therefor, a certificate of an officer of Tenant, certifying that Net
Worth, as shown in Tenant's annual certified financial statement,
exceeds the Minimum Net Worth (or that Tenant has complied with
the provisions of Section 24.4).
[Signature Page Follows]
IN WITNESS WHEREOF, Landlord and Tenant have hereunto
executed this Lease by their respective duly authorized representatives
as of the day and year first above written.
LANDLORD:
NY BROAD HOLDINGS, INC.,
a Delaware corporation
By:/s/ Marc Bilbao
Name:Marc Bilbao
Title: Vice-President
TENANT:
FAHNESTOCK & CO. INC.
a New York corporation
By:/s/ A.G. Lowenthal
Name:Albert G. Lowenthal
Title: Chairman and CEO
EXHIBIT A
Floor Plan
EXHIBIT B
Definitions
Whenever used in this Lease, the following terms shall have the
indicated meanings:
AAA: The American Arbitration Association or any successor thereto.
Abatement Application: As defined in Section 22.6.
ACM: As defined in Schedule D-2,2 of Exhibit D.
Actual LMP Benefits: As defined in Section 22.3.
ADA Requirements: As defined in Section 5.4.
Additional Rent: As defined in Section 3.2.
Additional Tax Payment: As defined in Section 4.2.1.
Address of Landlord: As defined in Section 16.13.
Address of Tenant: As defined in Section 16.13.
Address of the Building Manager: Anthony Viceconte, Building
Manager, 125 Broad Street Condominium, 125 Broad Street, New
York, New York.
Adjusted Unused Work Allowance: As defined in Exhibit D.
Adjusted Escalated Rent: As defined in Section 18.3.1.
Affiliate of Tenant: As defined in Section 14.8.
After Hours HVAC: As defined in Exhibit H.
All or Substantially All of the Premises: As defined in Section 14.3.1.
Allowance: As defined in Section 1.1.
Alteration: The installation, relocation or removal of any
Improvement. An Alteration may include (a) repair work performed
by Tenant pursuant to Article VIII or (b) compliance work performed
by Tenant pursuant to Section 5.3 if such work involves the
installation, relocation or removal of any Improvement.
Alteration Requirements: As defined in Exhibit J.
Available for Lease: As defined in Section 23.6.
Base Building: As defined in Schedule D-1 to Exhibit D.
Base Operating Expenses: As defined in Section 4.1.8.
Base Rent: As defined in Section 1.1.
Base Rent Commencement Date: As defined in Section 1.1.
Base Taxes: As defined in Section 4.1.3.
Base Year: As defined in Section 4.1.8.
Base Tax Year: As defined in Section 4.1.3.
Basic Capacity: As defined in Section 6.1.3.
Board of Managers: As defined in the Condominium Documents.
Building: The office tower building, other improvements and leasehold
interest in the underlying land known as The 125 Broad Condominium,
located at 125 Broad Street, New York, New York, and all rights and
interests appurtenant thereto.
Building Core: As defined in Exhibit M.
Building Directory: A computerized building directory located near
the Vietnam Veterans Memorial Park entrance and a separate
computerized building directory located near the 125 Broad Street
entrance, which shall meet the specifications set forth in Section 16.16.
Building Manager: As defined in Exhibit J.
Building Rules and Regulations: The rules and regulations for the
Building as set forth in Exhibit F attached hereto and any other building
rules and regulations adopted in accordance with Section 5.5.
Building Service Systems: All mechanical, electrical, plumbing, gas,
telecommunication, sanitary, sprinkler, HVAC, security, life safety,
elevator and other systems or facilities that service the Building or the
Unit up to the point of localized distribution to the floor on which the
Premises are located and excluding any systems or facilities located in
the Premises or extending beyond such point of localized distribution;
provided that Building Service Systems shall also include the Building
air distribution, electrical and plumbing systems to the points where (i)
the Building system's main distribution duct connects to Tenant's main
interior air distribution duct (it being intended that Building Service
Systems shall include the heat/recool coil unless the same is damaged
by Tenant or Tenant's servants, agents, employees, licensees or
invitees), (ii) the Building's electrical system's panel boxes serving the
Premises connect to the electrical system in the Premises and (iii) the
main vertical plumbing riser of the Building connects to all plumbing
lines in and serving the Premises (it being intended that Building
Service Systems shall include the valve at the connection point), but
excluding those components of distribution of such air distribution,
electrical and plumbing systems and any other systems which Tenant is
obligated to maintain and repair pursuant to Section 8.5,
Building Standards: The Building Standards for Alterations to the
Building as set forth in Exhibit E attached hereto and any other building
standards adopted in accordance with Section 5.5.
Business Days: As defined in the Declaration.
Business Hours: As defined in the Declaration.
By-Laws: The By-Laws of the Condominium, as the same may be
amended, restated, supplemented or otherwise modified from time to
time in accordance with the Declaration and the terms and provisions
of this Lease.
Cancellation Fee: As defined in Section 20.2.
Change Request: As defined in Exhibit D.
Cleaning Specifications: As defined in Section 6.4.
Commencement Date: As defined in Section 1.1.
Common Charges: As defined in the Declaration.
Common Elements: Those areas and facilities in the Building
designated in the Declaration as Common Elements or Limited
Common Elements, as such Common Elements or Limited Common
Elements may be changed from time to time pursuant to Law.
Common Expenses: As defined in the Declaration.
Comparable Buildings: Other first-class lower Manhattan high rise
office buildings which are comparable to the Building in size, location
and prestige.
Condominium: That leasehold condominium known as "The 125
Broad Condominium" established by the Declaration.
Condominium Documents: The Declaration, the By-Laws, the
Building Rules and Regulations and the Building Standards, as each of
the same may be amended, restated, supplemented or otherwise
modified from time to time.
Control: As defined in Section 14.8.
Corridor Area: As defined in Exhibit M.
Cost of the Work: As defined in Exhibit D.
Date of the Taking: As defined in Section 10.1.
Declaration: That Declaration of Condominium dated December 23,
1994, recorded in the Office of the Register of The City of New York
in New York County (the "Register's Office") on January 10, 1995, in
Reel 2171 at Page 1959, as amended by that certain First Amendment
to Declaration dated as of March 28, 1995, recorded in the Register's
Office on April 6, 1995, in Reel 2197 at Page 1306 and by that certain
Second Amendment to Declaration dated as of December __, 1996,
recorded in the Register's Office on February 6, 1997, in Reel 2025 at
Page 2419, and as the same may be further amended, restated,
supplemented or otherwise modified from time to time.
Decorative Alteration: As defined in Paragraph 7.6 of Exhibit J.
Deficiency: As defined in Section 15.2.3.
Direction of Payment Letter: As defined in Exhibit D.
Electric Inclusion Amount: As defined in Section 6.1.2.1.
Electricity Additional Rent: As defined in Section 6.1.1.
Eminent Domain: As defined in Section 10.1.
Escalated Rent: As defined in Section 18.3.1.
Escrow Agent: As defined in Section 16.3.
Escrow Agreement: As defined in Section 16.3.
Estimated Casualty Restoration Work Completion Date: As defined in
Section 9.1(e).
Estimated Operating Statement: As defined in Section 4.3.1.
Excess Costs: As defined in Exhibit D.
Execution Date: The date on which this Lease is executed and
delivered by the parties hereto as indicated on the cover page of this
Lease.
Expenses: As defined in Section 14.6.
Expiration Date: As defined in Section 1.1.
First Expansion FMRV: As defined in Section 18.4.1.
First Expansion Market: As defined in Section 18.4.1.
First Expansion Market Term: As defined in Section 18.4.1.
First Expansion Notice: As defined in Section 18.1.2.
First Expansion Option: As defined in Section 18.1.
First Expansion Space: As defined in Section 18.1.1.
First Expansion Space Availability Notice: As defined in Section
18.1.1.
First Expansion Space Base Rent: As defined in Section 18.3.
First Expansion Space Inclusion Date: As defined in Section 18.2.
First Expansion Space Rentable Area: As defined in Section 18.2.3.
First Expansion Space Scheduled Commencement Date: As defined in
Section 18.1.1.
First Expansion Space Term: As defined in Section 18.2.
First Offer Storage Availability Notice: As defined in Section 23.6.
First Offer Storage Period: As defined in Section 23.6.
First Offer Storage Space: As defined in Section 23.6.
First Offer Storage Space Acceptance: As defined in Section 23.6.
First Option Cancellation Notice: As defined in Section 18.7.2.
Force Majeure: As defined in Section 16.7.
Free Rent Period: As defined in Section 3.7.
Further Benefits: As defined in Section 22.7.
Further Cooperation: As defined in Section 22.7.
GAAP: Generally accepted accounting principles, consistently applied.
Ground Lease: That certain Lease dated December 31, 1968, between
John P. McGrath and Sol G. Atlas, as landlord, and Two New York
Plaza Company, as tenant, a memorandum of which was recorded on
May 21, 1969, in the Register's Office, in Reel 140, Page 730, which
lease affects certain real property located in the City, County and State
of New York, commonly known as 125 Broad Street, New York,
New York, which lease has been amended by the following
agreements: (a) Memorandum of Agreement modifying Lease, dated as
of December 1, 1969, and recorded on March 19, 1970, in the
Register's Office in Reel 168, Page 1219; (b) Memorandum of
Modification of Lease with option to purchase, dated as of June 28,
1974, and recorded on July 2, 1974, in the Register's Office in Reel
318, Page 401; (c) Assignment of Lease to American Express
Company, dated June 28, 1974, and recorded in the Register's office in
Reel 318, Page 410; (d) Assignment of Lease to American Express
Company and American Express International Banking Company,
dated March 26, 1976, and recorded on April 19, 1976, in the
Register's Office in Reel 367, Page 80; (e) Assignment of Partial
Interest in Lease to Ardmore Properties, Inc., recorded in the Register's
Office in Reel 585. Page 1881; (f) Assignment of Lease by Ardmore
Properties, Inc. to American Express Company dated June 24, 1982,
and recorded in the Register's Office on June 29, 1982, in Reel 628,
Page 1067; (g) Amendment of Lease by and between Sandra Atlas
Bass, John P. McGrath and Arthur Roth, as Executors under the Last
Will and Testament of Sol G. Atlas, deceased, and John P. McGrath,
individually, as lessors, and American Express Company and American
Express International Banking Corporation, as lessees, dated July 1,
1979, and recorded in the Register's Office on April 1, 1983, in Reel
679, Page 1277; (h) Assignment of Lease by American Express
Company and American Express International Banking Corporation, as
assignors, to Olympia & York 125 Broad Street Company, as assignee,
dated February 1, 1983, and recorded in the Register's Office on
February 3, 1983, in Reel 695, Page 1305 and (i) Modification
Agreement for Ground Lease, dated as of December 28, 1994, among
Sandra Atlas Bass and Robert Zabelle, as Executors, and Lucy
McGrath, as Executrix, as Lessors, and Sullivan & Cromwell, Johnson
& Higgins, and Landlord, as Lessee.
Hazardous Materials: Any element, compound, chemical mixture,
contaminant, pollutant, material, waste or other substance which is
defined, determined or identified as a "hazardous substance",
"hazardous waste" or "hazardous material" under any federal, state or
local statute, regulation or ordinance applicable to the Premises, as well
as any amendments and successors to such statutes and regulations, as
may be enacted and promulgated from time to time, including, without
limitation, the following: (i) the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (codified in
scattered sections of 26 U.S.C., 33 U.S.C., 42 U.S.C. and 42 U.S.C.
9601 et seq.); (ii) the Resource Conservation and Recovery Act of
1976 (42 U.S.C. 6901 et seq.); (iii) the Hazardous Materials
Transportation Act (49 U.S.C. 1801 et seq.); (iv) the Toxic
Substances Control Act (15 U.S.C. 2601 et seq.); (v) the Clean
Water Act (33 U.S.C. 1251 et seq.); (vi) the Clean Air Act (42
U.S.C. 7401 et seq.); (vii) the Safe Drinking Water Act (21 U.S.C.
349; 42 U.S.C. 201 and 300f et seq.); (viii) the National
Environmental Policy Act of 1969 (42 U.S.C. 3421); (ix) the
Superfund Amendment and Reauthorization Act of 1986 (codified in
scattered sections of 10 U.S.C., 29 U.S.C., 33 U.S.C. and 42 U.S.C.);
(x) Title III of the Superfund Amendment and Reauthorization Act (40
U.S.C. 1101 et seq.) and (xi) the Environmental Conservation Law
of the State of New York (codified in section 171/2 of McKinney's
1984).
HVAC: Heating, ventilation and air conditioning.
Improvement: Any fixed improvement in, to or upon the Premises
made by or for any tenant or occupant.
Initial Plans and Specifications: As defined in Exhibit D.
Insurance Requirements: As defined in Exhibit I.
Interest Factor: As defined in Section 20.2.
Interest Rate: As defined in Section 3.5.
Land: The real property upon which the Building is situated and which
is legally described in the Declaration.
Landlord: As defined in the introductory paragraph of this Lease and
in Section 12.2.
Landlord Parties: Landlord, any Senior Interest Holder, the Board of
Managers, and any partner, principal, director, officer, agent or
employee of any of the foregoing.
Landlord's Additional Work: As defined in Exhibit D.
Landlord's Broker: Edward S. Gordon Company, Inc., 111 Broadway,
10th Floor, New York, New York (PH) 212-618-7000 (Fax) 212-618-
7085.
Landlord's Delivery Date: The date on which the following shall have
occurred: (i) the Board of Managers and Landlord have executed and
delivered to Tenant the Nondisturbance Agreement contemplated by
Section 13.1 and (ii) provided Tenant has complied with Section 22.8,
Landlord has executed and delivered the documents required to be
delivered under this Lease with respect to the LMP Abatement
Benefits and Further Benefits, in each case, in accordance with the
terms of the Lease Escrow Agreement.
Landlord's Electrical Consultant: As defined in Section 6.1.2.1.
Landlord's First Expansion Rent Notice: As defined in Section
18.4.2.1.
Landlord's Percentage: As defined in Section 4.1.9.
Landlord's Renewal Rent Notice: As defined in Section 17.4.2.1.
Landlord's Second Expansion Rent Notice: As defined in Section
19.4.2.1.
Landlord's Share: As used in Section 4.1.2, Landlord's share of the
common charges for the maintenance, repair, replacement,
management, operation and use of the Common Elements as
determined in accordance with the provisions of the Declaration.
Landlord's Work: As defined in Exhibit D.
Law(s): The terms "law," "laws," "provisions of law," "requirements
of law," and words of similar import shall mean present and future
laws, statutes (including the Americans with Disabilities Act, 42 U.S.C.
12,101 et seq.), ordinances, codes (including building and fire codes),
rules (including the rules and requirements of the Occupational Safety
and Health Administration relating to indoor air quality codified at 29
CFR parts 1910, 1915, 1926 and 1928), regulations, requirements,
decrees, orders and directives of any or all of the federal, state, county
and city governments and all agencies, authorities, bureaus, courts,
departments, subdivisions, or offices thereof, and of any other
governmental, public or quasi-public authorities (including the board of
fire underwriters or other insurance body) having jurisdiction over the
Building, the Unit or the Premises, and the direction of any public
officer pursuant to law, whether now or hereafter in force. References
to specific statutes include (a) successor statutes of similar purpose and
import, and (b) all rules, regulations and orders made thereunder.
Lease Escrow Agreement: As defined in Section 16.14.
Lease Year: As defined in Section 4.1.6.
Leasing Activities: As defined in Section 18.12.
Letter of Credit: As defined in Section 16.18.
LIBOR Rate: The rate of interest per annum (rounded upward to the
nearest whole multiple of one-sixteenth of one percent (.0625%)),
which appears on the Telerate page 3750 (or if unavailable, such
similar or successor information service used in the financial markets to
determine such rate) as of 11:00 a.m. London time, two (2) Business
Days prior to the date upon which the LIBOR rate is to be determined
hereunder, for deposits of U.S. Dollars for a period of time equal to
thirty (30) days.
LMP Abatement Benefits: As defined in Section 22.2.
Lower Manhattan Plan: As defined in Section 22.1.
Material Default: Any default under Section 15.1.1, Section 15.1.2 (but
only with respect to Section 5.2, and Article XXIV), Section 15.1.4,
Section 15.1.5, Section 15.1.6, Section 15.1.7, Section 15.1.8, and
Section 15.1.9.
Mechanics Lien: As defined in Exhibit J.
Memo of Lease: As defined in Exhibit T.
Memorandum: As defined in Section 16.3.
Minimum Net Worth: As defined in Section 24.1.
Net Assignment Profits: As defined in Section 14.6
Net Effective Rent: As defined in Section 18.3.1.
Net Reletting Profits: As defined in Section 9.4.1.
Net Sublease Profits: As defined in Section 14.7.
Net Worth: As defined in Section 24.1.
Nondisturbance Agreement: As defined in Section 13.1.
Notice: As defined in Section 16.13.
Objection Notice: As defined in Section 4.4.
Offer: As defined in (a) Section 14.3.1 with respect to a sublease of a
portion of the Premises and (b) Section 14.3.2 with respect to a
sublease of all of the Premises or an assignment of this Lease.
Operating Expenses: As defined in Section 4.1.7.
Operating Statement: As defined in Section 4.3.3.
Permitted Use: As defined in Section 1.1.
Person: A natural person, firm, corporation, partnership, joint venture,
trust (including any beneficiary thereof), association, unincorporated
association or other form of business or legal entity, as the case may be.
Plans and Specifications: As defined in Paragraph 2.1 of Exhibit J.
Premises: As defined in Section 1.1.
Premises Area: As defined in Section 1.1.
Premises Core: With respect to (a) a full floor in the Unit occupied by
Tenant, the interior core of such floor which is not occupied by Tenant
and which includes the elevator shafts, mechanical rooms and electrical
closets on such floor but excludes the elevator lobby, bathrooms, sinks
and water fountains located on such floor and (b) a partial floor in the
Unit occupied by Tenant, the interior core of such floor which is not
occupied by Tenant and which includes the elevator shafts, mechanical
rooms, electrical closets, elevator lobby, public bathrooms, public
sinks, public water fountains and interior multiple tenant corridor on
such floor.
Prohibited Use: Any use or occupancy of the Premises that (a) violates
any certificate of occupancy in force for the Premises or the Unit or the
Building, other than any use or occupancy of the Premises for general
office uses and other uses incidental thereto; (b) causes or is likely to
cause damage to the Unit, the Building, the Premises or any equipment,
facilities or other systems therein; (c) impairs the character, reputation,
image or appearance of the Unit or the Building as a first-class office
building or commercial condominium (it being agreed that any use or
occupancy of the Premises that is ordinary and customary for tenants in
Comparable Buildings or consistent with the present conduct of
Tenant's business shall not be deemed to violate this clause (c)); (d)
interferes with the maintenance, operation and repair of the Unit or the
Building or their respective equipment, facilities or systems, including
without limitation, the Building Service Systems; (e) constitutes a
nuisance to other tenants or occupants of the Unit or the Building or
interferes with or disrupts the use or occupancy of any area of the Unit
or the Building (other than the Premises) by other tenants or
occupants; (f) disrupts the use, occupancy or quiet enjoyment of the
Unit or the Building by other tenants and occupants; (g) interferes with
the transmission or reception of microwave, television, radio or other
communication signals by antennae located on the roof of, or
elsewhere in, the Building or at that certain building having a street
address of 125 Broad Street, New York, New York (it being agreed
that any use or occupancy of the Premises that is ordinary and
customary for tenants in Comparable Buildings shall not be deemed to
violate this clause (g)); (h) subject to Article XIII in this Lease, violates
any provision of the Condominium Documents, any financing
documents from time to time encumbering the Unit or the Building, all
covenants, conditions and restrictions affecting the Unit or the Building
or any modifications, amendments, substitutions, replacements,
supplements or additions to any of the foregoing, provided that any
such modification, amendment, substitution, replacement, supplement
or addition does not impair or interfere with Tenant's rights or increase
Tenant's obligations hereunder, in a discriminatory manner (it being
agreed that any use or occupancy of the Premises that is ordinary and
customary for tenants in Comparable Buildings or consistent with the
present conduct of Tenant's business does not in and of itself violate
any term or provision of the Condominium Documents with respect to
use or occupancy of the Premises); or (i) with respect only to such use
or occupancy of the Premises that is not ordinary and customary for
tenants in Comparable Buildings, violates any requirement or condition
of any customary insurance policy maintained by Landlord or the
Board of Managers in connection with the Unit or the Building or of
the standard fire insurance policy issues for office building or
commercial condominiums in The City of New York or the rules and
regulations of the New York Board of Fire Underwriters or Insurance
Services Office (or similar bodies). In addition to the foregoing, a
Prohibited Use also includes the use of any part of the Premises for: (i)
a restaurant or bar (except for the use by Tenant's employees, guests
and invitees and which is not otherwise open to the public); (ii) the
preparation, consumption, storage, manufacture or sale of food,
beverages, liquor, tobacco or drugs (except for use by Tenant's
employees, guests, and invitees and not the general public); (iii) the
business of photocopying, multilith or offset printing (except in
connection with its own business); (iv) a typing or stenography
business; (v) a school or classroom open to the general public (but
excluding training classes and seminars for Tenant's employees,
invitees, and guests); (vi) cooking, lodging or sleeping; (vii)
[Intentionally Deleted]; (viii) medical or dental offices or laboratories;
(ix) a barber, beauty or manicure shop; (x) an employment agency,
executive search firm or similar enterprise; (xi) a consulate; (xii) the
manufacture, retail sale, storage of merchandise or auction of
merchandise, goods or property of any kind; or (xiii) any immoral or
illegal purposes.
Reletting Expenses: As defined in Section 9.4.1.
Renewal FMRV: As defined in Section 17.4.1.
Renewal Market: As defined in Section 17.4.1.
Renewal Market Term: As defined in Section 17.4.1.
Renewal Notice: As defined in Section 17.2.
Renewal Option: As defined in Section 17.1.
Renewal Term: As defined in Section 17.1.
Renewal Term Base Rent: As defined in Section 17.3.
Rentable Area: As to any particular space in the Building, the number
of rentable square feet of such space as expressly set forth in this Lease
or, if not expressly set forth in this Lease, as set forth in Exhibit M.
Rents: As defined in Section 3.3.
Rules and Regulations: As defined in Section 5.5.
Second Expansion FMRV: As defined in Section 19.4.1.
Second Expansion Market Term: As defined in Section 19.4.1.
Second Expansion Market: As defined in Section 19.4.1.
Second Expansion Notice: As defined in Section 19.1.2.
Second Expansion Option: As defined in Section 19.1.
Second Expansion Space: As defined in Section 19.1.1.
Second Expansion Space Availability Notice: As defined in Section
19.1.1.
Second Expansion Space Base Rent: As defined in Section 19.3.
Second Expansion Space Inclusion Date: As defined in Section 19.2.
Second Expansion Space Rentable Area: As defined in Section 19.2.3.
Second Expansion Space Scheduled Commencement Date: As defined
in Section 19.1.1.
Second Expansion Space Term: As defined in Section 19.2.
Second Option Cancellation Notice: As defined in Section 19.7.2.
Security Deposit: As defined in Section 1.1.
Senior Interest Holders: As defined in Section 13.1.
Senior Interests: As defined in Section 13.1.
Space: As defined in Exhibit M.
Storage Premises: As defined in Section 23.1.
Substantial Completion of Landlord's Work: As defined in Exhibit D.
Successor Landlord: As defined in Section 13.2.
Target Date: As defined in (a) Section 14.3.1 with respect to a
sublease of a portion of the Premises and (b) Section 14.3.2 with
respect to a sublease of all of the Premises or an assignment of this
Lease.
Tax Notice: As defined in Section 22.2.
Taxable Property: As defined in Section 4.1.5.
Tax Statement: As defined in Section 4.1.4.
Tax Year: As defined in Section 4.1.1.
Taxes: As defined in Section 4.1.2.
Tenant: As defined in the introductory paragraph of this Lease.
Tenant Delay: As defined in Exhibit D.
Tenant's Architect: As defined in Paragraph 2.1 of Exhibit J.
Tenant's Broker: Philip Mehler Realty, Inc.
Tenant's Electrical Consultant: As defined in Section 6.1.2.
Tenant's First Expansion Rescission Notice: As defined in Section
18.4.2.3.
Tenant's First Expansion Response Notice: As defined in Section
18.4.2.2.
Tenant's Improvements: Improvements made to the Premises by
Tenant except for those Improvements paid for by Landlord through
the Allowance.
Tenant's Operating Payment: As defined in Section 4.3.
Tenant's Percentage Share: As defined in Section 22.1.
Tenant's Preliminary Work: As defined in Exhibit D.
Tenant's Property: As defined in Section 8.2.
Tenant's Renewal Rescission Notice: As defined in Section 17.4.2.3.
Tenant's Renewal Response Notice: As defined in Section 17.4.2.2.
Tenant's Second Expansion Response Notice: As defined in Section
19.4.2.2.
Tenant's Share: As defined in Section 1.1.
Tenant's Tax Payment: As defined in Section 4.2.
Tenant's Work: As defined in Exhibit D.
Tenant Waiver Party: As defined in Exhibit N.
Term: As defined in Section 1.1.
Termination Agreement: As defined in Section 16.3.
Unit: That certain leasehold condominium unit designated as
Commercial Unit C in the Declaration presently consisting of the C-3
level and Floors 12 through 16 and 19 in the Building.
Unit Area: 205,028 rentable square feet, which is the total Rentable
Area of the Unit.
Unit Expenses: As defined in the Declaration.
Unused Work Allowance: As defined in Exhibit D.
Unused Work Allowance Adjustment Period: As defined in Exhibit D.
Work Letter: As defined in Section 2.4 and attached hereto as Exhibit
D.
EXHIBIT C
Basic Capacity
15th Floor
Closet "A" 100 amp switch feeds a 277 volt lighting panel.
100 amp switch feeds two 120 volt power panels.
Closet "B" 100 amp switch feeds a 277 volt lighting panel.
100 amp switch feeds two 120 volt power panels.
Closet "C" 600 amp distribution panel which is fed from a 200
amp switch feeds two power panels (distribution panel feeds the 15th,
16th, 17th, 18th floors & spare).
Closet "D" 600 amp distribution panel which is fed from a 200
amp switch feeds two power panels (distribution panel feeds the 15th,
16th, 17th & 18th floors).
16th Floor
Closet "A" 100 amp switch feeds a 277 volt lighting panel.
100 amp switch feeds two 120 volt power panels.
Closet "B" 100 amp switch feeds a 277 volt lighting panel.
100 amp switch feeds two 120 volt power panels.
Closet "C" 600 amp distribution panel which is fed from a 200
amp switch feeds two power panels (distribution panel feeds the 15th,
16th, 17th, 18th floors & spare).
Closet "D" 600 amp distribution panel which is fed from a 200
amp switch feeds two power panels (distribution panel feeds the 15th,
16th, 17th & 18th floors).
In addition to the panels listed above, there is a 600 amp 277/480 volt
distribution on the 15th floor.
EXHIBIT D
Work Letter
1. General. The purpose of this Work Letter is to set forth how
Landlord's Work (as defined in Paragraph 2 of this Work Letter) and
Tenant's Work (as defined in Paragraph 3 of this Work Letter) in the
Premises are to be constructed, who will undertake the construction of
such work, who will pay for the construction of such work, and the
time schedule for completion of such work. All capitalized terms used
and not otherwise defined in this Work Letter shall have the meanings
ascribed to them in the Lease.
2. Base Building; Landlord's Work. (a) Landlord shall at its sole
cost and expense and without deduction from the Allowance (a) deliver
the Premises to Tenant together with the systems, facilities, materials
and completed work described in Schedule D-1 attached hereto (the
"Base Building"), and (b) perform the additional work to the Premises
("Landlord's Additional Work") as described in Schedule D-2 attached
hereto (Landlord's Additional Work and the work required to deliver
the Base Building are sometimes collectively referred to in this Work
Letter or the Lease as "Landlord's Work").
(b) Tenant acknowledges that, except with respect to the items
described in Schedule D-4 attached hereto and the matters described in
Paragraph 9.1(b) below (which matters are also listed on Schedule D-
4), Substantial Completion of Landlord's Work (as defined in
Paragraph 9 of this Work Letter) has occurred.
(c) Subject to the last sentence of this subparagraph, Landlord
covenants and agrees that (i) it will use all reasonable efforts to
complete the items listed on Schedule D-4 on or prior to June 1, 1997
and (ii) with respect to the items listed on Schedule D-4 and marked
with an asterisk, Landlord will complete such items as soon as
practicable after the execution and delivery of this Lease but in no
event later than June 1, 1997. Notwithstanding anything in this
Paragraph 2(c) to the contrary, Tenant acknowledges that certain items
listed in Schedule D-4 shall not be completed on or prior to June 1,
1997 if under good construction scheduling practice such work should
be done after still incomplete Tenant's Preliminary Work has been
completed; provided that Tenant shall have agreed to the
postponement of the completion of such items.
3. Preparation and Submission of Plans and Specifications. After
the Execution Date, Tenant shall cause its Architect to submit to
Landlord Plans and Specifications (together with any revisions thereto
which are made in accordance with Exhibit J, being, collectively,
referred to as the "Initial Plans and Specifications") for the construction
of Tenant's improvements and alterations to the Premises ("Tenant's
Work"). The procedure for submission, and the standards, time and
procedure for approval, of the Initial Plans and Specifications is set
forth in Paragraph 2 of Exhibit J to the Lease. In addition to the basic
requirements for Plans and Specifications set forth in the Lease, the
Initial Plans and Specifications shall comply with the additional
requirements set forth on Schedule D-3 attached hereto. Tenant has
advised Landlord that it intends (i) to install a staircase between the
fifteenth (15th) and sixteenth (16th) floors of the Premises and, upon
exercise of the First Expansion Option or the Second Expansion
Option, between the fourteenth (14th) and fifteenth (15th) floors and
(ii) to install a vault on the fifteenth (15th) or sixteenth (16th) floor, and
Landlord agrees that it will not unreasonably withhold its consent to
the plans for such alterations; provided that such alterations comply
with Article VIII and Tenant has made adequate provision in its plans
to protect the structure and integrity of the Building (it being agreed
that upon Tenant's surrender of the Premises, Tenant will be under no
obligation to restore the cement slab to its original condition or to
remove the stairway).
4. Selection of Contractor. Unless such contractor or
subcontractor has been previously approved by Landlord in accordance
with Paragraph 1.1 of Exhibit J, Tenant shall submit to Landlord the
name of Tenant's contractor and subcontractors for Landlord's
approval in accordance with Paragraph 1 of Exhibit J.
5. Governmental Approvals and Permits. Subject to Paragraph 3
of Exhibit J, (i) upon Landlord's approval of the Initial Plans and
Specifications, Tenant shall file the same with the appropriate
governmental authority or authorities and shall take whatever other
action shall be necessary to obtain and maintain in effect throughout the
performance of Tenant's Work all governmental permits and
authorizations that may be required in connection with Tenant's Work
and (ii) upon the completion of Tenant's Work, Tenant shall obtain all
certificates and approvals required to be issued by any public authority
or any governmental authorities having jurisdiction over Tenant's Work
which are required by Law in order for Tenant to lawfully occupy the
Premises.
6. Landlord's Contribution; Excess Costs; Procedure for Payment;
Procedure for Unused Allowance.
6.1. Landlord's Contribution. Landlord shall pay for the Cost of the
Work (as defined below) first out of the Allowance, and Tenant shall
pay for the Cost of the Work in excess of the Allowance. Except as set
forth in Paragraph 6.3, Tenant shall not be entitled to any credit,
abatement or payment if the Allowance exceeds the Cost of the Work.
For purposes of this Lease, "Cost of the Work" means (a) any and all
costs to design and construct Tenant's Work (including, without
limitation, the reasonable out-of-pocket costs of preparing any Plans
and Specifications), (b) Tenant's moving expenses, (c) Tenant's legal
expenses in negotiating the Lease, and (d) any and all costs to design
and construct Tenant's trading floor which shall include trading desks
and electrical wiring thereof (but shall exclude therefrom Quotron,
telephones and any other items of Tenant's personal property);
provided that, in no event shall the Allowance be disbursed to pay the
"soft costs" (i.e., the design costs, moving expenses, and legal
expenses) of the Cost of the Work which exceed fifteen percent (15%)
of the Allowance. The Cost of the Work shall not include any
Landlord's Work. Nothing herein shall limit Tenant's right to have any
Unused Work Allowance credited to Rent pursuant to Paragraph 6.3
below.
6.2. Procedure for Payment. At any time after the Commencement
Date, the Allowance shall be paid by Landlord following Landlord's
receipt of invoices for the Cost of the Work delivered by Tenant to
Landlord together with a letter (a "Direction of Payment Letter") in
substantially the form of Exhibit O attached hereto authorizing and
directing Landlord to pay such invoices out of the then remaining
Allowance, in which case Landlord shall pay such invoices out of the
then remaining Allowance within 30 days of Landlord's receipt of such
Direction of Payment Letter and shall debit the Allowance therefor;
provided, however, that (a) Tenant shall not submit a Direction of
Payment Letter more than once per calendar month, (b) in the event
Tenant is then in Material Default under the Lease after the expiration
of applicable cure periods, Landlord shall not be obligated to pay any
amounts of the Allowance to Tenant or as otherwise directed by
Tenant but such amounts shall be credited against any damages
Landlord receives on account of such default; and (c) Tenant covenants
and agrees to retain as a holdback a reasonable and customary amount
after taking into account the nature of the work involved.
Upon substantial completion of Tenant's Work, Landlord shall
promptly, upon Tenant's request therefor, pay Tenant out of the then
remaining Allowance for all unpaid invoices previously submitted to
Landlord for payment.
6.3. Procedure for Unused Allowance. (a) Provided that no
Material Default has occurred and is continuing and provided that
Tenant has not defaulted under its obligations under Paragraph 13
below (beyond the expiration of any applicable grace, cure and notice
periods), Tenant shall be entitled to a credit against any Rent due under
this Lease on the Base Rent Commencement Date (and thereafter, until
such time as the Adjusted Unused Work Allowance is reduced to
zero), in an amount equal to the then Adjusted Unused Work
Allowance.
(b) As used herein, the following terms shall have the following
meanings:
(i) "Adjusted Unused Work Allowance" shall mean, as of any date, an
amount equal to the then remaining amount of Unused Work
Allowance after deducting therefrom any credits actually made against
Rent in accordance with this Paragraph 6.3.
(ii) "Unused Work Allowance" shall mean an amount equal to (x) the
Allowance minus any payments made to Tenant (or at Tenant's
direction to another person pursuant to this Paragraph) under
Paragraphs 6.1 and 6.2 relating to the Cost of the Work multiplied by
(y) one hundred seven and one-half percent (107.50%) per annum
compounded annually for the Unused Work Allowance Adjustment
Period.
(iii) "Unused Work Allowance Adjustment Period" shall mean the
period of time which commences on (1) the earlier to occur of (x) the
date Tenant occupies the Premises and commences the conduct of its
business at the Premises and (y) the date on which Tenant substantially
completes Tenant's Work and (2) which ends on the date following the
Base Rent Commencement Date when the Unused Work Allowance
has been fully disbursed.
7. General Conditions.
7.1. Performance of Work. Tenant shall cause Tenant's Work to be
performed in a good and workmanlike manner and, except as provided
otherwise in Paragraph 7.2, in accordance with the Initial Plans and
Specifications approved by Landlord.
7.2. Changes. Any material changes to Tenant's Work or to the
Initial Plans and Specifications necessitated by field conditions or
otherwise (each, a "Change Request") must be approved by Landlord
pursuant to the provisions of Paragraph 3 of this Work Letter.
7.3. Insurance. Throughout the construction of Tenant's Work,
Tenant shall maintain or cause to be maintained the insurance required
for Alterations pursuant to Exhibit J to the Lease.
8. Early Access to Premises; Tenant's Preliminary Work. If
Tenant wishes to perform any work in the Premises, including, without
limitation, Tenant's Work or the installation of information,
communication, computer, telephone or security systems, built-ins,
millwork or special decorative effects, prior to the Substantial
Completion of Landlord's Work, then Tenant shall so specify in such
detail on the Initial Plans and Specifications as may be necessary, in the
reasonable judgment of Landlord, in order to schedule such work
("Tenant's Preliminary Work") in the construction schedule, and shall
simultaneously furnish to Landlord the names of the contractors and
subcontractors Tenant proposes to use for Tenant's Preliminary Work.
Landlord shall be deemed to have consented to the performance of
Tenant's Preliminary Work by the contractors and subcontractors
designated by Tenant unless, within 7 Business Days after Landlord's
receipt of the Initial Plans and Specifications and the names of the
contractors and subcontractors for Tenant's Preliminary Work,
Landlord notifies Tenant (a) that it does not consent thereto (which
consent shall not be unreasonably withheld and which notice shall state
the reasons that Landlord does not so consent), or (b) that it consents
thereto upon such reasonable conditions as Landlord may set forth in
such notice, including, without limitation, the condition that Tenant's
Preliminary Work be performed at such times as Landlord may
reasonably designate in the construction schedule or, in the event that
Landlord shall at any time reasonably determine that Tenant's
Preliminary Work cannot be performed as set forth in the construction
schedule, then at such times as Landlord may reasonably designate with
not less than 2 Business Days' prior notice so as to minimize any
interference with the performance of Landlord's Work.
8.1. Performance of Tenant's Preliminary Work. Tenant's
Preliminary Work shall be deemed to be an Alteration to the extent that
Tenant's Initial Plans and Specifications do not provide for such
Preliminary Work, and the requirements of Exhibit J of the Lease shall
apply thereto except to the extent that the Plans and Specifications for
Tenant's Preliminary Work are already set forth in the Initial Plans and
Specifications. Notwithstanding anything to the contrary contained in
this Work Letter or in the Lease, in no event shall Landlord be
obligated to perform any portion of Tenant's Preliminary Work or
Tenant's Work.
8.2. Conditions to Access. In connection with Tenant gaining
access to the Premises prior to Substantial Completion of Landlord's
Work as provided in this Paragraph 8, Tenant agrees (a) to observe
and perform all of its obligations to Landlord under the Lease (except
for its obligations to pay Base Rent and its obligations to pay
Additional Rent for electricity used prior to the Substantial Completion
of Tenant's Work), including, without limitation, its indemnity
obligations under the Lease, (b) to cease promptly upon request by
Landlord any activity undertaken by or on behalf of Tenant which, in
Landlord's reasonable judgment, would interfere with or delay the
performance of Landlord's Work; provided, however, that Tenant shall
be permitted to continue the performance of Tenant's Preliminary
Work so long as the cause of such interference or delay shall be
eliminated, (c) to obtain the consent of Landlord prior to entering the
Premises during the performance of Tenant's Preliminary Work and,
after obtaining such consent, to comply with all reasonable rules and
regulations of Landlord and Landlord's contractor, including, without
limitation, the Building Standards and the Rules and Regulations, (d)
that such access shall be at the sole risk of Tenant and shall be deemed
to be a license, and (e) that prior to exercising such right, Tenant shall
deliver to Landlord the certificates of insurance required by Exhibit J of
the Lease. If Tenant fails to comply with any of the foregoing
obligations, then, in addition to all other rights and remedies under the
Lease, Landlord may by notice require Tenant to cease the
performance of Tenant's Preliminary Work until Substantial
Completion of Landlord's Work has occurred, and upon receipt of such
notice, Tenant shall so cease the performance of Tenant's Preliminary
Work.
9. Delivery of Premises to Tenant; Substantial Completion of
Landlord's Work. Landlord shall deliver possession of the Premises to
Tenant when Substantial Completion of Landlord's Work has occurred,
subject to the provisions of Section 9.1.
9.1. "Substantial Completion of Landlord's Work" shall be deemed
to have occurred as soon as Landlord's Work has been substantially
completed except for (a) minor or insubstantial details of construction,
mechanical adjustment or decoration that remain to be performed (i.e.,
so-called "punch list" items), or (b) portions of Landlord's Additional
Work that have not been completed because under good construction
scheduling practice such work should be done after still incomplete
Tenant's Preliminary Work has been completed; provided, however,
that in the event of a Tenant Delay, Substantial Completion of
Landlord's Work shall be the date on which Substantial Completion of
Landlord's Work would have occurred but for such Tenant Delay. In
determining when Substantial Completion of Landlord's Work would
have occurred but for a Tenant Delay, it shall be assumed that
Substantial Completion of Landlord's Work is delayed one day for each
day Substantial Completion of Landlord's Work is delayed, due to such
Tenant Delay. Notice of the occurrence of the Substantial Completion
of Landlord's Work shall be delivered by Landlord to Tenant, shall
specify in reasonably sufficient detail the basis for Landlord's
determination of such date and shall be binding upon Tenant unless
Tenant objects thereto within 10 Business Days of Tenant's receipt of
such notice and specifies in reasonable detail the nature of Tenant's
objection. From the Commencement Date through and including the
Substantial Completion of Landlord's Work, Tenant and its agents shall
have reasonable access at reasonable times upon prior notice to
Landlord (which notice may be made telephonically) to the Premises in
order to inspect the performance of Landlord's Work.
9.2. As used in this Work Letter, "Tenant Delay" means any actual
delay in the performance of Landlord's Additional Work by reason of:
(a) any action or omission of Tenant, its agents, employees, invitees,
licensees, contractors or subcontractors; (b) any direction by Tenant
that Landlord suspend or slow down the progress of Landlord's
Additional Work or any part thereof; or (c) any displacement resulting
from any of the foregoing of any portion of Landlord's Additional
Work from its place in the construction schedule and the rescheduling
of such Landlord's Additional Work (due regard being given to the
need to minimize disturbance to other tenants and occupants of the
Building); provided that with regard to clauses (a), (b) and (c) above,
Landlord will give Tenant notice of such actions that give rise to a
Tenant Delay and, with respect to (a) only, give Tenant a reasonable
time to cure. Notwithstanding anything herein to the contrary, Tenant
Delay shall not include any delays due to the extension of Landlord's
review period in accordance with the proviso of Paragraph 2.2 of
Exhibit J. Landlord acknowledges that no Tenant Delay has occurred
with respect to any of Landlord's Work completed to date (it being
understood and agreed that Landlord is not making any representation
with respect to Tenant Delay for the items listed in Schedule D-4).
10. Punch List Items. Following Substantial Completion of
Landlord's Work, Tenant shall make a final inspection of Landlord's
Work together with Landlord and Landlord's contractor, and such
parties shall jointly prepare a final "punch list". Landlord shall
thereafter cause its contractor to perform the work necessary to
complete such "punch list" as promptly as practicable.
11. Landlord's Expenses. Tenant shall pay to Landlord, as
Additional Rent within 10 days after demand therefor (together with
invoices if appropriate), any reasonable costs and expenses (which
expenses shall be included in Landlord's Work) incurred by Landlord or
the Board of Managers in connection with (a) any overtime or
premium pay specifically requested by Tenant, and (b) any other costs
or expenses expressly identified as costs or expenses payable by Tenant
in this Work Letter or the Lease.
12. Contractor's Warranties and Guaranties. Landlord hereby
assigns to Tenant all warranties and guaranties by Landlord's
contractor relating to Landlord's Additional Work and Landlord's
Work, and Tenant hereby waives all claims against Landlord relating
to, or arising out of the construction of, Landlord's Additional Work.
SCHEDULE D-1
Base Building Description
At no cost to Tenant, Landlord either has, or shall, with respect to
Owner's Installations, (or, with respect to Common Elements, use all
reasonable efforts to cause the Board of Managers to), supply, provide,
install or furnish all Building Service Systems, in connection with
Landlord's delivery of the Premises, which shall include, without
limitation, the following items, but in any case only to the extent such
Building Service Systems are required to be delivered, supplied,
provided, installed or furnished under the Condominium Documents
(collectively, the "Base Building"):
(a) Core Toilets
(i) Landlord shall install core toilets in the Premises in accordance
with, but only to the extent specified in, Schedule D-2.
(b) Asbestos and Hazardous Materials
(i) Landlord shall remove completely all ACM (as hereinafter
defined) in the Premises in accordance with, but only to the extent
specified in, Schedule D-2.
(c) Structural (with respect to the fifteenth (15th) floor only)
(i) Landlord shall fill in all existing slab penetrations with materials
consistent with existing construction or as required by applicable Laws.
(ii) Landlord shall repair and patch all slabs on Tenant's floors to a
smooth, level surface in a manner consistent with acceptable industry
practice in Comparable Buildings.
(iii) Landlord shall frame all columns with sheet-rock
(d) Elevators
As specified in the Declaration.
(e) Fireproofing and Insulation
(i) After any ACM removal, Landlord shall furnish and
install new fireproofing, in compliance with all applicable building code
requirements, on all decks, beams, columns and other structural work
from which ACM was removed.
(ii) After any ACM removal, Landlord shall furnish and install new
insulation, as required by good construction practice, on all pipes and
equipment from which ACM has been removed, and remove and
replace any damaged non-asbestos containing insulation, in abated
areas.
(iii) After any ACM removal, reinstallation or re-fireproofing,
Landlord shall restore any structure (such as column enclosures) to the
previous level of finish or a comparably priced finish requested by
Tenant.
(iv) Landlord shall replace all missing or damaged fireproofing or
insulation upon completion of all demolition.
(f) Demolition
(i) In connection with the demolition specified in Schedule D-2,
Landlord shall design, prepare drawings, file, obtain permits, demolish,
remove, patch damaged conditions, and obtain approvals for a
complete demolition of such areas.
(g) Sprinklers
(i) Landlord shall furnish standpipe risers, pumps connected to an
emergency power system, core loops, controls, alarms, valves, and
connections to the fire alarm system, necessary to permit Tenant to
install a complete sprinkler system in all areas of the Premises (other
than the Storage Space), in compliance with applicable Law.
(h) Plumbing
(i) "As Is," except to the extent set forth in Schedule D-2.
(i) HVAC
(i) "As Is," except to the extent set forth in Schedule D-2.
(j) Electric
(i) "As Is," except to the extent specified in Schedule D-2.
Landlord shall maintain existing service equipment and switchboards to
a standard consistent with Comparable Buildings.
(k) Life Safety
(i) Landlord will provide Tenant with sufficient connecting points
to provide for the Tenant's connection of life safety systems.
SCHEDULE D-2
Landlord's Additional Work
Landlord shall, at its sole cost and expense, perform the following
work to the Premises and discharge all of Landlord's obligations to
comply with Law pursuant to Section 5.3 as Landlord's Additional
Work on or prior to the Landlord's Delivery Date, unless another date
is expressly provided for herein for such performance:
A. WITH RESPECT TO THE FIFTEENTH (15TH) FLOOR
ONLY:
1. DEMOLITION. Demolish all areas of the fifteenth (15th)
floor (other than the raised trading floor, the 21 A/C Supplemental
Units (totaling 171 tons A/C), and sprinkler loops presently located on
the fifteenth floor of the Building, which, at Tenant's request, shall be
salvaged and delivered to Tenant in its "as is" condition, subject to
wear and tear; it being understood that Landlord shall not be
responsible for the utility or operation of any salvaged item, but
Landlord shall, to the extent reasonably practicable without incurring
substantial expense, use all reasonable efforts to protect such salvaged
items for Tenant) to be leased by Tenant and deliver such space raw
and in broom-clean condition. Remove any Improvements,
partitioning and ceiling in excess of the Base Building on the fifteenth
(15th) floor. In connection with such demolition, Landlord shall
perform the following on the fifteenth (15th) floor only:
a. HVAC. The HVAC trunk duct will be stubbed to the ceiling.
The perimeter HVAC Units shall be cleaned by Landlord.
b. Floors. All floor covering and floor outlets will be removed.
All floors will be flash patched and leveled. All holes in the slab or core
drills will also be patched and fire stopped.
c. Plumbing. All plumbing lines (not to be re-used) to be cut back
to mains and removed and the mains capped.
d. Electrical. Landlord shall remove all electrical lines beyond the
panel box.
e. Telephone. All telephone lines to be removed beyond the
telephone closet.
f. Underfloor Cell System. The existing underfloor cell system
shall be clean, dry and useable with all existing wiring removed and all
trough tops leveled.
2. ASBESTOS. Landlord shall deliver the fifteenth (15th) floor
free of all asbestos containing materials ("ACM") and, if ACM is
discovered at any time during the Term to have existed in such space as
of the Commencement Date, Landlord shall, at its sole cost and
expense, remove, enclose or encapsulate any such additional ACM to
the extent required by Law and to the extent consistent with then
current remediation techniques and industry standards for Comparable
Buildings and, if any ACM is enclosed or encapsulated, Landlord shall,
at its sole cost and expense, monitor such ACM to ensure that the level
of airborne asbestos fibers is no greater than that permitted under Law.
Landlord shall also deliver to Tenant an ACP-5 Certificate.
Notwithstanding anything in Paragraph 26 of Exhibit E to the contrary,
Landlord shall pay for the actual costs and expenses incurred by Tenant
by virtue of said Paragraph 26, but only to the extent that such cost and
expense relates to Landlord's Work or ACM (other than ACM due to a
default by Tenant under this Lease).
3. BATHROOMS. Landlord shall provide, at its sole cost and
expense, at least one public bathroom on the fifteenth (15th) floor that
complies with ADA Requirements, and that Landlord shall restore the
existing bathroom to first-class condition consistent with Comparable
Buildings.
4. Bullet-Proof Glass. To the extent that the bullet-proof glass
that was formerly in the Premises prior to the completion of the above-
described demolition is still readily accessible, Tenant shall be entitled,
at no additional cost, to the use of such glass; it being understood and
agreed that Landlord is making no representation or warranty with
respect to the existence, or the efficacy, of such bullet-proof glass.
B. SIXTEENTH (16TH) FLOOR WORK
Tenant agrees that (a) Tenant is leasing the sixteenth (16th) floor of the
Premises in its "AS IS" condition, subject to Section 5.3 above, and (b)
Landlord shall have no obligation to perform any work or to supply
any materials whatsoever to prepare the sixteenth (16th) floor of the
Premises for Tenant's occupancy (including, without limitation, the
making of any improvements or repairs to such Premises or any other
portion of the Unit), except for the following:
1. BATHROOMS. To the extent the ADA Requirements require
a separate bathroom accommodation for the handicapped on the
sixteenth (16th) floor in addition to the bathroom provided on the
fifteenth (15th) floor, Landlord shall provide, at its sole cost and
expense, at least one public bathroom on the sixteenth (16th) floor that
complies with ADA Requirements, and Landlord shall restore such
bathroom in first-class condition consistent with Comparable Buildings.
2. ASBESTOS. If ACM is discovered at any time during the
Term to have existed in such space as of the Commencement Date,
Landlord shall, at its sole cost and expense, remove, enclose or
encapsulate any such additional ACM to the extent required by Law
and to the extent consistent with then current remediation techniques
and industry standards for Comparable Buildings and, if any ACM is
enclosed or encapsulated, Landlord shall, at its sole cost and expense,
monitor such ACM to ensure that the level of airborne asbestos fibers
is no greater than that permitted under Law. Landlord shall also
deliver to Tenant an ACP-5 Certificate. Notwithstanding anything in
Paragraph 26 of Exhibit E to the contrary, Landlord shall pay for the
actual costs and expenses incurred by Tenant by virtue of said
Paragraph 26, but only to the extent that such cost and expense relates
to Landlord's Work or ACM (other than ACM due to a default by
Tenant under this Lease).
[COMMENT2] SCHEDULE D-3
Additional Requirements for
Initial Plans and Specifications
In addition to complying with the requirements for Plans and
Specifications generally (as set forth in Exhibit J), the Initial Plans and
Specifications for Tenant's Work shall comply with the following
additional requirements:
1. Architectural drawings must include the following:
a. Partition locations and types (including any slab-to-slab
partitions or special acoustical treatment required)
b. Door locations, door schedule, door frames and the swing of
each door
c. Reflected ceiling plan
d. Millwork items (if any)
e. Hardware schedule
f. Finish schedule showing all finish types and locations
g. Telephone rooms (if any) in addition to Base Building
telephone closets.
2. Structural drawings must include the following:
a. Location of any floor openings and stair drawings
b. Location and extent of any floor loading beyond building
standard
c. Any structural changes caused by Tenant's design (including
raised flooring).
3. Electrical drawings must include the following:
a. Location and extent of any special electric requirements caused
by equipment such as computer hardware, copiers or supplemental A/C
units (i.e., separate circuiting, coaxial cabling etc.)
b. Estimate of total electrical load on each floor
c. Location of all electrical outlets, switches, telephone outlets,
exit signs, and lighting fixtures
d. Location of all electronic calculating and cathode-ray tube
(CRT) systems and special audio-visual equipment.
4. Heating, ventilating and air conditioning (HVAC) drawings
must include the following:
a. Location of any ductwork, ceiling diffusers, and thermostats
b. Variable air volume (VAV) unit quantities and sizing
information
c. Location and sizing of any supplemental HVAC equipment
d. Estimate of total HVAC load on each floor.
5. Plumbing drawings must include the following (if applicable):
a. Location of kitchen, kitchenettes, etc.
b. Location of drinking fountains
c. Location of sinks and toilets (other than Base Building).
6. Sprinkler drawings.
7. Tenant security systems must include:
a. A preliminary outline equipment brochure and riser indicating
all components (electrical power characteristics, voltages and specific
locations on plan)
b. All requirements for dedicated circuits, if any
c. All requirements for bonding and grounding, if any
d. All requirements for outside connections to the telephone
company or a central protective alarm agency (such as ADT or
Holmes), if any
e. All emergency circuiting requirements, if any
f. The type, sizes, quantities and location of all required cable and
conduit.
8. Notwithstanding anything in Paragraph 2.1 of Exhibit J to the
contrary, Tenant shall submit a total of 1 paper sepia and 6 paper sets
of the Initial Plans and Specifications to the Building Manager, together
with one copy on disk formatted to DXF Standard CAT format.
SCHEDULE D-4
PUNCH LIST ITEMS
1. Landlord shall install venetian blinds to the windows consistent
with the blinds presently existing in the Premises.
2. The items listed in the attached letter.
EXHIBIT E
BUILDING STANDARDS FOR ALTERATIONS
AND
BUILDING RULES & REGULATIONS
125 BROAD STREET
NEW YORK, NEW YORK
REQUIREMENTS FOR MAJOR ALTERATIONS
IT IS AGREED AND UNDERSTOOD THAT IT SHALL BE THE
OCCUPANT'S SOLE RESPONSIBILITY TO SEE THAT ALL
EMPLOYEES AND INDEPENDENT CONTRACTORS OF THE
OCCUPANT INCLUDING BUT NOT LIMITED TO THE
OCCUPANT'S ARCHITECT, GENERAL CONTRACTOR AND
SUBCONTRACTOR SHALL COMPLY WITH ALL RULES,
REGULATIONS AND REQUESTS AS STATED HEREIN.
OCCUPANT WILL MAKE NO ALTERATIONS, DECORATIONS,
INSTALLATIONS, REPAIRS, ADDITIONS, IMPROVEMENTS
OR REPLACEMENT IN, TO OR ABOUT THE PREMISES
WITHOUT BUILDING MANAGEMENT'S PRIOR REVIEW AND
APPROVAL (10 BUSINESS DAY TURNAROUND) ONLY BY
CONTRACTORS OR MECHANICS APPROVED BY BUILDING
MANAGEMENT. ANY COSTS OR EXPENSE RESULTING
FROM OCCUPANT OR OCCUPANT'S EMPLOYEES OR
INDEPENDENT CONTRACTOR'S FAILURE TO COMPLY
WITH ANY OF THE FOLLOWING RULES, REGULATIONS
AND REQUESTS SHALL BE BORNE BY THE OCCUPANT.
1. Submit to Building Management scaled architectural and
engineering drawings including, but not limited to, demolition,
construction, HVAC, mechanical, plumbing and structural, reflected
ceiling, electric, telephone, finish and furniture plan. Submit one (1) set
of sepias and four (4) sets of prints. Prior to start of project a review of
the site and final approval must come from Building Management.
This submission of drawings will be concurrent with the Filing of
drawings with New York City Buildings Department.
2. In the event of major alterations to the original approved Occupant
drawings, Occupant is to submit plans for review to Building
Management as indicated in item one.
3. Name, address, telephone number and representative or
architect/designer and engineering firm responsible for Occupant
alteration must be submitted to Building Management.
4. A list of general contractors and sub-contractors being considered
for the construction project must be submitted to the Building
Management in writing. It shall be the occupant's sole responsibility to
submit to the above listed contractors a copy of the rules and
regulations as outlined, prior to bidding for the job.
5. After Building Management's review of contractors, submit name,
address, telephone number and representative of contractor selected to
perform the work.
6. Any licensed architect or engineer can file, however, it is preferred
that the Occupant use the approved building filing agent -- Charles
Fizzo and Associates.
7. Building Management will require a copy of Insurance for all
contractors, covering the following.
a. Workmen's Compensations
b. Public Liability insurance in the amount of $3,000,000.00
c. Bodily injury in the amount of $1,000,000.00 per person,
$3,000,000,00 per occurrence.
d. Property damage in the amount of $3,000,000.00
e. The insurance policy shall include a hold harmless clause for
the owner's benefit (see Exhibit "A")
Special Clause
Thirty days prior notice of Certificate of Insurance cancellation, non-
renewal or material change to 125 Broad Condominium and managing
agent by certified mail.
a. The failure of any contractor of subcontractor to keep the
required insurance policies in force during the performance of the work
covered by these Rules and Regulations, any extension thereof of any
extra or additional work contracted to be performed by such contractor
or subcontractor, shall be a breach of this agreement, and in such event,
Building Management shall have the right, in addition to any other
rights, to immediately halt work being performed on the premises
without further cost to the Condominium and Managing Agent.
b. The coverage and amounts set forth herein shall not be deemed
to limit contractor's or any subcontractor's liability in tort or with
respect to any work contracted for or performed during the term of this
agreement.
c. The contractor's contact shall contain the Indemnity Agreement
set forth below and compliance with the foregoing requirements as to
insurance shall not be deemed to relieve contractor of liability
thereunder.
8. Submit Building permit Applications for Building Management's
signature.
9. A copy of the Building Department permit is to be submitted to
Building Management prior to commencement of work. Permit is to
be posted on the job site in conspicuous location prior to
commencement of construction. Occupant shall be responsible for
keeping current all permits.
10. All work and materials shall comply with all governmental codes
and New York City Building Department regulations.
11. Contractor's construction supervisor must contact the property
manager prior to commencement of construction to arrange a
preliminary meeting.
12. During any new alteration, Occupant shall be responsible to
comply with all provisions of all current local and state laws, ADA and
all appurtenances necessary to comply with same.
13. Compliance with Local Law 16/84 in which Occupant is required
to install a source of emergency lighting which includes, but is not
limited to, exit signs, corridors, hallways and access facilities. The
fixture(s) must be compatible with the building's system.
All alterations requiring partition changes shall comply with
compartmentation space requirements for the portion of the Building
being altered, in accordance with Section C26-504.1 of the City of
New York Administrative Code, as amended from time to time. All
partitions that create division, separation or segregation between either
occupancy, demised and public areas and/or compartmented spaces
shall be of 2 hour fire rated construction inclusive or properly rated and
labeled doors.
14. The New York State Lighting Standards shall be complied with.
In order to maintain this requirement, we recommend that during a
major renovation, the installation of an energy conservation light
fixture(s) and its inner components (ballasts, bulbs, etc.) Specifications
of same are to be submitted along with architectural plans. During a
small renovation, fixtures may be reused.
15. All cabling shall comply with Bulletin 126-1976 and Article 5 of
the City of New York Electrical code.
16. Occupant or Occupant's general contractor (with Occupants
written approval) is to contact the property manager 24 hours in
advance for the scheduling and coordination of freight elevators for
deliveries, rubbish removal and rules unique to the building.
Requesting the elevator must be put in writing. Freight elevators
charges will be sundryed to the tenant. All rubbish removal shall be
before 8:00 am and after 6:00 pm. Elevators can be reserved before
8:00 am and after 6:00 pm. No material or equipment shall be carried
under or on top of any elevator. Construction material is expressly
prohibited from the passenger elevators. An owner's general
contractor can not monopolize the freight elevator. It is Building
Managements responsibility to coordinate scheduling of the elevators.
17. Repair and/or replace all materials adjacent to work affected areas
outside the occupant's space to the satisfaction of Building
Management.
18. Upon completion of the work, Occupant is to submit one complete
set of the Building Department approved plans, the HVAC balancing
report, and the Building Department sign-off to the Building
Management office.
19. All connections to the buildings electric service must be done by
the building's approved electrical contractors. A certificate of filing
prior to installations will be required with final sign-off or approval
when applicable.
20. Occupant shall reimburse Building Management for all fees
incurred for outside professional review of plans and specifications.
(i.e. - Structural Engineer, Mechanical Engineer)
21. No equipment is to be suspended from reinforcing rods.
22. Equipment shall be suspended with power house clips or steel
beams depending on load.
23. All floor loading and steel work shall be subject to review by an
approved Building structural engineer. All approvals shall be obtained
by the Occupant at Occupant's expense. Occupant shall also be
responsible for the costs of all controlled inspections.
24. Welding to building steel is permitted with the following
conditions. Proposed weld areas must be approved by the Building
Engineer. All welding shall be performed by licensed welders meeting
requirements of the Building Code and work under the supervision of a
licensed inspection agency. Inspection agency to submit progress
reports, difficulties, acceptance or rejection of the work, and file a
certificate with the Building Department authorities attesting to the
proper execution of the work.
25. If, as a result of the work, any changes are required to be made to
the Class E communication system (e.g., speaker relocation, addition,
type/style, etc.) as presently filed, approved and installed, and a
subsequent inspection by the New York Fire Department and/or
Building Department indicates their disapproval thereof, Occupant shall
correct same at Occupant's sole cost and expense.
26. Any alteration affecting, directly or indirectly, any areas that
contain hazardous material, e.g. asbestos, shall be performed at
Occupants sole cost and expense, in compliance with the rules,
regulations, procedures and guidelines, as amended or adopted from
time to time, of New York City Local Law 76/85 and amended by
Local Law 80/86, of the Environmental Protection Agency (EPA),
Occupational Safety and Health Act (OSHA), National Institute for
Occupational Safety (NIOSHA) and the New York City Board of
Education, with respect to standards for work causing, effecting or
involving hazardous material; repair, containment, removal, disposal
and/or cleaning operations. A consultant/Certified Hazardous Waste
Inspector, will survey and approve the proposed abatement plan and
also monitor the air quality testing and method of removal and submit
to building management. The cost for this service will be at Occupant's
expense. Occupant will relocate any personnel from the area where
this type of alteration is being performed. Occupant agrees to cause
such rules, regulations, procedures and guidelines to be complied with.
Occupant shall absolve and hold harmless 125 Broad Condominium
and Managing Agent and any other party owning an interest in the
property in which the work is being performed, their employees and
agents, from any and all liability with respect to any failure to comply
with any and all rules, regulations, procedures and/or guidelines, as
amended or adopted from time to time.
27. Occupant shall obtain from Occupant's general contractor and all
sub-contractors an agreement in form and substance satisfactory to
Building Management protecting and indemnifying 125 Broad
Condominium against any claims, damages, liabilities, costs or
expenses including attorney fees in connection with any work or any
portion of work affecting the premises demised to any other Occupant
or services to be rendered to any other Occupant.
28. Any mechanic's lien, filed against the demised premises of the
building for the work claimed to have been done for or materials
claimed to have been furnished to Occupant shall be discharged by
Occupant at its expense within ten (10) days after such filing, by
payment or filing of the bond required by law or otherwise. Proof of
such discharge shall be forwarded to the Building Office immediately
thereafter.
29. All work, if performed by a contractor's subcontractor, shall be
subject to reasonable supervision and inspection by Building
Management. If an outside consultant is required to review, such
supervision and inspection shall be at Occupant's sole expense.
30. All costs and expenses incurred with respect to this agreement,
either directly or indirectly, including amounts so incurred by Managing
Agent, shall be borne by Occupant and all payments thereof shall be
made by Occupant promptly as and when they become due, and
evidence of such payments shall be furnished to Building Management
upon request. All such costs and expenses incurred by Building
Management (Managing Agent), and all amounts payable to Managing
Agent pursuant to this agreement and will be sundryed to the occupant.
125 Broad Condominium & the Managing Agent shall have no
responsibility for or in connection with the work and Occupant shall, at
Occupant's sole cost and expense, remedy and be responsible for any
and all defects in such work that may appear at any time, whether the
same shall affect the premises in particular or any part of the Building in
general.
Occupant hereby indemnifies and agrees to defend and hold 125 Broad
Condominium and Managing Agent, their employees and agents
harmless from and against any and all suits, claims, actions, losses,
costs, damages or expenses (including claims for workmen's
compensation) based on personal injury or property damage caused in
the performance of this work by Occupant, Occupant's employees,
agents, servants or contractors engaged by Occupant; and at the
Condominium's or Managing Agent's election, Occupant shall repair,
replace or reimburse the Managing Agent for the cost and expense of
repairing or replacing, any portion of the Building, item or equipment
of Condominium's real or personal property so damaged, lost or
destroyed to or destruction of machinery, tools, equipment and
property of similar nature belonging to the Occupant, contractor, and
subcontractors including personal property of the Occupant, its
employees, and employees of the contractor and sub-contractors.
Nothing herein contained shall be deemed to (a) constitute any one
individual as the Condominium's agent or (b) waive any of the
Condominium's right pursuant to the terms of provisions of any specific
agreement.
Nothing herein contained shall be deemed to supersede and/or
contradict any article, provision and/or amendment to the officially
executed agreement in effect upon inception of these alterations.
SUMMARY OF THE WORK
Final Cleaning
All induction units shall be thoroughly cleaned. If a contractor is
working on a multi-tenanted floor, all toilet facilities must be kept in a
clean and neat condition subject to Building Management's approval.
General Notes
Standards shown apply, except where any applicable governing codes
or regulations are more restrictive, in which case such codes and
regulations shall govern. It shall be the Occupants full responsibility to
make all arrangements and pay the building charges for hoisting,
material moving, use of elevators and any labor in connection with the
foregoing and any shutdown, and all allowable building working hours
plus overtime hours.
Demolition
Building Management must be notified in writing prior to the start of
any demolition project. At which time Building Management or their
contractors shall have access to the space for inspection purposes.
Demolition work must be performed by an approved 125 Broad Street
Contractor.
Precautions
Provide, erect and maintain lights, barriers, weather protection and all
other items as required for the proper protection of the workmen
engaged in demolition operation, public and adjacent construction.
Provide and maintain weather protection at exterior openings so as to
fully protect the interior premises against all damages from the
elements. Provide and maintain temporary protection of the existing
structure designated to remain where demolition and removal work is
being done, connections made, materials handled, or equipment
removed.
Occupant is responsible for any damage to the existing structure or
contents by reason of the insufficiency of protection provided.
All base building items specifically designated for re-use but damaged
in the course of work performed under the general contract, or
otherwise unusable shall be replaced by items of equal quality and
appearance at no expense to the owner. The scheduling of all work
and the removals of all debris shall be in full compliance with the
building rules and regulations, including protection of floors and walls.
Demolition may be done at all times provided that if Building
Management receives complaints from other Occupants in the building
and advises Occupant thereof, Occupant will perform all such
demolition thereafter either before or after office hours.
Contractor shall use all means necessary to control dust if such dust is
caused by operations during performance of work. Contractors shall
thoroughly moisten all surfaces as required to prevent dust being a
nuisance to other Occupants, public areas and also provide dust proof
barriers between work and other areas. All public areas effected must
be kept clean each day.
GENERAL CONSTRUCTION
1. Partitions between Occupants on multiple tenancy floors and
between Occupants and public corridors shall be constructed of 2 1/2"
metal studs 16" on center with two (2) layer fire rated sheet rock, both
sides from slab to underside of slab above with full thickness fiberglass
aluminum backed insulation in accordance with applicable building
codes. Gypsum wall board to be taped and spackled a minimum of
three (3) coats.
2. Building standard partitions within Occupant's Demised Premises
shall consist of at a minimum of 2 1/2" steel studs 24" on center to arch
with one (1) layer of 5/8" fire rated sheet rock on each side. All wall
butting mullions shall have a proper channel to receive the Gypsum
wall board.
3. If Occupant's partition layout interferes with existing fan coil units,
the relocation of these units will be at Occupant's sole cost and expense
including the material and labor overtime for the necessary drain down
and refilling of system.
4. Entrance doors to be a 1 1/2 hour fireproof self-closing type with
welded frame. All wood doors shall have a fire label. All hollow metal
doors shall be properly fire rated if they are located in rated partitions
with visible label.
5. All woodwork shall be fireproofed and a New York City affidavit of
certification must be furnished.
6. All locks shall be keyed and mastered to building setup. Keys must
be supplied to the building manager. All hardware shall be ADA
compliant. (Lever type)
7. Any contractor engaged by Occupant to perform the work shall
make available fire extinguishers based on the following:
Alterations up to 3,000 sq. ft. - one fire extinguisher
Alterations over 3,000 sq. ft. - one fire extinguisher for every additional
3,000 sq. ft.
Said fire extinguishers shall be 25 lb. type approved for type A, B, C
fires and shall be kept and maintained on the premises by Occupant's
contractor for the duration of the work and be placed and identified in
a conspicuous manner so as to be readily available if required.
8. All common areas shall meet Departments of Buildings'
requirements or requirements of other agencies having Jurisdiction.
ELECTRICAL SPECIFICATIONS
1. All base building electrical work and tie-ins to be performed solely
by the building's approved electrical contractors.
2. All wiring shall meet requirements of the Department of Water
Supply, Gas and Electric and of Underwriter's Laboratory. All
electrical devices are to meet New York City code.
3. All wiring to meet New York City code.
4. Sealite to be used for final connection to motors. Prewired flexible
conduit to be used for recessed fixtures.
5. All wire to be minimum 12 gauge copper THWN
6. All fixtures that are removed and reinstalled shall be cleaned and re-
lamped and ballast changed to energy efficient types as approved by
Con Edison (Except when matching to existing)
7. Building Management requests that any fixtures being removed and
not reinstalled be turned over to Building Management.
8. All coring, chopping, chasing of concrete and work which results in
noise shall be accomplished before 8 A.M. or after 5:30 P.M. during
normal working days.
9. All open floor outlets shall be capped with appropriate blanking
plate.
10. Conduits larger than 2" shall be rigid aluminum.
11. All branch circuit and feeder wiring shall be tagged at each box or
panel. Tags shall indicate circuit number and phase. All panels cover
troughs, switch covers and trim to be restored to its proper place.
Panel directory shall be updated to reflect changes.
12. All existing or new wiring for switching, fixtures, devices, ceiling
and related elements, outlets on approved shop drawings located with
the demised area, shall not carry over control to or controlled by any
devices or adjacent space.
13. Home runs shall be indicated on plans. Rigid conduit, BX or thin
wall tubing shall be used throughout. 1/4" minimum size.
14. Light fixtures shall be Con Edison energy efficient.
15. All conduit shall be supported by standoffs, not wired to ceiling
supports.
16. All electrical boxes shall meet code requirements.
17. If excessive electrical power is required, it is to be taken from the
main distribution board and not from existing Building panels.
18. plans with requirements shall be submitted to Building
Management to determine riser capacity.
19. Building Mechanic or Engineer shall supervise all riser shutdowns.
SPECIFICATIONS FOR AIR CONDITIONING
1. Occupant shall be responsible for alternations to existing air
conditioning duct work or systems and for insuring that such work is
properly integrated into existing Building systems with no adverse
effects on the Building system. Building Management shall not be
responsible for the proper HVAC design or balancing within the area
of any Occupant Alteration. The system shall be balanced at the
completion of the job.
2. All air conditioning components should be passed by Building
Management for review.
3. Additional outside louvers are not permitted, unless the need
therefore is firmly established. The location of such louvers shall be
subject to Owner's Representatives/Building Management's approval.
Detailed sketches of all louvers shall be submitted for Building
Management's approval.
4. All shut off valves shall be accessible at all times, and tagged.
5. All unused equipment, such as air handling units and air
conditioning units shall be removed.
6. Exhaust fan system must discharge to the atmosphere based on
usage, not in ceiling or existing Building return air systems.
7. All condensate lines must be insulated with an approved material.
8. Supplementary A/C units to be installed with the proper isolators so
as not to disturb the quiet enjoyment of adjoining premises.
9. It is to be understood that periodic maintenance of auxiliary A/C
units is the occupant's responsibility and expense. All filing and
inspection requirements are occupant's responsibility.
10. All supplementary units connected to the building supplemental
plant shall be metered by approved meters at the individual owner's
cost. Location is at the review of Building Management and the
occupant will be billed monthly for usage as per their agreement with
125 Condominium. All installation is at occupant's cost.
11. Occupant shall furnish design balancing figures to Building office.
PLUMBING RULES AND REGULATIONS FOR ALTERATIONS
1. All water supply to a floor shall originate on the same floor from
nearest wet column with proper access for maintenance. Pipes
supplying such fixtures shall be insulated.
2. All piping, fitting, valves, etc. shall be properly insulated to prevent
pipe condensation and/or heat loss.
3. Cooper tube must be used to all supply service connections.
4. All waste lines shall be properly pitched and piped to insure total
drainage as not to create nor form traps (except as may be required,
e.g. made by means of long turn or 45 degree "Y" fittings) and shall
maintain existing clean-out connections and shall further provide clean-
out connections at fittings.
5. All piping shall conform to the Plumbing Code, Dept. of Buildings,
City of New York.
6. All core drilling, chopping chasing of concrete and work which
results in noise shall be accomplished before 8 A.M. or after 5:30 P.M.
during normal working days.
7. All piping runs in the Occupant areas to be accessible.
8. No water risers shall be shut down during Building, office hours. A
Building mechanic shall supervise all riser shutdowns.
9. No plastic pipe will be permitted.
10. Sweat joint must be made with a silver based alloy solder.
11. All unused fixtures and piping shall be capped at its respective
riser.
12. All run outs from risers shall be brass pipe.
VENETIAN BLINDS AND CURTAINS
1. No curtain rods are to be installed in venetian blind pockets.
2. Curtain rods shall not be supported by any part of the acoustical tile.
Rods shall be supported by headers attached to the ceiling's mechanical
supports of black iron.
3. If curtains are to be installed by any Occupant, such curtains shall be
flame proof and shall not interfere with the proper functioning of the
peripheral HVAC system. A Certificate of Flammability must be sent
to the Building Office.
CEILINGS
1. All ceilings shall meet all requirements of New York City
Department of Buildings.
2. All ceilings are to be supported independently and not from duct
work. Ceiling installation shall be approved by building management
for accessibility.
SPECIFICATIONS FOR TELEPHONE INSTALLATION AND
LOW VOLTAGE WIRING
1. All wall wiring is to comply with New York City code.
2. No more than 6' of cable or wire can be run exposed along any wall.
No exposed wiring to run along the floor. All such wiring must be
properly covered.
3. When applicable no excess wire or panels may be left inside the
peripheral induction unit and enclosed.
4. Ceiling tiles and light fixtures are to be replaced by qualified
personnel. If the building personnel are required to reinstall fixtures
and tiles, charges to the occupant will result.
5. Prior to any new installations, all old or obsolete wiring must be
removed. All new exposed cabling that is run in the ceiling must be
individually hung and supported and not be dependent upon support of
building hung ceiling.
6. Open communication cables may be run in spaces used as return air
plenum provided they are jacketed conductors with Teflon insulation,
silicon rubber insulated with glass tape, or other conductors approved
for this type of application. All other types of cable must be installed in
a raceway, pipe, thin wall or conduit. All piping and conduit must
comply with New York City Electrical Code. In ceilings which do not
convey environmental air, open communication wiring of any type may
be installed.
Contingencies:
This consent shall be no force and effect unless and until it is signed by
you and returned to Building Management within ten (10) days of the
date of this letter, acknowledging your consent to the foregoing.
Very truly yours,
The Galbreath Company
as agent for 125 Broad Condominium
125 Broad Street
Building Management
By:
ACCEPTED AND AGREED:
Occupant:
By:
Date:
EXHIBIT A
THE GALBREATH COMPANY
INDEMNITY CLAUSE
FOR CERTIFICATE OF INSURANCE
To the fullest extent permitted by law, the Contractor hereby agrees to
indemnify and hold harmless 125 Broad Condominium, The Galbreath
Company, Edward S. Gordon Company Inc. and any of their
respective agents, employees, partners, officers, directors and principals
(disclosed or undisclosed) (collectively, the "Indemnities") from and
against all claims, losses damages, costs, expenses and other liabilities
(including, without limitation, attorney's fees and disbursements and
liability, if any, for the payment of worker's compensation or disability
benefits) arising out of or resulting from the performance of the
services called for under this contract Requirements and Specifications,
to the extent that any such claim, loss, damage cost, expense or other
liability is attributable (i) to personal injury, sickness, disease or death,
or (ii) to injury to or destruction of property, including, but not limited
to the loss of use resulting therefrom, and is caused, in whole or in part,
by the acts or omissions of the Contractor or its subcontractors or their
respective agents or employees including, without limitation, the
Contractor's or its subcontractors' failure to comply with all laws,
ordinances, rules, regulations and requirements or any governmental
authorities having jurisdiction over the services hereunder, including
those governing the removal and disposal of toxic or hazardous waste.
The Contractor shall defend any action brought against the indemnities
which is based on any claim, loss, damage, cost, expense or liability
referred to herein. Such obligations shall not be construed to negate,
abridge, or otherwise reduce any other right or obligation of indemnity
which would otherwise exist for the benefit of any indemnitee.
If any and all claims against the indemnities by any of the Contractor's
employees, anyone directly or indirectly employed by the Contractor or
anyone for whose acts the Contractor may be liable, the
indemnification obligation hereunder shall not be limited in any way or
any limitation on the amount of type of damages, compensation or
other benefits payable by or for the Contractor under worker's or
workman's compensations acts, disability acts or other employee
benefit acts.
FILING FOR CERTIFICATE OF INSURANCE
125 BROAD STREET
NEW YORK, NY 10004
CONTRACTORS (VENDORS) WORKING DIRECTLY FOR The
Galbreath Company at 125 Broad Street. The certificate should have a
minimum of $3,000,000.00 liability coverage and should be made to
read as follows:
Insured -
Vendor's full name and address.
Certificate Holder -
The Galbreath Company
AAF 125 Broad Condominium
125 Broad Street
New York, NY 10004
Attn: Stephen McGann
Listed as additional insured -
125 Broad Condominium, The Galbreath Company and Edward S.
Gordon Co., Inc., are included as additional insured with respects to
125 Broad Street, New York, NY 10004.
CONTRACTORS CONTRACTED BY A TENANT
Insured -
Contractor's full name and address.
Certificate Holder -
Tenant's full name, address and floor.
125 Broad Street, New York, NY 10004.
Listed as additional insured -
125 Broad Condominium, The Galbreath Company and Edward S.
Gordon Co., Inc., are included as additional insured with respects to
125 Broad Street, New York, NY 10004.
TENANTS INSURANCE REQUIRED BY LEASE
Insured -
Tenant's Full name, address and floor.
Certificate Holder -
The Galbreath Company
AAF 125 Broad Condominium
125 Broad Street
New York, NY 10004
Attn: Stephen McGann
Additional insured -
125 Broad Condominium, The Galbreath Company and Edward S.
Gordon Co., Inc., are included as additional insured with respect to
125 Broad Street, New York, NY 10004.
OCCUPANT RULES AND REGULATIONS
1. The rights of Occupants in the entrances, corridors, elevators and
escalators of the Building are limited to ingress to and egress from the
Occupant's premises for the Occupant's and their employees, licensees
and invitees, and no Occupant shall use, or permit the use of, the
entrances, corridors, escalators or elevators for any other purpose. All
deliveries and shipments of goods and packages shall be through the
freight elevators, and not the passenger elevators. No Occupant shall
invite to the Occupant's premises, or permit the visit of, persons in such
numbers or under such conditions as to interfere with the use and
enjoyment of any of the plazas, entrances, corridors, escalators,
elevators and other facilities of the Building by other Occupants
without notice to the Building Management office. Fire exits and
stairways are for emergency use only, and they shall not be used for
any other purposes by the Occupants, their employees, licensees or
invitees. No Occupant shall encumber or obstruct, or permit the
encumbrance or obstruction of any of the lobbies, sidewalks, plazas,
entrances, corridors, escalators, elevators, fire exits, stairways or other
public portions of the Building. The Owner's representatives and
Building Management reserve the right to control and operate the
public portions of the Building and the public facilities, as well as
facilities, furnished for the common use of the occupants, in such
manner as it reasonably deems best for the benefit of the occupants
generally.
2. Building Management may refuse admission to the Building outside
of ordinary business hours to any person not known to the watchman
in charge or not having a pass issued by occupant or not properly
identified, and may require all persons admitted to or leaving the
Building outside of ordinary business hours to register. Occupant's
employees, agents and visitors shall be permitted to enter and leave the
Building whenever appropriate arrangements have been previously
made between the owners representative and the occupant with respect
thereto. Each occupant shall be responsible for all persons for whom
he requests such permission and shall be liable to 125 Broad
Condominium for all acts of such persons. Any person whose presence
in the Building at any time shall, in the reasonable judgment of Building
Management, be prejudicial to the safety of the Building or its
occupants may be denied access to the Building or may be ejected
therefrom. In case of invasion, riot, or civil disorder Building
Management may prevent all access to the Building during the
continuance of the same, by closing the doors or otherwise, for the
safety of the occupants and protection of property in the Building.
Building Management may require any person leaving the Building
with any bulky package or other bulky object to exhibit a pass from the
occupant from whose premises the package or object is being removed,
but the establishment and enforcement of such requirement shall not
impose any responsibility on Building Management for the protection
of any occupant against the removal of property from the premises of
the occupant. 125 Broad Condominium shall, in no way, be liable to
any occupant for damages or loss arising from the admission, exclusion
or ejection of any person to or from the occupant's premises or the
Building under the provisions of this rule.
3. No occupant shall obtain or accept for use in its premises ice, towel,
barbering, boot blacking, door polishing, lighting maintenance, cleaning
or other similar services from any persons not authorized by Building
Management in writing to furnish such services, provided that there are
a reasonable number of sources available to occupant (consistent with
proper Building operation and security), and the charges for such
services by persons authorized by Building Management are not
excessive. Such services shall be furnished only at such hours, in such
places within the occupant's premises and under such regulations as
may be fixed by Building Management.
4. No awnings or other projections over or around the windows which
shall be visible from the exterior (with the blinds down) shall be
installed by any occupant.
5. There shall not be used in any space, or in the public halls of the
Building, either by the Occupant or by jobbers or others, in the delivery
or receipt of merchandise, any hand trucks, except those equipped with
rubber tires and side guards.
6. Entrance doors on multiple occupancy floors shall not be left open
at any time. All blinds and or drapes therein above the ground floor
shall be lowered and kept drawn when and as reasonably required
because of the position of the sun, during the operation of the Building
air-conditioning system to cool or ventilate the Occupant's premises.
Occupant's failure to comply with the requirements of the previous
sentence may result in an inadequacy of performance of the Building
air-conditioning and ventilating system.
7. No noise, including the playing of any musical instruments, radio or
television, which, in the judgment of Building Management, might
disturb other Occupants in the Building shall be made or permitted by
any Occupant. Nothing shall be done or permitted in any Occupant's
premises, and nothing shall be brought into or kept in any Occupant's
premises, which would impair or interfere with any of the Building
services or the proper and economic heating, cleaning or other
servicing of the Building or the premises, or the use or enjoyment by
any other occupant of any other premises, nor shall there be installed by
any Occupant any ventilating, air conditioning, electrical or other
equipment of any kind which, in the judgment of Building
Management, might cause any such impairment or interference. No
dangerous, inflammable, combustible or explosive object or material
shall be brought into the Building by any occupant or with the
permission of any occupant except for usual office.
8. Occupant shall not permit any cooking within the Demised Premises
unless filed with the New York City Buildings Department and
approved by Building Management and shall not permit any food odors
emanating within the Demised Premises to seep into other portions of
the Building.
9. No acids, vapors or other materials shall be discharged or permitted
to be discharged into the waste lines, vents or flues of the Building
which may damage them. The water and wash closets and other
plumbing fixtures in or serving any Occupant's premises shall not be
used for any purpose other than the purpose for which they were
designed or constructed, and no sweepings, rubbish, rags, acids or
other foreign substances shall be deposited therein. All damages
resulting from any misuse of the fixtures shall be borne by the
Occupant who, or whose servants, employees, agents, visitors or
licensees, shall have caused the same.
10. Except as expressly authorized in accordance with the Occupant's
Agreement, no signs, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by Occupant, which is visible
from outside of the Demised Premise without the prior written consent
of Building Management which shall not be unreasonably withheld. In
the event of the violation of the foregoing by tenant, Building
Management may remove the same without any liability, and may
charge the expense incurred by such removal to the Occupant or
Occupants violating this rule. Signs or lettering in public areas of the
Building, shall be of a size, color and style acceptable to Owner's
representatives and Building Management. Building Management shall
have the right to prohibit any advertising by any Occupant which refers
to or identifies the Building and which impairs the reputation of the
Building or its desirability as a building for offices, and upon written
notice from Building Management, Occupant shall refrain from or
discontinue such advertising. If a floor is leased out to more than one
tenant, the signage placed in the corridor is to be approved by Building
Management.
11. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows in any occupant's premises and no lock on any
door therein shall be changed or altered in any respect, unless all are
master-keyed and occupant shall furnish key to Building Management.
Upon the termination of an Occupant's Agreement, all keys of the
Occupant's premises and toilet rooms shall be delivered to Building
Management.
12. No Occupant shall use or occupy, or permit any portion of the
premises demised to such Occupant to be used or occupied, as an
office for a public stenographer or typist, or as a barber or manicure
shop or as an employment bureau (except to employ personnel for
Occupant) or for any mail order business. No Occupant or occupancy
shall engage or pay any employees in the Building, except those
actually working for such Occupant or Occupant in the building, nor
advertise for laborers giving an address at the Building. No premises
shall be used, or permitted to be used, at any time, as a store for the
sale or display of goods, wares or merchandise of any kind (except as
otherwise permitted in your agreement), or as a shop, booth, bootblack
or other stand, or for the conduct of any business or occupation which
predominantly involves direct patronage of the general public in the
premises demised to such Occupant, or for manufacturing or for other
similar purposes.
13. The requirements of Occupant will be attended to only upon
application at the office of the Building. Employees of the building
shall not perform any work or do anything outside of the regular duties,
unless under special instructions from the Building Office.
14. Each Occupant shall, at its expense, provide artificial light in the
premises demised to such Occupant for persons performing Janitorial
or other cleaning services and making repairs or alterations in said
premises, during the performance thereof.
15. The Occupant's employees shall not gather in the hallways,
stairways, elevators, front, roof or any other part of the Building used
in common by the occupants thereof
16. If the premises demised to any occupant become infested with
vermin, such Occupant, at its sole cost and expense, shall cause its
premises to be exterminated, from time to time, and shall employ such
exterminators therefor as shall be cleared by Building Management.
17. Occupant shall not place a load upon any floor of the Demised
Premises which exceeds the load per square foot which such floor was
designed to carry and which is allowed by law.
18. Business machines and mechanical equipment belonging to
Occupant which cause noise, vibration or any other nuisance that may
be transmitted to the structure or other portions of the Building outside
of the Demised Premises, to such a degree as to be objectionable to
Building Management or which interfere with the use or enjoyment by
other occupants of their premises or the public portions of the Building,
shall be placed and maintained by Occupant at Occupant's cost and
expense, in settings of cork, rubber or spring type vibration to the
reasonable satisfaction of Building Management.
19. Building Management has agreed to maintain a Building Directory
for Occupants of the Building in accordance with Section 16.16 of the
Lease. The Building Management will, at the request of Occupant,
maintain listings on the Building Directory of the name of Occupant
and of any other person, firm, association or corporation lawfully in
possession of the premises or any part thereof. The number of listings
for Occupant shall be no less than 138 and such additional listings as do
not exceed the same proportion of the directory capacity as Occupant's
Pro Rata Share. The listing of any name other than that of Occupant,
whether on the doors of the premises, on the Building Directory, or
otherwise, shall not operate to vest any right or interest in this
agreement or in the premises or be deemed to be the written consent of
Building Management, it being expressly understood that any such
listing is a privilege extended by 125 Broad Condominium.
20. Occupant shall not move any safe, heavy equipment or bulky
matter in or out of the Building without coordinating with building
Management. If the movement of such items require special handling,
Occupant agrees to employ only persons holding a Master Rigger's
License to do said work and all such work shall be done in full
compliance with the Administrative Code of the City of New York and
other municipal requirements. All such movements shall be made
during hours which will least interfere with the normal operations of
the Building, and all damage caused by such movement shall be
promptly repaired by Occupant at Occupant's expense. All moving,
shipping and receiving of Occupant's products, samples and supplies
shall be through the freight or service elevator(s) and shall be subject to
the Occupant's Agreement.
21. No Occupant shall suffer or permit the Demised Premises or any
part thereof to be used in any manner or anything to be brought into or
kept therein, which would in any way (i) violate any Laws or
Ordinances, (ii) cause structural injury to the Building or any part
thereof, (iii) constitute a public or private nuisance, (iv) impair the
appearance, character or reputation of the Building, (v) discharge
objectionable fumes, vapors or odors into the Building heating,
ventilating and air conditioning system or into Building flues or vents
not designed to receive them or otherwise in such manner as may
offend other occupants, or (vi) violate any of tenant's other obligations
under its agreement.
22. If Occupant's use of the freight elevator is after regular hours, or in
such a manner that reasonably requires the supervision of Building
Management's employees, Occupant shall pay to 125 Broad
Condominium, the Building Standard cost of furnishing, such after
hours service and/or supervision.
As used herein, the following terms shall have the following meanings:
"Occupant" - References the individual owners and tenants in the same.
"Agreement" - in regards to an owner this reflects the condominium
agreement. In regards to the tenant this reflects the lease.
EXHIBIT F
Landlord's Building
Rules and Regulations
1. The sidewalks, areas, entrances, vestibules, passages, corridors,
halls, elevators and stairways shall not be encumbered nor obstructed
by any of the tenants, their agents, clerks, servants or visitors, or be
used by them for any other purpose than for ingress and egress to and
from their respective premises. Landlord reserves the right to restrict
and regulate the use of aforementioned public areas of the Unit by the
tenants, their employees, guests, contractors and customers and by
persons making deliveries to tenants, including but not limited to the
right to allocate certain elevators for delivery service, and the right to
designate which Building entrances shall be used by persons making
deliveries in the Building.
2. The doors, skylights, and windows that reflect or admit light
into passageways or into any place in the Building shall not be covered
or obstructed by any tenant.
3. The water-closets, wash-closets, urinals and other water
apparatus shall not be used for any purposes other than those for which
they were constructed and no sweepings, rubbish, rags, ashes,
chemicals, refuse from electric batteries, or other substances shall be
thrown therein. No tenant shall lay linoleum or other similar floor
covering so that the same shall come in direct contact with the floor
covering of the Premises, and if linoleum or other similar floor covering
is desired to be used, an interlining of builder's deadening felt shall be
first affixed to the floor by a paste, or other material, which may easily
be removed with water, the use of cement or other similar adhesive
material being expressly prohibited.
4. No tenant shall mark, paint, drill into, drive nails into, or in any
way damage, mutilate or deface any walls, ceilings, partitions, floors,
wood, stone or iron work of the Unit or the Building, except in
connection with Alterations.
5. No sign, advertisement or notice shall be inscribed, painted,
affixed or displayed on any of the windows or doors or on any other
part of the outside or the inside of the Building, without the prior
consent in writing of Landlord; provided that, with respect to signs,
advertisements or notices inscribed, painted, affixed or displayed on the
doors or on any other part of the inside of the Building, Landlord shall
not withhold its consent if such signs or notices are inscribed, painted,
affixed or displayed in a first-class manner consistent with Comparable
Buildings.
6. No tenant shall do anything or permit anything to be done, in
its Premises, or bring or keep anything therein or in the Building, that
will in any way obstruct or interfere with the rights of other tenants, or
in any way injure or annoy them, or those having business with them.
Tenants, their agents, clerks, servants or visitors, shall not make or
cause any improper noises in the Building, or interfere in any way with
other tenants, or those having business with them.
7. No freight, furniture, or bulky matter of any description will be
received into the Building, or carried up or down, except during hours
(which will include reasonable times during Business Hours) and in the
manner designated by Landlord, which may involve overtime work for
Landlord's employees, agents or contractors or for the employees,
agents or contractors of the Board of Managers. The moving of safes
shall occur at such times as Landlord shall designate upon previous
notice to Landlord or Landlord's agent; and the persons employed to
move the safes in and out of the Premises must be acceptable to
Landlord. No tenant shall use the passenger elevators for the hauling
and removal of materials or debris and the same shall be done only after
Business Hours and only via the freight elevator.
8. Tenants shall not install any locks or bolts on any doors nor
make any changes in existing locks unless Tenant promptly provides
Landlord with a key or combination thereto. All keys shall be keyed to
the building master. Each tenant must, upon the termination of the
tenancy, restore to Landlord all the keys (or other similar access
devices) of offices, rooms and toilet-rooms which shall have been
furnished to Tenant or that Tenant shall have had made, and in the
event of loss of any keys so furnished shall pay Landlord therefor.
9. Tenant shall not use the Premises for the manufacturing or
storage of merchandise or for lodging.
10. Nothing shall be swept or thrown by the tenants or by their
agents, clerks, servants or visitors into the corridors, halls, stairways,
elevators, or light shafts, or upon the skylights of the Building, or into
or upon any heating or ventilating registers, or plumbing apparatus in
the Building, or upon adjoining buildings or upon the street. No
awnings or other projections shall be attached to the outside walls of
the Building without the prior written consent of Landlord.
11. No animals or birds shall be kept in or about the Premises.
12. Tenants shall not bring into the Building or keep to use in the
Building any gasoline, kerosene, camphene, burning fluid, other
inflammable, combustible or explosive fluid, chemical or substance, or
any Substance designated as hazardous under any applicable law.
13. No tenant shall cause or permit any unusual or objectionable
odors arising to a nuisance to emanate from the Premises. No tenant
shall permit the delivery of any food or beverage to the Premises,
except by persons reasonably approved by Landlord and only under
reasonable regulations fixed by Landlord. No food or beverages shall
be carried in the public halls and elevators of the Building except in
closed containers or as otherwise be customary in Comparable
Buildings.
14. Tenants shall not obtain any towel supply service or ice service
except from Persons approved by Landlord, nor obtain drinking water
for delivery on the Premises from any source not approved by
Landlord. Canvassing, peddling and soliciting are prohibited in the
Building and Tenant shall cooperate to prevent the same.
15. Telegraph, telephone and other wires and instruments shall not
be introduced by Tenant without previous notice to Landlord and with
its reasonable approval.
16. Landlord reserves the right to exclude from the Building
between the hours of 6:00 o'clock p.m. and 8:00 o'clock a.m. on
weekdays, on Saturdays, Sundays and legal holidays, all Persons who
do not present a pass to the Building signed by Landlord or Landlord's
agent. Landlord or its agent will furnish passes to Persons for whom
any tenant requests same in writing. Each tenant shall be responsible
for all Persons for whom he requests such pass and shall be liable to
Landlord for all acts of such Persons. Landlord may require all such
Persons to sign a register on entering and leaving the Building.
17. Landlord shall use all reasonable efforts (or, if the enforcement
of such Rules and Regulations is the responsibility of the Board of
Managers, Landlord shall use all reasonable efforts to cause the Board
of Managers) to enforce the Rules and Regulations against occupants
of the Unit in a uniform and non-discriminatory manner.
18. Landlord may from time to time adopt additional systems and
procedures to improve the security or safety of the Unit, any persons
occupying, using or entering the same, or any equipment, finishings or
contents thereof, and Tenant shall comply with Landlord's reasonable
requirements relative thereto.
19. Tenant shall conduct all aspects of its operations so as to
preserve labor harmony and to insure that the security and operations
of the Building shall not be disrupted.
20. Landlord reserves the right to rescind, alter, waive or add, as to
one or more or all tenants, any rule or regulation at any time prescribed
for the Building or the Unit when, in the judgment of Landlord,
Landlord deems it necessary or desirable for the reputation, safety,
character, security, care, appearance or interests of the Building, the
Unit or the Premises, the preservation of good order therein, the
operation or maintenance of the Building or the Unit, the equipment
thereof, or the comfort of Tenants or others in the Building or the Unit
so long as such rescission, alteration, waiver or addition is done in a
uniform and non-discriminatory manner. No rescission, alteration,
waiver or addition of any rule or regulation in respect of one tenant
shall operate as a rescission, alteration or waiver in respect of any other
tenant.
21. Tenant shall not place a load upon any floor of the Premises
that exceeds the lesser of (a) 50 pounds live load per square foot
(except in locations expressly indicated by Landlord in writing to have
been reinforced to bear greater live loads) or (b) that is allowed by
Law. Business machines and mechanical equipment used in the
Premises that cause vibrations or noise that may be transmitted to any
other space in the Building to such a degree as to be reasonably
objectionable to Landlord or to any tenants or occupants of the
Building shall be placed and maintained by Tenant, at its expense, in
settings of cork, rubber or spring-type vibration eliminators sufficient,
in Landlord's judgment, to eliminate such vibrations or noise.
22. Tenant shall not clean nor require, permit, suffer or allow any
window in the Premises to be cleaned from the outside in violation of
Section 202 of the Labor Law of the State of New York (or its
successor or any law of similar import), any other applicable Law, the
rules of the Board of Standards and Appeals (or any successor body),
or of any other agency, bureau, board or other body having or asserting
jurisdiction.
23. Tenant shall neither contract for, nor employ, any labor in
connection with the maintenance or cleaning of, or providing of any
other services to, the Premises (but excluding Tenant's Property)
without the prior consent of Landlord which consent shall not be
unreasonably withheld. It shall be reasonable for Landlord to withhold
any such consent on the ground that use of such service provider
would disturb labor harmony in the Building.
Tenant agrees that in the event of any inconsistency or conflict between
the terms, provisions, rules and/or regulations contained in Exhibit E
and in Exhibit F, as the case may be, the more restrictive, term,
provision, rule and/or regulation shall apply.
EXHIBIT G
Cleaning Specifications
1. With respect to the Common Areas, reference is made to
Schedule I of Exhibit B of the Declaration.
2. With respect to the Premises, reference is made to Exhibit G-1
annexed hereto.
EXHIBIT G-1
Cleaning Specifications
GENERAL (Common and occupied Areas)
All stone, ceramic tile, marble, terrazzo and other unwaxed or
untreated flooring to be swept nightly. Wash such flooring in building
areas nightly and as necessary during inclement weather.
All linoleum, rubber, asphalt tile and other similar types of flooring
(that may be waxed or treated) to be swept nightly, using approved
dust down preparation. Such flooring in public areas to be waxed or
treated in approved manner as often as necessary to maintain
appearance suitable to Agent.
All carpeting and rugs to be vacuum cleaned nightly.
In all areas remove all gum and foreign matter on sight, spot clean
carpeting and resilient floor each night or as necessary.
Hand dust and wipe clean with damp or treated cloth all furniture
including lamp shades, files, fixtures, window sills, telephones and
convector enclosure tops nightly; wash said sills and tops if necessary
at a minimum, monthly. Horizontal surfaces of window frames to be
hand dusted nightly. Dust all chair rails, trim and baseboards nightly.
Empty all waste receptacles nightly and deliver the recycled waste
paper and waste materials to the locations designated by the Agent.
Where a mechanical compactor is in use for rubbish removal, the
Contractor is required to separate, bale and or deposit the building
waste material in said compactor and/or compactors for removal at no
additional expense to Agent as directed by Agent. Contractor will
supply all clear plastic bags and related equipment necessary in
maintaining a proper rubbish removal and/or recycling operation each
night. Contractor will adopt appropriate recycling procedures as set
forth by Agent.
Empty and clean all ashtrays and screen and clean all sand urns nightly.
Dust all door and other ventilating louvers at least once each week or
as necessary.
Wipe clean all water fountains and coolers nightly, empty waste water
where required.
Keep locker and slop sink rooms in a neat and orderly condition at all
times.
Wipe clean nightly and polish weekly all brass and other bright work.
Check all private stairwells throughout entire Building nightly and keep
in clean condition.
Check all public stairwells through entire building daily and keep in
clean condition. Wash floors once each month or more frequently as
required.
Interior and exterior of metal car and hatch doors (including saddles) of
all elevators to be properly cleaned and treated. Saddles to be hand
rubbed and polished nightly.
Clean and treat all interior metal window frames, pilasters and other
unpainted interior metal surfaces of the perimeter walls of the Building
each time the interior of the windows is washed (quarterly).
Specifically, clean these surfaces each year with a suitable cleaning
solution to obtain results as hereinafter stated. Certain window areas
to be determined at a later date will require this cleaning at more
frequent intervals. Plaster walls or other surfaces adjacent to these
window frames to be protected from staining or damage, and in the
event this condition comes about, Contractor to restore areas to proper
conditions.
All carpet installed throughout the public corridor of the building will
be vacuumed nightly, spot cleaned as needed, and shampooed quarterly
to maintain an appearance suitable to Agent.
LAVATORIES (Core Only)
Sweep and wash all lavatory and rest room floors nightly, using proper
approved disinfectants. Wash and polish all mirrors, powder shelves,
bright work and enameled surfaces in all lavatories and rest rooms
nightly. Machine scrub rest room Boors with proper disinfectants once
a week.
Scour, wash and disinfect all basins, bowls and urinals throughout all
lavatories nightly; odorless disinfectants to be used.
Wash and disinfect all toilet seats both sides nightly.
Hand dust and clean, washing where necessary, all partitions, tile walls,
dispensers and receptacles in all lavatories and rest rooms nightly.
Empty paper towel receptacles and sanitary disposal receptacles in
lavatories and rest rooms nightly and deliver the waste paper and waste
materials to the locations designated by the Agent.
Fill all toilet tissue holders nightly.
Wash waste cans and receptacles in lavatories and rest rooms as
necessary, but at least once a week, to keep waste receptacles clean
and odor free.
Thoroughly wash and polish all wall tile and stall surfaces of lavatories
and rest rooms as often as necessary but in no event less than once
every week.
Hand dust all lights and grills once each month. Wash toilet lighting
fixtures as often as necessary but not less than twice per year.
Fill soap dispensers and paper towel dispensers nightly as required and
report any broken or damaged dispensers to Building management
immediately (all items to be supplied by Contractor). Fill sanitary
dispensers in all lavatories nightly (all items to be supplied by
Contractor).
BUILDING LOBBY
Floor of Building Lobby to be swept and washed nightly with
manufacturer approved cleaner, or as necessary in inclement weather,
scrubbed weekly and treated, with manufacturer approved method, to
provide an appearance suitable to the Agent.
Wash all entrance mats nightly and maintain in clean condition.
Floor in elevator cabs to be washed and waxed and polished nightly,
walls and metal work and saddles to be dusted and rubbed down
nightly. If carpet is used in any elevators, carpet to be vacuum cleaned
nightly, spot cleaned nightly as needed and shampooed monthly, to
maintain an appearance suitable to Agent.
Wipe down mail chutes and mail depositories nightly. Mail chute glass
to be kept clean at all times. Contractor will be responsible for
arrangement with Post Office for removing panels and/or glass.
Vertical surfaces, such as walls, partitions, doors and bucks, of all
corridors and lobbies to be dusted, spot cleaned, treated and polished
as often as necessary, but not less than once (1) per week.
Horizontal louvers to be dusted weekly, spot cleaned and treated as
needed, to maintain a uniform appearance in the lobby.
Clean lights, globes and fixtures (including glass, metal and plastic
enclosures) in lobby, public areas, and maintenance areas as often as
necessary, but not less than once (1) per week.
Clean all unpainted metal work bright and free of finger marks nightly
and treat as necessary. Polish all lobby entrance door saddles and push
bars nightly.
MISCELLANEOUS CLEANING REQUIREMENTS (Common and
occupied Areas)
Vacuum clean all peripheral air conditioning units semi-annually in
accordance with schedule to be set by Agent.
Remove snow from sidewalks, plaza area park area and Building
entrances and approaches, remove snow at curbs and all Building
entrances adequate for access by vehicles and remove snow at street
crosswalks adequate for pedestrian access, all as and when required, at
no additional charge to Agent. All entrances, exits, driveways,
walkways, etc., are to be made accessible and kept clean at all times.
Contractor will provide and maintain proper equipment to be stored on
premises at no cost to Agent, including approved ice melting substance
to all surfaces.
HIGH DUSTING
DO ALL HIGH DUSTING QUARTERLY WHICH INCLUDES
THE FOLLOWING:
Dust all pictures, frames, charts, graphs, and similar wall hangings not
reached in nightly cleaning.
Dust clean all vertical surfaces, such as walls, partitions, doors and
bucks and other surfaces not reached in nightly cleaning except as
otherwise herein provided including closet shelving.
Dust clean all pipes, ventilating and air conditioning louvers, ducts,
high moldings and other high areas not reached in nightly cleaning.
Dust all exterior surfaces of light fixtures, including glass and plastic
enclosures.
DAY PORTERS
Day Porters as may be reasonably required will be assigned daily to the
Building for the following services:
To service all Public and Operating Space throughout the Building.
To service all Plaza and/or Park Areas as necessary.
To keep elevator cars and escalators clean and neat during the day.
To maintain Lobby on street floor and during wet weather keep
entrance ways mopped dry.
Dust and rub down all elevator doors, frames, directory, etc., daily.
To clean roof and setbacks as often as necessary.
To inspect and keep clean fire hoses and equipment
To lay, remove and clean lobby rain mat runners as necessary.
To inspect and service mens lavatories and rest rooms as necessary.
To keep all Lobby and Public Areas in clean condition.
To keep staircases policed during the day.
To maintain exterior granite and exterior metal work along with metal
in Building entrance doors, store front trim, exterior window frames
and mullions. To clean standpipes and sprinkler siamese connections
and hose bibs. Generally, to properly maintain the exterior of the
Building so that there is uniformity of color and brightness at all times.
Keep all sand urns or equivalent type fixtures screened and in a clean
condition.
Fill soap dispensers and paper towel dispensers in mens lavatories and
public rest rooms. If required, waste cans and receptacles to be
emptied and lavatories to be visited and policed a minimum of once in
the morning and once in the afternoon.
Keep in clean condition and water interior and exterior planting areas.
Sweep sidewalks, ramps, loading dock, trucking area, etc., daily, scrub
and steam-clean loading dock walls, floors and ceilings quarterly.
Wash and disinfect sidewalks and stairs each morning, weather
permitting.
Keep fan rooms, motor rooms, electric closets, telephone closets and
air conditioning rooms in clean condition as directed by Owner as
necessary.
To inspect exterior stone or metal clad walls for marks of graffiti daily
and remove as needed.
Matrons will be assigned to the Building in order to visit and inspect all
ladies lavatories at least twice a day. They will insert toilet tissue.
They will also service sanitary napkin dispensers with sanitary napkins
and sanitary seat covers (furnished by the Contractor in accordance
with this Agreement). Fill soap dispensers and paper towel dispensers
in ladies and mens lavatories.
NIGHT PORTERS
Clean truck dock and ramps. Clean main floor and sub-basement
public corridors and facilities, building employee locker rooms and
facilities.
Separate, bail and/or deposit waste paper and rubbish as directed by
Agent in compliance with recycling efforts.
All cleaning services except those performed by day porters, window
cleaners and matrons are (except as herein otherwise provided) to be
performed nightly, 5 nights per week or as otherwise designated.
Contractor is to furnish all the necessary materials, implements,
machinery and supplies for the satisfactory completion of the foregoing
service. Owner reserves the right to furnish any material, i.e, plastic
bags and paper products affecting credits from Contractor.
WINDOW CLEANING SERVICE
All exterior windows, spandrels and fixed glass from the 2nd floor up
to and including the Roof will be cleaned, weather permitting, three
times per year.
All interior windows within tenant occupied areas from the 2nd floor to
the Roof will be cleaned approximately quarterly.
Entrance doors and revolving doors to be cleaned twice daily and kept
in clean condition at all times during the day. All interior and exterior
windows from Plaza to 2nd floor will be cleaned quarterly.
Clean lobby directory glass daily.
Window cleaning procedures shall be used which shall not cause the
energy saving film located on interior windows to be scratched or
damaged or adjacent interior or exterior surfaces to be stained or
damaged.
A daily work slip to indicate type, location and completed windows
cleaned for all interior and exterior glass surfaces will be provided to
Agent's representative to enable verification of services performed.
Contractor to provide necessary labor and materials to properly
perform all services necessary to maintain and operate all window
cleaning rigs (Agents' and/or Contractors') at all times and to meet all
Federal, State and City regulations governing use and operation of
window cleaning rigs.
EXTERMINATING SERVICE
1. Contractor shall perform exterminating service customary in
first class office Buildings once a month throughout the public areas of
the Budding, throughout areas in which Owner's equipment is located
and throughout vacant areas of the Building. Service shall be provided
by a licensed operator with additional cost to Agent. Agent reserves
the right to cancel extermination portion of this contract at any time
and contract directly for same service with vendor of its choice.
2. All public space shall be kept under a controlled treatment
program once (1) each month.
3. Cafeteria(s) and executive dining area(s) shall be kept under a
controlled treatment program once (1) each week.
4. Special emergency calls shall be made on request at no
additional charge.
5. Service shall be rendered at such hours as will not interfere
with normal business of occupants and shall be consistent with sound
Management Practice.
EXHIBIT H
Heating and Air Conditioning Rates
All requests for service at times other than Business Hours must be
submitted in writing via telecopier or mail on the Tenant's letterhead to
the Building superintendent (or such other person designated by
Landlord or the Board of Managers), by a person authorized by Tenant
to make such requests, one (1) day prior to when the additional HVAC
is needed.
In the event of emergency, service may be obtained by calling the
Building superintendent (or such other person designated by Landlord)
in sufficient time to enable the superintendent to follow up with a
written request to confirm and to provide the service requested.
Tenant shall pay to Landlord for Landlord's actual out-of-pocket cost
and expense incurred in connection with providing (x) heating or air
conditioning service to any supplemental HVAC units installed by
Tenant at any time and (y) base building heating or air conditioning
service at times other than Business Hours ("After Hours HVAC").
All rates for such services shall be paid by Tenant to Landlord as
Additional Rent within 20 days after Landlord renders a bill or
statement therefor to Tenant.
EXHIBIT I
Insurance Requirements
The following requirements (collectively, the "Insurance
Requirements") shall be complied with by Tenant at all times during the
Term:
1. Insurance to be Maintained by Tenant. At all times during the
Term, Tenant shall maintain, at Tenant's expense, the following
insurance coverage:
(a) fire and extended coverage property insurance covering all physical
loss to the Improvements, Alterations and Tenant's Property in the
Premises for their full replacement value;
(b) broad form commercial general liability insurance (including
protective liability coverage on operations of independent contractors
engaged in construction and blanket contractual liability insurance),
written on a per occurrence basis with an aggregate limit of not less
than $10,000,000, a per-occurrence limit of not less than $5,000,000
and with other limits reasonably satisfactory to Landlord;
(c) business interruption insurance covering risk of loss due to the
occurrence of any of the hazards covered by the insurance to be
maintained by Tenant described in Paragraph 1(a) with coverage in a
face amount of not less than the aggregate amount, for a period of 12
months following the insured-against peril, of 100% of all Rent to be
paid by Tenant under this Lease;
(d) worker's compensation insurance and employer's liability coverage
in statutory limits, and New York State disability insurance as required
by Law, covering all employees; and
(e) such other coverage as Landlord may reasonably require with
respect to the Premises, its use and occupancy and the conduct or
operation of business therein.
Landlord may, from time to time, but not more frequently than once
every year, adjust the minimum limits set forth above.
2. Insurer and Policy Requirements. All insurance policies to be
maintained under Paragraph 1 (a) shall be issued by companies of
recognized responsibility, licensed to do business in the State of New
York, reasonably acceptable to Landlord, and maintaining a rating of
A-/XII or better in Best's Insurance Reports-Property-Casualty (or an
equivalent rating in any successor index adopted by Best's or its
successor), (b) shall provide that they may not be canceled or modified
unless Landlord and all additional insureds and loss payees thereunder
are given at least 30 days prior written notice of such cancellation or
modification, (c) shall name, as additional insureds, Landlord, Ground
Lease (as defined in the Declaration) the managing agent of the Unit,
the managing agent of the Common Elements, the Board of Managers,
the owners of any other condominium units in the Building, and any
Senior Interest Holder whose name and address shall have been
furnished to Tenant and (d) shall be primary and non-contributory in all
respects. All policies providing fire and extended coverage property
insurance coverage pursuant to Paragraph 1(a) shall name Landlord, as
agent for the Board of Managers, as loss payee with respect to
Improvements and Alterations, and shall name Tenant as loss payee
with respect to Tenant's Property.
3. Evidence of Coverage; Renewals. Prior to the Commencement
Date or, in the case of insurance required during the performance of
Alterations, prior to the commencement of the Alterations, Tenant shall
deliver to Landlord certificates of insurance for the insurance coverage
required by Paragraph 1 and, if required by Landlord, copies of the
policies therefor, in each case, in form and providing for deductibles
reasonably satisfactory to Landlord. Tenant shall procure and pay for
renewals of such insurance from time to time before the expiration
thereof, and Tenant shall deliver to Landlord certificates of renewal at
least 30 days before the expiration of any existing policy. If Tenant
fails to procure or maintain any insurance required by this Lease and to
pay all premiums and charges therefor, Landlord may (but shall not be
obligated to) pay the same, and Tenant shall reimburse Landlord,
within 20 days after demand, for all such sums paid by Landlord. Any
such payment shall not cure or waive any default by Tenant in the
performance of its obligations hereunder, nor shall the foregoing right
of Landlord to make such payment in any way limit, reduce, diminish
or impair the rights of Landlord under the terms of this Lease or at
Law or in equity arising as a result of any such default.
4. Additional Insurance, Blanket Insurance. Tenant shall not
carry separate or additional insurance, concurrent in form or
contributing in the event of any loss or damage with any insurance
required to be obtained by Tenant under this Lease unless the parties
required by Paragraph 2 to be named as additional insureds or loss
payees thereunder are so named. Tenant may carry any insurance
coverage required of it hereunder pursuant to blanket policies of
insurance so long as the coverage afforded Landlord and the other
additional insureds or loss payees, as the case may be, thereunder shall
not be less than the coverage that would be provided by direct policies.
5. Mutual Waiver of Recovery. Neither Landlord, Tenant nor the
Board of Managers shall be liable to the other or to any insurance
company (by way of subrogation or otherwise) insuring any of the
other parties, and each hereby waive their entire right of recovery
against the others, for any loss or damage arising out of or incident to
the perils insured, or required pursuant to this Lease to be insured,
against under any property insurance policy insuring the Unit (in the
case of Landlord) or the Building and/or the Common Elements (in the
case of the Board of Managers), and any property or business
interruption insurance policy insuring the Improvements, Tenant's
Property and/or Tenant's business interest (in the case of Tenant), even
though such loss or damage might have been occasioned by the
negligence of Landlord, Tenant, the Board of Managers or their
respective agents, employees, contractors, invitees and/or permitted
subtenants. Each of Landlord and Tenant (a) shall give notice to their
respective insurers that the foregoing mutual waiver of recovery is
contained in this Lease and, if required by any such insurer, shall obtain
such insurer's prior consent to the foregoing waiver of its and its
insured's right of recovery, and (b) shall endeavor to obtain from their
respective insurers an appropriate clause in, or an endorsement upon,
each such insurance policy pursuant to which each such insurer shall
agree that the foregoing waiver shall not affect the validity or
enforceability of its insured's coverage. If such a clause or endorsement
is obtainable only upon payment of an additional premium, each party
shall pay such additional premium and, if either Landlord or the Board
of Managers are required to pay such additional premium, the same
shall be included in Operating Expenses. If Tenant's insurer shall refuse
to issue such clause or endorsement even with an additional premium,
then Landlord shall have the right to designate another insurer with a
Best's Insurance Guide rating of A-/XII or better who would be
prepared to permit such clause or endorsement and Tenant shall use
such other insurer. If it is not possible to obtain a clause or
endorsement of the type described in clause (b) above, then the party
unable to obtain such clause or endorsement shall notify the other
parties of this fact and such parties shall no longer be obligated
hereunder to endeavor to obtain such a clause or endorsement in their
insurance policies. The provisions of this Paragraph 5 shall be
applicable to any new or renewal property or business interruption
insurance policies which Tenant may obtain during the Term.
6. Insurance for Alterations. During the performance of any
Alteration, Tenant shall maintain the insurance described in Exhibit J.
EXHIBIT J
Alteration Requirements
The following requirements (collectively, the "Alteration
Requirements") shall be complied with as a condition to the
performance of all Alterations by Tenant pursuant to Section 8.1 of the
Lease:
1. Contractors.
1.1. Approval of Contractors. Prior to commencing any Alteration
(other than a Decorative Alteration), Tenant shall submit to Landlord
for its approval (which shall not be unreasonably withheld or delayed) a
list of the contractors and subcontractors (categorized by trade) which
Tenant proposes to use or from which Tenant proposes to solicit bids
in connection therewith. If Landlord shall fail within 30 days (10
Business Days in the case of Tenant's initial Alterations) to approve
Tenant's proposed contractors or subcontractors, then for all purposes
of this Lease Landlord shall be deemed to have approved the same. If,
prior to or after commencement of any Alteration, there is a change in
the contractors or subcontractors, Tenant shall submit a new or
supplemental list and the foregoing provisions of this Paragraph 1 shall
be applicable thereto. As of the date hereof, each of the Board of
Managers and the Landlord approves the architects, engineers,
contractors and subcontractors listed on Exhibit Q annexed hereto for
the Performance of Tenant's Work. Landlord agrees to use all
reasonable efforts to promptly approve or disapprove Tenant's
proposed contractors or subcontractors before the 30 day (or 10
Business Days, as the case may be) time period allowed on this
Paragraph 1.1.
1.2. Contractors for Certain Work. Notwithstanding anything to
the contrary in the Building Standards or in this Exhibit J, connections
to, and disconnections from, the Building's fire safety system, the
Building's sprinkler system, and the Building's condenser or chilled
water system shall be performed, in each case, solely at Tenant's
expense, and only by contractors acceptable to both the Board of
Managers and Landlord.
2. Submission of Plans and Specifications.
2.1. Number and Form. Prior to commencing any Alteration (other
than a Decorative Alteration or the installation or removal of Tenant's
Property), Tenant shall submit (i) to the Building Manager 1 paper
sepia and 3 paper sets of the Plans and Specifications for such
Alteration together with one copy on disk in a format to be determined
by Landlord (except with respect to Tenant's Initial Plans and
Specifications which is governed by Paragraph 8 of Exhibit D-3) and
(ii) to Landlord (and, if Landlord requests, to the Board of Managers) a
statement or certificate from a licensed architect or professional
engineer licensed to practice as such in the State of New York selected
by Tenant and reasonably satisfactory to Landlord ("Tenant's
Architect") certifying that such Alteration is not a Structural Alteration
(as such term is defined in the Declaration). As used in the preceding
sentence, the term "Plans and Specifications" shall mean architectural,
mechanical, electrical, sprinkler and structural plans and specifications
conforming to the requirements set forth in the Building Standards and
prepared at Tenant's cost and expense (which cost and expense shall be
included in the Cost of the Work for the purposes of Paragraph 6.1 of
Exhibit D) by Tenant's Architect, which Plans and Specifications shall
bear the seal of Tenant's Architect and shall be in form, content and
detail (a) sufficient to secure all required governmental approvals and
permits, (b) reasonably sufficient for a contractor to perform the work
covered thereby and shown thereon, and (c) reasonably sufficient to
determine (i) if the materials to be used by Tenant meet the Building
Standards, (ii) if the Alteration is likely to comply with all Laws, and
(iii) the effect of the Alteration on the structural components and
Building Service Systems of the Unit and the Building. The Initial
Plans and Specifications shall also comply with the provisions of
Schedule D-3 to Exhibit D of this Lease.
2.2. Standards, Time and Procedures for Approval. All
submissions of Plans and Specifications shall be made, together with a
letter from Tenant requesting approval of such Plans and
Specifications, by hand delivery to the Address of the Building
Manager, or to such other Persons and address as may be hereafter
designated by Landlord (the "Building Manager"). Landlord shall not
unreasonably withhold or delay its approval of any Plans and
Specifications (or any revisions thereto) submitted by Tenant and, in
any case, shall, within 30 days (10 Business Days in the case of the
Initial Plans and Specifications) of Landlord's receipt of such Plans and
Specifications or such revisions, as the case may be, either (a) approve
of such Plans and Specifications or such revisions or (b) disapprove of
such Plans and Specifications or such revisions and include with such
disapproval a statement of the reasons therefor (which reasons
themselves must be reasonable); provided, however, that if such Plans
and Specifications or such revisions are of a nature and/or complexity
not customarily found in build-outs of office space in Comparable
Buildings, then such 30-day period (10 Business Day period in the case
of the Initial Plans and Specifications) shall be extended to 45 days (15
Business Days in the case of the Initial Plans and Specifications). If
Landlord shall fail within the time period set forth above to approve or
disapprove any Plans and Specifications (including with such
disapproval the required statement), then, for all purposes of this
Exhibit J and the Lease, Landlord shall be deemed to have approved
the same.
2.2.1. Any revision to previously-approved Plans and Specifications,
regardless of whether such revision is made prior to or after
commencement of such Alteration, shall be subject to review and
approval or disapproval by Landlord in accordance with the
requirements of the preceding paragraph. Landlord covenants to act as
promptly as commercially practicable to respond to such revisions, but
in no event later than the time periods specified in Paragraph 2.2 above.
2.2.2. Tenant acknowledges that (a) the Board of Managers has the
right to approve of the Plans and Specifications pursuant to the
Declaration.
2.2.3. The review and approval by Landlord, the Board of Managers
and/or their respective agents of any Alteration or of any Plans and
Specifications are solely for the benefit of Landlord and/or the Board of
Managers, and, except as expressly set forth in this Lease, neither
Landlord nor the Board of Managers nor any of their respective agents
shall have any duty toward Tenant or any other Person claiming
through or under Tenant to grant or withhold their consent, nor shall
Landlord or the Board of Managers or any of their respective agents be
deemed to have made any representation or warranty to Tenant, or
have any liability, with respect to the safety, adequacy, correctness,
efficiency or compliance with Laws of the Plans and Specifications, the
Alteration, its design, or any other matter regarding the Alteration.
3. Governmental Approvals and Permits. Prior to commencing
any Alteration (other than a Decorative Alteration), Tenant, at its
expense (which expense may be included in the Cost of Work for
Paragraph 6.1 of Exhibit D), (a) shall prepare all applications and other
documents necessary for filing with the appropriate governmental
authorities, including the Plans and Specifications, required for the
lawful commencement, performance and completion of any Alteration,
(b) shall submit to the Building Manager (and, if otherwise required
under this Lease, Landlord and the Board of Managers) for its
execution one (or more, if necessary) "owner-signed" set of such
applications and other documents requiring "owner" execution thereof,
and (c) shall, except as otherwise provided herein, file such applications
and other documents and thereafter secure and maintain all necessary
permits and approvals for the construction of the Alteration. Tenant
shall deliver copies of all such permits and approvals to the Building
Manager promptly upon obtaining the same. With respect to the
matters set forth in clauses (a) and (c) in the preceding sentence,
Landlord agrees to cooperate with Tenant, and to execute and deliver
such documents as may be reasonably necessary in connection with
Tenant's applications and filings, provided that such documents as to
Tenant's information are completed and are otherwise satisfactory for
filing. And, to the extent that such applications or filings may only be
obtained or filed by Landlord (and not Tenant or its agents), Landlord
agrees (at Tenant's cost and expense) to obtain and/or file such
applications or filings upon Tenant's prior written request, provided
that Tenant reimburses Landlord for all costs and expenses incurred in
connection therewith.
4. Insurance for Alterations.
4.1. Generally. Throughout the performance of any Alteration,
Tenant shall maintain, with insurers meeting the requirements of
Paragraph 2 of Exhibit I, the insurance specified in Paragraph 4.2 of
this Exhibit J and any other insurance that the Board of Managers may
require if such other insurance is required by the Board of Managers of
all owners of condominium units in the Building and all tenants and
occupants thereof who are performing Alterations. Landlord and the
Persons specified in Paragraph 2 of Exhibit I shall be designated as
additional insureds on the insurance policies. Tenant shall furnish
Landlord and the Board of Managers with certificates of insurance
evidencing that such insurance has been obtained and is in effect prior
to the commencement of any Alteration.
4.2. Required Insurance. Throughout the performance of any
Alteration, Tenant shall maintain the following insurance: (a) workers'
compensation insurance and employer's liability coverage in statutory
limits, (b) builder's risk insurance, with vandalism and malicious
mischief endorsements, completed value form covering all physical loss
(including any loss of or damage to supplies, machinery and
equipment) in connection with the performance of such Alteration, and
(c) broad-form commercial general liability insurance, with a completed
operations endorsement and a contractual liability endorsement,
covering any occurrence in or about the Premises, the Unit or the
Building in connection with such Alteration, with limits of not less than
$5,000,000 and with a $5,000,000 limit for bodily injury, including
death, property damage and personal injury. Landlord may, from time
to time, but not more frequently than once every year, adjust the
minimum limits set forth above.
4.3. Contractor's Indemnity. Tenant shall require all contractors
engaged by Tenant and all subcontractors engaged by any such
contractor to deliver to Landlord an instrument providing as follows
prior to commencing work on any Alteration:
"The undersigned shall indemnify and hold harmless Landlord, Tenant,
the owners of the other condominium units in the Building, the
managing agent of the Unit, the managing agent of the Common
Elements, the Board of Managers and any Senior Interest Holder and
the officers, partners and directors of any of them (the "indemnities")
from and against, any loss, cost, expense, liability or damage (including,
without limitation, judgments, attorneys' fees, court costs and the cost
of appellate proceedings), that any indemnitee may incur because of
injury to, or death of, any Person or on account of any damage to
property, including loss of use thereof, or any other claim to the extent
arising out of the negligence or willful misconduct of the undersigned
or any of its subcontractors or any of the officers, directors, employees
or agents of the undersigned or of any such subcontractors, or anyone
directly or indirectly employed by the undersigned or anyone for whose
acts the undersigned may become liable regardless of whether such
loss, cost, expense, liability or damage may be caused in part by the
negligence of an indemnitee."
5. Reimbursement of Costs and Expenses. Tenant shall pay to
Landlord and/or the Board of Managers, within 20 days after written
demand therefor (which demand shall include bills, invoices and other
back-up documentation reasonably sufficient to substantiate such costs
and expenses), (a) all reasonable costs and expenses (which expenses
may be included in the Cost of Work for Paragraph 6.1 of Exhibit D)
incurred by Landlord and/or the Board of Managers in reviewing
Tenant's Plans and Specifications (other than Initial Plans and
Specifications for the Premises) for, and inspecting work being
performed on, any Alteration to determine whether it is being
performed in accordance with the Plans and Specifications and in
compliance with Law and the requirements of this Lease, including the
reasonable fees of any attorneys, architects, engineers, building code
consultants or other Persons retained by Landlord and/or the Board of
Managers for such purpose, and (b) all reasonable incremental costs
(e.g., the costs of supplemental security personnel, temporary
maintenance service, use of hoist, removal of waste and debris)
incurred by Landlord and/or the Board of Managers as a result of any
Alteration.
6. Completion of Alterations.
6.1. Evidence of Completion. Within 30 days after completion of
an Alteration, Tenant shall, at its expense, secure all required final
approvals, certificates or other documents required hereunder in
connection with such Alteration and deliver copies thereof to Landlord
promptly upon obtaining the same.
6.2. Violations and Liens. (a) Tenant, at its expense, and with
diligence and dispatch, shall procure the cancellation of all notices of
violation arising from or otherwise connected with any Alteration, or
any other work, labor, services or materials done for or supplied to
Tenant, or any Person claiming through or under Tenant, issued by any
governmental or public authority. Subject to Paragraph 6.2(b) below,
Tenant, at its expense, shall satisfy or discharge of record each
mechanics or other lien or encumbrance filed, claimed or asserted in
connection with any Alteration or any other work, labor, services or
materials done for or supplied to Tenant or any Person claiming
through or under Tenant (each, a "Mechanics Lien") within 20 days
after it is filed. If Tenant does not so timely satisfy or discharge any
such Mechanics Lien, Landlord or the Board of Managers may (but
neither shall be obligated to) satisfy or discharge the same and take any
other action reasonably necessary to protect the title to the Premises or
the Building with respect to such Mechanic's Lien, including without
limitation, dismissing an action to foreclose such Mechanic's Lien and
removing a notice of pendency of such action. Tenant shall reimburse
Landlord (or the Board of Managers, as the case may be) within 20
days after demand for all reasonable costs and expenses so incurred
without regard to any defense or offset that Tenant may have had
against the claimant.
(b) Provided Tenant is not in default under the Lease, Tenant shall
have the right to contest in good faith and with diligence the
correctness or the validity of any Mechanics Lien if Tenant procures a
lien release bond (covering all amounts, including attorneys fees,
potentially recoverable by the claimant and otherwise in a form and
issued by a surety satisfactory to Landlord) in an amount equal to
125% of the amount of the Mechanics Lien. Nothing in this Exhibit J
or in the Lease shall be construed as a consent on the part of Landlord
to subjecting Landlord's estate in the Premises to any lien or liability
under the Lien Law of the State of New York.
6.3. As Built Plans. Within 30 days after completion of an
Alteration, Tenant shall, at its expense, deliver to each of Landlord, the
Board of Managers and the Building Manager a full and complete set
of "as-built" plans in the form required by the Building Standards.
6.4. [Intentionally Deleted.]
6.5. Relocation of Smoke Detectors. If any smoke detectors are
relocated during an Alteration, Tenant shall, at its expense, relocate
such smoke detector in accordance with all Laws and Building
Standards applicable thereto, and if requested by Landlord, provide to
Landlord a certificate in form and content reasonably satisfactory to
Landlord and Tenant.
7. General Conditions for Performance of Alterations.
7.1. Performance of Work. Tenant shall perform all work in
accordance with the Building Standards, the Building Rules and
Regulations, and Law. Such work shall be diligently performed in a
good and workmanlike manner so as not to unreasonably interfere
with, or cause unreasonable interruption of, the operation and
maintenance of the Building, cause unreasonable interference with the
use and occupancy of the Unit or the Building by other tenants and
occupants and in a manner that does not unreasonably interfere with,
delay, or impose additional expense on Landlord or the Board of
Managers with respect to, the construction, maintenance, cleaning,
repair, safety, management, security or operation of the Unit or the
Building, as the case may be.
7.2. Inspection. Landlord and the Board of Managers (or their
agents) shall have the right to inspect work on any Alteration at
reasonable times (except in the case of emergencies) after reasonable
prior notice to Tenant (which notice may be oral), except in an
emergency in which case no notice shall be required. Except in the
case of an emergency, an agent or employee of Tenant shall
accompany Landlord, the Board of Managers or any of their agents on
any such inspection.
7.3. Labor Harmony. If any Alteration being performed by Tenant
or its contractors causes any labor disturbances or unrest, Tenant shall,
or shall cause Tenant's contractor to, rectify the same as soon as is
reasonably possible following written demand therefor by Landlord or
the Board of Managers, unless failure to rectify such disturbance or
unrest immediately will result in an emergency situation, in which event
Tenant shall, or shall cause Tenant's contractor to, rectify such
disturbance or unrest immediately. If Tenant or Tenant's contractor
shall fail to comply with the aforesaid demand (whether or not such
failure is Tenant's fault), Landlord, by further notice to Tenant, may
direct Tenant to suspend all work being performed by or on behalf of
Tenant in connection with such Alteration, and Tenant shall thereupon
immediately do so until such disturbance or unrest is rectified in the
reasonable judgment of Landlord or the Board of Managers, as the
case may be.
7.4. Use of Freight Elevators. Tenant shall have the right, together
with any other tenants or occupants of the Building, to reserve, from
time to time, the freight elevators serving the Premises for its use by
reasonable prior notice to the Building Manager and subject to the
Rules and Regulations. If Tenant uses the freight elevators after
Business Hours, Tenant shall pay the cost of the Building employee(s)
required to operate such freight elevator after Business Hours. All
building materials and other bulky freight shall be transported in
accordance with the Building Standards.
7.5. Construction Hours. Any Alteration which is noisy or
otherwise disruptive to other occupants of the Building shall be
performed only during non-Business Hours, and in any case, any
Alteration shall be performed only in accordance with the Building
Standards.
7.6. Decorative Alterations. Tenant may, without complying with
Paragraph 1, 2, 3, 6.1 and 6.3 of this Exhibit J, make any Alteration
which consists solely of painting, installing or removing wallcovering or
installing or removing carpeting or other floor covering or which
consists solely of installing or removing Tenant's Property (collectively,
a "Decorative Alteration"); provided, however, that Tenant shall
perform such Decorative Alteration in accordance with all other
applicable provisions of this Exhibit J.
EXHIBIT K
Form of Subordination, Nondisturbance and
Attornment Agreement
THIS SUBORDINATION, NONDISTURBANCE AND
ATTORNMENT AGREEMENT (this "Agreement") is made as of
________ __, 1997, by and among THE BOARD OF MANAGERS
OF THE 125 BROAD CONDOMINIUM (the "Board"),
FAHNESTOCK & CO. INC., a New York corporation ("Tenant"),
and NY BROAD HOLDINGS, INC., a Delaware corporation
("Landlord").
WHEREAS, Tenant and Landlord have entered into that certain Office
Space Lease dated as of ___________ __, 1997 (as the same may be
amended from time to time, the "Lease") by which Tenant shall lease
from Landlord certain space being all of the 15th and 16th floors (such
space, together with such other additional space, including the First
Expansion Space and Second Expansion Space (as such terms are
defined in the Lease) with respect to portions of the 14th floor, as
Tenant may from time to time be leasing pursuant to the Lease, the
"Premises"), in Commercial Unit C (the "Unit") in The 125 Broad
Condominium (the "Condominium") established by that certain
Declaration of Condominium dated December 23, 1994, recorded in
the Office of the Register of the City of New York in New York
County on January 10, 1995 in Reel 2171 at Page 1959 (as such
declaration may hereafter be amended or restated from time to time,
the "Declaration");
WHEREAS, the Premises are leased for a term of approximately 16
years with one (1) five (5) year renewal option; and
WHEREAS, Tenant has requested Landlord to cause the Board to
execute and deliver to Tenant this Agreement,
NOW, THEREFORE, in consideration of the foregoing, and of the
mutual premises herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Lease, and the rights of Tenant under it, are subordinate
and subject to (i) the Declaration, (ii) the By-Laws of The 125 Broad
Condominium attached to the Declaration (the "By-Laws"), (iii) the
Rules and Regulations of The 125 Broad Condominium attached to the
Lease as Exhibit F (the "Rules and Regulations"), and (iv) the Building
Standards for Alterations for The 125 Broad Condominium attached to
the Lease as Exhibit E (the "Building Standards") and all amendments
thereto (the Declaration, the By-Laws, the Rules and Regulations and
the Building Standards being hereinafter collectively referred to as the
"Condominium Documents"). Notwithstanding the preceding
sentence, neither the Lease nor Tenant's rights thereunder shall be
subject and subordinate to, nor shall Tenant be required to comply
with, (a) any amendments or modifications to any of the Condominium
Documents that impair or interfere with Tenant's rights or increase
Tenant's obligations under the Lease in a discriminatory manner, or (b)
any resolutions or decisions of the Board adopted pursuant to the
Condominium Documents after the date hereof that impair or interfere
with Tenant's rights or increase Tenant's obligations under the Lease in
a discriminatory manner.
2. The Lease is subordinate to the Board's lien on the Unit for
Common Charges and Unit Expenses (as such terms are defined in the
Declaration) and any interest thereon in accordance with the
Declaration (the "Board's Lien").
3. The Lease is subordinate to the Ground Lease (as hereinafter
defined), as the Ground Lease may be modified or amended from time
to time.
4. As long as at the time of the exercise of any right described in
clauses (a), (b) or (c) below, no default under the Lease shall have
continued for such period as would entitle Landlord to terminate the
Lease or dispossess Tenant thereunder, Tenant shall not be named or
joined in any action or proceeding to foreclose the Board's Lien, and
the Lease shall not be terminated, nor shall any of the rights or
obligations of Tenant granted under the Lease be affected in any
manner, in (a) any foreclosure or other action or proceeding instituted
under or in connection with the Board's Lien, (b) the exercise of any
rights of the Board in connection with the enforcement of the Board's
Lien, or (c) the taking of possession of the Premises or the Unit
pursuant to any provisions of the Condominium Documents or
otherwise by the Board or any person(s) acquiring the interest of
Landlord, their successors and assigns, by reason of foreclosure and,
subject to proviso (ii) below, the Board or such person(s) shall succeed
to Landlord's obligations under the Lease; provided, however, that (i)
no provision in the Lease allowing a reduction in the rent payable by
Tenant thereunder by reason of a foreclosure of the Board's Lien shall
survive any such foreclosure, even though Tenant is not joined in such
action or proceeding, it being understood and agreed that the Board
need only given Tenant written notice of such foreclosure for this
clause (i) to be operative, and (ii) the person acquiring the interest of
Landlord by reason of foreclosure of the Board's Lien and such
person's successors and assigns (collectively, the "Purchaser") shall not
be:
(A) bound by any rent which Tenant might have paid for more than
the current month to any prior landlord under the Lease;
(B) liable for any previous act or omission of any prior landlord
under the Lease;
(C) subject to any defense or offset previously accrued in favor of
Tenant against any prior landlord under the Lease;
(D) liable for the return of any deposit, rental security or any other
sums deposited with any prior landlord under the Lease, except to the
extent such sums have been paid over to the Purchaser;
(E) obligated to complete any construction work required to be
done by Landlord pursuant to the provisions of the Lease, to reimburse
Tenant for any construction work done by Tenant, or to make any
funds available to Tenant in connection with any such construction
work;
(F) required to make any repairs to the Premises required as a
result of fire or other casualty or by reason of condemnation, unless the
Board, as Landlord, shall be obligated under the Lease to make such
repairs and shall have received sufficient casualty insurance proceeds or
condemnation awards to finance the completion of such repairs;
(G) required to make any capital improvements to the Building or
to the Premises which Landlord may have agreed to make, but had not
completed, or to perform or provide any services not contained in
Article VI of the Lease or not related to possession or quiet enjoyment
of the Premises;
(H) required to perform any of Landlord's obligations under any
lease takeover agreement or similar arrangement between Tenant and
Landlord, nor subject to any offsets provided for under the Lease
related to Landlord's failure to perform its obligations thereunder or
under any such agreement except for offsets in Article XXII of the
Lease; or
(I) subject to any provisions of the Lease which are personal to
Landlord or otherwise impossible for the Board to perform.
5. Tenant shall not, without obtaining the prior written consent of
the Board, (a) enter into any agreement amending, modifying or
terminating the Lease, (b) prepay any of the rents, additional rents or
other sums due under the Lease for more than one (1) month in
advance of the due dates thereof, except pursuant to estimates of taxes
and operating expenses in Article IV of the Lease, (c) voluntarily
surrender the Premises or terminate the Lease without cause or shorten
the term thereof, except pursuant to Article IX, Article X, and Article
XX of the Lease, (d) assign the Lease or sublet the Premises or any
part thereof other than pursuant to the provisions of the Lease, or (e)
subordinate the Lease to any other lien; and any such amendment,
modification, termination, prepayment, voluntary surrender, assignment
or subletting or subordination, without the Board's prior consent, shall
not be binding upon the Board; it being agreed that, notwithstanding
anything in this paragraph to the contrary, no consent of the Board
shall be required in connection with Tenant's exercise of its
Termination Right (as hereinafter defined).
6. Tenant hereby represents and warrants to the Board that as of
the date hereof, (a) Tenant is the owner and holder of the Tenant's
interest under the Lease, (b) the Lease is in full force and effect and has
not been modified or amended, and no other agreements or
understandings exist with respect to the Tenant's interests under the
Lease or the Premises, except for such agreements as are specifically
contemplated by the Lease, (c) the term of the Lease commenced on
the Commencement Date (as such term is defined in the Lease) and
will expire on the Expiration Date (as such term is defined in the Lease)
pursuant to the provisions thereof, (d) except as provided in Article
XVII of the Lease, there are no extension or renewal options or
obligations under the Lease, (e) there is no security deposit, but Tenant
has the right to post security in circumstances described in Article
XXIV, (f) except as provided in Article XVIII, Article XIX and Article
XXIII of the Lease, the Lease does not contain any expansion option
with respect to any other portion of the Unit, nor any purchase option
or first-refusal rights or other rights or interests with respect to the
Premises, (g) the construction of the Premises has not been completed
for Tenant's initial occupancy thereof, and Tenant has not taken
possession of the same on a rent-paying basis, and rent shall be abated
under the Lease through and including the installment due on October
8, 1998 as such date may be extended pursuant to the Lease, (h)
Tenant has not received any notice that Tenant is in default under any
of the terms, covenants or provisions of the Lease, and Tenant, to the
best of its knowledge, knows of no event which, but for the passage of
time or the giving of notice or both, would constitute an event of
default by Tenant under the Lease, (i) neither Tenant nor, to the best of
Tenant's knowledge, Landlord has commenced an action or given or
received any notice for the purpose of terminating the Lease, and (j) all
rents, additional rents or other sums due and payable under the Lease
(of which none have become due or payable at present) have been paid
in full, and no rents, additional rents or other sums payable under the
Lease have been paid for more than one (1) month in advance of the
due dates thereof.
7. (A) The Board acknowledges that under the terms of the
Lease, Tenant has the right to (i) extend the term of the Lease pursuant
to the provisions of Article XVII of the Lease (the "Renewal Right"),
(ii) expand its occupancy in the Unit to include the fourteenth floor in
the Unit pursuant to the provisions of Articles XVIII and XIX of the
Lease and additional storage space pursuant to Article XXII (the
"Expansion Right") and (iii) terminate the lease pursuant to Articles IX,
X or XX of the Lease (the "Termination Right").
(B) The Board agrees that the exercise by Tenant of (i) its Renewal
Right pursuant to the terms and conditions of Article XVII or (ii) its
Expansion Right pursuant to the terms and conditions of Articles
XVIII and XIX of the Lease will not be deemed to constitute a new
lease or occupancy for purposes of Paragraph 18(a) and (b) of the
Declaration, and will not be considered a new lease, sublease,
assignment or occupancy under the Lease or Declaration requiring the
Board's further consent.
(C) The Board acknowledges Tenant's right to allow certain
individuals or entities to occupy desk space in the Premises in
accordance with Section 14.9 of the Lease. The Board agrees that the
occupancy by certain individuals or entities of desk space in the
Premises pursuant to Section 14.9 of the Lease will not be deemed to
violate the requirements of Paragraph 18 of the Declaration, and will
not be considered a lease, sublease, assignment or occupancy under the
Lease or Declaration requiring the Board's further consent.
(D) The Board acknowledges and consents to the recording of the
Memorandum (and the Termination of Memorandum) in accordance
with Section 16.3.
(E) The Board hereby agrees that it shall use all reasonable efforts
to enforce the Building Rules and Regulations and the terms and
provisions of the Condominium Documents, in each case, to the extent
such relate to the use to the roof of the Building in a uniform and non-
discriminatory manner with respect to the occupants of the Building
(including without limitation Tenant).
(F) The Board hereby agrees to permit the Landlord to install,
maintain and operate, and allow Tenant a listing of at least 138 names
in, the Building Directory (as defined in the Lease) in accordance with
the specifications set forth in Section 16.16 of the Lease.
(G) The Board of Managers has been advised that Tenant intends
(i) to install a staircase between the fifteenth (15th) and sixteenth (16th)
floors of the Premises and, upon exercise of the First Expansion Option
or the Second Expansion Option, between the fourteenth (14th) and
fifteenth (15th) floors and (ii) to install a vault on the fifteenth (15th) or
sixteenth (16th) floor of the Premises, and the Board of Managers
agrees that it will not unreasonably withhold its consent to the plans for
such alterations; provided that such alterations comply with the
alteration provisions of the Condominium Documents and Tenant has
made adequate provision in its plans to protect the structure and
integrity of the Building.
8. The Board hereby certifies that, as of the date hereof, to the
best of the Board's knowledge, the Landlord is not in default under the
Condominium Documents and no notice of default has been delivered.
9. The Board of Managers acknowledges receipt of the notice
letter described in Exhibit X to the Lease with respect to the delivery of
notices under the Condominium Documents to Tenant. The Board
agrees that Tenant, at its sole option, after receipt of the above
mentioned notice from the Board, may cure any pending default of
Landlord; provided, that, in no event shall Tenant's time period to cure
Landlord's default hereunder extend beyond the time period permitted
to Landlord for such cure, if any, under the Condominium Documents.
Notice to Tenant should be in accordance with the Notice provisions
(Section 16.13) of the Lease.
10. In the event that the Purchaser succeeds to the interests of
Landlord under the Lease by reason of foreclosure of the Board's Lien
or otherwise, Tenant shall be bound to the Purchaser under all of the
terms, covenants and conditions of the Lease for the balance of the
term thereof remaining, with the same force and effect as if the
Purchaser were the landlord under the Lease, and Tenant does hereby
attorn to the Purchaser, including the Board if it be the Purchaser, as its
landlord, said attornment to be effective and self-operative without the
execution of any further instruments upon the Purchaser succeeding to
the interest of Landlord under the Lease, provided that Tenant shall not
be obligated to pay any rent to the Purchaser until Tenant has received
notice from the Purchaser that it has succeeded to such interest.
Tenant shall be entitled to rely solely upon such notice given by
Purchaser.
11. This Agreement shall run with the land and bind all future
Boards of Managers and owners of units in the Condominium. This
Agreement may not be modified orally or in any manner other than 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 representatives,
successors and assigns.
12. The Premises shall be used solely for office use and related uses
incident thereto in accordance with the terms, provisions, covenants
and conditions set forth in the Declaration.
13. As used herein, "Ground Lease" shall mean: That certain
Lease dated December 31, 1968, between John P. McGrath and Sol G.
Atlas, as landlord, and Two New York Plaza Company, as tenant, a
memorandum of which was recorded on May 21, 1969, in the Office of
the Register, New York County, New York (the "Register's Office"),
in Reel 140, Page 730, which lease affects certain real property located
in the City County and State of New York, commonly known as 125
Broad Street, New York, New York, which lease has been amended
by the following agreements: (a) Memorandum of Agreement
modifying Lease, dated as of December 1, 1969, and recorded on
March 19, 1970, in the Register's Office in Reel 168, Page 1219; (b)
Memorandum of Modification of Lease with option to purchase, dated
as of June 28, 1974, and recorded on July 2, 1974, in the Register's
Office in Reel 318, Page 401; (c) Assignment of Lease to American
Express Company, dated June 28, 1974, and recorded in the Register's
office in Reel 318, Page 410; (d) Assignment of Lease to American
Express Company and American Express International Banking
Company, dated March 26, 1976, and recorded on April 19, 1976, in
the Register's Office in Reel 367, Page 80; (e) Assignment of Partial
Interest in Lease to Ardmore Properties, Inc., recorded in the Register's
Office in Reel 585. Page 1881; (f) Assignment of Lease by Ardmore
Properties, Inc. to American Express Company dated June 24, 1982,
and recorded in the Register's Office on June 29, 1982, in Reel 628,
Page 1067; (g) Amendment of Lease by and between Sandra Atlas
Bass, John P. McGrath and Arthur Roth, as Executors under the Last
Will and Testament of Sol G. Atlas, deceased, and John P. McGrath,
individually, as lessors, and American Express Company and American
Express International Banking Corporation, as lessees, dated July 1,
1979, and recorded in the Register's Office on April 1, 1983, in Reel
679, Page 1277; (h) Assignment of Lease by American Express
Company and American Express International Banking Corporation, as
assignors, to Olympia & York 125 Broad Street Company, as assignee,
dated February 1, 1983, and recorded in the Register's Office on
February 3, 1983, in Reel 695, Page 1305 and (i) Modification
Agreement for Ground Lease, dated as of December 28, 1994, among
Sandra Atlas Bass and Robert Zabelle, as Executors, and Lucy
McGrath, as Executrix, as Lessors, and Sullivan & Cromwell, Johnson
& Higgins, and Landlord, as Lessee.
14. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original, which,
when read together, shall constitute one and the same instrument.
15. (a) The Board acknowledges that in order to receive Further
Benefits (as defined in the Lease), Tenant is planning to sublease the
Premises to The Industrial Development Agency of the City of New
York (the "IDA") and the IDA will then sub-sublease the Premises to
Tenant. Tenant covenants that (i) the sublease to the IDA will not give
the IDA any right to occupy the Premises at any time, (ii) Tenant shall
at all times comply with the public liability and plate glass insurance
required under Paragraph 18(c) of the Declaration, and (iii) in the event
that the Lease or the sub-sublease by the IDA to Tenant terminates or
expires, the sublease by Tenant to the IDA shall also immediately
terminate or expire.
(b) Before entering into the sublease or sub-sublease transaction
described above, Tenant will obtain the consent of the Board, which
consent shall not be unreasonably withheld or delayed. Provided that
such consent is given, (i) the Board agrees to deliver evidence of its
consent to such sublease and sub-sublease in the form required by the
IDA and reasonably satisfactory to the Board and Tenant and (ii) the
Board shall waive (A) the applicability of clauses (1) and (5) of
Paragraph 18(b), (B) the requirement regarding the language
contained in Section 16.03 of the Ground Lease set forth in Paragraph
18(c), and (C) the public liability and plate glass insurance required
under Paragraph 18(c), of the Declaration to such sublease by Tenant
to the IDA.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
representatives as of the day and year first above written.
THE BOARD OF MANAGERS OF THE 125 BROAD
CONDOMINIUM
By:______________________________________________
Name:____________________________________________
Title:_____________________________________________
By:______________________________________________
Name:____________________________________________
Title:_____________________________________________
TENANT: FAHNESTOCK & CO., INC., a New York
corporation
By:______________________________________________
Name:____________________________________________
Title:_____________________________________________
LANDLORD: NY BROAD HOLDINGS, INC., a Delaware
corporation
By:______________________________________________
Name:____________________________________________
Title:_____________________________________________
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the __ day of _____________, before me personally came
_________________, to me known, who, being by me duly sworn, did
depose and say he resides at ___________________; that he is the
____________ of the Board of Managers of The 125 Broad
Condominium, the entity described in and which executed the
foregoing instrument; and that he signed his name thereto by order of
the Board of Managers of The 125 Broad Condominium.
_________________________
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of ______________, before me personally came
________________, to me known, who, being by me duly sworn, did
depose and say that he resides at __________________________; that
he is the _____________ of FAHNESTOCK & CO., INC., the
corporation described in and which executed the foregoing instrument;
and that he signed his name thereto by order of the board of directors
of said corporation.
______________________
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ______ day of ________________, before me personally came
______________, to me known to be the individual who executed the
foregoing instrument, and who, being by me duly sworn, did depose
and say that he resides at ____________________; that he is the
_________ of NY BROAD HOLDINGS, INC., the corporation
described in and which executed the foregoing instrument; and that he
signed his name thereto by order of the board of directors of said
corporation.
______________________
Notary Public
EXHIBIT L
Form of Estoppel Certificate
[Addressee]
___________________
___________________
Gentlemen:
Fahnestock & Co. Inc., as "Tenant", and NY Broad Holdings, Inc., as
"Landlord", entered into an office space lease dated as of
____________, 1997, ("Lease"), in which Landlord leased to Tenant,
and Tenant hired from Landlord, certain premises located in the City of
New York, New York and described in said Lease as the "Premises".
Tenant is executing and delivering this certificate with the
understanding that either a potential buyer or lessee is contemplating
acquiring or leasing all or part of the Unit (as defined in the Lease) or a
potential lender is contemplating providing financing secured by the
Unit, and that such buyer, lessee or lender, or some other party taking
action based in part upon this certificate, will be entering into such
transaction in material reliance on this certificate. In furtherance of the
foregoing, the undersigned hereby certifies and agrees as follows:
1. The Lease is in full force and effect and has not been amended,
modified, supplemented or assigned by Tenant except by written
agreement(s) dated ______________, 19__, and such agreement(s) are
in full force and effect. The Lease [as modified] represents the entire
agreement between Landlord and Tenant.
2. Tenant's current address for receipt of notices under the Lease
is:
________________________________________________________
_____________________________.
3. Tenant has not received any concession (rental or otherwise) in
connection with leasing the Premises except as follows:
_________________________________________________
________________________________________________________
_________. All of the foregoing concessions have been fully satisfied
by Landlord except as follows: ____________.
4. Construction of all tenant improvements required under the
Lease has been satisfactorily completed, and Tenant has accepted the
Premises and presently occupies them, and is paying rent on a current
basis, except as follows: _________________. Tenant presently
occupies all of the Premises and no person (other than Tenant) is
subletting or occupying any part of the Premises except as follows:
_____________.
5. Base Rent (as defined in the Lease) in the amount of
$________________ was payable commencing on _____________,
19__. Base Rent has been paid through ___________________, and
no Base Rent has been paid by Tenant in advance under the Lease
except as follows: ___________________________.
6. The amount of Tenant's Tax Payment (as defined in the Lease)
currently payable by Tenant is $_________ per year (payable in semi-
annual installments), and the amount of Tenant's Operating Payment
(as defined in the Lease) currently payable by Tenant is $_________
per month; Tenant has paid such amounts up to and including the
Tenant's Tax Payment due on __________, 19__ and the Tenant's
Operating Payment due on __________, 19__. A security deposit in
the amount of $_______________ was deposited with Landlord upon
execution of the Lease.
7. Tenant has no claim against Landlord for any security deposit,
prepaid fee or charge or prepaid rent except as disclosed in Paragraph
5 or 6 of this certificate.
8. As of the date of this certificate, Tenant has not received any
notice of default with respect to the performance of any of its
covenants, agreements and obligations under the Lease, or of any
breach of the Lease.
9. As of the date of this certificate, to the best of Tenant's
knowledge, Landlord is not in default in the performance of any of its
covenants, agreements and obligations under the Lease and has not
committed any breach of the Lease, except as follows: _________. As
of the date of this certificate, no notice of default has been given to
Landlord and Tenant has not asserted any setoffs, claims or defenses to
the enforcement of the Lease, except as follows:
10. To the best of Tenant's knowledge, there are no pending suits,
proceedings, judgments, bankruptcies, liens or executions against
Tenant or any affiliate of Tenant which could affect Tenant's ability to
perform its obligations under the Lease.
11. Tenant does not have any rights or options to purchase all or
any part of the Building (as defined in the Lease).
12. Tenant does not have any rights or options to renew the Lease
or to lease additional space in the Building except as follows:
___________________________________________
________________________________________________________
___________________.
13. From and after the date hereof, Tenant will not pay any rent
under the Lease more than one month in advance of its due date.
This certificate is hereby executed and effective as of the date first
above written by a duly authorized officer or partner of Tenant.
FAHNESTOCK & CO. INC., as Tenant
By:______________________________
Its:______________________________
EXHIBIT M
The Rentable Area of each floor of the Unit is as follows:
Unit C
Floor Square Footage
12th Floor 33,825
13th Floor 33,743
14th Floor 33,948
15th Floor 34,504
16th Floor 34,504
19th Floor 34,504
205,028
Method for Measurement
of Rentable Area
for Single Tenant Floor
The Rentable Area of any floor of the Unit occupied by a single tenant
shall be determined as follows:
1. Measure the floor to the outside surface of exterior walls, or to
the outside surface of the glass, as the case may be. Subtract from this
area the following areas:
(a) Public elevator shafts and elevator machines and their enclosing
walls;
(b) Public stairs and their enclosing walls;
(c) Heating, ventilating and air conditioning facilities (including
pipes, ducts and shafts), and their enclosing walls, unless such
equipment, mechanical room space, or shafts serve such floor;
(d) Fire towers and fire tower courts and their enclosing walls;
(e) Main telephone equipment rooms and main electric switchgear
rooms, and their enclosing walls, except for telephone equipment and
electric switchgear rooms exclusively serving the Premises.
2. The Rentable Area of such floor shall be equal to the product
of the net useable area determined above and 125%.
Method for Measurement
of Rentable Area
for Multi-Tenant Floor
The Rentable Area of any space ("Space") leased or held for lease on a
floor of the Unit, the entire leasable space on which floor is not leased
to a single tenant shall be determined as follows:
1. Determine, separately for each Space on such floor, the area
enclosed by the enclosing walls of such Space by measuring with
respect to each enclosing wall (i) which is an exterior wall of the
Building, to the inside surface of the exterior wall, or to the inside
surface of the glass, as the case may be, and (ii) which is a demising
wall of the Space, to the center line thereof, and (iii) which is a wall
abutting a corridor, to the corridor side of the finished surface thereof.
2. Determine the Corridor Area of such floor. The term
"Corridor Area" shall include bathrooms, toilets, supply rooms, etc.
The Building Core shall be excluded from the term "Corridor Area".
The term "Building Core" shall mean (i) public elevator shafts and
elevator machines and their enclosing walls; (ii) public stairs and their
enclosing walls; (iii) heating, ventilation, and air-conditioning facilities
(including pipes, ducts and shafts), and their enclosing walls (other than
equipment, mechanical room space or shafts serving such floor which
shall be included in the corridor area); (iv) fire towers and fire tower
courts and their enclosing walls; and (v) main telephone equipment
rooms and main electric switchgear rooms, and their enclosing walls
(other than telephone equipment and electric switchgear rooms
exclusively serving such floor which shall be included in the corridor
area).
3. Add (i) the area of such Space determined pursuant to
paragraph 1. above, to (ii) the product of the Corridor Area determined
pursuant to paragraph 2. above multiplied by a fraction, the numerator
of which is the area of such Space determined pursuant paragraph 1.
above and the denominator of which is the sum, for all Spaces on such
floor, of the area determined pursuant to paragraph 1. above.
4. The Rentable Area of such Space shall be equal to the product
of (i) the result obtained under paragraph 3 above with respect to such
Space and (ii) 125%.
EXHIBIT N
ADDITIONAL REPRESENTATIONS
1. Landlord represents to Tenant that, as of the date hereof and as of
the Commencement Date, to the best of its knowledge, without
undertaking any independent investigation, no document, agreement,
or instrument (other than this Lease) restricts in any material manner
Tenant's rights under the Lease including Tenant's use and occupancy
of the Premises, other than as listed below:
a. Ground Lease;
b. Condominium Documents;
c. Any lien, claim or encumbrance disclosed in the Title Report
(as hereinafter defined);
d. Any license or permit relating to the Building or the Unit; and
e. Certificate of Occupancy.
2. Landlord represents to Tenant that, to the best of its knowledge,
without undertaking any independent investigation, Landlord has
delivered to Tenant true and complete copies of the following:
a. Ground Lease;
b. Condominium Documents;
c. Operating Expense bills for the Unit;
d. Real Estate tax bills for the Unit; and
e. Title Report of Title Associates Inc. number TA #96(01)761,
dated November 4, 1996, covering the Unit (the "Title Report").
3. Landlord represents and warrants to Tenant that, as of the date
hereof and as of the Commencement Date, (a) the Unit (including the
Premises) is not subject to any outstanding mortgage liens and (b) to
the best of Landlord's knowledge, without undertaking any
independent investigation, the Premises is not subject to any other liens,
claims or encumbrances not described in the Title Report which affect
Tenant's occupancy of the Premises.
EXHIBIT O
Form of
Direction of Payment Letter
Date:_________
NY Broad Holdings, Inc.
c/o Canadian Imperial Bank
of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Marc A. Bilbao
Re: Office Space Lease dated _________, 1997 (the "Lease")
between NY Broad Holdings, Inc.("Landlord") and Fahnestock & Co.
Inc., ("Tenant")
Gentlemen:
Pursuant to Paragraph 6.2 of Exhibit D to the Lease, Tenant hereby
authorizes and directs Landlord to pay the invoices attached to this
letter within 30 days of the date hereof. The total amount of invoices
for which payment is directed by this letter is $___________. Please
debit the Allowance under the Lease for this amount.
If you have any questions regarding this letter, please contact
_________________ at (212)_________.
Very truly yours,
FAHNESTOCK & CO. INC.
By:________________________
Title:______________________
EXHIBIT P
PARKING PLAN
Tenant shall be entitled to use parking space numbers 41 and 42 as set
forth on the attached parking plan, subject to the terms and conditions
of this Lease.
EXHIBIT Q
[Attach list of approved Contractors and Subcontractors]
EXHIBIT R
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE dated as of ___, 1997 by and
between NY BROAD HOLDINGS, INC., a New York corporation
with its office at c/o Canadian Imperial Bank of Commerce, 425
Lexington Avenue, New York, New York ("Landlord") and
FAHNESTOCK & CO. Inc., a New York corporation having an office
at _______, New York, New York ("Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have entered into a lease dated as of
_________, 1997 (the "Lease") wherein Landlord has let and demised
to Tenant the entire rentable portions of the 15th and 16th floors and a
portion of the sub-basement space in the Building (the "Building")
located on the parcel of land described in Exhibit A annexed hereto,
and known by the address of 125 Broad Street, New York, New York
(the "Premises");
NOW, THEREFORE, this Memorandum of Lease is to be recorded in
order that third parties may have notice of the existence of the Lease.
1. The Lease is for an initial term of approximately sixteen (16)
years commencing on the date hereof and shall expire on September
30, 2013, unless extended in accordance with the Lease, or such earlier
date upon which the Lease may expire or be terminated pursuant to the
Lease or Law.
2. Tenant has an option to renew the term of the Lease for one
(1) additional period of five (5) years.
3. Pursuant to the terms of the Lease, Tenant has the right to
lease certain additional space in the Building pursuant to two separate
expansion options for space located on the fourteenth (14th) floor of
the Building (which, if both options are exercised, shall constitute the
entire 14th floor).
4. The subordination of the Lease to ground, overriding and/or
underlying leases affecting the Building hereinafter entered into and to
any mortgages affecting the Unit shall be subject to the provisions of
Article XIII of the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed
and delivered this Memorandum of Lease as of the day and year first
above written.
NY BROAD HOLDINGS, INC.
By:___________________________
FAHNESTOCK & CO. INC.
By:___________________________
Title:
AFFIDAVIT
STATE OF NEW YORK )
)SS.:
COUNTY OF NEW YORK )
The undersigned makes this affidavit in support of the annexed Real
Property Transfer Gains Tax Affidavit - Real Estate Transfer Tax
Return (TP-584) and states as follows:
1. The lease dated as of _______, 1997 (the "Lease") from NY
Broad Holdings, Inc. ("Landlord") to Fahnestock & Co. Inc.,
("Tenant") of real property located at Unit "C" at 125 Broad Street,
New York, New York (the "Property") is for a term of less than 49
years.
2. The Lease does not contain an option to purchase the Property
or any part thereof.
Accordingly, the conveyance is not a transfer of real property within
the meaning of Subdivision 7 of Section 1440 of Article 31-B of the
Tax Law or within the meaning of Section 1401 of Article 31 of the
Tax Law and is therefore not subject to the real estate transfer tax.
IN WITNESS WHEREOF, the undersigned has executed this
Affidavit as of ________, 1997.
______________________________
Name:
Title:
Sworn to before me this
__ day of ______, 1997.
________________________
Notary Public
EXHIBIT A
TO EXHIBIT R
[Legal Description]
EXHIBIT S
TERMINATION OF MEMORANDUM OF LEASE
THIS TERMINATION OF MEMORANDUM OF LEASE (this
"Termination"), dated as of _________________ between NY
BROAD HOLDINGS, INC., a New York corporation (together with
its successors and assigns, "Landlord") and FAHNESTOCK & CO.
INC., a New York corporation (together with its permitted successors
and assigns, "Tenant").
W I T N E S S E T H:
WHEREAS, Landlord and Tenant have entered into that certain
Agreement of Lease, dated as of ________ __, 1997 (as the same may
have been amended or modified from time to time, the "Lease"), a
memorandum of which was recorded in the Office of the Register,
New York County, New York (the "Register's Office"), in Reel _____,
Page ___ (the "Memorandum"), which Lease and Memorandum
thereof affects certain real property located in the City, County and
State of New York, commonly known as the 125 Broad Condominium
located at 125 Broad Street, New York, New York; and
WHEREAS, the Expiration Date (as such term is defined under the
Lease) has occurred, the parties hereto desire to record this
Termination in the Register's Office;
NOW, THEREFORE, this Termination of Memorandum of Lease is to
be recorded in order that third parties may have notice of the expiration
and/or termination of the Lease.
1. The recitals described above are incorporated herein by
reference as if fully set forth herein.
2. The Lease is terminated and/or expired and of no further force
and effect, except
for such terms and provisions which by their express terms survive
expiration or early termination of the Lease.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed
and delivered this Termination of Memorandum of Lease as of the day
and year first above written
NY BROAD HOLDINGS, INC.
By:________________________
Title:
FAHNESTOCK & CO. INC.
By:___________________________
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ____ day of ______________, before me personally came
________________, to me known, who, being by me duly sworn, did
depose and say that he resides at __________________________; that
he is the _____________ of ___________________, the corporation
described in and which executed the foregoing instrument; and that he
signed his name thereto by order of the board of directors of said
corporation.
________________________
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ______ day of ________________, before me personally came
______________, to me known to be the individual who executed the
foregoing instrument, and who, being by me duly sworn, did depose
and say that he resides at ____________________; that he is the
_________ of ___________ the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto
by order of the board of directors of said corporation.
________________________
Notary Public
EXHIBIT A
TO EXHIBIT S
[Legal Description]
EXHIBIT T
ESCROW AGREEMENT
ESCROW AGREEMENT (this "Agreement"), made as of the ___ day
of ________, 1997 by and among NY BROAD HOLDINGS, INC., a
New York corporation with its office at c/o Canadian Imperial Bank of
Commerce, 425 Lexington Avenue, New York, New York 10017
("Landlord"), FAHNESTOCK & CO. INC., a New York corporation
having an office at 110 Wall Street, New York, NY 10005 ("Tenant"),
and SIDLEY & AUSTIN, having an office at 875 Third Avenue, New
York, New York 10019, Attention: Alan S. Weil, Esq. ("Escrow
Agent").
W I T N E S S E T H:
WHEREAS,
A. Landlord and Tenant have entered into that certain Agreement
of Lease dated as of the date hereof (the "Lease") pursuant to which
Landlord agreed to lease to Tenant and Tenant agreed to rent from
Landlord certain space in the building known as 125 Broad Street,
New York, New York;
B. Landlord and Tenant have entered into a certain Memorandum
of Lease (the "Memo of Lease"); and
C. Six (6) originals of the Termination of Memorandum of Lease
have been fully executed by Landlord and Tenant, and Landlord and
Tenant desire to have all such agreements (collectively, the
"Documents") held in escrow in the manner hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. Certain capitalized terms used herein but not otherwise defined
herein are defined by reference to the Lease.
2. Escrow Agent is in possession of the Documents.
3. No later than ten (10) Business Days following the Expiration
Date of the Lease, Landlord shall provide Escrow Agent with written
notice with a copy to Tenant (the "Termination of Escrow Notice"),
which notice shall certify that the Expiration Date has occurred and
shall set forth such Expiration Date, instruct Escrow Agent to release
the Documents from escrow and record one (1) original executed copy
of the Termination of Memorandum of Lease in the Register's Office
three (3) Business Days after Landlord has provided Tenant with the
Termination of Escrow Notice. Tenant hereby irrevocably authorizes
Landlord to send the Termination of Escrow Notice at any time on or
after the Expiration Date so long as Landlord provides Tenant with
copy of such Notice at three (3) Business Days before the Escrow
Agent releases the Documents. Escrow Agent shall be entitled to rely
upon the Termination of Escrow Notice without limitation.
4. All communications and notices, including, without limitation,
the Termination of Escrow Notice (collectively, "Notices") to the
parties hereto shall be addressed to the party sought to be notified at
the address set forth in the Lease (and in the case of Escrow Agent, as
set forth above) for such party, or to such other address as such party,
or its attorney, shall have designated by notice given to the other
parties in accordance with the provisions of the Lease. Any Notices
which may be given or are required to be given in connection herewith
shall be in writing, and shall be delivered personally, and shall be
deemed to have been duly given as of the time received or refused by
the addressee. Notices may be given by an attorney for a party hereto
on behalf of the party represented by such attorney.
5. In the event any disagreement or dispute shall arise between or
among any of the parties hereto and/or any other persons resulting in
adverse claims and demands being made for the Documents, then, at
Escrow Agent's option (a) Escrow Agent may refuse to comply with
any claims or demands on it and continue to hold the Documents until
(i) Escrow Agent receives written notice signed by all parties hereto
and any other person who may have asserted a claim to or made a
demand for the Documents, in which event Escrow Agent shall then
deliver the Documents in accordance with said direction, or (ii) Escrow
Agent receives a certified copy of a final and non-appealable judgment
of a court of competent jurisdiction directing the delivery of the
Documents, in which event Escrow Agent shall then deliver the
Documents, in which event Escrow Agent shall then deliver the
Documents in accordance with said direction; or (b) in the event
Escrow Agent shall receive a written notice advising that a litigation
over entitlement to the Documents has been commenced, Escrow
Agent may deposit the Documents with the Clerk of the Court in
which said litigation is pending; or (c) Escrow Agent may take such
affirmative steps as it may elect to substitute another impartial party
reasonably satisfactory to the other parties hereto, whose consents shall
not be unreasonably withheld, to hold the Documents including,
without limitation, the delivery of the Documents to a court of
competent jurisdiction and the commencement of an action for
interpleader, the costs thereof to be borne by the losing party.
6. Escrow Agent shall not be or become liable in any way or to
any person for its refusal to comply with adverse claims and demands
being made for the Documents. Escrow Agent shall not be responsible
for any act or failure to act on its part nor shall it have any liability
under this Agreement or in connection herewith except in the case of
its own willful default or gross negligence. This Agreement shall
terminate and Escrow Agent shall be automatically released from all
responsibility and liability hereunder upon Escrow Agent's delivery or
deposit of the Documents in accordance with the provisions of this
Agreement.
7. It is expressly understood that Escrow Agent acts hereunder as
an accommodation to Landlord and Tenant and as a depository only
and is not responsible or liable in any manner whatsoever for the
sufficiency, correctness, genuineness or validity of any instruments or
other property received by or deposited with it, or for the form of
execution of such instruments, or for the identity, authority or right to
any person executing or depositing the same, or for the terms and
conditions of any instrument pursuant to which Escrow Agent or any
other party may act.
8. The duties of Escrow Agent are purely ministerial. Escrow
Agent shall not have any duties or responsibilities except those set forth
in this Agreement and shall not incur any liability in acting upon any
signature, notice, request, waiver, consent, receipt or other paper or
document believed by Escrow Agent to be genuine, and Escrow Agent
may assume that any person purporting to have given it any notice on
behalf of any party in accordance with the provisions hereof has been
duly authorized to do so.
9. Landlord and Tenant hereby jointly and severally agree to
indemnify and save Escrow Agent harmless from any and all loss,
damage, claim, liability, judgment and other cost and expense of every
kind and nature which may be incurred by Escrow Agent by reason of
its acceptance of, and its performance under, this Agreement
(including, without limitation, attorneys' fees) except in the case of
Escrow Agent's own willful default or gross negligence.
10. This Agreement and the provisions hereof may not be changed,
waived, discharged or terminated orally, but only by an instrument in
writing, signed by Landlord and Tenant. Any modification of this
Agreement which expands the scope of Escrow Agent's responsibilities
or liabilities hereunder shall not be binding upon Escrow Agent without
its prior written consent.
11. This Agreement and all matters relating hereto shall be
governed by, construed and interpreted in accordance with the laws of
the State of New York.
12. This agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors and assigns.
13. Whether or not any litigation shall be commenced by Tenant
against Landlord, Tenant hereby agrees that Escrow Agent may serve
as attorney for Landlord.
IN WITNESS WHEREOF, the parties have executed this Agreement
the day and year first above written.
NY BROAD HOLDINGS, INC.
By:
Name:
Title:
FAHNESTOCK & CO. INC.
By:
Name:
Title:
SIDLEY & AUSTIN
By:
Name:
A Partner
EXHIBIT U
DESCRIPTION OF STORAGE SPACE
The Storage Space is to be located on level C-3 of the Building.
EXHIBIT V
[Attach Lease Escrow Agreement]
EXHIBIT W
LIMITED GUARANTEE OF PAYMENT
LIMITED GUARANTEE OF PAYMENT, dated as of ___________
__, 1997, between CANADIAN IMPERIAL BANK OF
COMMERCE (together with its successors and assigns, "Guarantor")
and FAHNESTOCK & CO. INC. (together with its successors and
permitted assigns, "Tenant").
W I T N E S S E T H:
WHEREAS, NY Broad Holdings, Inc. ("Landlord") and Tenant are
entering into that certain Lease (as the same may be modified, amended
or supplemented from time to time, the "Lease"), dated as of the date
hereof, with respect to certain premises located in Unit C of The 125
Broad Condominium, New York, New York;
WHEREAS, Paragraph 6.3 of Exhibit D of the Lease obligates
Landlord to pay to Tenant the Allowance (or to provide a Rent credit
in the amount of the Adjusted Unused Work Allowance) (as such
terms are defined by reference to the Lease), subject to the terms and
conditions contained in the Lease;
WHEREAS, Tenant is a wholly-owned subsidiary of the Guarantor,
and Guarantor shall derive substantial benefit from the consummation
of the transactions contemplated by the Lease; and
WHEREAS, in order to induce Tenant to enter into the Lease,
Guarantor is willing to unconditionally guarantee certain obligations of
Landlord under the Lease, subject to the terms and conditions
contained herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
GUARANTEE
SECTION 1.01. Definitions. Certain capitalized terms used herein
and not otherwise defined shall have the meanings ascribed to them in
the Lease.
SECTION 1.02. Limited Guarantee. Guarantor hereby
unconditionally guarantees the full and punctual payment of all
amounts due and payable by Landlord to Tenant under Paragraph 6.3
of Exhibit D to the Lease; provided that in no event shall the amount
guaranteed under this Section 1.02 exceed the Allowance. Upon the
failure by Landlord to pay punctually any such amount (or to credit the
Adjusted Unused Work Allowance in accordance with Paragraph 6.3
of Exhibit D), Guarantor shall forthwith on written demand pay the
amount not so paid (or credited, as the case may be) at the place and in
the manner specified in such demand letter.
SECTION 1.03. Guarantee Unconditional. The obligations of
Guarantor hereunder shall be unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of Landlord under the Lease by
operation of law or otherwise;
(ii) any modification or amendment of or supplement to the Lease;
and
(iii) any change in the corporate existence, structure or ownership
of Landlord or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting Landlord or its assets or any resulting
release or discharge of any obligation of Landlord contained in the
Lease.
SECTION 1.04. Discharge Only Upon Payment In Full; Reinstatement
In Certain Circumstances. The Guarantor's obligations hereunder shall
remain in full force and effect until the payment in full by Landlord of
all amounts due and payable, if any, to Tenant under Paragraph 6.3 of
Exhibit D to the Lease, but in no event greater than the Guaranteed
Amount. Notwithstanding the foregoing, if at any time any payment
due and payable by Landlord under Paragraph 6.3 of Exhibit D of the
Lease is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of Landlord or otherwise,
Guarantor's obligations hereunder with respect to such payment shall
be reinstated as though such payment had been due but not made at
such time.
SECTION 1.05. Waiver by Guarantor. Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not
provided for herein, as well as any requirement that at any time any
action be taken by any corporation or person against Landlord or any
other corporation or person.
SECTION 1.06. Waiver of Subrogation. Guarantor expressly and
irrevocably waives any right to be subrogated to the rights of the payee
against Landlord with respect to any payment made by Guarantor
hereunder.
SECTION 1.07. Stay of Payment. If payment of any amount by
Landlord under Paragraph 6.3 of Exhibit D is stayed upon the
insolvency, bankruptcy or reorganization of Landlord, all such amounts
otherwise payable or subject to credit under such paragraph shall
nonetheless be payable by Guarantor hereunder forthwith on demand
by Tenant.
ARTICLE II
MISCELLANEOUS
SECTION 2.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing and shall be
given to such party at its address set forth below in accordance with the
notice provisions of the Sublease.
If to Guarantor:
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, N.Y. 10017
Attention: Marc Bilbao, Vice President
Re: The 125 Broad Street Condominium
with copies to:
Sidley & Austin
875 Third Avenue
New York, New York 10019
Attention: Alan S. Weil, Esq.
SECTION 2.02. No Waivers. No failure or delay by Tenant in
exercising any right, power or privilege hereunder or under the Lease
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 2.03. Amendments and Waivers. Any provision of this
Agreement may be amended or waived if, but only if, such amendment
or waiver is in writing and is signed by each of Guarantor and Tenant.
SECTION 2.04. Governing Law; Submission to Jurisdiction; Waiver
of Jury Trial. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. Guarantor and
Tenant hereby submit to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any
New York State Court sitting in New York City for purposes of all
legal proceedings arising out of or relating to this Agreement.
Guarantor and Tenant irrevocably waive, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been
brought in an inconvenient forum. Guarantor and Tenant each hereby
irrevocably waive any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement.
SECTION 2.05. Counterparts; Integration. This Agreement may be
signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement constitutes the entire
agreement and understanding among the parties hereto and supersedes
any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof.
SECTION 2.06. Successors and Assigns. The covenants, agreements,
terms and conditions contained in this Guaranty shall bind and inure to
the benefit of the parties hereto and their respective successors and
permitted assigns; it being understood and agreed that Tenant may only
assign the benefits under this Guarantee to a permitted assignee of
Tenant's interest under the Sublease in accordance with the terms and
provisions of the Sublease.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers
as of the day and year first above written.
CANADIAN IMPERIAL BANK OF COMMERCE
By:
Title:
FAHNESTOCK & CO. INC.
By:
Title:
EXHIBIT X
NY Broad Holdings, Inc.
c/o Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Marc A. Bilbao
As of ___________ __, 1997
By Hand
To the Addressees
listed on Schedule I
Re: Office Space Lease dated as of ______ __, 1997 (the "Lease")
between NY Broad Holdings, Inc. ("Landlord") and
Fahnestock & Co. Inc. ("Tenant")
Gentlemen:
Reference is hereby made to that certain Declaration of Condominium
(the "Declaration") dated December 23, 1994, recorded in the Office of
Register of The City of New York in New York County (the
"Register's Office") on January 10, 1995, in Reel 2171 at Page 1959, as
amended by that certain First Amendment to Declaration dated as of
March 28, 1995, recorded in the Register's Office on April 6, 1995, in
Reel 2197 at Page 1306 and by that certain Second Amendment to
Declaration dated as of December __, 1996, recorded in the Register's
Office on February 6, 1997, in Reel 2025 at Page 2419, and as the
same may be further amended, restated, supplemented or otherwise
modified from time to time.
Pursuant to Paragraph 33 of the Declaration, copies of any notices,
demands, reports and other information with respect to the Building
and the Unit to be delivered to NY Broad Holdings, Inc. (including its
successors and assigns) under the Declaration should also be sent as
follows:
Fahnestock & Co. Inc.
110 Wall Street
New York, NY 10005
Attention: Albert G. Lowenthal
with a copy to:
Whitman Breed Abbott & Morgan
200 Park Avenue
New York, New York 10166
Attention: Richard Crystal, Esq.
; provided that, once Fahnestock & Co. Inc. gives you notice that it has
occupied its Premises in the Building, any notices, demands, reports
and other information sent to Fahnestock & Co. Inc. shall be sent to
them at the Premises.
Very truly yours,
NY BROAD HOLDINGS, INC.
By:__________________________
Title:
Schedule I
Board of Managers
The 125 Broad Condominium
125 Broad Street
New York, New York
Board of Managers
The 125 Broad Condominium
c/o The Galbreath Company, L.P.
437 Madison Avenue
New York, New York 10022
Attention: Joseph Syslo
Irv Flinn, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York
Mr. James Delaney
Johnson & Higgins
125 Broad Street
New York, New York
TABLE OF CONTENTS
Page
ARTICLE I BASIC LEASE PROVISIONS 1
ARTICLE II PREMISES AND TERM 3
ARTICLE III RENTS 4
ARTICLE IV TAX AND OPERATING EXPENSE
ADJUSTMENTS 6
ARTICLE V USE AND COMPLIANCE WITH LAW 16
ARTICLE VI SERVICES AND UTILITIES 18
ARTICLE VII INSURANCE AND INDEMNIFICATION 23
ARTICLE VIII ALTERATIONS, REPAIRS AND MAINTENANCE
24
ARTICLE IX DAMAGE OR DESTRUCTION 26
ARTICLE X EMINENT DOMAIN 32
ARTICLE XI SURRENDER OF PREMISES 33
ARTICLE XII EXCULPATION AND CERTAIN LANDLORD
RIGHTS 35
ARTICLE XIII SUBORDINATION; ESTOPPEL CERTIFICATES
38
ARTICLE XIV ASSIGNMENTS AND SUBLEASES 40
ARTICLE XV CONDITIONAL LIMITATIONS 48
ARTICLE XVI MISCELLANEOUS 54
ARTICLE XVII RENEWAL OPTION 66
ARTICLE XVIII FIRST EXPANSION OPTION 69
ARTICLE XIX SECOND EXPANSION OPTION 77
ARTICLE XX TENANT TERMINATION OPTION 86
ARTICLE XXI PARKING 87
ARTICLE XXII THE LOWER MANHATTAN PLAN 88
ARTICLE XXIII STORAGE SPACE 93
ARTICLE XXIV NET WORTH OF TENANT 95
EXHIBITS
EXHIBIT A - Floor Plan
EXHIBIT B - Definitions
EXHIBIT C - Electrical Capacity
EXHIBIT D - Work Letter
EXHIBIT E - Building Standards for Alterations
EXHIBIT F - Building Rules and Regulations
EXHIBIT G - Cleaning Specifications
EXHIBIT H - Additional Heating and Air Conditioning Rates
EXHIBIT I - Insurance Requirements
EXHIBIT J - Alteration Requirements
EXHIBIT K - Form of Subordination, Nondisturbance and
Attornment Agreement with Board of Managers
EXHIBIT L - Form of Estoppel Certificate
EXHIBIT M - Method for Measurement of Rentable Area
EXHIBIT N - Additional Representations
EXHIBIT O - Form of Direction of Payment Letter
EXHIBIT P - Parking Plan
EXHIBIT Q - List of Approved Contractors, Subcontractors
EXHIBIT R - Memorandum of Lease
EXHIBIT S - Termination of Memorandum of Lease
EXHIBIT T - Escrow Agreement
EXHIBIT U - Description of Storage Space
EXHIBIT V - Lease Escrow Agreement
EXHIBIT W - Limited Guaranty of Landlord Allowance
EXHIBIT X - Notice Letter
THIS PAGE MUST BE KEPT AS THE LAST PAGE OF
THE DOCUMENT.
[DESCRIPTION] EXHIBIT 10( i )
OFFICE LEASE AGREEMENT
PROJECT LOCATED AT: 300 RIVER PLACE
DETROIT, MICHIGAN
LANDLORD: THE STROH COMPANIES, INC.,
A Delaware Corporation
300 River Place
Detroit, Michigan 48207-4291
TENANT: FIRST OF MICHIGAN CORPORATION
a Delaware corporation
100 Renaissance Center
26th Floor
Detroit, Michigan 48243
300 RIVER PLACE LEASE SUMMARY
TENANT: First of Michigan Corporation
TRADE NAME (IF DIFFERENT):
SPACE/SUITE NO. :
SIZE: 37,259 Rentable Square Feet on fourth floor, 5,594 Rentable
Square Feet on first floor; 2,875 Rentable Square feet of basement
storage space.
LEASE YEAR: August 1 to July 31 (or July 1 to June 30 if Tenant takes
possession on or before July 1, 1997)
LEASE TERM: Ten years, August 1, 1997 to July 31, 2007 (or July 1,
1997 to June 30, 2007 if Tenant takes possession on or before July 1,
1997)
EXPIRATION DATE: July 31, 2007 (or June 30, 2007 if Tenant takes
possession on or before July 1, 1997)
USE: Office
MINIMUM RENT: $16/Rentable Square Foot ("RSF") years 1-4;
$16.50/RSF years 5 and 6; $17.25/RSF years 7 and 8; $18.00/RSF
years 9 and 10; $10/RSF for storage space
CPI ADJUSTMENTS: N/A
OPTIONS: 2 options, 5 years each
SALES/INCOME REPORTS: N/A
CAM%: 8.53 % (after first 5 years)
EXPENSE STOP: 1997 calendar year base (grossed up to reflect
95% occupancy)
TAXES: 8.53% (after first 3 years, 1997 calendar year base)
INSURANCE:
DEFAULT BY TENANT:
ADVERTISING: N/A
SECURITY DEPOSIT: N/A
LANDLORD'S CONSTRUCTION OBLIGATIONS:
GUARANTY: N/A
SPECIAL PROVISIONS: Option to terminate
at end of fifth (5th) lease year
Partial option to terminate as to first
floor space only after second (2nd) full
lease year
TABLE OF CONTENTS
OFFICE LEASE
SECTION - HEADING PAGE
Section 1.00 DEMISED PREMISES. 1
Section 1.1 1
Section 1.2 1
Section 2.00 TERM. 2
Section 2.1. 2
Section 2.2. 2
Section 3.00 RENT. 4
Section 4.00 OPERATING EXPENSES, PROPERTY
TAXES, MAINTENANCE OF COMMON AREAS. 5
Section 4.1 5
Section 4.2 9
Section 4.3 9
Section 4.4 10
Section 4.5 10
Section 4.6 10
Section 4.7 10
Section 4.8 10
Section 5.00 USE AND OCCUPANCY, HAZARDOUS
SUBSTANCES 10
Section 5.1 10
Section 5.2 10
Section 5.3 10
Section 5.4 10
Section 5.5 11
Section 5.6 11
Section 6.00 SERVICES. 11
Section 6.1 11
Section 6.2 11
Section 6.3 12
Section 6.4 13
Section 7.00 REPAIRS. 13
Section 8.00 ALTERATIONS. 13
Section 9.00 ASSIGNMENT AND SUBLETTING. 14
Section 9.1 14
Section 9.2 14
Section 9.3 14
SECTION - HEADING PAGE
Section 9.4 14
Section 9.5 15
Section 9.6 15
Section 9.7 15
Section 10.00 INSURANCE, INDEMNIFICATION AND
WAIVER OF SUBROGATION 15
Section 10.1 15
Section 10.2 15
Section 10.3 15
Section 10.4 16
Section 10.5 16
Section 11.00 FIRE. 16
Section 11.1 16
Section 11.2 16
Section 11.3 17
Section 12.00 EMINENT DOMAIN. 17
Section 13.00 RULES. 17
Section 14.00 ENTRY BY LANDLORD. 17
Section 14.1 17
Section 14.2 18
Section 15.00 EVENTS OF DEFAULT. 18
Section 15.1 18
Section 15.2 18
Section 16.00 REMEDIES. 19
Section 17.00 TERMINATION UPON DEFAULT. 20
Section 18.00 LANDLORD'S RIGHT TO CURE
DEFAULTS. 20
Section 19.00 ATTORNEY'S FEES. 20
Section 20.00 SUBORDINATION. 20
Section 20.1 20
Section 20.2 21
Section 20.3 21
Section 21.00 NO MERGER. 21
Section 22.00 NONLIABILITY OF LANDLORD. 21
Section 22.1 21
Section 22.2 21
Section 22.3 22
Section 23.00 ESTOPPEL CERTIFICATE. 22
Section 24.00 NO LIGHT, AIR OR VIEW EASEMENT. 22
Section 25.00 HOLDING OVER. 22
Section 26.00 ABANDONMENT. 22
SECTION - HEADING PAGE
Section 27.00 WAIVER. 23
Section 27.1 23
Section 27.2 23
Section 28.00 NOTICES. 23
Section 29.00 COMPLETE AGREEMENT. 23
Section 30.00 CORPORATE AUTHORITY. 23
Section 31.00 INABILITY TO PERFORM. 24
Section 32.00 COVENANT OF QUIET ENJOYMENT. 24
Section 33.00 MASTER LEASE. 24
Section 34.00 SECURITY DEPOSIT. 24
Section 35.00 ACCORD AND SATISFACTION. 24
Section 36.00 MISCELLANEOUS. 25
Section 36.1 25
Section 36.2 25
Section 36.3 25
Section 36.4 25
Section 36.5 25
Section 36.6 25
Section 37.00 OPTIONS. 25
Section 37.1 25
Section 37.3 27
Section 38.00 PARKING. 27
SECTION 39.00 SIGNAGE 28
SECTION 40.00 ADA COMPLIANCE. 29
SECTION 41.00 UTILIATION OF ROOF/PENTHOUSE 29
300 RIVER PLACE -
OFFICE LEASE AGREEMENT
THIS LEASE, made this 28th day of February, 1997, between
THE STROH COMPANIES, INC., a Delaware corporation, whose
address is 300 River Place, Detroit, Michigan, 48207-4291, (hereinafter
referred to as "Landlord") and FIRST OF MICHIGAN CORPORATION, a
Delaware corporation, whose address is 100 Renaissance Center, 26th
Floor, Detroit, Michigan 48243 (hereinafter referred to as "Tenant").
W I T N E S S E T H:
Section 1.00 DEMISED PREMISES.
Section 1.1 Landlord, in consideration of the rents to be paid
and the covenants and agreements to be performed by the Tenant does
hereby lease unto Tenant Demised Premises situated in the City of
Detroit, County of Wayne and State of Michigan, more particularly
described as: Suites 4,000 and 1,400, containing approximately 37,259
rentable square feet on the fourth floor and 5,594 rentable square feet
on the first floor (collectively the "Office Premises") in the north half and
2875 rentable square feet (the "Storage Space") in the lower level of the
south atrium of that certain office building, known as "300 River Place"
(hereinafter referred to as the "Building) located on land more
particularly described in the legal description attached hereto as Exhibit
A and shown on the specifications and floor plan attached hereto and/or
referenced in Exhibit B, and thereby made a part hereof, (the Office
Premises and the Storage Space hereinafter collectively referred to as
the "Demised Premises"), together with the right to use certain interior
and exterior common and public areas and facilities including, but not
limited to, public corridors, stairwells, restrooms, elevators and parking
facilities (on a space available basis and upon payment of requisite
parking fees) (hereinafter referred to as the "Common Areas") as may
be designated by Landlord for use in common with Landlord and the
tenants and occupants (their agents, employees, customers and
invitees) of the Building, and the tenants and occupants (their agents,
employees, customers and invitees) of Landlord's other adjacent
buildings now or hereafter constructed in the development in Detroit,
Michigan known as "River Place" (hereinafter referred to as "River
Place"), if any. Tenant acknowledges that portions of the Common
Areas may be designated by Landlord from time to time for the benefit
of and use by others.
The precise number of rentable square feet of the Demised
Premises shall be determined by the Landlord's architect after the exact
location of the demising walls of the Demised Premises has been
specified by the Tenant, or when the Demised Premises are otherwise
completed and ready for occupancy and written confirmation of such
determination shall be attached hereto and incorporated herein by
reference; provided, that the rentable square footage set forth in Section
1.1 shall govern until such determination has been made. Such
determination shall be based on usable square feet in the Demised
Premises, measured in accordance with the ANSI Z65.1-1980
(reaffirmed in 1989), standard for determining usable square feet, plus a
fifteen percent (15%) common area factor.
Section 1.2 Landlord reserves (a) the right to convert
portions of the Building designated as Office Premises, Retail Premises
or Common Areas or designated for use for other purposes to other of
such purposes from time to time as Landlord shall determine, (b) the
right from time to time to make changes, alterations, additions,
improvements, repairs or replacements in or to the Building (including
the Demised Premises, subject to the protections afforded Tenant by
Sections 7.00 and 14.1 below) and the fixtures and equipment thereof,
as well as in or to the street entrances, halls, passages, elevators,
escalators and stairways and other parts of the Building, and to erect,
maintain, and use pipes, ducts, and conduits in and through the
Demised Premises, all as Landlord may reasonably deem necessary or
desirable; provided, however, that there be no unreasonable obstruction
of the means of access to the Demised Premises, (c) all rights to, and
the use of, the perimeter walls of the Demised Premises, any balconies,
terraces or roofs adjacent to the Demised Premises (including any
installations on said walls, balconies, terraces and roofs) and any space
in and/or adjacent to the Demised Premises used for shafts, stairways,
stacks, pipes, conduits, ducts, mail chutes, conveyors, pneumatic tubes,
electric or other utilities, sinks, fan rooms and other facilities of the
Building, as well as access thereto through the Demised Premises (at
and for such times as shall not unreasonably interfere with Tenant's
business) for the purpose of such use and the operation, improvement,
replacement, addition, repair, maintenance or decoration thereof, and
(d) the right to eliminate, substitute and/or rearrange the Common Areas
(which may theretofore have been so designated) as Landlord deems
appropriate in its discretion. Tenant's nonexclusive right to utilize the
Office Common Areas shall be in common with Landlord, other tenants
and occupants of the Building and others to whom Landlord grants such
rights from time to time.
Section 2.00 TERM.
Section 2.1. Except as hereinafter provided, the term of this
Lease, hereinafter called "Term", and the Tenant's obligation to pay rent
hereunder shall commence on the first to occur of (i) the date that is
thirty (30) days after Landlord notifies Tenant that the Demised
Premises are ready for occupancy ("Tenant's Fixturing Period"), or (ii)
when Tenant opens for business to the general public hereinafter called
"Commencement Date". Provided, that (i) Tenant shall be free to
occupy the Demised Premises at any time on or after the date on which
Landlord notifies Tenant that the Demised Premises are ready for
occupancy and, (ii) if Tenant occupies the Demised Premises prior to
July 1, 1997, the Commencement Date shall not be earlier than July 1,
1997. Tenant shall give Landlord reasonable prior notice of tenant's
anticipated move-in date to permit coordination of Tenant's move-in.
The Demised Premises shall be deemed to "be ready for
occupancy" when the Landlord shall have substantially completed
construction work required of Landlord in relation to said Demised
Premises in accordance with the specifications and plans which are to
be approved by the parties hereto, and attached hereto and made a part
hereof as Exhibit B. The Exhibit includes specific reference to the
construction responsibilities of each of the parties hereto.
The Term of this Lease shall end on the last date of the tenth
(10th) consecutive full Lease Year as said term "Lease Year" is
hereinafter defined, unless sooner terminated as hereinafter provided.
The term "Lease Year" as used herein shall be defined to mean
a period of twelve (12) consecutive calendar months. The first Lease
Year shall begin on the Commencement Date of the Term of this Lease
if such Commencement Date shall occur on the first day of a calendar
month; if not, then the first Lease Year shall commence on the first day
of the first calendar month following the Commencement Date of this
Lease.
The foregoing notwithstanding, in the event Landlord fails to
deliver the Demised Premises on the aforementioned Commencement
Date because the Demised Premises is not then ready for occupancy, or
because the previous occupant of the Demised Premises is holding
over, or for any other cause beyond Landlord's control, then, except as
expressly hereinafter provided, Landlord shall not be liable to Tenant for
any damages as a result of Landlord's delay in delivering the Demised
Premises, nor shall any such delay affect the validity of this Lease or the
obligations of Tenant hereunder, and the Commencement Date of this
Lease shall be postponed (and the expiration date correspondingly
extended) until such time as the Demised Premises are ready for
Tenant's occupancy.
Section 2.2. The provisions of Section 2.1 notwithstanding, if
Landlord fails to deliver possession of the Demised Premises to Tenant ,
ready for occupancy, by August 1, 1997 for Tenant's fixturing and if, as a
result, Tenant is unable to complete its fixturing in the Demised
Premises by September 1, 1997, (which is the date upon which Tenant
will become a holdover Tenant under its existing lease at 100
Renaissance Center) Tenant shall receive a credit against the rents first
coming due under this lease in an amount equal to fifty percent (50%) of
the Rent Differential (as hereinafter defined) for the month of
September, 1997. For purposes of this Section 2.2, the term Rent
Differential shall mean the amount by which the rent actually paid by
Tenant to its existing Landlord at the Renaissance Center during this
holdover period, beginning September 1, 1997, exceeds the rent
payable by Tenant under that lease for the month of August, 1997. If
Landlord fails to deliver the Demised Premises to Tenant, ready for
occupancy, on or before September 1, 1997, for fixturing, and if, as a
result, Tenant is unable to complete its fixturing by October 1, 1997,
Tenant shall receive a credit against rents first coming due under this
Lease equal to the full amount of such Rent Differential for the period
beginning October 1, 1997. Provided, if Tenant's holdover rent liability
in such circumstances is calculated on a per diem basis, Landlord's
liability under this Section 2.2 shall be limited to its share of the Rent
Differential for that number of days equal to the number of days after
August 1, 1997 that Landlord delivers the Demised Premises to Tenant
for fixturing. Provided, further, that in no event shall Tenant be entitled
to rent credit for any Rent Differential for the period beyond the end of
the calendar month during which Tenant's thirty (30) day Fixturing
Period ends.
Anything contained in this Lease to the contrary notwithstanding,
in the event the Demised Premises are not delivered by Landlord for
Tenant by October 1, 1997, with all leasehold improvements
substantially completed as set forth on Exhibit "B" to this Lease, then
Tenant shall have the right to terminate this Lease as hereinafter
provided. Tenant may exercise this right of termination by delivering to
Landlord written notice of the same at any time prior to Landlord's
substantial completion of Landlord's work and such termination shall be
effective 10 days after the date of delivery of such notice to Landlord
unless Landlord delivers possession of the Demised Premises to Tenant
with Landlord's work substantially completed within said 10 day period.
If this Lease is so terminated, Landlord and Tenant shall have no further
obligation to the other and any prepaid rents or security deposits
theretofore paid by Tenant to Landlord shall be promptly refunded to
Tenant; provided, that Tenant shall be liable to Landlord for the cost of
any tenant improvement work for which Tenant is liable pursuant to the
terms of this Lease, as set forth on Exhibit B, and Tenant shall not be
entitled to a refund of any sums paid to Landlord with respect to such
work.
The foregoing notwithstanding, in the event Landlord has not
completed its work within the aforesaid time periods due to any action or
failure to act on the part of Tenant or its agents, including without
limitation any delay in the completion of Landlord's work occasioned by
interference with Landlord's contractors by any agent or contractor of
Tenant, then the dates upon which Tenant's right to credit for Rent
Differential and right of termination arise shall be extended by a number
of days equivalent to the number of days delay caused by the actions or
inaction of Tenant or its agents or contractors. Moreover, if this Lease
has not been fully executed by both Landlord and Tenant by February
19, 1997, the dates upon which Tenant's right to credit for Rent
Differential and right of termination arise shall also be extended by a
number of days equivalent to the number of days after February 26,
1997, that this Lease is fully executed by both Landlord and Tenant.
Upon occupancy of the Demised Premises, Tenant shall be
deemed to have accepted the Demised Premises in their then existing
condition, to have acknowledged that the Demised Premises are in the
condition, and of the nature required by this Lease except with respect to
latent defects (i.e. those defects not reasonably discoverable by Tenant
during the course of a walk through inspection of the Demised Premises)
reported to Landlord in writing within ninety (90) days after the
Commencement Date.
Immediately upon execution of this Lease by or on behalf of
both Landlord and Tenant, Tenant shall be permitted to enter that
portion of the Demised Premises not presently occupied for the purpose
of commencing Tenant's work. Tenant shall be permitted to perform
such non-structural work as shall be reasonably necessary to prepare
the Demised Premises for Tenant's occupancy, subject to Landlord's
prior written approval of such work. Tenant shall be responsible for
obtaining all necessary licenses or permits for such work; shall repair
any damage to the Demises Premises caused by such work; shall
perform such work in such a manner as to interference with the present
tenant of the occupied portion of the Demised Premises; shall keep the
Demised Premises free and clear of all liens and encumbrances arising
from such work; and shall indemnify, defend and hold Landlord harmless
with respect to all injury or damage to persons or property arising out of
such work. In addition, Tenant's contractors shall schedule their work in
such a manner as to avoid interference with Landlord's contractors. The
work to be performed by Tenant may include the right to replace and
maintain wiring conduits between the first floor portion of the Demised
Premises and the fourth floor portion of the Demised Premises, provided
that all such conduits shall be located at Landlord's direction and the
installation work shall be conducted in such a manner as to not interfere
with the tenants of any space through which such conduits shall run.
Alternatively, at Landlord's election, Landlord may install all conduits
running through space presently occupied by other tenants at Tenant's
expense.
Section 3.00 RENT.
Tenant shall and hereby agrees to pay to the Landlord at the
offices of The Stroh Companies, Inc., 300 River Place, Detroit, Michigan
48207-4291, Attention: Treasury Department, or at such other place or
places as Landlord shall designate from time to time in writing during the
continuance of said Term, without any offset whatsoever, and subject to
Section 1.1 hereof, minimum rent, commencing on the Commencement
Date and continuing on the first day of each month thereafter during the
Term of this Lease, but subject to any credits or abatements to which
Tenant is entitled pursuant to the terms of this Lease, as follows:
a. For the Office Premises:
i. During years 1 to 4 of the Lease Term, a minimum
rental of Sixteen and 00/100 Dollars ($16.00) per
rentable square foot per annum, payable in monthly
installments in advance, at the rate of Fifty-Seven
Thousand One Hundred Thirty-Seven and 33/00 Dollars
($57,137.33) per month;
ii. During years 5 and 6, a minimum rental of Sixteen and
50/100 Dollars ($16.50) per rentable square foot per
annum, payable in monthly installments in advance, at
the rate of Fifty-Eight Thousand Nine Hundred Twenty-
Two and 88/100 Dollars ($58,922.88) per month;
iii. During years 7 and 8, a minimum rental of Seventeen
and 25/100 Dollars ($17.25) per rentable square foot per
annum, payable in monthly installments in advance, at
the rate of Sixty-One Thousand Six Hundred One and
19/100 Dollars ($61,601.19) per month; and
iv. During years 9 and 10, a minimum rental of Eighteen
and 00/100 Dollars ($18.00) per rentable square foot,
payable in monthly installments in advance, at the rate
of Sixty-Four Thousand Two Hundred Seventy-Nine and
50/100 Dollars ($64,279.50) per month.
b. For the Storage Space, a minimum rental of Ten Dollars
($10.00) per rentable square foot per annum, payable in monthly
installments in advance, at the rate of Two Thousand Three Hundred
Ninety Five and 83/100 Dollars ($2,395.83) per month.
Provided, that if the date on which Tenant's rent obligation
would otherwise commence under this Lease is prior to the expiration of
Tenant's (30-day) Fixturing Period, Tenant's liability for base rent shall
be abated until the earlier of the expiration of the 30-day Fixturing
Period or the date on which Tenant completes its fixturing of the
Demised Premises, but in no event earlier than July 1, 1997. Provided,
further, that Tenant shall be entitled to an abatement of rent equal to
Tenant's share of the cost of tenant improvements pursuant to Exhibit B,
but not in excess of one month's minimum rent.
Tenant shall pay the minimum rent for the first full month of the
Lease Term within ten (10) days after the date of execution of this Lease
on behalf of both Landlord and Tenant.
If the Term of this Lease shall commence upon a day other than
the first day of a calendar month, then Tenant shall pay, upon the
Commencement Date of the Term, a pro-rata portion of the fixed
monthly rent, computed upon the basis of a thirty (30) day month,
pro-rated on a per diem basis for the number of days between such
Commencement Date and the end of such calendar month. Thereafter,
minimum rental and any additional rent, if any, as hereinafter defined
shall be paid as set forth above. The foregoing notwithstanding, if
Tenant occupies the Demised Premises on or after May 1, 1997 but
prior to July 1, 1997 as permitted pursuant to Section 2.00 above,
Tenant's minimum rental obligation shall not commence until the
Commencement Date, July 1, 1997.
Section 4.00 OPERATING EXPENSES, PROPERTY TAXES,
MAINTENANCE OF COMMON AREAS.
Section 4.1 In addition to the rent specified in Section 3.00
above, Tenant shall pay to Landlord, throughout the term of this Lease
and any renewals or extensions hereof in the manner and at the times
herein provided, and subject to the limitations hereinafter set forth,
Tenant's Share of (i) all Operating Expenses incurred by Landlord during
each calendar year in excess of the amount incurred by Landlord for
Operating Expenses during the applicable Base Year, "grossed up" as
hereinafter provided, (the "Operating Expense Floor") and (ii) the
amount of Real Property Taxes payable with respect to the Building and
the land on which it is located during each calendar year in excess of the
amounts of real property taxes payable during the applicable Base Year
(the "Property Tax Floor"). During the initial Term of the lease, the Base
Year shall be calendar year 1997. If this Lease is extended for one or
both Renewal Periods pursuant to Section 37.1 below, then the Base
Years for the first and second Renewal Periods, respectively, shall be
the calendar years 2007 and 2012. Anything contained herein to the
contrary notwithstanding, Tenant shall have no liability for Operating
Expenses during the first five years nor for Real Property Taxes during
the first three years, following the earlier of the Commencement Date or
the date of occupancy by Tenant. Tenant shall have no liability for
Operating Expenses and Real Property Taxes from the commencement
of each Renewal Period through the end of the calendar year (2007 and
2012, respectively) during which the Renewal Period commences.
Thereafter, Tenant shall pay its share of the amount by which the
Operating Expenses incurred and Real Property Taxes payable by
Landlord during each calendar year exceed the applicable Operating
Expense Floor and Property Tax Floor.
Landlord represents to Tenant that the Building is not presently
subject to any property tax exemption or abatement that will expire
during the Term of this Lease.
Tenant's Share of the Operating Expenses and Real Property
Taxes shall mean the percentage as determined in Section 4.4 hereof
and shall be paid in monthly installments, in advance, at the same time
as the monthly rental payments. No credit shall be given to the Tenant
hereunder in the event that Landlord's actual Operating Expenses and
Real Property Taxes are less than the Operating Expense Floor or
Property Tax Floor, respectively, for any year.
Prior to the commencement of the first lease year for which
Tenant is obligated to pay its share of Operating Expenses or Real
Property Taxes, and prior to the commencement of each ensuing
calendar year, or as soon thereafter as practicable, Landlord shall give
Tenant written notice of Landlord's estimate of Tenant's Share of
Operating Expenses and Real Property Taxes for the then current
calendar year and each ensuing calendar year. Commencing on the
first day of the first month of the first lease year for which Tenant is
obligated to pay its share of Operating Expenses or Property Taxes, and
continuing on the first day of each and every month thereafter
throughout the Term and any extensions thereof, Tenant shall pay to
Landlord one-twelfth (1/12) of such estimated amounts; provided that
until such notice is given with respect to the ensuing calendar year,
Tenant shall continue to pay the amount currently payable pursuant
hereto until after the month such notice is given. If at any time or times
it appears to Landlord that Tenant's Share of Operating Expenses for the
then current calendar year will vary from Landlord's estimate by more
than five (5%) percent, Landlord may, by written notice to Tenant, revise
its estimate for such year and subsequent payments by Tenant for such
year shall be based upon such revised estimate.
Within ninety (90) days after the end of each calendar year, or
as soon after such ninety (90) day period as practicable, Landlord shall
deliver to Tenant a written statement prepared by Landlord of what
Tenant's Share of Operating Expenses and Real Property Taxes is (or
would have been but for the abatement provided above) for such
calendar year and such statement shall be final and binding upon
Landlord and Tenant, subject to Tenant's audit rights as provided below.
If on the basis of such statement Tenant owes an amount that is less
than the estimated payments for such calendar year previously made by
Tenant, Landlord shall credit such excess amount against the next
payment(s) due from Tenant to Landlord of Operating Expenses. In no
event shall the Tenant be entitled to receive any credit or
reimbursement in an amount greater than the difference between the
Operating Expense Floor or Property Tax Floor and the estimated
amount of the Tenant's Share paid by the Tenant for any fiscal year. If
on the basis of such statement, Tenant owes an amount that is more
than the estimated payments for such fiscal year previously made by
Tenant, Tenant shall pay the deficiency to Landlord within thirty (30)
days after delivery of such statement.
For each calendar year for which Tenant is obligated to pay its
share of Operating Expenses and/or Property Taxes, Tenant shall have
the right, for a period of ninety (90) days after delivery of the aforesaid
statement, to audit Landlord's Operating Expense and Real Property
Tax records on which such statement is based. If such audit discloses
an error in Landlord's statement, the difference shall promptly be paid
by, or credited to, Tenant as appropriate. Tenant acknowledges that
Landlord is not a publicly held corporation, that Landlord is not obligated
to provide financial information to the general public, and that the audit
right granted hereby shall be limited to only those records as pertain to
the Operating Expenses and/or Property Taxes, as applicable, for the
Building for the years for which Tenant has an obligation to pay its share
of Operating Expenses and/or Property Taxes, and Tenant shall have no
right to review or audit any other records of Landlord. In addition, if such
audit discloses an error in the statement in Landlord's favor of more than
ten percent of the amount of the statement, Landlord shall pay Tenant's
audit costs, but not in excess of the amount of the error. If Tenant does
not exercise this right of audit within said ninety (90) day period, this
right of audit shall expire, and the statement delivered by Landlord shall
be final and conclusive.
For purposes of this section, the term "Operating Expenses"
shall mean actual costs incurred by Landlord, whether incurred directly
or incurred indirectly as Lessee under the terms of its Master Lease, with
respect to the operation, maintenance, repair and replacement and
administration of that portion of the Building consisting of the first
through sixth floors, inclusive, and basement of the Building, and
designated Common Areas, including, without limitation or duplication,
(a) the costs incurred for air-conditioning; mechanical ventilation;
heating; cleaning (including janitorial services); rubbish removal; snow
removal; general landscaping and maintenance; window washing,
elevators, escalators, porter and matron services; electric current for
Common Areas; steam; management fees; protection and security
services; sprinkler apparatus; public liability and property damage
insurance (including loss of rental income insurance); supplies, wages,
salaries, disability, benefits, pensions, hospitalization, retirement plans
and group insurance respecting service and maintenance employees
and management, accounting and administrative staff; uniforms and
working clothes for such employees and the cleaning thereof; expenses
imposed pursuant to any collective bargaining agreement with respect to
such employees; payroll, social security, unemployment and other
similar taxes with respect to such employees and staff; sales, use and
other similar taxes; water rates and sewer charges; advertising, public
relations and promotions; depreciation of movable equipment and
personal property, which is, or should be, capitalized on the books of
Landlord, and the cost of movable equipment and personal property,
which need not be so capitalized, as well as the cost of maintaining all
such movable equipment, and any other costs, charges and expenses
which, under generally accepted accounting principles and practices,
would be regarded as maintenance and operating expenses, (b) the cost
of any capital improvements made to the Building by Landlord after the
Commencement Date that are intended to reduce other Operating
Expenses, or made to the Building by Landlord after the date of this
Lease that are required under any governmental law or regulation that
was not applicable to the Building at the time it was last renovated
(approximately 1986), such cost to be amortized over such reasonable
period as Landlord shall determine, together with interest on the
unamortized balance at the rate of two (2%) percent in excess of the
then current "prime rate" of Michigan National Bank or such higher rate
as may have been paid by Landlord on funds borrowed for the purpose
of constructing such capital improvements, and (c) the amount incurred
by Landlord (directly or indirectly as Lessee under the terms of its
Master Lease) of all ad valorem personal property taxes and
assessments, special or otherwise, levied upon or with respect to the
Building and the personal property used in connection therewith,
imposed by any taxing authority having jurisdiction ("Personal Property
Taxes"). Real Property Taxes shall include all ad valorem real property
taxes and assessments, special or otherwise, levied upon or with respect
to the Building, the land on which it is located, and the fixtures and
improvements therein and thereon, imposed by any taxing authority
having jurisdiction (Real Property Taxes and Personal Property Taxes
are sometimes collectively referred to as "Property Taxes"). Property
Taxes shall also include all taxes, levies and charges which may be
assessed, levied or imposed in replacement of, or in addition to, all or
any part of ad valorem Real and Personal Property Taxes as revenue
sources, and which in whole or in part are measured or calculated by or
based upon the Building, the freehold and/or leasehold estate of
Landlord or Tenant, or the rent and other charges payable hereunder
including any expenses incurred by Landlord in determining or
attempting to obtain a reduction of taxes.
Operating Expenses shall not include depreciation of the
Building other than depreciation on standard exterior window coverings
provided by Landlord and carpeting in Common Areas and, other than
as set forth above, costs of services or repairs, replacements and
maintenance which are paid for by proceeds of insurance, by other
tenants (in a manner other than as provided in this Section 4.1) or third
parties, costs of operating the parking areas servicing the Building,
tenant improvements, real estate brokers' commissions, interest and
capital items other than those referred to above. Operating Expenses
shall also not include any of the following:
A. Repairs or other work occasioned by fire, windstorm
or other casualty of an insurable nature or by the
exercise of the right of eminent domain;
B. Leasing commissions, attorneys fees, costs
disbursements and other expenses incurred in
connection with negotiations or disputes with
tenants/Tenant, other occupants, or prospective
tenants or other occupants, or purchasers or
mortgagees of the Building;
C. Expenses incurred in renovating or otherwise
improving or decorating, painting, or redecorating
space for tenants/Tenant or other occupants or
vacant tenant space;
D. Except as otherwise provided herein, costs incurred
by Landlord for alterations which are considered
capital improvements and replacements under
generally accepted accounting principles;
E. Except as otherwise provided herein, costs of a
capital nature, including, but not limited to, capital
improvements, capital repairs, capital equipment,
and capital tools all in conformance with generally
accepted accounting principles;
F. Expenses in connection with services or other
benefits of a type which are not provided Tenant but
which are provided to any other tenant or occupant;
G. Costs incurred due to violation by Landlord or any
tenant or other occupant of the terms and conditions
of any lease;
H. Overhead and profit increments paid to subsidiaries
or affiliates of Landlord for services on or to the real
property, to the extent only that the costs of services
exceed competitive costs of such services
obtainable from other sources;
I. Interest on debt or amortization payments on any
mortgage, mortgages, or similar debit and rental
under any ground or underlying leases or lease;
J. Any compensation paid to clerks, attendants, or
other persons in commercial concessions operated
by Landlord;
K. All costs, fines or penalties incurred due to
violations by Landlord of any governmental rule or
authority;
L. Costs incurred in connection with the sale,
refinancing, mortgaging or selling or change of
ownership of the Building, including brokerage
commissions, attorneys and accountants fees,
closing costs and interest charges;
M. Costs, fines, interest, penalties, legal fees or costs
of litigation incurred due to the late payments of
taxes, utilities and other charges resulting from
Landlord's failure to make such payments when
due;
N. Costs or expenses for owning, leasing and/or
maintaining sculptures, paintings, or other works of
art (but excluding lobby plants) installed in and on
the Building or the Land;
O. State, local or federal personal or corporate income
taxes (including Michigan single business tax)
measured by the income of Landlord from all
sources or from sources other than rent alone,
estate and inheritance taxes, franchise, succession
and transfer taxes and interest on taxes and
penalties resulting from failure to pay real estate
taxes. Further, the amount of tax expenses paid by
Tenant and attributable to tenant improvements, or
tax expenses in connection with other alterations,
additions, substitutions and improvements done by
or for the tenants in the Building which is separately
assessed to and paid by such other tenants or
directly received by Landlord from such other
tenants, shall be excluded from operating expenses;
P. Expenses and costs relating in any way whatsoever
to the identification, testing, monitoring, control,
encapsulation, removal, replacement, repair and
abatement of any hazardous materials within the
Building, Demised Premises (which shall be subject
to the provisions of Article V of this Lease) and the
Land; and
Q. Costs with respect to Landlord's central office, if
any, or its operations conducted, or employees
engaged, therein, except costs that directly relate to
or are otherwise allocable to the Land, the Building,
or any portion thereof.
Landlord and Tenant acknowledge that certain of the costs of
operation, maintenance and repair of the Building may be allocated by
Landlord entirely to the office portion of the Building (floors 2 through 6),
certain of such costs may be allocated entirely to the retail portion of the
Building (first floor) and certain of such costs will be allocated among the
office and retail portion of the Building. In addition, certain costs may be
allocated between buildings within the development known as "River
Place." The determination of such costs and their allocation shall be
made by the Landlord on a reasonable basis.
Section 4.2 It is the intention of Landlord and Tenant that all
Operating Expenses will be determined on a basis which will not unfairly
allocate Operating Expenses to either Landlord or Tenant and that
Tenant shall pay as Tenant's Share its fairly allocated portion of those
Operating Expenses which are variable in amount based on the level of
occupancy of the Building. Accordingly, if the average occupancy rate
of the Building is less than 95% during calendar year 1997, or any
subsequent Base Year for any Renewal Periods, the actual Operating
Expenses incurred by Landlord for that Base Year shall be "grossed up"
to reflect the estimated Operating Expenses that would have been
incurred by Landlord had the occupancy rate of the Building averaged
95% during that Base Year, and the result shall be the Operating
Expense Floor for determining Tenant's Share. Such grossing up shall
be accomplished by adjusting those expenses which are dependent
upon or calculated based upon occupied or utilized area within the
Building by an amount which, in the exercise of Landlord's best
reasonable judgment, would result in those adjusted expenses reflecting
the amount of expenses which would have actually been incurred by
Landlord had the occupancy rate for the Building averaged 95% during
that Base Year. Similarly, if the average occupancy rate for the Building
is less than 95% for any calendar year during which Tenant is obligated
to pay its share of Operating Expenses pursuant to this Section 4.00, the
Operating Expenses for that calendar year shall also be "grossed up" in
the same manner as the Operating Expenses for the Base Year, in order
to more accurately reflect the Operating Expenses which Landlord would
have incurred had the occupancy rate of the Building during that
calendar year averaged 95%; provided, that in no event shall Tenant be
liable for more than 100% of the actual increase in Operating Expenses.
The foregoing notwithstanding, the amount of the increase in
Building Operating Expenses (grossed up as provided above) to be
taken into consideration in determining Tenant's Share for calendar year
2002 shall not exceed that amount determined by multiplying the
Operating Expense Floor by a percentage equal to the greater of (i) the
percentage change between the CPI (as hereinafter defined) for the
month of December, 1997 and the CPI for the month of December,
2001, but not more than 46.4% (which represents cumulative maximum
increases of 10% per year during the first four years of the Lease Term),
or (ii) 21.5% (which represents cumulative increases of 5% per year
during the first four years of the Lease Term). Thereafter, during the
initial term of this Lease, the amount which Tenant shall be required to
pay for Operating Expenses during each calendar year shall not exceed
the amount which Tenant was required to pay during the preceding
calendar year by more than the greater of (iii) the percentage change in
the CPI from the month of December next preceding that calendar year
to the month of December immediately preceding that calendar year
(but not more than 10%) or (iv) 5%. Similarly, for renewal periods,
should Tenant exercise one or both of its options to renew, the amount
of the increase in Building Operating Expenses (grossed up as provided
above) to be taken into consideration in determining Tenant's liability for
Operating Expenses during the first full calendar year of each renewal
period shall not exceed the amount determined by multiplying the new
Operating Expense Floor for that renewal period by a percentage equal
to the greater of the percentages set forth in clauses (iii) and (iv) above.
Subsequent annual adjustments shall also be subject to the same
percentage increase limitations as during the initial Term.
For purposes hereof, the term "CPI" shall mean the Consumer
Price Index for All Urban consumers (CPI-U) for the Detroit-Ann Arbor,
Michigan Metropolitan Area, (1982-84=100).
Section 4.3 Tenant's Share of Operating Expenses and Real
Property Taxes that is allocable to the calendar year during which
Tenant's obligation to pay the same commences and the calendar year
in which this Lease terminates shall be prorated on the basis of the
number of calendar days within such years as are within the Term.
Section 4.4 The term "Tenant's Share" shall mean 8.53% of
the total Operating Expenses and Real Property Taxes incurred by
Landlord. Tenant's Share has been reasonably computed by the
Landlord on the basis of the rentable square foot area of the Demised
Premises, excluding the Storage Space, divided by the rentable square
foot area of the Building (excluding the basement).
Section 4.5 Tenant shall pay as additional rental any money
and charges required to be paid by Tenant pursuant to the terms of this
Lease, whether or not the same may be designated "additional rent."
Section 4.6 Except as above provided, rent and additional
rental shall be paid to Landlord without notice or demand and without
deduction or offset, in lawful money of the United States of America at
Landlord's address for notices hereunder or to such other person or at
such other place as the Landlord may from time to time designate in
writing. All amounts payable by Tenant to Landlord hereunder, if not
paid within ten (10) days after the date due, shall bear interest from the
due date until paid at the rate of two (2%) percent in excess of the then
current "prime rate" of Michigan National Bank of Detroit, but not in
excess of the legal rate.
Section 4.7 Tenant shall also pay all real and personal
property taxes levied or assessed against Tenant's property and
improvements upon or affixed to the Demised Premises, including taxes
attributable to all alterations, additions or improvements made by
Tenant, whether assessed to Tenant or included in Assessments to
Landlord, and identifiable as such.
Section 4.8 Throughout the Term of this Lease, Landlord
shall be responsible for cleaning, maintenance and repair of the
Common Areas, which Landlord shall continue to maintain at a level of
care at least equal to Landlord's current level of maintenance of the
same.
Section 5.00 USE AND OCCUPANCY, HAZARDOUS
SUBSTANCES.
Section 5.1 During the Term, the Demised Premises shall
be used and occupied for office and incidental purposes and for no other
purposes without the prior written consent of Landlord in its sole
discretion. Tenant shall not conduct its business in a manner which will
cause an increase in property physical damage insurance premiums for
the Demised Premises or the Building, and Tenant will comply with all
requirements of the insurance policies and the Insurers relating to the
Demised premises. Tenant shall not use the Demised Premises for any
purpose in violation of any law, municipal ordinance, or regulation, nor
shall Tenant perform any acts or carry on any practices which may injure
the Demised Premises or the Building or be a nuisance, disturbance or
menace to the other tenants of the Building. Upon breach of this
agreement, Landlord shall have the right to terminate this Lease
forthwith and to reenter and repossess the Demised Premises, but
Landlord's right to damages will survive.
Section 5.2 Tenant shall not (a) perform any acts or carry on
any practices that may injure the structure or be a nuisance or menace
to the other Tenants in the Building; (b) use or permit the use of any
portion of the Demised Premises as sleeping apartments, lodging room
or for any unlawful purposes; and (c) use any of the Common Areas
including the hallways for its own business purposes.
Section 5.3 Neither Tenant, Tenant's employees or agents
nor any subtenant, licensee or concessionaire of Tenant shall solicit
business in the Common Areas, place any handbills or any other
advertising material in or on automobiles parked in the parking area or in
any other Common Areas unless Tenant shall have received the prior
written approval of the Landlord.
Section 5.4 Tenant shall not use, store, generate, treat, or
dispose of any hazardous substance on the Premises, or cause suffer or
permit the same to be done by any person without the prior written
consent of Landlord, which consent may be granted or withheld in
Landlord's sole discretion, and shall at all times comply with all
applicable federal, state and local laws, statutes, ordinances and
regulations governing hazardous substances. For purposes of this
section, the term "hazardous substance" means any substance, the
manufacture, use, treatment, storage, transportation, or disposal of
which is regulated by any law having as its object the protection of public
health, natural resources, or the environment, including, by way of
illustration only and not as a limitation, the following: the Resource
Conservation and Recovery Act; the Comprehensive Environmental
Response, Compensation, and Liability Act; the Toxic Substances
Control Act; the Federal Water Pollution Control Act; the Clean Air Act;
the Michigan Hazardous Waste Management Act; the Michigan Water
Resources Commission Act; the Michigan Medical Waste Disposal Act;
and the Michigan Solid Waste Management Act, as each of such acts
shall be amended from time to time. Upon expiration or termination of
this Lease Tenant shall clean up and remove from the Premises all such
hazardous substances deposited therein due to the acts or omissions of
Tenant. Tenant hereby agrees to indemnify and hold Landlord harmless
from and against any and all liability, loss, costs, penalty, damage and
expense, including reasonable consultant's and attorneys' fees, resulting
from or due to the Tenant's use, storage, generation or release or
threatened release of hazardous or toxic substances occurring or alleged
to have occurred on or from the Premises at any time. This indemnity
obligation shall survive the expiration or termination of this Lease.
Section 5.5 Tenant shall promptly supply to Landlord a copy
of the reports of any environmental audit or investigation at any time
undertaken on the Premises or adjacent property, all notices, demands,
inquiries, or claims received from any person or entity as a result of
hazardous substances alleged to be on or emanating from the Premises
or adjacent property, and any notices, reports, or applications for
licenses, permits, or approvals submitted by or on behalf of Tenant to
any environmental regulatory agency affecting the Premises or adjacent
property.
Section 5.6 Whenever in this Lease Landlord has reserved
the right to re-enter and repossess the Demised Premises upon Tenant's
default, Landlord agrees that, unless Tenant Voluntarily surrenders
possession of the Demised Premises to Landlord, Landlord shall only
take possession of the Demised Premises through Summary
Proceedings or such other similar proceedings as may then be
prescribed by applicable statutes and/or court rules.
Section 6.00 SERVICES.
Section 6.1 Landlord will arrange for the furnishing of
electricity to the Demised Premises, and Landlord shall charge Tenant
for electricity as determined by metering at the applicable secondary
rates filed by Landlord with the proper regulating authorities in effect
from time to time covering such services, but not more than the
secondary rates which would be charged to Tenant by the public utility
company. Such charge to Tenant for electricity shall be payable in
monthly installments in the amount invoiced to Tenant which shall be
due and payable on the first day of each month, commencing on the
earlier of the date on which Tenant occupies the Demised Premises or
the Commencement Date, whether or not Rent is payable for that
month. Engineering surveys shall be performed by independent
licensed professional electrical engineering consultants selected by
Landlord. From time to time during the Term, Landlord may inspect the
Demised Premises in order to evaluate Tenant's kilowatt hour electric
consumption and demand, and if as a result of such inspection, the
amount charged to Tenant shall change because of changes in demand
and/or consumption, or in the cost of electricity to Landlord, Landlord
shall notify Tenant in writing and commencing with the first day of the
next calendar month, Tenant shall pay such revised charge in monthly
installments.
Section 6.2 Landlord shall furnish the Demised Premises
with (a) heat, ventilation and air-conditioning (HVAC) and water service
for the same to the extent required for the occupancy of the Demised
Premises (excluding the first floor space and Storage Space) to levels of
comfort at least equivalent to current levels and during such hours in
each case as reasonably determined by Landlord for the Office portion
of the Building (which hours shall be not less than from 8:00 A.M. to 6:00
P.M. on weekdays (Monday through Friday), and 8:00 A.M. to 2:00 P.M.
on Saturday, (except the holidays of New Year's, Memorial,
Independence, Labor, Thanksgiving and Christmas), or such broader
hours as Landlord may designate in its sole discretion, or as may be
prescribed by any applicable policies or regulations adopted by any
utility or governmental agency, (b) elevator service, and (c) janitorial
service only to the areas of the Demised Premises used for office
purposes during the times and in the manner that janitorial services are
furnished in comparable first-class office buildings in the Metropolitan
Detroit area, provided that Landlord shall not provide janitorial services
to any portion of the Demised Premises used for other than office
purposes such as preparing, dispensing or consumption of food or
beverages or as an exhibition area or for storage, shipping room,
washroom or similar purposes, or as private restrooms or a shop or for
the operation of computer data processing, reproduction, duplicating or
similar equipment. Except as expressly hereinafter provided, Landlord
shall not be in default hereunder or be liable for any damages directly or
indirectly resulting from, nor shall the rental herein reserved be abated
by reason of: (1) the installation, use or interruption of use of any
equipment in connection with the furnishing of any of the foregoing
services, to the extent not within the reasonable control of Landlord, (2)
failure to furnish or delay in furnishing any such services when such
failure or delay is caused by accident or any condition beyond the
reasonable control of Landlord or by the making of necessary repairs or
improvements to the Demised Premises or to the Building, or (3) any
limitation, curtailment, rationing or restriction on use of water, electricity,
steam, gas or any other form of energy or utility serving the Demised
Premises or the Building. Landlord shall use reasonable efforts
diligently to remedy any interruption in the furnishing of such services.
Notwithstanding the provisions of this Section 6.2, Landlord shall not be
required to provide ventilation and air-conditioning to the Demised
Premises as herein provided if Tenant shall utilize in the Demised
Premises heat generating equipment or lighting other than building
standard lights which affect the temperature otherwise maintained by the
air-conditioning system or if the Demised Premises are occupied by a
number of persons in excess of the design criteria of the air-conditioning
system.
In the event that any interruption in services occurs as a result
of the acts or omissions of Landlord, the prevention or cure of which is
within a reasonable control of Landlord, and if such interruption
continues for more than the greater of five (5) consecutive calendar
days or four (4) consecutive business days, or more than eight (8)
business days during any Lease Year; Tenant shall be entitled to an
equitable abatement of rental for the period of such interruption. If the
interruption is such that it renders all, or a portion of the Demised
Premises unusable, the rent shall be abated for the portion of the
Demised Premises rendered unusable at a rate equivalent to the full
daily rental rate for such unusable portion of the Demised Premises. If
no portion of the Demised Premises is totally unusable, but Tenant's
activities are curtailed in some portion or all of Demised Premises as a
result of the interruption, then the abatement shall be limited to an
equitable proportion of the daily rent for the portion of the Demised
Premises so affected.
Any services required by Tenant at times and/or manner other
than that prescribed by the Landlord under the standard policy for the
Building shall be subject to Landlord's prior written approval at Tenant's
sole expense.
Section 6.3 Tenant shall pay as additional rent the cost of
providing all heating, ventilating and air-conditioning ("HVAC"), including
all costs associated with the installation of meters for measuring the
same, to the Demised Premises in excess of that required for normal
office use or during hours requested by Tenant when HVAC is not
otherwise furnished by Landlord. Tenant shall notify Landlord in writing
at least twenty-four (24) hours prior to the time it requires HVAC during
periods the same is not otherwise furnished by Landlord.
Notwithstanding the foregoing, Landlord shall only be required to provide
HVAC to the extent available utilizing the existing equipment servicing
the Building. The foregoing notwithstanding, Landlord shall not charge
Tenant for HVAC during the hours 8:00 a.m. to 8:00 p.m. Monday
through Sunday for the first two months following the earlier of the
Commencement Date or the date on which Tenant occupies the
Demised Premises. In addition, Tenant shall not be charged for the first
twenty (20) hours of after-hours HVAC per lease year. Thereafter,
Tenant shall pay all costs of providing the same as provided above.
Presently, Tenant's cost for after-hours HVAC would be Fifty Dollars
($50.00) per hour, but the amount is subject to increase from time to
time during the Lease Term as Landlord's costs increase.
Section 6.4 With respect to the first floor space, only,
Landlord will provide and install a heating, ventilating and air
conditioning system (HVAC) as part of the performance of Landlord's
work as set forth on Exhibit "B." Throughout the term of the Lease
Tenant shall pay the cost of all gas, electricity, water, or other utilities or
services utilized in connection with the operation of the HVAC system in
the first floor space. In addition, Tenant shall be fully responsible for
maintaining and repairing the same at Tenant's expense in a good
workmanlike condition throughout the Term of the Lease.
Section 6.5 Throughout the term of the Lease, Landlord
shall keep in the place the existing electronic security system for the
Building; provided, that Landlord shall be free to replace the existing
system with a system that is functionally equivalent to, or better than,
the existing system and, provided further, that Landlord shall be free to
utilize a temporary security system in the event of loss of electrical
power or damage to or construction of the security system control
center. In addition, Landlord shall provide or cause to be provided
security services at a level at least equivalent with the level of security
services presently provided at the Building.
Section 7.00 REPAIRS.
Subject to Tenant's obligation to pay Operating Expenses
pursuant to Section 4 hereof, Landlord shall, with reasonable diligence
and at its expense, make all necessary repairs and replacements to the
exterior of the Building and to the Common Areas, including Landlord's
HVAC, plumbing and electrical systems located therein (but excluding
the HVAC system in the first floor space, which shall be Tenant's
responsibility), and Landlord shall also make all repairs to the Demised
Premises (but not to Tenant's property) which are structural in nature or
required due to fire, casualty, or other act of God; provided, however,
that Tenant shall make all repairs and replacements arising from its act,
neglect or default. Except as provided above, Tenant shall keep the
Demised Premises in good repair, including any special equipment
installed in the Demised Premises (such as, but not limited to, air
conditioners, transformers and plumbing), whether installed by Landlord
or Tenant, and Tenant shall, upon the expiration of the Term, yield and
deliver up the Demised Premises in like condition as when taken,
reasonable use and wear thereof and repairs required to be made by
Landlord excepted.
In the event that the Landlord shall deem it necessary or be
required by any governmental authority to repair, alter, remove,
reconstruct or improve any part of the Demised Premises or of the
Building (unless the same results from Tenant's act, neglect, default or
mode of operation in which event Tenant shall make all such repairs,
alterations and improvements), then the same shall be made by
Landlord with reasonable dispatch, and should the making of such
repairs, alterations or improvements cause any interference with
Tenant's use of the Demised Premises, such interference shall not
relieve Tenant from the performance of its obligations hereunder nor
shall such interference be deemed an actual or constructive eviction or
partial eviction or result in an abatement of rent, provided, that such
alterations and improvements are not the result of Landlord's gross
negligence or wrongful act. Notwithstanding the foregoing, Tenant shall,
at its own cost and expense, make all repairs and provide all
maintenance in connection with any alterations, additions or
improvements made by Tenant pursuant to Section 8 hereof. The
foregoing notwithstanding, if any such repairs , alterations or
improvements are undertaken by Landlord on a non-emergency basis,
Tenant shall be entitled to an equitable, proportional, abatement of rent
should the performance of such repairs, alterations or improvements
materially interfere with Tenant's use and enjoyment of the Demised
Premises for more than three (3) consecutive business days or more
than five (5) business days during any Lease Year. Such partial
abatement shall be limited to only that portion of the Demised Premises
interfered with, and only for such period of time as such interference
continues.
Section 8.00 ALTERATIONS.
Tenant shall not make any alterations, additions or
improvements to the Demised Premises (whether or not the same may
be structural in nature) without Landlord's prior written consent, and all
alterations, additions or improvements made by either party hereto to
the Demised Premises, except movable office furniture and equipment
installed at Tenant's expense, shall be the property of Landlord and
remain upon and be surrendered with the Demised Premises at the
expiration of the Term; provided, however, that Landlord may require
Tenant to remove any additions made by Tenant to the Demised
Premises and to repair any damage caused by such removal, and
provided further, that if Tenant has not removed its property and
equipment within ten (10) days after the expiration or termination of this
Lease, Landlord may elect to retain the same as abandoned property.
Tenant shall only use contractors approved by Landlord for the permitted
alterations to the Demised Premises and shall not permit any mechanics
liens to be placed or remain upon the Demised Premises.
Section 9.00 ASSIGNMENT AND SUBLETTING.
Section 9.1 Tenant covenants not to assign or transfer this
Lease or hypothecate or mortgage the same or sublet the Demised
Premises or any part thereof without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, but in the
event of any such assignment or transfer, Tenant shall remain fully
liable to perform all of the obligations under this Lease. Any
assignment, transfer (including transfers by operation of law or
otherwise), hypothecation, mortgage, or subletting without such written
consent shall give Landlord the right to terminate this Lease and to
re-enter and repossess the Demised Premises but Landlord's right to
damages shall survive. No consent by Landlord to any assignment,
transfer, hypothecation, mortgage or subletting on any one occasion
shall be deemed a consent to any subsequent assignment, transfer,
hypothecation, mortgage or subletting by Tenant or by any successors,
assigns, transferees, mortgagees or sublessees of Tenant. The
foregoing notwithstanding, Tenant shall have the right, without receiving
Landlord's prior written consent, to assign this Lease to an entity with
which Tenant shall merge or consolidate, provided such assignee has a
net worth not less than that of Tenant and, provided further, such
assignee executes an agreement in form and substance satisfactory to
Landlord pursuant to which it assumes all of Tenant's unperformed
obligations under this Lease, whether arising before or after the date of
assignment.
Section 9.2 The cumulative sale, issuance or transfer of any
voting capital stock of Tenant, if Tenant be a corporation at the signing
of this Lease, which results in a change in the voting control of Tenant,
shall be deemed to be an assignment of this Lease within the meaning
of this Section 9.
Section 9.3 If at the execution of this Lease, Tenant is a
sole proprietorship or a co-partnership, the subsequent cumulative sale
of fifty-one percent (51%) or more of its business to another person or
entity which would result in a change of the control of Tenant shall be
deemed to be an assignment of this Lease within the meaning of this
Section 9.
Section 9.4 If at any time or from time to time during the
Term, Tenant desires to sublet all or any part of the Demised Premises
or to assign this Lease, Tenant shall give notice to Landlord setting forth
the proposed subtenant or assignee, the terms of the proposed
subletting and the space so proposed to be sublet or the terms of the
proposed assignment, as the case may be. Landlord shall have the
option, exercisable by notice given to Tenant within twenty (20) days
after Tenant's notice is given, (a) if Tenant's request relates to a
subletting, either to sublet from Tenant such space at the rental and
other terms set forth in Tenant's notice, or, if the proposed subletting is
for the entire Demised Premises for the balance of the Term, to
terminate this Lease, or (b) if Tenant's request relates to an assignment,
either to have this Lease assigned to Landlord or to terminate this
Lease. If Landlord does not exercise such option, Tenant shall be free
for a period of one hundred eighty (180) days thereafter to sublet such
space or to assign this Lease to such third party if and only if Landlord
shall consent thereto, which consent shall not be unreasonably withheld,
provided that the sublease or assignment shall be on the same terms set
forth in the notice given to Landlord and that the rental to such subtenant
or assignee shall not be less than the then market rate for the Demised
Premises. Under no circumstances shall the Tenant hypothecate or
mortgage this Lease.
Section 9.5 In the event Tenant shall so sublet a portion of
the Demised Premises, or assign this Lease, all of the sums or other
economic consideration received by Tenant as a result of such
subletting or assignment whether denominated rent or otherwise, under
the sublease or assignment, which exceed in the aggregate, the total
sums which Tenant is obligated to pay Landlord under this Lease
(prorated to reflect obligations allocable to that portion of the Demised
Premises subject to such sublease) shall be payable to Landlord as
additional rent under this Lease without affecting or reducing any other
obligations of Tenant hereunder.
Section 9.6 Regardless of Landlord's consent, no subletting
or assignment shall release Tenant of Tenant's obligations or alter the
primary liability of Tenant to pay the rental and to perform all other
obligations to be performed by Tenant hereunder. The acceptance of
rental by Landlord from any other person shall not be deemed to be a
waiver by Landlord of any provision hereof. Consent to one assignment
or subletting shall not be deemed consent to any subsequent assignment
or subletting. In the event of default by any assignee of Tenant or any
successor of Tenant in the performance of any of the terms hereof,
Landlord may proceed directly against Tenant without the necessity of
exhausting remedies against such assignee or successor. Landlord may
consent to subsequent assignments or subletting of this Lease or
amendments or modifications to this Lease with assignees of Tenant,
without notifying Tenant, or any successor of Tenant, and without
obtaining its or their consent thereto and such action shall not relieve
Tenant of liability under this Lease.
Section 9.7 In the event Tenant shall assign this Lease or
sublet the Demised Premises or request the consent of Landlord to any
assignment or subletting or if Tenant shall request the consent of
Landlord for any act that Tenant proposes to do, then Tenant shall pay
Landlord's reasonable attorneys' fees and processing fees incurred in
connection therewith.
Section 10.00 INSURANCE, INDEMNIFICATION AND WAIVER OF
SUBROGATION
Section 10.1 Tenant hereby waives all claims against
Landlord for damage to any property or injury or death of any person in,
upon or about the Demised Premises arising at any time and from any
cause other than solely by reason of the gross negligence or willful act of
Landlord, its employees or contractors, and Tenant shall indemnify and
hold harmless Landlord from and against any and all claims arising from
Tenant's use of the Demised Premises or other portions of the Building,
and shall further indemnify, defend and hold harmless Landlord from
and against any and all claims arising from a breach or default in the
performance of any obligation on Tenant's part to be performed under
the terms of this Lease, or arising from any negligence of the Tenant, or
any of the Tenant's agents, contractors or employees, except such as is
caused solely by gross negligence or willful act of Landlord, its
contractors or employees. The foregoing indemnity obligation of Tenant
shall include reasonable attorneys' fees, investigation costs and all other
reasonable costs and expenses incurred by Landlord from the first notice
that any claim or demand is to be made or may be made. The
provisions of this Section 10.1 shall survive the termination of this Lease
with respect to any damage, injury or death occurring prior to such
termination.
Section 10.2 Tenant shall procure and keep in effect during
the term hereof public liability and property damage liability insurance
with a minimum single limit of liability of Eleven Million and no/100
($11,000,000.00) Dollars per occurrence for bodily injury or death and/or
property damage. From time to time, Tenant shall increase the limit of
such liability insurance to such higher limit as any mortgage lender of
Landlord shall reasonably require. Such insurance shall specifically
include the liability assumed hereunder by Tenant, and shall provide that
it is primary insurance and not excess over or contributory with any other
valid, existing and applicable insurance in force for or on behalf of
Landlord, and shall provide that Landlord shall receive thirty (30) days'
written notice from the insurer prior to any cancellation or change of
coverage.
Section 10.3 Tenant shall procure and keep in effect fire
insurance (including standard extended coverage endorsement and
leakage from fire protective devices perils) for not less than the book
value of Tenant's trade fixtures, equipment and personal property, and
not less than the full replacement cost of leasehold improvements.
Section 10.4 Tenant shall deliver policies of the insurance
required pursuant to Sections 10.2 and 10.3 hereof or certificates thereof
to Landlord on or before the Commencement Date, and thereafter at
least thirty (30) days before the expiration dates of expiring insurance
policies.
Section 10.5 Landlord and Tenant shall each obtain from
their respective insurers under all policies of property insurance
maintained by either of them at any time during the Term insuring or
covering the Building or any portion thereof or operations therein, a
waiver of all rights of subrogation which the insurer of one party might
have against the other party, and Landlord and Tenant shall each
indemnify the other against any loss or expense, including reasonable
attorneys' fees, resulting from the failure to obtain such waiver and, so
long as such waiver is outstanding, each party waives, to the extent of
the proceeds received under such policy, any right of recovery against
the other party for any loss covered by the policy containing such
waiver; provided, however, that if at any time their respective insurers
shall refuse to permit waivers of subrogation, Landlord or Tenant, in
each instance, may revoke said waiver of subrogation effective thirty
(30) days from the date of such notice, unless within such thirty (30) day
period, the other is able to secure and furnish (without additional
expense) equivalent insurance with such waivers with other companies
satisfactory to the other party.
Section 11.00 FIRE.
Section 11.1 In the event the Demised Premises are
damaged or destroyed in whole or in part by fire or other insured
casualty during the term hereof, Landlord shall, at its own cost and
expense, repair and restore the Demised Premises and the Common
Areas of the Building to tenantable condition with reasonable dispatch,
and the rent, herein provided shall be reduced in direct proportion to the
amount of the Demised Premises so damaged or destroyed until such
time as the Demised Premises are restored to a condition substantially
equivalent to that which existed prior to the occurrence of such fire or
other casualty. If the Demised Premises cannot be restored, or if, in
fact, they are not restored to tenantable condition within a period of one
hundred eighty (180) days, Landlord and Tenant shall each have the
right to terminate this Lease upon written notice to the other (Tenant's
cancellation notice shall be given within thirty (30) days after receipt of
written notice from Landlord that the Demised Premises cannot be
timely restored), and any rent paid for any period in advance of the date
of such damage and destruction shall be refunded to Tenant. If the
Demised Premises are damaged due to fire or other casualty, Tenant
shall, at its own cost and expense, remove such of its furniture and other
belongings from the Demised Premises as Landlord shall require in
order to repair and restore the Demised Premises. Landlord shall use
reasonable discretion as to the extent of the untenantability of the
Demised Premises and of the time required for the repair and rebuilding
of the same and no such damage or untenantability shall be deemed
either an actual or constructive eviction or result in an abatement of
rental (except as provided herein for insured casualties).
Section 11.2 In the event the Building is destroyed to the
extent of more than one-half (1/2) of the then value thereof, Landlord
shall have the right to terminate this Lease upon written notice to
Tenant, in which event any rent paid in advance of the date of such
destruction shall be refunded to Tenant.
Section 11.3 Landlord and Tenant do each hereby release
the other from any liability resulting from damage by fire or any other
insured peril and including perils covered by extended coverage
insurance with waiver of subrogation normally available in the State of
Michigan irrespective of the cause therefor; provided, however, that if an
increase in premium is required for such waiver of subrogation, the other
party will pay such increase or the waiver will not be furnished.
Section 12.00 EMINENT DOMAIN.
If all or any part of the Demised Premises shall be taken as a
result of the exercise of the power of eminent domain, this Lease shall
terminate as to the part so taken as of the date of taking, and, in the
case of partial taking, Landlord and Tenant shall each have the right to
terminate this Lease as to the balance of the Demised Premises by
notice to the other party within thirty (30) days after such date. In the
event of any taking, Landlord shall be entitled to any and all
compensation, damages, income, rent, awards, or any interest therein
whatsoever which may be paid or made in connection therewith, and
Tenant shall have no claim against Landlord or the condemning
authority for the value of any unexpired term of this Lease or otherwise.
Provided, that nothing contained herein shall preclude Tenant from
seeking and obtaining, at its own cost and expense, an award from the
condemning authority for loss of business, the value of any personal
property of Tenant taken by the condemning authority or moving
expenses, so long as such award will not result in a diminution of the
award made to Landlord. In the event of a partial taking of the Demised
Premises which does not result in a termination of this Lease, the rental
thereafter to be paid shall be reduced pro-rata in proportion to the
square footage of the Demised Premises so taken.
Section 13.00 RULES.
Tenant shall faithfully observe and comply with the rules and
regulations annexed to this Lease as Exhibit C and, after notice thereof,
all reasonable modifications thereof and additions thereto from time to
time promulgated in writing by Landlord, provided such modification or
addition does not abridge any express provision of this Lease or impose
an additional material financial obligation on Tenant. Landlord shall not
be responsible to Tenant for the nonperformance by any other tenant or
occupant of the Building of any such rules and regulations.
Section 14.00 ENTRY BY LANDLORD.
Section 14.1 Landlord and designees may enter the Demised
Premises at reasonable hours to (a) inspect the same, (b) exhibit the
same to prospective purchasers, lenders or tenants, (c) determine
whether Tenant is complying with all of its obligations hereunder, (d)
supply janitor service and any other services to be provided by Landlord
to Tenant hereunder, and (e) make repairs required of Landlord under
the terms hereof or repairs to any adjoining space or utility services or
make repairs, alterations or improvements to any other portion of the
Building; provided, however, that all such work shall be done as
promptly as reasonably possible. Tenant hereby waives any claim for
damages for any injury or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the Demised
Premises or any other loss occasioned by such entry. Anything
contained herein to the contrary notwithstanding, in the event any such
repairs, alterations or improvements are undertaken by Landlord on a
non-emergency basis, such repairs, alterations or improvements shall be
performed in such a manner as to minimize the interference with
Tenant's daily business operation and, in the event such non-emergency
repairs, alterations or improvements materially interfere with Tenant's
ability to use and enjoy the Demised Premises for more than five (5)
consecutive business days, or more than eight (8) business days during
any Lease Year, Tenant shall be entitled to an equitable abatement of
rental. Such partial abatement shall be limited to only that portion of the
Demised Premises interfered with, and only for such period of time as
such interference continues.
Section 14.2 Landlord shall at all times have and retain a key
or access card with which to unlock all of the doors in, on or about the
Demised Premises (excluding Tenant's vaults, safes and similar areas
designated in writing by Tenant in advance); and Landlord shall have the
right to use any and all means which Landlord may deem proper to open
said doors in an emergency in order to obtain entry to the Demised
Premises, and any entry to the Demised Premises obtained by Landlord
by any of said means, or otherwise, shall not under any circumstances
be construed or deemed to be a forcible or unlawful entry into or a
detainer of the Demised Premises or an eviction, actual or constructive,
of Tenant from the Demised Premises, or any portion thereof.
Section 15.00 EVENTS OF DEFAULT.
Section 15.1 The occurrence of any one or more of the
following events (hereinafter referred to as "Events of Default") shall
constitute a breach of this Lease by Tenant: (a) if Tenant shall fail to
pay the rent when and as the same becomes due and payable and such
failure shall continue for more than ten (10) days; or (b) if Tenant shall
fail to pay any other sum due to Landlord under this Lease when and as
the same becomes due and payable and such failure shall continue for
more than ten (10) days; or (c) if Tenant shall fail to perform or observe
any other term hereof or of the rules and regulations referred to in
Section 13 hereof to be performed or observed by Tenant, such failure
shall continue for more than thirty (30) days after written notice thereof
from Landlord, and Tenant shall not within such thirty (30) day period
commence with due diligence and dispatch the curing of such default,
or, having so commenced, shall thereafter fail or neglect to prosecute or
complete with due diligence and dispatch the curing of such default
(except if the observance or performance of such term, covenant or
condition is of such nature that observance or performance cannot be
reasonably attained within thirty (30) days, then within such greater time
period as is reasonably required to, with due diligence and dispatch,
attain such observance or performance); or (d) if Tenant shall make a
general assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts as they become due or shall file a petition in
bankruptcy, or shall be adjudicated as insolvent or shall file a petition in
any proceeding seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present
or future statute, law or regulation, or shall file an answer admitting or
fail timely to contest or acquiesce in the appointment of any trustee,
receiver or liquidator of Tenant or any material part of its properties; or
(e) if within ninety (90) days after the commencement of any proceeding
against Tenant seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present
or future statute, law or regulation, such proceeding shall not have been
dismissed, or if, within ninety (90) days after the appointment without the
consent or acquiescence of Tenant, of any trustee, receiver or liquidator
of Tenant or of any material part of its properties, such appointment
shall not have been vacated; or (f) if this Lease or any estate of Tenant
hereunder shall be levied upon under any attachment or execution and
such attachment or execution is not vacated within ten (10) days, or (g)
if the Demised Premises are abandoned or vacated by Tenant.
Section 15.2 If, as a matter of law, Landlord has no right on
the bankruptcy of Tenant to terminate this Lease, then, if Tenant, as
debtor, or its trustee wishes to assume or assign this Lease, in addition
to curing or adequately assuring the cure of all defaults existing under
this Lease on Tenant's part on the date of filing of the proceeding (such
assurances being defined below), Tenant, as debtor, or the trustee or
assignee must also furnish adequate assurances of future performance
under this Lease (as defined below). Adequate assurance of curing
defaults means the posting with Landlord of a sum in cash sufficient to
defray the cost of such a cure. Adequate assurance of future
performance under this Lease means posting a deposit equal to three (3)
months' rent, including all other charges payable by Tenant hereunder,
and, in the case of an assignee, assuring Landlord that the assignee is
financially capable of assuming this Lease, and that its use of the
Demised Premises will not be detrimental to the other tenants in the
Building or Landlord. In a reorganization under Chapter 11 of the
Bankruptcy Code, the debtor or trustee must assume this Lease or
assign it within one hundred twenty (120) days from the filing of the
proceeding, or it shall be deemed to have rejected and terminated this
Lease.
Section 16.00 REMEDIES.
If any of the Events of Default shall occur, then Landlord shall
have the following remedies:
a. Landlord at any time after the Event of Default,
at Landlord's option, may give to Tenant seven
(7) days' written notice of termination of this
Lease, and in the event such notice is given,
this Lease shall come to an end and expire
(whether or not the Term shall have
commenced) upon the expiration of such seven
(7) days, but Tenant shall remain liable for
damages as provided in Section 17 hereof.
b. Either with or without terminating this Lease,
Landlord may immediately or at any time after
the Event of Default and failure to cure within
the cure periods, if any, provided in Section
15.00 above, or after the date upon which this
Lease shall expire, reenter the Demised
Premises or any part thereof, without notice,
except as required by law, but subject to the
provisions of Section 5.6 above, either by
summary proceedings or by any other
applicable action or proceeding, and may
repossess the Demised Premises and remove
any and all of Tenant's property and effects
from the Demised Premises.
c. Either with or without terminating this Lease,
Landlord may relet the whole or any part of the
Demised Premises from time to time, either in
the name of Landlord or otherwise, to such
tenant or tenants, for such term or terms ending
before, on or after the expiration date, at such
rental or rentals and upon such other conditions,
which may include concessions and free rent
periods, as Landlord, in its sole discretion, may
determine. In the event of any such reletting,
Landlord shall not be liable for the failure to
collect any rental due upon any such reletting,
and no such failure shall operate to relieve
Tenant of any liability under this Lease or
otherwise to affect any such liability; and
Landlord may make such repairs, replacements,
alterations, additions, improvements,
decorations and other physical changes in and
to the Demised Premises as Landlord, in its sole
discretion, considers advisable or necessary in
connection with any such reletting or proposed
reletting, without relieving Tenant of any liability
under this Lease or otherwise affecting such
liability.
d. Landlord shall have the right to recover the
rental and all other amounts payable by Tenant
hereunder as they become due (unless and until
Landlord has terminated this Lease) and all
other damages incurred by Landlord as a result
of an Event of Default.
e. All rights, options and remedies of Landlord
contained in this Lease, shall be construed and
held to be cumulative, and no one of them shall
be exclusive of the other, and Landlord shall
have the right to pursue any one or all of such
remedies or any other remedy of relief which
may be provided by law, whether or not stated
in this Lease. No waiver of any Event of Default
of Tenant hereunder shall be implied from any
acceptance by Landlord of any rent or other
payments due hereunder or any omission by
Landlord to take any action on account of such
Event of Default if such Event of Default
persists or is repeated, and no express waiver
shall affect any Event of Default other than as
specified in said waiver. The consent or
approval of Landlord to or of any act by Tenant
requiring Landlord's consent or approval shall
not be deemed to waive or render unnecessary
Landlord's consent or approval to or of any
subsequent similar acts by Tenant.
The foregoing notwithstanding, if the default is a non-payment of
rent or other sum due to Landlord within the time provided in Section
15.1, clause (a) or (b) of, Landlord agrees that it will not pursue any of its
remedies under this Section 16 until, with respect to the first two of such
defaults within any lease year, Landlord shall have first given Tenant
written notice of Tenant's default and Tenant shall have failed to cure
the same within seven (7) days after delivery of such notice by Landlord
to Tenant. Provided, that Landlord shall not be required to give such
notice more than six (6) times during the initial term of this Lease nor
more than two (2) times during any extension term of this Lease, before
pursuing any of its remedies hereunder.
Section 17.00 TERMINATION UPON DEFAULT.
Upon termination of this Lease by Landlord pursuant to Section
16 hereof, Landlord shall be entitled to recover from Tenant the
aggregate of: (a) the unpaid rental which had been earned at the time of
termination; (b) the worth at the time of award of the amount by which
the unpaid rental for the balance of the Term exceeds the reasonable
rental value of the Demised Premises for such period; and (c) any other
amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant's failure to perform its obligations under
this Lease or which in the ordinary course of things would be likely to
result therefrom. The "worth at the time of award" of the amount
referred to in clause (b) above is computed by discounting such amount
at the discount rate of the Federal Reserve Bank of Chicago at the time
of termination.
Section 18.00 LANDLORD'S RIGHT TO CURE DEFAULTS.
All covenants, terms and conditions to be performed by Tenant
under any of the terms of this Lease shall be at its sole cost and
expense and without any abatement of rental, except as expressly
provided in this Lease. If Tenant shall fail to pay any sum of money,
other than rent and other sums to be paid to Landlord as additional rent,
required to be paid by it hereunder or shall fail to perform any other act
on its part to be performed hereunder and such failure shall continue for
thirty (30) days after delivery of written notice thereof by Landlord,
Landlord may, but shall not be obligated so to do, and without waiving or
releasing Tenant from any obligations of Tenant, make any such
payment or perform any such other act on Tenant's part to be made or
performed as in this Lease provided. All sums so paid by Landlord and
all necessary incidental costs shall be deemed additional rent hereunder
together with interest on such costs at the rate of two (2%) percent in
excess of the then current "prime rate" announced by Michigan National
Bank of Detroit and shall be payable to Landlord on demand, and
Landlord shall have (in addition to any other right or remedy of Landlord)
the same rights and remedies in the event of the nonpayment thereof by
Tenant as in the case of default by Tenant in the payment of rent.
Section 19.00 ATTORNEY'S FEES.
If as a result of any breach or default in the performance of any
of the provisions of this Lease, Landlord uses the services of any
attorney in order to secure compliance with such provisions or recover
damages therefor, or to terminate this Lease or evict Tenant, Tenant
shall reimburse Landlord upon demand for any and all attorney's fees
and expenses so incurred by Landlord. In the event of litigation between
the parties concerning or arising out of this Lease which is adjudicated
wholly in favor of one of the parties, the losing party shall reimburse the
prevailing party for its litigation costs and expenses, including
reasonable attorneys fees.
Section 20.00 SUBORDINATION.
Section 20.1 This Lease is and shall be subject and
subordinate, at all times, to (a) the lien of any mortgage or mortgages
which may now or hereafter affect the Building, and to all advances
made or hereafter to be made upon the security thereof and to the
interest thereon, and to any agreements at any time made modifying,
supplementing, extending or replacing any such mortgages, provided
the mortgagee under any subsequent mortgage shall join in the
execution of a subordination, non-disturbance and attornment
agreement or similar agreement agreeing to recognize this Lease in the
event of Landlord's default under such mortgage, and (b) any ground,
master or underlying lease which may now or hereafter affect the
Building, including all amendments, renewals, modifications,
consolidation, replacements and extensions thereof, which may be freely
made by Landlord as it deems appropriate, provided the lessor under
any subsequent ground lease, master lease or other underlying lease
shall join in the execution of a subordination, non-disturbance and
attornment agreement or similar agreement agreeing to recognize this
Lease in the event of Landlord's default under such lease, Tenant
agrees to attorn to the successor in interest of Landlord following any
transfer of such interest which occurs either voluntarily or by operation of
law and to recognize such successor as the Landlord under this Lease;
provided, that Landlord's successor in interest agrees to recognize this
Lease and not to disturb Tenant's enjoyment of the Demised Premises
so long as Tenant fully performs all of its obligations under this Lease.
Notwithstanding the foregoing, at the request of the holder of any of the
aforesaid mortgage or mortgages or the lessor under the aforesaid
ground, master or underlying lease, this Lease may be made prior and
superior to such mortgage or mortgages and/or such ground, master or
underlying lease. Such attornment is to be effective and self-operative
without the execution of any further instruments upon successors in
interest succeeding to the interest of the Landlord under this Lease.
Section 20.2 Tenant shall, contemporaneously with the
execution hereof, execute and deliver to Landlord a Subordination,
Non-Disturbance and Attornment Agreement in the form attached hereto
as Exhibit D. At the request of Landlord, Tenant shall execute and
deliver such further instruments as may be reasonably required to
implement the provisions of this Section 20. Tenant hereby irrevocably,
during the term of this Lease, constitutes and appoints Landlord as
Tenant's agent and attorney-in-fact to execute any such instruments if
Tenant shall fail or refuse to execute the same within ten (10) days after
delivery of written notice by Landlord.
Section 20.3 If, as a condition of approving this Lease,
Landlord's mortgagee shall request reasonable modifications of this
Lease, Tenant shall not unreasonably withhold or delay its agreement to
such modifications, provided that such modifications do not increase the
obligations or materially and adversely affect the rights of Tenant under
this Lease.
Section 21.00 NO MERGER.
The voluntary or other surrender of this Lease by Tenant, or a
mutual cancellation hereof, shall not work a merger, and shall, at the
option of Landlord, terminate all or any existing subleases or
subtenancies, or may, at the option of Landlord, operate as an
assignment to it of any or all such subleases or subtenancies.
Section 22.00 NONLIABILITY OF LANDLORD.
Section 22.1 In the event the Landlord hereunder or any
successor in interest shall sell, assign or transfer its interest as Lessee
under the Master Lease, all liabilities and obligations on the part of the
original Landlord or such successor in interest under this Lease accruing
thereafter shall terminate, and thereupon all such liabilities and
obligations shall be binding upon the new assignee. Tenant shall attorn
to such new assignee.
Section 22.2 Landlord shall not be responsible or liable to
Tenant for any loss or damages that may be occasioned by or through
the acts or omissions of persons occupying adjoining areas or any part
of the area adjacent to or connected with the Demised Premises or any
part of the Building or for any loss or damage resulting to Tenant or its
property from burst, stopped or leaking water, fire sprinkler system, gas,
sewer or steam pipes, or from theft or a failure of the security systems in
the Building, or for any damage or loss of property within the Demised
Premises from any cause other than solely by reason of the gross
negligence or willful act of Landlord, its employees, agents or
contractors, and no such occurrence shall be deemed to be an actual or
constructive eviction from the Demised Premises or result in an
abatement of rental.
Section 22.3 If Landlord shall fail to perform any covenant,
term or condition of this Lease upon Landlord's part to be performed,
and, if as a consequence of such default, Tenant shall recover a money
judgment against Landlord, such judgment shall be satisfied only against
the right, title and interest of Landlord in the Building and out of rents or
other income from the Building receivable by Landlord, or out of the
consideration received by Landlord from the sale or other disposition of
all or any part of Landlord's right, title and interest in the Building, and
Landlord shall not be personally liable for any deficiency out of any other
assets of Landlord.
Section 23.00 ESTOPPEL CERTIFICATE.
At any time and from time to time but not less than ten (10) days
prior written request by Landlord, Tenant will promptly execute,
acknowledge and deliver to Landlord, at no cost to Landlord, a certificate
indicating (a) that this Lease is unmodified and in full force and effect
(or, if there have been modifications, that this Lease is in full force and
effect, as modified, and stating the date and nature of each
modification), (b) the date, if any, to which rental and other sums
payable hereunder have been paid, (c) that no notice has been received
by Tenant of any default which has not been cured, except as to defaults
specified in said certificate, and (d) such other matters as may be
reasonably requested by Landlord. Any such certificate may be relied
upon by any prospective purchaser or mortgagee of the Building or any
part thereof.
Section 24.00 NO LIGHT, AIR OR VIEW EASEMENT.
Any diminution or shutting off of light, air or view by any
structure which may be erected on lands adjacent to the Building shall in
no way affect this Lease or impose any liability on Landlord.
Section 25.00 HOLDING OVER.
This Lease shall terminate without further notice upon the
expiration of the Term, and any holding over by Tenant after such
expiration shall not constitute a renewal hereof, or give Tenant any
rights under this Lease, it being understood and agreed that this Lease
cannot be renewed, extended, or in any manner modified except in
writing, signed by both parties hereto. If Tenant shall hold over for any
period after the expiration of said Term, Landlord may, at its option,
exercised by written notice to Tenant, treat Tenant as a tenant from
month-to-month, commencing on the first day following the expiration of
the Term and subject to the terms and conditions herein contained. In
any event, unless and until Landlord and Tenant shall have entered into
a new written lease or a written renewal or extension of this Lease, the
rent to be paid for any holdover period, whether as a month-to-month
tenant or otherwise, shall be at a rate equal to one hundred fifty percent
(150%) of the monthly rental payable for the last full month under this
Lease, plus all other charges payable hereunder until such time as
Tenant has actually vacated the Demised Premises and turned
possession of the Demised Premises over to Landlord. If Tenant fails
to surrender the Demised Premises, upon the expiration of the Term,
despite demand to do so by Landlord, Tenant shall indemnify, defend
and hold Landlord harmless from all loss or liability, including without
limitation, any claim made by any succeeding Tenant based on, or
resulting from or related to such failure to surrender.
Section 26.00 ABANDONMENT.
If Tenant shall abandon or surrender the Demised Premises, or
be dispossessed by process of law or otherwise, any personal property
belonging to Tenant and left on the Demised Premises shall be deemed
to be abandoned, or, at the option of Landlord, may be removed by
Landlord at Tenant's expense.
Section 27.00 WAIVER.
Section 27.1 The waiver by Landlord of any agreement,
condition or provision herein contained shall not be deemed to be a
waiver of any subsequent breach of the same or any other agreement,
condition or provision herein contained, nor shall any custom or practice
which may grow up between the parties in the administration of the
terms hereof be construed to waive or to lessen the right of Landlord to
insist upon the performance by Tenant of the terms hereof in strict
accordance with said terms. The subsequent acceptance of rental
hereunder by Landlord shall not be deemed to be a waiver of any
preceding breach by Tenant of any agreement, condition or provision of
this Lease, other than the failure of Tenant to pay the particular rental so
accepted, regardless of Landlord's knowledge of such preceding breach
at the time of acceptance of such rental.
Section 27.2 Landlord and Tenant hereby waive trial by jury
in any action, proceeding, or counterclaim brought by Landlord or
Tenant against the other on any matter whatsoever arising out of or in
any way connected with this Lease, the relationship of Landlord to
Tenant, the use or occupancy of the Demised Premises by Tenant or
any person claiming through or under Tenant, any claim of injury or
damage, and any emergency or other statutory remedy; provided,
however, the foregoing waiver shall not apply to any action for personal
injury or property damage. If Landlord commences any summary or
other proceeding for nonpayment of rent or the recovery of possession
of the Demised Premises, Tenant shall not interpose any counterclaim
of whatever nature or description in any such proceeding, unless the
failure to raise the same would constitute a waiver thereof.
Section 28.00 NOTICES.
All notices, consents, requests, demands, designations or other
communications which may or are required to be given by either party
to the other hereunder shall be in writing and shall be deemed to have
been duly given when personally delivered or deposited in the United
States mail, certified or registered, postage prepaid, and addressed as
follows: to Tenant at the address set forth in the first paragraph of this
Lease, or to such other place as Tenant may from time to time designate
in a written notice to Landlord; to Landlord at the address set forth in the
first paragraph of this Lease, or to such other place as Landlord may
from time to time designate in a written notice to Tenant; or, in the case
of Tenant, delivered to Tenant at the Demised Premises. Tenant hereby
appoints as its agent to receive the service of all summary or distraint
proceedings and notices thereunder the person in charge of or
occupying the same, and such service may be made by attaching the
same on the main entrance of the Demised Premises.
Section 29.00 COMPLETE AGREEMENT.
There are no oral agreements between Landlord and Tenant
affecting this Lease, and this Lease supersedes and cancels any and all
previous negotiations, arrangements, brochures, agreements and
understandings, if any, between Landlord and Tenant or displayed by
Landlord to Tenant with respect to the subject matter of this Lease or the
Building. There are no representations between Landlord and Tenant
other than those contained in this Lease and all reliance with respect to
any representations is solely upon such representations. This Lease
cannot be amended, modified or terminated except by an agreement in
writing, signed by the party against whom enforcement of such
amendment, modification or termination is sought.
Section 30.00 CORPORATE AUTHORITY.
If Tenant signs as a corporation, each of the persons executing
this Lease on behalf of Tenant does hereby covenant and warrant that
Tenant is a fully authorized and existing corporation, that Tenant has
and is qualified to do business in Michigan, that the corporation has full
right and authority to enter into this Lease, and that each and all of the
persons signing on behalf of the corporation are authorized to do so.
Section 31.00 INABILITY TO PERFORM.
If, by reason of the occurrence of unavoidable delays due to
acts of God, governmental restrictions, strikes, labor disturbances,
shortages of materials or supplies or for any other cause or event
beyond Landlord's reasonable control, Landlord is unable to furnish or is
delayed in furnishing any utility or service required to be furnished by
Landlord under the provisions of Section 6 hereof or any other
provisions of this Lease or any collateral instrument, or is unable to
perform or make or is delayed in performing or making any installations,
decorations, repairs, alterations, additions, or improvements, whether
required to be performed or made under this Lease or under any
collateral instrument, or is unable to fulfill or is delayed in fulfilling
any of Landlord's other obligations under this Lease or any collateral
instrument, no such inability or delay shall constitute an actual or
constructive eviction in whole or in part, or entitle Tenant to any
abatement or diminution of rental or other charges due hereunder or
relieve Tenant from any of its obligations under this Lease, except as
expressly provided in this Lease, or impose any liability upon Landlord
or its agents by reason of inconvenience or annoyance to Tenant, or
injury to or interruption of Tenant's business, or otherwise.
Section 32.00 COVENANT OF QUIET ENJOYMENT.
Upon Tenant paying the rental and other charges due hereunder
and performing all of Tenant's obligations under this Lease, Tenant may
peacefully and quietly enjoy the Demised Premises during the Term,
without hindrance or interruption by Landlord or any other person or
persons lawfully or equitably claiming by, through or under Landlord,
subject, however, to the provisions of this Lease and to any mortgages
or ground, master or underlying leases referred to in Section 20 hereof.
Provided, however, that nothing contained in this Lease shall be deemed
to obligate Landlord to exercise any option to extend or renew the
Master Lease which may be contained therein nor any option to
purchase which now exists or may hereafter arise in favor of Landlord,
nor shall Tenant have any right to require Landlord to exercise any such
options, whether by judgment for specific performance or otherwise.
Section 33.00 MASTER LEASE.
Tenant acknowledges that Landlord's interest in the Demised
Premises is as lessee pursuant to a master lease (the "Master Lease")
dated May 3, 1985, as amended and restated November 1, 1995, with
MG-LXV Associates Limited Partnership as lessor, which Master Lease
is incorporated herein by reference. Notwithstanding any provision of
this Lease, Tenant agrees that this Lease, including any extended term,
is and shall be subject and subordinate at all times to the Master Lease.
Tenant acknowledges receipt of a copy of the Master Lease and agrees
that it shall comply with the provisions of Section 6 thereof, which is
incorporated herein by this reference, except to the extent of any conflict
with the express terms of this Lease, in which case the terms of this
Lease shall govern. The foregoing notwithstanding, Landlord agrees to
indemnify Tenant for any costs or liability incurred by Tenant in
complying with the provisions of Section 6 of the Master Lease to the
extent that the obligations imposed thereby are imposed on Landlord by
the terms of this Lease.
Section 34.00 SECURITY DEPOSIT. (INTENTIONALLY DELETED).
Section 35.00 ACCORD AND SATISFACTION.
No payment by Tenant or receipt by Landlord of a lesser amount
than the rent which is stipulated in this Lease shall be deemed to be
other than on account of the earliest stipulated rent nor shall any
endorsement or statement on any account or any letter accompanying
any check or payment as rent be deemed an accord and satisfaction,
and Landlord shall accept such check or payment without prejudice to
Landlord's right to recover the balance of such rent or pursue any other
remedy provided in this Lease.
Section 36.00 MISCELLANEOUS.
Section 36.1 The words "Landlord" and "Tenant" as used
herein shall include the plural as well as the singular. If there be more
than one Tenant, the obligations hereunder imposed upon Tenant shall
be joint and several.
Section 36.2 Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for
lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.
Section 36.3 The agreements, conditions and provisions
herein contained shall, subject to the provisions as to assignment, set
forth in Section 9 hereof, apply to and bind the heirs, executors,
administrators, successors and permitted assigns of the parties hereto.
Section 36.4 Tenant shall not, without the consent of
Landlord, use the name of the Building for any purpose other than as the
address of the business to be conducted by Tenant in the Demised
Premises. Landlord reserves the right to select the name of the Building
and to make such changes of name as it deems appropriate from time to
time.
Section 36.5 If any provisions of this Lease shall be
determined to be illegal or unenforceable, such determination shall not
affect any other provisions of this Lease and all such other provisions
shall remain in full force and effect.
Section 36.6 This Lease shall be governed by and construed
pursuant to the laws of the State of Michigan.
Section 37.00 OPTIONS, RIGHT OF FIRST OPPORTUNITY TO
LEASE.
Section 37.1 Landlord hereby grants unto Tenant two separate
options to extend the Lease Term for two additional periods, hereinafter
called "Renewal Periods" of five (5) years each. In the event Tenant
exercises the Option to Renew, then and in that event, all of the terms,
covenants, conditions, provisions and agreements of this Lease shall apply,
except as provided in this section 37.1, including the minimum rental which
is more particularly set forth hereinafter.
The Option to Renew shall be exercised by Tenant by giving written
notice to the Landlord not more than twelve (12) months and not less than
six (6) months prior to the expiration of the initial Lease Term or first
Renewal Period, as applicable, and upon such exercise, the Renewal Period
shall become part of the Term hereof. The exercise by Tenant of such
option shall be conditional upon (a) Tenant not being in default in the
payment of any rent or other sums due under this Lease, and (b) there being
no existing defaults by Tenant in any other Lease provisions at the time of
such exercise.
During the first Renewal Period, the minimum annual rent shall be
95% of the minimum annual rent then established by Landlord for new
tenants of the Building at the time Tenant exercises its option to renew. The
minimum annual rent for the second Renewal Period shall be 100% of the
minimum annual rent then established by Landlord for new tenants of the
Building at the time Tenant exercises its option to renew. Provided, that at
no time during any Renewal Period shall the minimum annual rent be less
than the minimum annual rent payable during the last lease year of the initial
lease term or the preceding Renewal Period, as applicable.
Section 37.2 Landlord hereby grants unto Tenant an option to
terminate this Lease as to the first floor space, only, upon the terms and
conditions contained in this Section 37.2. Such partial termination of this
Lease shall be effective only as of the close of business on the last day of
the second, third, fourth, or fifth full Lease Year of the initial term, as
Tenant shall elect. This option may be exercised by Tenant by giving Landlord
written notice of Tenant's election to exercise this partial termination option
which notice shall be given to Landlord not less than six (6) months, nor
more than twelve (12) months, prior to the end of the Lease Year at which
Tenant desires this partial termination to be effective, and upon payment of
the early termination premium as hereinafter set forth. As a condition
precedent to the partial termination of this Lease pursuant to this Section
37.2, Tenant (i) shall pay all rent and other sums payable by Tenant
pursuant to the terms of this Lease, and perform all other obligations
imposed upon Tenant by the terms of this Lease through and including the
date of partial termination and, (ii) shall pay to Landlord, prior to the last
date of the Lease Year upon which Tenant elects to make such partial
termination effective, an early termination premium as follows:
A. If termination is effected at the end of the second
Lease Year, an early termination premium equal to
$42.00 per rentable square foot of the first floor space;
B. If termination is effected at the end of the third Lease
Year, an early termination premium equal to $38.00
per rentable square foot of the first floor space;
C. If termination is effected at the end of the fourth Lease
Year, an early termination premium equal to $32.00
per rentable square foot of the first floor space; and
D. If termination is effected at the end of the fifth Lease
Year, an early termination premium equal to $26.00
per rentable square foot of the first floor space.
The early termination premium is intended to compensate Landlord for
losses suffered and expenses incurred as a result of Tenant's early
termination and shall be retained by the Landlord as liquidated damages, not
as a penalty. If Tenant fails to timely satisfy both of the conditions
precedent to partial early termination set forth in this Section 37.2, the
partial early termination option set forth in this Section 37.2, and Tenant's
attempted exercise thereof, shall be null and void and of no effect, and this
Lease shall continue in full force and effect in accordance with its terms with
respect to the entire Demised Premises. Tenant shall have no right to effect a
partial termination of the Lease pursuant to this Section 37.2 after the
fifth Lease Year of the Initial Term.
Section 37.3 Landlord hereby grants unto Tenant an option to
terminate this Lease as to the entire Demised Premises effective at the
close of business on the last day of the fifth (5th) full Lease Year of the
initial Term. This option may be exercised by Tenant by giving Landlord
written notice of Tenant's election to exercise this option to terminate which
notice must be given to Landlord not less than twelve (12) months prior to the
end of the fifth full Lease Year, and upon payment of the early termination
premium as hereinafter set forth. As a condition precedent to the
termination of this Lease pursuant to this option to terminate, Tenant (i)
shall pay all rent and other sums payable by Tenant pursuant to the terms of
this Lease, and perform all other obligations imposed upon Tenant by the terms
of this Lease, through and including the date of termination, and (ii) shall
pay to Landlord, prior to the last day of the fifth (5th) full Lease Year, an
early termination premium equal to $26.00 per rentable square foot of the
Demised Premises, determined as provided in Section 1.1 above. The early
termination premium is intended to compensate Landlord for losses suffered
and expenses incurred as a result of Tenant's early termination and shall be
retained by Landlord as liquidated damages, not as a penalty. If Tenant fails
to timely satisfy both of the conditions precedent to early termination set
forth in this Section 37.3, the early termination option set forth in this
Section 37.3, and Tenant's attempted exercise thereof, shall be null and void
and of no effect, and this Lease shall continue in full force and effect in
accordance with its terms.
Section 37.4 Landlord hereby grants onto Tenant, so long as
Tenant is not in default under the Lease, a right of first opportunity to lease
any space on the third or fourth floors of the north one-half of the Building
which is contiguous to the Demised Premises (hereinafter the "ROFO
Premises") as it becomes available during the initial Lease Term. This right
of first opportunity shall be limited to the initial Term of this Lease, shall
be subordinate to any rights or options of existing tenants with respect to
the ROFO Premises, and shall not preclude Landlord from renewing and/or
extending the lease of any existing or future tenant of the ROFO Premises.
At such time as Landlord becomes aware that any portion of the
ROFO Premises will become available to lease to Tenant at any time during
the initial Lease Term of this Lease, Landlord shall so notify Tenant in
writing, including the date on which the space will become available for
occupancy by Tenant. If Tenant desires to exercise this right of first
opportunity with respect to that space, Tenant shall so notify Landlord in
writing within 15 days after receipt of Landlord's notice. If Tenant elects
not to exercise this right of first opportunity with respect to such space, or
if Tenant fails to deliver written notice of its intent to exercise this right
of first opportunity within said 15 days, Tenant's right shall be deemed to be
waived with respect to that space, Tenant shall have no further rights with
respect to that space, and Landlord shall be free to rent that space to any
other person or entity.
If Tenant does timely exercise this right of first opportunity with
respect to all or any portion of the ROFO Premises, Landlord and Tenant
shall execute an amendment to this Lease adding that portion of the ROFO
Premises to the Demised Premises effective on the earlier of the date on
which Landlord has substantially completed any tenant improvements
agreed to between Landlord and Tenant, or sixty (60) days after Landlord's
receipt of Tenant's notice of exercise of this right of first opportunity, but
in no event sooner than thirty (30) days after the space has been vacated by
the prior tenant. The portion of the ROFO Premises thereby added to the
Demised Premises shall be accepted by Tenant on an "as is" basis unless
Landlord and Tenant otherwise then agree in writing, except that Tenant
shall be entitled to a tenant improvement allowance determined as
hereinafter provided. The tenant improvement allowance shall be
determined by multiplying the usable square feet in the portion of the ROFO
Premises to be added to the Demised Premises by $20.00 per square foot,
and then multiplying the product by a fraction, the numerator of which is the
number of full months remaining in the initial Lease Term and the
denominator of which is 120. Tenant shall be obligated to pay its pro-rata
share of Operating Expenses and Real Property Taxes with respect to the
portion of the ROFO Premises added to the Demised Premises on the same
basis as provided in this Lease.
Section 37.5 The options and rights granted by this Section 37.00
shall be personal to First of Michigan Corporation and shall not be
exercisable by any assignee or sublessee thereof, nor may they be
exercised by Tenant if this Lease has been assigned or any portion of the
Demised Premises subleased by Tenant to any person or entity, including an
affiliate, with or without Landlord's consent. If Tenant assigns this Lease
or subleases any portion of the Demised Premises to any person or entity,
including an affiliate, without Landlord's prior written consent subsequent to
exercising any option or right, such assignment or subletting shall constitute
a default under this Lease and Landlord shall have all rights afforded
Landlord in this Lease or at law including, without limitation, the right to
terminate this Lease.
Section 38.00 PARKING.
Landlord shall make available to Tenant, at additional cost as
hereafter provided, one hundred thirty (130) vehicle parking spaces, of which
up to forty-eight (48) vehicle parking spaces, at Tenant's option, may be
located in the parking deck adjacent to the River Place development and the
balance on one or more of Landlord's surface parking lots, to be designated
by Landlord, within the River Place Development. Up to eight (8) of the deck
parking spaces as Tenant shall determine, shall be reserved spaces, to be
designated by Landlord, within the executive parking area of the deck.
In addition, Landlord will post "reserved for FOM customers" signs
on up to five parking spaces (which shall be part of Tenant's total 130-space
allocation), some or all of which may be located in the parking deck, as
Tenant determines. Landlord agrees that it will instruct the parking deck
security personnel to cooperate with Tenant in providing access to such
spaces by Tenant's clients and invitees, but security personnel shall not be
obligated to admit anyone to the deck who does not have a deck parking
pass without prior telephone notice from Tenant. Tenant acknowledges that
Landlord shall not be responsible for policing the use of Tenant's client
parking spaces and that Landlord cannot assure Tenant that those spaces
will not be used by other users of the parking deck.
The parking spaces shall not otherwise be specifically reserved to
Tenant, but Landlord shall provide Tenant with appropriate parking permits
for the deck and surface lot. Tenant shall also have the right to rent, on a
space-available basis, additional parking spaces in either the deck or surface
lot at any time during the term of this Lease. All parking spaces shall be
paid for monthly, in advance, at the then prevailing parking rates being
charged by Landlord, presently $95.00 per month for executive parking spaces,
$75.00 per month for other deck parking and $35.00 per month for surface
parking. The monthly parking fees shall be paid at the time of, and in
addition to, the rent and other charges to be paid by Tenant pursuant to this
Lease and Landlord shall have the right, in addition to all other available
remedies, to terminate or revoke any parking permit for which the monthly
parking fee is not timely paid as required by this Section 38.00. Tenant shall
pay Landlord the cost of "reserved parking" signs for the eight executive and
five client parking spaces. Landlord represents that all of the foregoing
parking spaces will be available for Tenant's use at the commencement of
the Lease. At least one month prior to the Commencement Date, Tenant
will advise Landlord of the number and location of parking spaces Tenant
desires at the Commencement Date. Landlord will establish a validation
procedure for Tenant's clients utilizing Tenant's allocated parking spaces so
those clients will not be charged for parking.
Tenant acknowledges that, if it does not elect to pay for all of said
spaces at the commencement of the Lease and throughout the Lease Term,
Landlord shall be free to lease to third parties any spaces not actually leased
on a continuous basis by Tenant; provided, that during the first Lease Year,
Landlord shall notify Tenant if the number of parking spaces Landlord
proposes to lease and/or otherwise allocate to other users would reduce the
available number of parking spaces to less than the number of spaces
hereby allocated to Tenant, but not actually leased by Tenant. Tenant shall
have ten (10) days thereafter to notify Landlord in writing as to whether
Tenant intends to exercise a right of first refusal to lease some or all of the
remaining parking spaces allocated to Tenant by this Section 38.00 but not
then leased by Tenant. If Tenant exercises this right as to any or all of the
spaces, Tenant's obligation to pay rent for those spaces shall commence on
the first day of the following calendar month, or sooner at Tenan'ts option.
If Tenant does not affirmatively exercise this right of first refusal as to
any or all of such spaces by timely written notice to Landlord, this right of
first refusal shall expire as to those spaces and Landlord shall be free to
rent the spaces to other users.
SECTION 39.00 SIGNAGE.
Landlord agrees that, if and to the extent Landlord has the legal
or contractual right to permit the installation of an additional sign on
Landlord's sign post located at the intersection of Jefferson Avenue and
Joseph Campau Street, Landlord will permit Tenant to install a sign on
that sign post advertising Tenant's offices in the Building. Provided, that
the sign shall be placed beneath Landlord's sign on the sign post and
shall be not larger than Landlord's sign thereon. Tenant shall be fully
responsible for obtaining at its expense all necessary permits, consents
and variances necessary for the installation of such sign. Tenant shall
be responsible for the full cost of installation of such sign and the cost of
electricity utilized for the illumination of the same so long as the sign
remains in place. Tenant shall be solely responsible for the cost of
maintaining its sign, which Tenant shall maintain in a first class
condition, and Tenant and Landlord shall share equally in the cost of
maintaining and repairing the sign post and/or other appurtenant
fixtures. If Tenant fails to maintain its sign in a first class condition,
Landlord shall have the right, but not the obligation, after first giving
Tenant not less than thirty (30) days written notice of its intention to do
so (except in the case of emergency, in which no notice shall be
required), to take such action as shall be necessary to maintain or repair
Tenant's sign and the cost thereof shall be immediately due and payable
by Tenant to Landlord, as additional rent, upon Landlord's delivery of the
invoice or invoices for the same. Upon the expiration or early
termination of this Lease, Tenant shall, if requested by Landlord, remove
its sign from the sign post and restore the same at Tenant's sole cost
and expense.
Tenant shall be permitted to install and maintain, at Tenant's
expense, signage at or adjacent to the entrance to the Demised
Premises similar to the signage presently maintained by CBS at its
premises in the Building, subject to Landlord's approval as to location
and appearance.
SECTION 40.00 ADA COMPLIANCE.
Landlord represents to Tenant that the Tenant improvement
work to be performed by Landlord upon the Demised Premises shall be
performed in accordance with, and the Demised Premises shall meet the
requirements of, the Americans With Disabilities Act ("ADA") and similar
federal, state or local statutes, ordinances or regulations as may be in
effect upon the commencement of the Lease (but excluding any work
performed thereon by Tenant). Landlord further agrees that it shall,
throughout the term of the Lease, comply with the lawful orders of any
governmental agency or court of competent jurisdiction pertaining to the
compliance of the Building and common areas with the ADA and/or
similar statutes pertaining to the accommodation of the handicapped.
Landlord further agrees that it will indemnify and defend Tenant against
the claims of any invitee or licensee of Tenant seeking to impose
liability against Tenant due to any failure of the Building or common
areas to comply with the ADA or other then-applicable statutes
pertaining to the accommodation of handicapped persons.
SECTION 41.00 UTILIZATION OF ROOF/PENTHOUSE
Tenant shall have the right during the Term to install one
satellite receive-only dish on the roof of the Building, provided there is
sufficient room available on the roof of the Building at the time Tenant
elects to exercise this right. The satellite dish shall be placed on the
north one-half of the Building, in a location to be determined by
Landlord. The satellite dish shall not exceed six (6) feet in diameter and
shall otherwise be subject to Landlord's prior written approval as to
engineering and design. In addition, if Tenant does place a satellite dish
on the roof of the Building pursuant to this Section 41.00, Tenant shall
have the right to use such adjoining penthouse or mechanical room
space, as may then be available, to be designated by Landlord, as may
be necessary to house related equipment, but not more than fifty (50)
square feet in total.
Tenant shall, at its sole cost and expense, comply with all
applicable laws, ordinances, rules and regulations governing the
installation and use of such satellite dish and shall obtain all necessary
licenses and permits therefor including, without limitation, any and all
licenses and/or permits required by the Federal Communications
Commission, and shall provide proof of the issuance of the same to
Landlord prior to commencement of installation of any of such
equipment. The method of attaching the satellite dish to the roof shall
be subject to Landlord's prior written approval, which Landlord may
withhold in its sole discretion and, in any event, such attachment shall
be accomplished in such a manner as to preserve the waterproof
integrity of the roof membrane and/or any built-up roofing on the
building. Such satellite dish shall be installed and utilized in such a
manner so as not to interfere with the use, for broadcast or reception
purposes, of any other antennae or satellite dish then located on the roof
of the Building. Access to the roof shall be restricted to only those
agents and employees of Tenant whose services shall be necessary for
the proper installation, maintenance, service and operation of the
satellite dish.
The rights granted to Tenant by this Section 41.00 are not
exclusive, nor do they grant any priority rights to Tenant. Landlord shall
be free to use or permit the utilization of the roof for any lawful purpose
including, without limitation, the placement of additional antennae,
satellite dishes, and other equipment and facilities, so long as such
additional equipment and facilities placed on the roof after the
installation of Tenant's satellite dish will not interfere with the normal
operation of Tenant's satellite dish.
The insurance required of Tenant pursuant to Section 10.00
above shall also affirmatively cover Tenant's satellite dish and related
equipment as well as the installation, maintenance and removal thereof.
Tenant shall indemnify, defend and hold Landlord harmless with respect
to all damages, loss, costs and expenses, including reasonable attorneys
fees, with respect to any personal injury or property damage (including
damage to the Building) arising out of or relating to the installation,
maintenance, repair and/or removal of the satellite dish and/or other
equipment from the roof and the penthouse/mechanical room. Upon
expiration or earlier termination of this Lease, Tenant shall remove the
satellite dish from the roof, shall repair all damage to the roof and
restore the same to Landlord's satisfaction, all at Tenant's sole cost and
expense.
If Tenant elects to place a satellite dish on the roof of the
Building pursuant to this Section 41.00, Tenant shall pay additional rent
for the use of the roof for such satellite dish, together with any necessary
penthouse or mechanical room space, in an amount to be established by
Landlord in the exercise of its reasonable discretion, but not more than
Two Thousand Five Hundred Dollars ($2,500.00) per year. Such
additional rent shall be payable in equal monthly installments, in
advance, at the same time as the monthly rental payments due under
this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this
Lease as of the day and year first above written.
WITNESSES: LANDLORD:
THE STROH COMPANIES, INC.,
a Delaware corporation
/s/Tracy A. Rauch By:/s/ V.M.Alzatemarco
_____ Its:Assistant Treasurer
TENANT:
FIRST OF MICHIGAN CORPORATION, a
Delaware corporation
/s/ Jeffrey F. Plopa By:/s/ Conrad W. Koski
/s/ Lenore P. Denys Its:President and Chief Executive Officer
EXHIBIT "A"
LEGAL DESCRIPTION
PARCEL 9
Land in the City of Detroit, County of Wayne, State of Michigan:
A parcel of land of part of the "Theo J. & Dennis J. Campau Plat of
Subdivision of Private Claim 609, Jos. Campau Estate" recorded in
Liber 2 of Plats, Page 1, Wayne County Records, more particularly
described as follows: Commencing at the intersection of the southerly
line of vacated Guoin Street (50 feet wide) and the easterly line of
Joseph Campau Avenue (presently 69.65 feet wide);
Thence South 26 degrees 07 minutes 00 seconds East along the
easterly line of Joseph Campau Avenue, a distance of 203.47 feet to the
Point of Beginning;
Thence continuing South 26 degrees 07 minutes 00 seconds East along
the easterly line of Joseph Campau Avenue, a distance of 225.87 feet to
the northwesterly corner of Easement No. 7;
Thence North 60 degrees 22 minutes 15 seconds East, a distance of
227.97 feet along the southerly line of Building No. 64 and the northerly
line of Easement No. 7 to a point on the westerly line of Easement No.
5;
Thence North 26 degrees 08 minutes 42 seconds West along the
westerly line of Easement No. 5, a distance of 226.00 feet to the
southeasterly corner of Parcel No. 10;
Thence South 60 degrees 20 minutes 11 seconds West along the
southerly line of Parcel No. 10, a distance of 227.87 feet to the Point of
Beginning.
EXHIBIT "B"
DESCRIPTION OF LANDLORD AND TENANT
IMPROVEMENTS AND SPECIFICATIONS
I. Interior improvements supplied by Landlord ("Landlord's Work")
are as follows:
All those items set forth on the first page of the February
12,1997, letter from Broadcast Design & Construction, Inc., to Frank
Oddo of The Stroh Companies, Inc., (the "BDC Budget Letter") except
those items listed as "Not included" thereon, a copy of which letter is
attached hereto as an exhibit.
II. All extra work Identified on the second page of the BDC
Budget Letter under the caption "Additional Items", and
any other work required by Tenant in addition to
Landlord's Work as hereinabove set forth will be
furnished and installed by Landlord at Tenant's expense
(including any architectural, engineering, general
conditions or supervision charges associated therewith)
and shall be of material, manufacture, design, capacity
and finish established or approved by Landlord.
III. Tenant agrees that Tenant will reimburse Landlord for
the work identified in paragraph II above and all extra
work requested by Tenant, including architectural and
engineering charges, within ten days after being billed
therefor by Landlord, based on the progress of the
work. Landlord shall bill Tenant for such work
periodically as the work progresses, but not more often
than twice a month. In any case, Landlord will be fully
reimbursed by Tenant for such improvements on or
before either (1) the Commencement Date of this lease,
or (2) the date the Tenant occupies the space,
whichever occurs first, unless Tenant terminates this
Lease pursuant to Section 2.2 of this Lease due to
Landlord's failure to timely deliver the Demised
Premises to Tenant. In the latter event, Tenant shall be
liable for the costs of all work invoiced to Tenant at
least ten (10) days prior to such termination, but only to
the extent that such work has been completed.
IV. The work shall be performed in accordance with the
plans prepared by Ford and Earl
Associates dated February 17, 1997, Drawing numbers
SP-ISD and SP-IB, Project number 83600, which plans
have been approved and initialed on behalf of Landlord
and Tenant, and the construction drawings to be
prepared pursuant thereto which will be hereafter
approved and initialed on behalf of both Landlord and
Tenant.
V. It is agreed that notwithstanding the date provided in the
Lease for the commencement thereof, Tenant's
obligations for the payment of rent shall not commence
until Landlord shall have substantially completed all
work to be performed by Landlord as hereinbefore set
forth provided; however, that if Landlord shall be
delayed in substantially completing said work as a result
of:
A. Tenant's failure to furnish layouts and
approvals in accordance with paragraph IV
hereof; or
B. Tenant's request for materials finishes or
installations other than Landlord's standard; or
C. Tenant's changes in said plans; or
D. The performance by a person, firm or
corporation employed by Tenant or the
completion of said work by said person, firm or
corporation; or
E. If Tenant shall otherwise delay the substantial
completion of Landlord's work;
then the payment of rent thereunder shall be
accelerated by the number of days of such delay.
VI. If there are any changes requested by Tenant after
completion of the architectural plans and engineering
drawings, Tenant will be responsible for all costs and
related expenses resulting from such changes.
WITNESSES: LANDLORD:
THE STROH COMPANIES, INC.,
a Delaware corporation
_____ By: ______________
_____ Its:______________
TENANT:
FIRST OF MICHIGAN CORPORATION,
a Delaware corporation
By: _______
Its:_______
EXHIBIT "C"
300 RIVER PLACE - RULES
The following Rules shall apply, where applicable, to all leased
premises, the Building, the land situated beneath the Building, and the
appurtenances thereof:
1. No part or the whole of the sidewalks, parking
structures, plaza area, atrium areas, entrances, passages, courts,
elevators, vestibules, stairways, corridors or halls of the Building or the
Real Property shall be obstructed or encumbered by any Tenant or used
for any purposes other than ingress and egress to and from the space
demised to such Tenant.
2. No awnings or other projection shall be attached to the
outside or inside atrium walls or windows of the Building. No curtains,
blinds, shades or screens shall be attached to or hung in, or used in
connection with, any window or door of the Demised Premises other
than those furnished by Landlord. All electric ceiling fixtures hung in
offices or spaces along the perimeter of the Building must be florescent,
of a quality type, design and bulb color approved by Landlord. Neither
the interior nor exterior of any windows shall be coated or otherwise
sunscreened without the express written consent of Landlord.
3. No sign, advertisement, object, lettering, or notice shall
be exhibited, painted or affixed by any Tenant on any part of the
Demised Premises or the Building without the prior written consent of
the Landlord. In the event of the violation of the foregoing by any
Tenant, Landlord may remove same without any liability, and may
charge the expense incurred in such removal to the Tenant violating this
Rule. Interior signs on doors and directory tablets shall be inscribed,
painted or affixed for each Tenant by Landlord at the expense of such
Tenant, and shall be of a size, color and style acceptable to the
Landlord. The directory tablet will be provided exclusively for the
display of the name and location of Tenants only and Landlord reserves
the right to exclude any other names therefrom. Nothing may be placed
on the exterior of corridor walls or corridor doors other than Landlord's
standard lettering without Landlord's approval.
4. The sashes, sash doors, skylights, windows, and doors
that reflect or admit light and air into halls, passageways or other public
places in the Building shall not be obstructed by any Tenant, nor shall
any bottles, parcels or other articles including plants be placed on the
windowsills.
5. The water and wash closets and other plumbing fixtures
shall not be used for any purpose other than those for which they are
constructed, and no sweepings, rubbish, rags or other substances
(including, without limitation, coffee grounds) shall be thrown therein. All
damages resulting from any misuse of the fixtures shall be borne by the
Tenant who, or whose servants, employees, agents, visitors or
licensees, shall have caused the same.
6. No Tenant shall mark, paint, drill into, or in any way
deface any part of the Demised Premises or the Building. No boring,
cutting or stringing of wires, or laying of linoleum or other similar floor
coverings shall be permitted, except with the prior written consent of the
Landlord and as the Landlord may direct.
7. No bicycles, vehicles, birds or animals of any kind,
except leader dogs for the blind, shall be brought into or kept in or about
the Demised Premises, and no cooking shall be done or permitted by
any Tenant on the Demised Premises, except that in the preparation of
coffee, tea, hot chocolate and similar items for Tenants and their
employees shall be permitted provided power shall not exceed that
amount which can be provided by a 30 amp circuit. No Tenant shall
cause or permit any unusual or objectionable odors to be produced or
permeate the Demised Premises, or the Building.
8. The Demised Premises shall not be used for
manufacturing or for storage of merchandise except as such storage
may be incidental to the use of the Demised Premises for general office
purposes. Tenant shall not occupy or permit any portion of his Demised
Premises to be occupied as an office for a public stenographer or typist,
or for the manufacture or sale of liquor, narcotics or tobacco in any form,
or as a medical office, or as a barber or manicure shop, or as an
employment bureau or for the auction of any goods, or for a distress, or
bankruptcy sale. No Tenant shall engage or pay any employees on the
Demised Premises except those actually working for such Tenant on the
Demised Premises, nor advertise for laborers giving an address at the
Demised Premises. The Demised Premises shall not be used for
lodging or sleeping or for any immoral or illegal purposes.
9. No Tenant shall make, or permit to be made, any
unseemly or disturbing noises or disturb or interfere with occupants of
the Building or neighboring buildings or premises or those having
business with them, whether by the use of any musical instrument, radio,
phonograph, unusual noise, or any other way. No Tenant shall throw
anything out of doors, windows or skylight or down the passageways.
10. No Tenant nor any Tenant's servants, employees,
agents, visitors or licensees, shall at any time bring or keep upon the
Demised Premises any inflammable, combustible or explosive fluid,
chemical or substances.
11. No additional locks or bolts of any kind shall be placed
upon any of the doors or windows by any Tenant, nor shall any changes
be made in existing locks or the mechanism thereof. Each Tenant must,
upon the termination of its tenancy, restore to the Landlord all keys of
stores, offices, and toilet rooms, either furnished to, or otherwise
procured by such Tenant and in the event of the loss of any keys so
furnished, such Tenant shall pay to the Landlord the cost of replacing
the same or of changing the lock or locks opened by such lost key if
Landlord shall deem it necessary to make such change.
12. All removals, the carrying in or out of any safes, freight,
furniture, or bulky matter of any description or the use of the Building's
elevators therefor must take place between such hours as the Landlord
may determine, from time to time. The moving of sales, other fixtures,
equipment or bulky matter of any kind must be made upon previous
notice to the superintendent of the Building and under his supervision,
and the person employed by any Tenant for such work must be
acceptable to the Landlord. The Landlord reserves the right to inspect
all safes, freight, or other bulky articles to be brought into the Building
and to exclude from the Building all safes, freight or bulky articles which
violate any of these Rules. The Landlord reserves the right to prescribe
the weight and position of all safes, which must be placed upon supports
approved by landlord to distribute weight. If additional expenses are
incurred by Landlord by reason of moving of Tenant's safes, other
fixtures, equipment or bulky matter of any kind, such expenses shall be
borne by Tenant. No Tenant shall place, or permit to be placed, on any
part of the floor or floors of the space demised to such Tenant a load
exceeding the floor load per square foot which such floor was designed
to carry and which is allowed by law.
13. No Tenant shall purchase spring water, ice, towel,
janitorial or maintenance or other like services, from any company or
persons not approved by the Landlord.
14. Landlord shall have the right to prohibit any advertising
by any Tenant which, in Landlord's opinion, tends to impair the
reputation of the Building or its desirability as an office building and upon
written notice from Landlord any Tenant shall refrain from or discontinue
such advertising.
15. Landlord reserves the right to control and operate the
public portions of the Building and the public facilities, as well as
facilities furnished for the common use of the Tenants, in such manner
as it deems best for the benefit of the Tenants, generally, including,
without limitation, the right to exclude from the Building, between the
hours of 6:00 P.M. and 8:00 A.M on business days and all hours on
Saturdays except 8:00 A.M. to 1:00 P.M., Sundays, and holidays, all
persons who do not present a pass to the Building signed by Landlord or
other suitable identification satisfactory to Landlord. Landlord will
furnish passes to persons for whom any Tenant shall request such
passes. Each Tenant shall be responsible for all persons for whom it
requests passes or clearances and shall be liable to the Landlord for all
acts of such persons. Landlord shall in no case be liable for damages
for any error with regard to the admission to or exclusion from the
Building of any person. In case of an invasion, mob, riot, public
excitement or other circumstances rendering such action advisable in
Landlord's opinion, Landlord reserves the right to prevent access to the
Building during the continuance of the same by closing the doors or
otherwise, for the safety of the Tenants and the protection of the
Building and the property in the Building.
16. Any persons employed by any Tenant to do janitorial
work, shall, while in the Building and outside of the Demised Premises,
be subject to and under the control and direction of the superintendent of
the Building (but not as an agent or servant of said superintendent or of
the Landlord), and shall be allowed in the Building between 7:00 P.M.
and 7:00 .AM. on Mondays through Fridays and at all hours on Saturday,
Sundays and legal holidays.
17. All doors opening into public corridors shall be kept
closed, except when in use for ingress and egress.
18. The requirements of Tenants will be attended to only
upon application at the office of the Landlord. Building employees shall
not be required to perform, and shall not be requested by any Tenant to
perform, any work outside of their regular duties, unless under specific
instructions from the office of Landlord.
19. Canvassing, soliciting and peddling in the Building are
prohibited and each Tenant shall cooperate to prevent the same.
20. Landlord reserves the right to specify where in the
Demised Premises Tenants' business machines and mechanical
equipment shall be placed or maintained in order, in Landlord's
judgment, to absorb and prevent vibration, noise, and annoyance to
other Tenants of the Building.
21. No air-conditioning unit or other similar apparatus shall
be installed or used by any Tenant without the written consent of
Landlord.
22. There shall not be used in the Building, either by any
Tenant or by its agents or contractors, in the delivery or receipt of
merchandise, freight, or other matter, any hand trucks or other means or
conveyance except those equipped with rubber tires, rubber side guards,
and other safeguards as Landlord may require.
23. Landlord shall have the right, exercisable without notice
or without liability to any Tenant, to change the name and address of the
Building.
24. No vending machine or machines of any description
shall be installed, maintained or operated upon the Demised Premises
without the prior written consent of Landlord.
25. The scheduling of moves of Tenant's furniture and
equipment into or out of the Building is subject to the reasonable
discretion of Landlord.
26. All electric wiring and electrical outlets and connection
of every kind shall be introduced and connected only by Landlord, and
no boring or cutting for wires shall be allowed except with the prior
written consent of the Landlord. The location of telephones, call boxes
and other office equipment affixed to the Demised Premises shall be
subject to the prior written approval of Landlord.
27. Landlord reserves the right to exclude or expel from the
Building and the Demised Premises any person who, in the judgment of
Landlord is intoxicated or under the influence of liquor or drugs, or who
shall in any manner do any act in violation of these Rules.
28. Tenant shall not place any radio or television antenna
on the roof or on any part of the inside or the outside of the Building
other than the inside of the Demised Premises without the prior written
consent of the Landlord. Tenant shall not operate or permit to be
operated any musical or sound procuring instrument or device inside or
outside the Demised Premises which may be heard outside the Demised
Premises, or operate any electrical device from the Demised Premises
which may emanate electrical waves which may interfere with or impair
radio or television broadcasting or reception from or in the Building or
elsewhere, without the Landlord's prior written consent.
29. Tenant shall comply with all rules applicable to the
parking garage servicing the Building as determined by the parking
garage operator from time to time.
30. Each Tenant shall, at its expense, provide artificial light
in the Demised Premises for Landlord's agents, contractors, and
employees while performing janitorial or other cleaning services and
making repairs or alterations in Demised Premises.
31. No show cases or other articles shall be put in front of or
affixed to any part of the exterior of the Building, nor placed in the halls,
corridors, vestibules, or other public parts of the Building.
32. Landlord reserves the right, after reasonable notice
thereof, to rescind, notify and add to these Rules as may be
promulgated by the Landlord in writing from time to time.
EXHIBIT "D"
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND
ATTORNMENT AGREEMENT ("Agreement") is made by and among
THE STROH COMPANIES, INC., a Delaware corporation ("Sublessor"),
FIRST OF MICHIGAN CORPORATION, a Delaware corporation
("Sublessee"), and C. PENFIELD STROH, FRANCES R. STROH and
JAMES L. HUGHES, SUCCESSOR TRUSTEES FOR THE
IRREVOCABLE TRUST f/b/o THE STROH FAMILY FIFTH
GENERATION u/a DATED AUGUST 10, 1983, a Michigan Trust
("Lender"), Lender, Sublessor and Sublessee are sometimes hereinafter
referred to herein individually as a "Party" and collectively as the
"Parties".
RECITALS
A. Under a certain sublease dated , 1997
(the "Sublease"), Sublessor did sublease, sublet and demise certain
space (hereinafter called the "Subleased Premises") in the property
legally described in Exhibit A hereto ("Property"), as described in the
Sublease, to Sublessee for the period of time and upon the covenants,
terms, and conditions stated in the Sublease.
B. Under a certain Amended and Restated Master Lease
("Master Lease") dated as of November 1, 1995, Sublessor has leased
the Property from MG-LXV Associates Limited Partnership, doing
business as Waterview L.P., a Michigan limited partnership ("Master
Lessor").
C. Lender is (i) the assignee of a certain Loan Agreement
dated as of April 1, 1994 ("Loan Agreement") between Westpac Banking
Corporation, and Master Lessor, together with the related Amended and
Restated Mortgage, Security Agreement, Assignment of Rents and
Subleases and Fixture Filing (the "Mortgage") encumbering the
Subleased Premises and certain other property, and (ii) the lessor under
a certain ground lease dated May 3, 1985, which was amended and
restated as of April 1, 1994 (the "Ground Lease") pursuant to which
Master Lessor, as lessee thereunder, leases the land on which the
Property is located .
D. The Parties hereto desire to confirm that the Sublease is
subordinate to (i) the lien of the Mortgage, it being a condition of the
loan agreement and the mortgage that the lien and charge of the
Mortgage be unconditionally and at all times prior and superior to the
leasehold interests and estate created by the Sublease, and (ii) the
Master Lease.
E. Sublessee has requested that Lender agree not to disturb
Sublessee's possessory rights in the Subleased Premises if Lender
forecloses the Mortgage or acquires possession of the Property as a
result of the termination of the Ground Lease, provided that Sublessee
shall not be in default under the Sublease and that Sublessee shall
attorn to Lender or the purchaser at any foreclosure sale of the Property.
AGREEMENT
NOW, THEREFORE, for and in consideration of the covenants,
terms conditions, agreements, and demises herein contained, and for
other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereto agree, covenant,
represent and warrant as follows:
1. Notwithstanding anything contained in the Sublease to the
contrary, the Parties do hereby covenant and agree that the Sublease
and any modifications and amendments subsequently approved by
Lender and all rights, options, liens or charges created thereby are, and
shall continue to be, subject and subordinate in all respects to the
Mortgage and the lien created thereby, to any future advances secured
thereby, to any considerations, extensions, modifications or renewals
thereof, and to any other mortgage on the Property which may hereafter
be held by Lender, as well as to the Master Lease.
2. So long as Sublessee is not in default under any of the
covenants, terms and conditions contained in the Sublease or in any
modification or amendment subsequently approved by Lender on the
part of Sublessee to be observed and performed, Lender , in its
capacities both as lender under the Mortgage and as lessor under the
Ground Lease, hereby covenants and agrees that if Lender obtains title
to the Property, either by foreclosure or by deed in lieu of foreclosure, or
upon termination of the Ground Lease, and thereafter obtains right of
possession of the Property, the Sublease, including without limitation the
Options to Renew, Right of First Opportunity to Lease and Options to
Terminate set forth therein, and any modifications or amendments
hereafter approved by Lender will continue in full force and effect, and
Lender shall recognize the Sublease, and any modifications or
amendments subsequently approved by Lender and the Sublessee's
rights thereunder, and agrees not to disturb Sublessee's possession
thereunder so long as Sublessee is not thereafter in default thereunder,
and will hereby establish direct privity of estate and contract between
Lender and Sublessee with the same force and effect and with the same
relative priority in time and right as though the Sublease and any
modifications or amendments subsequently approved by Lender were
directly made from Lender in favor of Sublessee.
3. If there occurs any default or event of default on the part of
Sublessor under the Sublease, Sublessee shall, prior to taking any
action or exercising any right with respect to such default, send Lender a
copy of any written notice of such default or event of default sent or
given to Sublessor, with a description of such default or event of default.
4. (a) In the case of the occurrence of a default in the
performance of Sublessor's obligations under the Sublease (any of
which shall be referred to as a "Sublessor Default"), Sublessee hereby
covenants and agrees to give Lender an additional period of thirty (30)
days after Lender's receipt of the notice referred to in Section 3 above
during which to cure a Sublessor Default; provided, however, that if such
Sublessor Default cannot reasonably be cured within such thirty (30) day
period, then Lender shall have a reasonable period after such thirty (30)
day period during which to cure such default, or, if such default can only
be cured by persons in actual possession of the Property, then Lender
shall have a reasonable period during and after any litigation action,
including any foreclosure action, bankruptcy action, possessory action,
or a combination of such actions concerning the Property, during which
to cure such default; further provided that if the nature of the default
disrupts the quiet enjoyment of the Subleased Premises by Sublessee or
the conduct of Sublessee's business, Lender will cure as soon as
reasonably as practicable. Sublessee further agrees not to exercise any
right it may have to terminate the Sublease during the thirty (30) day
period after notice of default, or during the period of such litigation, or
during any period that Lender is proceeding with due diligence to cure
such default which is susceptible of cure by Lender, as the case may be.
(b) Sublessee further agrees that Lender shall have
the right to enter upon the Subleased Premises at any time upon
reasonable notice for the purpose of curing any Sublessor Defaults
(Lender having no obligation to do so) and Sublessee hereby agrees to
accept Lender's performance of and compliance with the Sublessor's
agreements and obligations under the Sublease with the same force and
effect as though such cure were performed or effected by the Sublessor
itself. Furthermore, if during the period of times allowed under this
Agreement for Lender to cure such Sublessor Default, the Sublessor
itself cures Sublessor Default, then Sublessee shall accept such cure
and shall also notify Lender of the Sublessor's effecting such cure.
5. If the interests of the Sublessor under the Sublease shall be
transferred to Lender by reason of foreclosure, deed in lieu of
foreclosure, or otherwise, Sublessee hereby covenants and agrees to
make full and complete attornment to Lender as substitute Sublessor
upon the same terms, covenants and conditions as provided in the
Sublease, except for provisions which are impossible for Lender to
perform, so as to establish direct privity of estate and contract between
Lender and Sublessee with the same force and effect and relative
priority in time and right as though the Sublease and all modifications
and amendments thereof hereafter consented to by Lender, together
with all guarantees of Sublessee's obligations under the Sublease, were
originally made between Lender and Sublessee. If Lender notifies
Sublessee of a default under the Mortgage and demands that Sublessee
pay its rent and all other sums due under the Sublease to Lender,
Sublessee will honor such demand and thereafter make all payments
directly to Lender or as otherwise directed in such notice. Sublessor
hereby directs Sublessee to comply with the foregoing provision, and
agrees to release and hold Sublessee harmless from any claims of
Sublessor, its successors and assign relating to such compliance.
Sublessee waives all joinder and/or service of any and all foreclosure
actions by Lender under the Mortgage upon the Property, and of any
actions at law or otherwise by Lender to gain possession of the Property.
It shall not be necessary, except as required by law or court rules or
procedures, for Lender to name Sublessee as a party to enforce
Lender's right's under the Mortgage, or any other instrument securing the
Loan, or to prosecute any action at law or otherwise to gain possession
of the Property. Unless required by law or court rules or procedures,
Lender agrees not to name Sublessee in any such proceeding. If the
interests of Sublessor under the Sublease shall be transferred by reason
of foreclosure of the Mortgage, deed in lieu of foreclosure, or otherwise,
to any party other than Lender (hereinafter referred to as a
"Transferee"), then Sublessee hereby covenants and agrees to make full
and complete attornment to such Transferee as substitute Sublessor,
upon the same terms and conditions as provided for herein in the case
of attornment to Lender, provided that such Transferee agrees to be
bound by the terms of this agreement, and Transferee shall thereupon
have all rights and privileges of Lender under this Agreement. Upon the
written request of Lender given in connection with a foreclosure or deed
in lieu of foreclosure, Sublessee agrees to execute a lease of the
Subleased Premises upon the same terms and conditions as the
Sublease between Sublessor and Sublessee, which lease shall cover
any unexpired term of the Sublease existing prior to such foreclosure or
conveyance in lieu of foreclosure.
6. The provisions of this Agreement shall constitute covenants
running with the Property and shall be binding upon and inure to the
benefit of the Parties and their respective heirs, executors,
administrators, beneficiaries, successors and assigns, including, without
limitation, any person who shall obtain, directly or by assignment or
conveyance (a) any interest in the Mortgage or (b) any interest in the
Subleased Premises, whether through foreclosure or otherwise.
Furthermore, the provisions of this Agreement shall be binding upon any
guarantor of Sublessee's obligations under the Sublease.
7. Sublessee hereby covenants and agrees that Lender shall
not be:
(a) Liable personally for any act or omission of Sublessor;
(b) Subject to personal liability for any claims, offsets or
defenses which the Sublessee might have against Sublessor or any prior
lessor;
(c) Required or obligated to credit Sublessee with any rent
or additional rent for any rental period beyond the then current month's
rental period which Sublessee might have paid Sublessor unless and
until such rent shall have been delivered by Sublessor to and actually
received by Lender; provided that prior to making payment of such rent
or additional rent, Sublessee shall have received written notice from
Lender to pay such rent to Lender,
(d) Bound by any modifications or amendments of the
Sublease made without Lender's written consent; or
(e) Bound to or be liable to refund all or any part of any
security deposit by Sublessee with Sublessor for any purpose unless and
until all such security deposits shall have been delivered by Sublessor to
and actually received by Lender.
If Lender receives any rent or security deposit, Lender's obligations with
respect thereto shall be limited to the amount of such rent or security
deposit actually received by Lender, and Lender shall be entitled to all
rights, privileges and benefits of Sublessor set forth in the Sublease with
respect thereto.
8. Sublessee shall not, without the express written consent of
Lender:
(a) Cancel, terminate or surrender the Sublease, except as
provided therein or in any modification or amendment specified herein
or hereafter consented to by Lender;
(b) After the date hereof, enter into any agreement with
Sublessor or its successors or assigns, which grants any concession with
respect to the Sublease or which compromises, discounts or otherwise
reduces the rent called for thereunder; or
(c) After the date hereof, prepay rent more than one (1)
month in advance.
9. Sublessor and Sublessee hereby agree that neither this
Agreement, nor any assignment of the Sublease for collateral purposes,
nor anything to the contrary in the Sublease or in any modifications or
amendments thereto shall, prior to Lender's acquisition of Sublessor's
interest in and possession of the Subleased Premises, operate or give
rise to or create any responsibility or liability upon Lender for the control,
care, management or repair of the Subleased Premises or for any waste
committed on the Subleased Premises by any party whatsoever or for
any dangerous or defective condition of the Subleased Premises; or
impose responsibility for the carrying out by Lender of any of the
covenants, terms and conditions of the Sublease or of any modification
or amendment whether or not hereafter consented to by Lender, or for
any negligence in the management, upkeep, repair or control of the
Subleased Premises resulting in loss, injury or death to any lessee,
licensee, invitee, guest, employee, agent, or stranger. Notwithstanding
anything to the contrary in the Sublease, Lender, its successors and
assigns (and any Transferee, as appropriate), shall be responsible for
the performance of only those covenants and obligations of the
Sublease accruing after Lender's, its successors' and assigns' (or
Transferee's as appropriate), acquisition of Sublessor's interest in and
possession of the Subleased Premises.
10. All notices, requests, demands or other communications
under this Agreement shall be in writing and shall be deemed to have
been given or made upon delivery, if hand delivered, or three (3)
business days after being deposited in the United States certified or
registered mail, postage prepaid, return receipt requested, or one (1)
business day after delivery to an overnight air courier, in either case
addressed as follows:
If to Lender:
James L. Hughes, Trustee
150 West Jefferson, Suite 900
Detroit, Michigan 48226-4430
If to Sublessee:
First of Michigan Corporation
100 Renaissance Center, 26th Floor
Detroit, Michigan 48243
Attention: Lenore P. Denys
If to Sublessor:
The Stroh Companies, Inc.
300 River Place
Detroit, Michigan 48207
Attention: Vincent M. Abatemarco, Assistant
Treasurer
11. This Agreement contains the entire agreement among the
Parties hereto with respect to the subject matter hereto. No variations,
modifications or changes herein or hereof shall be binding upon any of
the Parties unless set forth in a document duly executed by or on behalf
of such Party.
12. Whenever used herein, the singular number shall include
the plural, the plural the singular, and the use of any gender shall include
all genders. The words, "Sublessee", "Sublessor", "Lender", and
"Lenders" shall include their respective heirs, executors, administrators,
beneficiaries, successors and assigns.
13. This Agreement supersedes any inconsistent provisions of
the Sublease. Nothing contained in this Agreement shall be construed
to derogate from or in any way impair or affect the lien, charge or
provisions of the Mortgage.
14. As used herein, the term "Mortgage" shall include
mortgages, trust deeds, deeds of trust and any similar security
documents now or hereafter used in the state in which the Property is
located.
15. Sublessee agrees that this Agreement satisfies any
condition or requirement in the Sublease relating to the granting of a
non-disturbance agreement.
16. This Agreement may be executed in multiple counterparts,
each of which shall constitute an original and all of which together shall
constitute one instrument.
17. This Agreement and all rights, obligations and liabilities
arising hereunder shall be governed by the internal laws and decisions
of the State of Michigan (without giving effect to Michigan choice of law
principles).
18. Notwithstanding anything contained in this Agreement or in
the Master Lease to the contrary, any liability for damage or breach or
nonperformance by Lender or any Transferee shall be collectible only
out of its interest in the Property and no personal liability is assumed by,
nor at any time may be asserted against Lender or any Transferee or
their respective employees, servants, agents, affiliates, representatives,
successors, or assigns, all such liability, if any, being expressly waived
and released by Sublessee for itself and any and all persons and entities
claiming by, through or under Sublessee.
IN WITNESS WHEREOF, the Parties have caused this
Agreement to be executed as of the __________ day of
_______________________________, 1997.
SUBLESSOR:
THE STROH COMPANIES, INC., a Delaware corporation
By:____________________________________
Its:____________________________________
SUBLESSEE:
FIRST OF MICHIGAN CORPORATION,
a Delaware corporation
By: ___________________________________
Its:____________________________________
LENDER:
______________________________________
C. Penfield Stroh, Successor Trustee for
the Irrevocable Trust f/b/a The Stroh Family
Fifth Generation u/a Dated August 10, 1983,
a Michigan Trust
______________________________________
Frances R. Stroh, Successor Trustee for
the Irrevocable Trust f/b/a The Stroh Family
Fifth Generation u/a Dated August 10, 1983,
a Michigan Trust
______________________________________
James L. Hughes, Successor Trustee for
the Irrevocable Trust f/b/a The Stroh Family
Fifth Generation u/a Dated August 10, 1983,
a Michigan Trust
STATE OF MICHIGAN )
:ss
COUNTY OF )
Before me, the undersigned authority, on this day personally
appeared Vincent M. Abatemarco, Assistant Treasurer of The Stroh
Companies, Inc., a Delaware corporation, known to me to be the person
whose name is subscribed to the foregoing instrument and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, in the capacity stated, and as the act
and deed of said corporation.
Given under my hand and seal of office this ____ day of
________________, 1997
________________________________
Notary Public
__________________________ County,
My commission
expires:
STATE OF MICHIGAN )
:ss
COUNTY OF )
Before me, the undersigned authority, on this day personally
appeared , the of
First of Michigan Corporation, a Delaware corporation, known to me to
be the person whose name is subscribed to the foregoing instrument and
acknowledged to me that he executed the same for the purposes and
consideration therein expressed, in the capacity stated, and as the act
and deed of said corporation.
Given under my hand and seal of office this _______ day of
_______________________, 1997.
________________________________
Notary Public
__________________________ County,
My commission
expires:
STATE OF )
:ss
COUNTY OF )
Before me, the undersigned authority, on this day personally
appeared C. Penfield Stroh, Successor Trustee for the Irrevocable Trust
f/b/a The Stroh Family Fifth Generation u/a Dated August 10, 1983, a
Michigan Trust, known to me to be the person whose name is subscribed
to the foregoing instrument and acknowledged to me that he executed
the same for the purposes and consideration therein expressed, in the
capacity stated.
Given under my hand and seal of office this _____ day of
_____________________, 1997.
________________________________
Notary Public
__________________________ County,
My commission
expires:
STATE OF )
:ss
COUNTY OF )
Before me, the undersigned authority, on this day personally
appeared Frances R. Stroh, Successor Trustee for the Irrevocable Trust
f/b/a The Stroh Family Fifth Generation u/a Dated August 10, 1983, a
Michigan Trust, known to me to be the person whose name is subscribed
to the foregoing instrument and acknowledged to me that he executed
the same for the purposes and consideration therein expressed, in the
capacity stated.
Given under my hand and seal of office this _____ day of
_____________________, 1997.
________________________________
Notary Public
__________________________ County,
My commission
expires:
STATE OF )
:ss
COUNTY OF )
Before me, the undersigned authority, on this day personally
appeared James L. Hughes, Successor Trustee for the Irrevocable Trust
f/b/a The Stroh Family Fifth Generation u/a Dated August 10, 1983, a
Michigan Trust, known to me to be the person whose name is subscribed
to the foregoing instrument and acknowledged to me that he executed
the same for the purposes and consideration therein expressed, in the
capacity stated.
Given under my hand and seal of office this _____ day of
_____________________, 1997.
________________________________
Notary Public
__________________________ County,
My commission expires: \
[DESCRIPTION] EXHIBIT 10(j)
STOCK APPRECIATION AGREEMENT
THIS AGREEMENT, dated as of the 15th day of February, 1995, between
Fahnestock & Co. Inc. (the "Company") and Albert G. Lowenthal ("Lowenthal");
WHEREAS, Lowenthal is employed by the Company as its Chief Executive
Officer and serves as Chairman of its Board of Directors; and
WHEREAS, the Compensation Committee of the Board of Directors of Fahnestock
Viner Holdings Inc., the indirect parent of the Company, has reviewed
Lowenthal's compensation in comparison to that of executives holding
similar positions at similar firms and has concluded that Lowenthal's
salary and incentive compensation is substantially below that of comparable
executives; and
WHEREAS, the Company deems it appropriate to recognize Lowenthal's special
contributions in managing the growth and profitability of the Company, with
particular emphasis on cost control, risk management, and formulating and
implementing the Company's acquisition strategy;
NOW, THEREFORE, in consideration of the premises set forth in this Agreement,
the Company and Lowenthal agree as follows:
1. Definitions.
(a) Common Stock means the Class A non-voting shares of Fahnestock Viner
Holdings Inc.
(b) Base Price means CDN$9.00, representing the closing price at February 14,
1995 of a share of Common Stock.
(c) Market Value of a share of Common Stock as of December 31 of a calendar
year means the average closing price on the Toronto Stock Exchange of a share
of Common Stock on each trading day during the period beginning December 15
of such year and ending January 15 of the following year. The Market Value
of a share of Common Stock as of any other determination date means the
average closing price on the Toronto Stock Exchange of a share of Common
Stock on each trading day during the period beginning fifteen (15) calendar
days before, and ending fifteen (15) calendar days after, such date. If the
Common Stock is not listed on the Toronto Stock Exchange at the time for
determination, the closing price on NASDAQ shall be used and the Base Price
shall be US$6.25.
2. Stock Appreciation Payments.
Within thirty-one (31) days following the end of each of calendar years 1995
and 1996, the Company shall pay Lowenthal, as additional compensation, a
single-sum amount (a "Stock Appreciation Payment") with respect to such
calendar year equal to the greater of (i) 100,000 times the amount by which
the Market Value as of the December 31 of such calendar year of a share of
Common Stock exceeds the Base Price, or (ii) US$150,000; provided, however,
that the sum of the two Stock Appreciation Payments for 1995 and 1996 shall
not exceed US$625,000.
3. Termination of Employment.
If, on or before the last day of calendar year 1995 or 1996, Lowenthal
ceases to be employed by the Company as its Chief Executive Officer or by
Fahnestock Viner Holdings Inc. as its Chief Executive Officer for any reason
other than death or disability, his right to a Stock Appreciation Payment
with respect to such calendar year shall be forfeited.
4. Death or Disability.
If, before both Stock Appreciation Payments have been made pursuant to
Paragraph 2, Lowenthal's employment with the Company or Fahnestock Viner
Holdings Inc. terminates by reason of death or permanent disability, then in
lieu of any remaining payments under Paragraph 2, the Company shall pay
Lowenthal or his estate, within thirty (30) days after such termination,
100,000 times the amount by which the Market Value of a share of Common Stock
as of such date of termination of employment exceeds the Base Price; provided,
however, that such amount shall be doubled if Lowenthal has received no prior
Stock Appreciation Payments pursuant to Paragraph 2. In no event shall the
payment made pursuant to this Paragraph 4, when added to any payment made
pursuant to Paragraph 2, exceed US$625,000.
5. Interpretation.
No provision of this Agreement may be altered or waived except in writing
and executed by the other party hereto. This Agreement constitutes the
entire contract between the parties hereto and no party shall be bound by
any warranties, representations or guarantees, except as specifically set
forth in this Agreement. This Agreement shall be interpreted under the laws
of the State of New York.
6. Arbitration.
Any controversy or claim arising out of or relating to this Agreement or the
breach of this Agreement which cannot be resolved by Lowenthal and the
Company shall, at the instance of either Lowenthal or the Company, be
submitted to arbitration in accordance with New York law and the procedures
of the New York Stock Exchange. The determination of the arbitrator shall
be conclusive and binding on the Company and Lowenthal and judgment may be
entered on the arbitrator's award in any court having jurisdiction.
7. Assignability.
The respective rights and obligations of Lowenthal and the Company under
this Agreement shall inure to the benefit of and be binding upon the heirs
and legal representatives of Lowenthal and the successors and assigns of the
Company.
IN WITNESS WHEREOF, the Company and Lowenthal have executed this Agreement
as of the day and year first above written.
FAHNESTOCK & CO. INC.
By: /s/ E.K. Roberts
Title: Treasurer
/s/ A.G. Lowenthal
Albert G. Lowenthal
[DESCRIPTION] EXHIBIT 10(k)
PERFORMANCE-BASED COMPENSATION AGREEMENT
THIS AGREEMENT, dated as of the 25th day of March, 1997, between FAHNESTOCK
VINER HOLDINGS INC. ("Holdings") and ALBERT G. LOWENTHAL ("Lowenthal").
W I T N E S S E T H :
WHEREAS, Lowenthal is employed by Fahnestock & Co. Inc., a wholly-owned
subsidiary of Holdings (the "Company"), and Holdings as their respective
Chief Executive Officer and serves as Chairman of their respective Boards of
Directors; and
WHEREAS, the Compensation and Stock Option Committee (the "Committee") of
the Board of Directors of Holdings has determined that it is in the best
interests of the Company and Holdings to compensate Lowenthal for his
services during the Term hereof in a manner that aligns the compensation of
Lowenthal with the performance of the Company and Holdings, the long-term
interests of the shareholders of Holdings and the compensation paid to other
chief executive officers of comparable financial service companies;
NOW, THEREFORE, in consideration of the premises set forth in this Agreement,
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Holdings and Lowenthal agree as follows:
1. Definitions.
(a) Common Stock means the Class A non-voting shares of Holdings.
(b) Base Price means, with respect to any Stock Appreciation Amount (i) for
the calendar year ended December 31, 1997, $14.50, being the average closing
price on the New York Stock Exchange of a share of Common Stock on each
trading day during the period beginning December 15, 1996 and ending January
15, 1997 and, (ii) for any subsequent year during the Term, the average
closing price on the New York Stock Exchange of a share of Common Stock on
each trading day during the period beginning December 15 of such year and
ending January 15 of the following year.
(c) Market Value of a share of Common Stock as of December 31 of a calendar
year means the average closing price on the New York Stock Exchange of a
share of Common Stock on each trading day during the period beginning
December 15 of such year and ending January 15 of the following year. The
Market Value of a share of Common Stock as of any other determination date
means the average closing price on the New York Stock Exchange of a share of
Common Stock on each trading day during the period beginning fifteen (15)
calendar days before, and ending fifteen (15) calendar days after, such date.
If the Common Stock is not listed on the New York Stock Exchange at the time
for determination, the closing sale price on NASDAQ shall be used.
(d) Performance Award means any payment made pursuant to Section 2 of this
Agreement.
(e) Term means the period commencing on January 1, 1997 and ending on
December 31, 2001.
2. Performance Awards.
(a) On or before the 90th day of each year during the Term, the Committee
shall establish a written performance goal with respect to such year
("performance year") pursuant to which Lowenthal shall be entitled to a
single-sum amount to be calculated by the Committee in accordance with a
formula set by the Committee on or before the 90th day of each year during
the Term, which is based upon the performance of Holdings, the Common Stock,
Mr. Lowenthal, or some combination thereof, during the reference year (the
"Performance Amount").
(b) Following the of each year during the Term, the Committee shall
calculate an amount (the "Stock Appreciation Amount" with respect to
such calendar year equal the amount by which the Market Value as of the
December 31 of such calendar year of a share of Common Stock exceeds
the Base Price as of December 31 of the previous year multiplied by
an assumed number of shares of Common Stock to be set each year by the
Committee on or before the 90th day of each year during the Term.
(c) Except as otherwise provided in Section 6 and subject to the limit set
forth in Section 5, within five (5) days after the Committee's certification
for each award in accordance with Section 4 following the end of each year
during the term, the Company shall pay Lowenthal in cash as additional
compensation an amount (the "Performance Award") equal to the Performance
Amount (if greater than zero) and the Stock Appreciation Amount (if greater
than zero) for that year.
3. Administration.
The procedures with respect to Stock Appreciation Payments and Performance
Awards made under this Agreement shall be administered by the Committee.
The Committee shall at all times consist of two or more members and shall be
constituted in such a manner as to satisfy the requirements of applicable
law, the provisions of Rule 16b-3 under the Securities Exchange Act of 1934
or any successor rule, and the provisions of Section 162(m)(4)(C)(i) of the
Internal Revenue Code of 1986, as amended (the "Code"). The Committee shall
have full power and authority to grant awards hereunder and to administer
and interpret this Agreement and to adopt such rules, regulations and
guidelines as it deems necessary or advisable to give effect to the purpose
and intent of this Agreement. Prior to payment of any Performance Award
payable hereunder in each year during the Term the Committee shall certify
as to the degree to which the performance goals underlying the Performance
Award have been attained for such year. Certification by the Committee shall
be made no later than January 31st of each year during the Term for the
Stock Appreciation Amount and within ten (10) days after Holdings' issuance
of its annual audited financial statements with respect to each year during
the Term for the Performance Amount.
4. Limit on Performance Awards
The sum of all Performance Awards during the Term shall not exceed
$5,000,000 in the aggregate.
5. Termination of Employment
If, on or before the last day of any calendar year during the Term,
Lowenthal ceases to be employed by the Company as its Chief Executive
Officer or by Holdings as its Chief Executive Officer for any reason
other than death or disability, his right to receive any payment under
this Agreement with respect to such calendar year shall be forfeited.
6. Death or Disability
If Lowenthal's employment with the Company or Holdings terminates by
reason of death or permanent disability, in lieu of any payments
otherwise payable under this Agreement, Lowenthal or his estate,
within thirty (30) days after December 31 following any such termination,
shall be paid the sum of (i) the amount that would be owed to Lowenthal
with respect to the Performance Amount for such year multiplied by a
fraction, the numerator of which is the number of actual days of the
year to the date of such termination and the denominator of which is
365 and (ii) the amount that would be owed to Lowenthal with respect to
the Stock Appreciation Amount using the Market Value of the Common
Stock on such termination date; provided, however, that any such
payment of a Performance Award shall be subject to the limit set forth
in Section 4 and the prior certification of the Committee as set forth
in Section 3.
7. Effectiveness of Agreement
This Agreement shall be effective as of the date of its adoption by the
Committee, subject to the approval thereof at a meeting of shareholders by
the holders of a majority of the Class B voting shares (the "Class B Shares")
present and entitled to vote at the meeting.
8. Interpretation
No provision of this Agreement may be altered or waived except in writing
executed by the parties hereto. This Agreement constitutes the entire
egreement between the parties hereto and no party shall be bound by any
warranties, representations or guarantees, except as specifically set forth
in this Agreement. This Agreement shall be interpreted under the law of the
State of New York without giving effect to the conflict of law provisions
thereof.
9. Arbitration.
Any controversy or claim arising out of or relating to this Agreement or the
breach of this Agreement which cannot be resolved by Lowenthal and Holdings
shall, at the instance of either Lowenthal or Holdings, be submitted to
arbitration in accordance with New York law and the procedures of the New
York Stock Exchange. The determination of the arbitrator shall be conclusive
and binding on Holdings and Lowenthal and judgment may be entered on the
arbitrator's award in any court having jurisdiction.
10. Assignability.
The respective rights and obligations of Lowenthal and Holdings under this
Agreement shall inure to the benefit of and be binding upon the heirs and
legal representatives of Lowenthal and the successors and assigns of Holdings.
IN WITNESS WHEREOF, Holdings and Lowenthal have executed this Agreement as
of the day and year first above written.
FAHNESTOCK VINER HOLDINGS INC.
By:/s/ E.K. Roberts
Name:Elaine K. Roberts
Title:President
/s/ A.G. Lowenthal
Albert G. Lowenthal, individually
