April 21, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: National Discount Brokers Group, Inc.: Form 8-K
Dear Sir/Madam:
On behalf of National Discount Brokers Group, Inc. (the "Company"),
enclosed for filing is a copy of the Company's Current Report on Form 8-K,
including exhibits thereto.
If you have any questions or comments regarding this filing, please
call me at (201) 946-4482.
Very truly yours,
\s\Frank E. Lawatsch, Jr.
--------------------------
Frank E. Lawatsch, Jr.
Executive Vice President &
General Counsel
Enclosures
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 21, 1999
NATIONAL DISCOUNT BROKERS GROUP, INC.
(Exact name of Registrant as specified in Charter)
Delaware 1-9480 22-2394480
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification
Number)
10 Exchange Place Centre, 15th Floor, Jersey City, New Jersey 07302-3913
(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code: (201) 946-2200
--------------
Not Applicable
(Former name and former address, as changed since last report)
Item 5. Other Events
1. National Discount Brokers Group, Inc. 1999 Stock Option Plan.
The Board of Directors adopted the National Discount Brokers Group,
Inc. 1999 Stock Option Plan. The Plan permits the granting of non-qualified
stock options covering up to 1,000,000 shares of the Company's common stock.
2 Definitive Agreement Regarding Sale of Equitrade Partners, L.L.C.
As of May 7, 1999, National Discount Brokers Group, Inc.(the "Company")
entered into a definitive agreement with Spear, Leeds & Kellogg Specialists LLC
("SLK") and the other members of Equitrade Partners, L.L.C. ("Equitrade")
providing for the sale of all the membership interests of Equitrade to SLK. The
Company would receive approximately $82,400,000 in cash for its membership
interests (consisting of gain on sale, return of capital and repayment of notes
and interest receivable). From these proceeds the Company must repay a loan of
$15,000,000 plus any unpaid, accrued interest to the parent of SLK. The
transaction is scheduled to close in the second quarter or early in the third
quarter of 1999. The Company will record an after-tax gain of approximately
$20,500,000, accrued income taxes payable of approximately $15,500,000
(calculated at the statutory rate of 43%) and a bonus to its chief executive
officer of approximately $6,400,000. The transaction is subject to several
conditions including the receipt of approvals by SLK from The New York Stock
Exchange. There can be no assurance that the conditions to closing will be met
or waived, that the transaction will close, or that the transaction will close
on schedule. The foregoing agreement contains representations, warranties,
covenants and conditions to closing as well as rights of parties to terminate
the agreement. The foregoing is a summary and is subject to the terms of the
definitive agreement which is filed as an exhibit. In connection with the
execution of this agreement, Spear, Leeds & Kellogg entered into a side letter
with the Company deferring repayment of the foregoing $15,000,000 loan
(including any unpaid, accrued interest) until the closing under the agreement
or, if the agreement is terminated without a closing, to a date 18 months from
such termination.
3. Change of Control Agreement
The Company has entered into a Change of Control Agreement with Matthew
Stadler, its Senior Vice President and Chief Financial Officer, a copy of which
is filed as an exhibit hereto.
4. Lease
The Company entered into a lease for space at 90 Hudson Street, Jersey
City, New Jersey covering approximately 96,000 sq. ft. for a rent of
approximately $2,900,000 per year with an initial term of 15 years and with
certain rights to extend the term. The Company may terminate the lease if it
does not receive a non-disturbance agreement from the present mortgage lender. A
copy of the lease is filed as an exhibit hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
Exhibit No. Description
2 Purchase Agreement dated as of May 7, 1999
among Spear, Leeds & Kellogg Specialists LLC
and the selling members relating to the
purchase and sale of 100% of the membership
interests of Equitrade Partners, L.L.C.
10 (a) National Discount Brokers Group, Inc. 1999
Stock Option Plan.
10(b) Change of Control Agreement with Matthew
Stadler.
10(c) Lease at 90 Hudson Street, Jersey City, New
Jersey.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
National Discount Brokers Group, Inc.
Registrant
Dated: May 7, 1999 By:____________________________________
Name: Arthur Kontos
Title:President and Chief Executive
Officer
EXHIBIT 2
PURCHASE AGREEMENT
dated as of
May 7, 1999
among
SPEAR, LEEDS & KELLOGG SPECIALISTS LLC,
and
THE SELLING MEMBERS LISTED ON
SCHEDULE I HERETO
relating to the purchase and sale
of
100% of the membership interests in
Equitrade Partners, LLC
<PAGE>
v
TABLE OF CONTENTS
--------------
<TABLE>
<CAPTION>
Page
ARTICLE I.
DEFINITIONS
SECTION 1.1. Definitions. 1
ARTICLE II.
PURCHASE AND SALE
<S> <C>
SECTION 2.1. Purchase and Sale...................................................................................7
SECTION 2.2. Purchase Price......................................................................................7
SECTION 2.3. Closing 8
SECTION 2.4. Closing Date Balance Sheet..........................................................................9
SECTION 2.5. Final Closing Date Balance Sheet...................................................................10
SECTION 2.6. Supplemental Closing Payments......................................................................11
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLER INDIVIDUALS
SECTION 3.1. Limited Liability Existence and Power..............................................................11
SECTION 3.2. Authorization......................................................................................12
SECTION 3.3. Governmental Authorization.........................................................................12
SECTION 3.4. Non-Contravention..................................................................................12
SECTION 3.5. Regulatory Filings.................................................................................12
SECTION 3.6. Capitalization.....................................................................................13
SECTION 3.7. Ownership of Interests.............................................................................13
SECTION 3.8. Ownership and Lease of NYSE Seats..................................................................14
SECTION 3.9. Subsidiaries.......................................................................................14
SECTION 3.10. Financial Statements..............................................................................14
SECTION 3.11. No Undisclosed Material Liabilities...............................................................14
SECTION 3.12. Intercompany Accounts.............................................................................15
SECTION 3.13. Material Contracts................................................................................15
SECTION 3.14. Litigation........................................................................................17
SECTION 3.15. Compliance with Laws and Court Orders; No Defaults................................................17
SECTION 3.16. Properties........................................................................................17
SECTION 3.17. Intellectual Property.............................................................................18
SECTION 3.18. Licenses and Permits..............................................................................18
SECTION 3.19. Certain Assets....................................................................................19
SECTION 3.20. Receivables.......................................................................................19
SECTION 3.21. Disclosure by Seller..............................................................................19
SECTION 3.22. Finders' Fees.....................................................................................19
SECTION 3.23. Employees.........................................................................................19
SECTION 3.24. Labor Matters.....................................................................................22
SECTION 3.25. Receivables.......................................................................................23
SECTION 3.26. Accredited Investor; No Distribution..............................................................23
SECTION 3.27. Organizational Documents..........................................................................23
SECTION 3.28. Year 2000 Compliance..............................................................................23
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE RSF GROUP
SECTION 4.1. Authorization......................................................................................23
SECTION 4.2. Governmental Authorization.........................................................................24
SECTION 4.3. Non-Contravention..................................................................................24
SECTION 4.4. Capitalization.....................................................................................24
SECTION 4.5. Ownership of Interests.............................................................................24
SECTION 4.6. Intercompany Accounts..............................................................................25
SECTION 4.7. Litigation.........................................................................................25
SECTION 4.8. Certain Assets.....................................................................................25
SECTION 4.9. Disclosure by Seller...............................................................................25
SECTION 4.10. Finders' Fees.....................................................................................26
SECTION 4.11. Accredited Investor; No Distribution..............................................................26
SECTION 4.12. No Actual Knowledge of Misrepresentations.........................................................26
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF NDB AND SHD
SECTION 5.1. Corporate Existence and Power......................................................................26
SECTION 5.2. Corporate Authorization............................................................................27
SECTION 5.3. Governmental Authorization.........................................................................27
SECTION 5.4. Non-Contravention..................................................................................27
SECTION 5.5. Capitalization.....................................................................................27
SECTION 5.6. Ownership of Interests.............................................................................27
SECTION 5.7. Ownership and Lease of NYSE Seats..................................................................28
SECTION 5.8. Litigation.........................................................................................28
SECTION 5.9. Certain Assets.....................................................................................28
SECTION 5.10. Intercompany Accounts.............................................................................28
SECTION 5.11. Disclosure by Seller..............................................................................29
SECTION 5.12. Finders' Fees.....................................................................................29
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 6.1. Existence and Power................................................................................29
SECTION 6.2. Authorization......................................................................................29
SECTION 6.3. Governmental Authorization.........................................................................29
SECTION 6.4. Non-Contravention..................................................................................30
SECTION 6.5. Finders' Fees......................................................................................30
SECTION 6.6. Litigation.........................................................................................30
ARTICLE VII.
COVENANTS OF THE SELLERS
SECTION 7.1. Conduct of the Company.............................................................................31
SECTION 7.2. Access to Information..............................................................................32
SECTION 7.3. Notices of Certain Events..........................................................................32
SECTION 7.4. Noncompetition.....................................................................................33
SECTION 7.5. No Transfer of Seller Interests....................................................................34
SECTION 7.6. Material Agreements................................................................................34
SECTION 7.7. No Transfer of Promissory Notes....................................................................34
SECTION 7.8. Transfer of Seats..................................................................................34
ARTICLE VIII.
COVENANTS OF THE BUYER AND THE SELLERS
SECTION 8.1. Reasonable Best Efforts............................................................................35
SECTION 8.2. Certain Filings....................................................................................35
SECTION 8.3. Public Announcements...............................................................................35
SECTION 8.4. Intercompany Accounts..............................................................................36
ARTICLE IX.
TAX MATTERS
SECTION 9.1. Tax Definitions....................................................................................36
SECTION 9.2. Tax Representations................................................................................37
SECTION 9.3. Post-Closing Tax Filings and Covenants.............................................................39
SECTION 9.4. Other Tax Matters..................................................................................40
SECTION 9.5. Cooperation on Tax Matters.........................................................................41
SECTION 9.6. Tax Indemnification................................................................................41
SECTION 9.7. Audits.............................................................................................45
SECTION 9.8. Allocation of Purchase Price.......................................................................45
SECTION 9.9. Purchase Price Adjustment..........................................................................46
SECTION 9.10. Survival..........................................................................................46
ARTICLE X.
CONDITIONS TO CLOSING
SECTION 10.1. Conditions to Obligations of the Buyer and Sellers................................................46
SECTION 10.2. Conditions to Obligations of the Buyer............................................................46
SECTION 10.3. Conditions to Obligation of Sellers...............................................................49
ARTICLE XI.
SURVIVAL; INDEMNIFICATION
SECTION 11.1. Survival..........................................................................................51
SECTION 11.2. Indemnification...................................................................................52
SECTION 11.3. Procedures........................................................................................53
SECTION 11.4. Indemnification Limits; Notices to Seller Individuals.............................................54
ARTICLE XII.
TERMINATION
SECTION 12.1. Grounds for Termination...........................................................................55
SECTION 12.2. Effect of Termination.............................................................................55
ARTICLE XIII.
MEMBERS' REPRESENTATIVE
SECTION 13.1. Appointment; Acceptance...........................................................................56
SECTION 13.2. Authority.........................................................................................56
SECTION 13.3. Actions...........................................................................................57
SECTION 13.4. Effectiveness.....................................................................................57
SECTION 13.5. Indemnification; Fees and Expenses................................................................57
SECTION 13.6. Successor.........................................................................................58
SECTION 13.7. Survival of Authorizations........................................................................58
ARTICLE XIV.
MISCELLANEOUS
SECTION 14.1. Notices...........................................................................................58
SECTION 14.2. Amendments and Waivers............................................................................60
SECTION 14.3. Expenses..........................................................................................60
SECTION 14.4. Successors and Assigns............................................................................60
SECTION 14.5. Governing Law.....................................................................................60
SECTION 14.6. Counterparts; Third Party Beneficiaries...........................................................60
SECTION 14.7. Confidentiality...................................................................................61
SECTION 14.8. Entire Agreement..................................................................................61
SECTION 14.9. Waiver of Rights..................................................................................61
</TABLE>
<PAGE>
SCHEDULES AND EXHIBITS
Schedule I Sellers; Seller Interests; Premium
Schedule II Capital Accounts
Schedule III NYSE Specialist Securities
Schedule IV Membership Allocations
Schedule V Balance Sheet
Schedule 3.6 Company Securities
Schedule 3.7 Ownership of Interests
Schedule 3.8 NYSE Seats Owned or Leased by the Company
Schedule 3.11 Liabilities
Schedule 3.12 Intercompany Balances
Schedule 3.13 Material Contracts
Schedule 3.14 Litigation
Schedule 3.15 Compliance With laws; No Defaults
Schedule 3.18 Permits
Schedule 3.19 Certain Assets
Schedule 3.23(a) Company Benefit Plans
Schedule 3.23(f) Violations of ERISA
Schedule 3.23(h) Pending Actions Against Company Benefit Plans
Schedule 3.23(i) Maintenance of Company Benefit Plans; Liability
of Fiduciaries
Schedule 3.24(a) Labor/Collective Bargaining Agreements
Schedule 3.24(b) Representation by Labor Organizations
Schedule 3.25 Specialist Securities (Exceptions)
Schedule 4.5 Ownership of Interests
Schedule 4.6 Intercompany Accounts
Schedule 4.8 Certain Assets
Schedule 5.7 NYSE Seats Owned by the Company
Schedule 5.8 Litigation
Schedule 5.9 Certain Assets
Schedule 5.10 Intercompany Balances
Schedule 9.2 Tax Returns
Schedule 9.2(c) Tax Jurisdictions
Exhibit A Matters to be Covered by Opinions of Counsel
Exhibit B Form of Promissory Notes
Exhibit C Form of NDB Release
Exhibit D Form of Seller Individual Release
<PAGE>
63
PURCHASE AGREEMENT
AGREEMENT dated as of May __, 1999 among Spear, Leeds &
Kellogg Specialists LLC, a New York limited liability company (the "Buyer"), and
the selling members listed on the signature pages hereto (each, a "Seller" and
collectively, the "Sellers").
The parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. Definitions. (a) The following terms, as used
herein, have the following meanings:
"Adjusted Purchase Price" means an amount equal to the sum of
the Adjusted NDB Group Purchase Price plus the Adjusted Seller Individuals
Purchase Price.
"Adjusted NDB Group Purchase Price" means an amount determined
in the same manner as the NDB Group Purchase Price; provided, however, that in
performing such calculation, all references in Section 2.2(b) to the Closing
Date Balance Sheet shall be deemed to be references to the Final Closing Date
Balance Sheet.
"Adjusted Seller Individuals Purchase Price" means an amount
determined in the same manner as the Seller Individuals Purchase Price;
provided, however, that in performing such calculation, all references in
Section 2.2(c) to the Closing Date Balance Sheet shall be deemed to be
references to the Final Closing Date Balance Sheet.
"Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such Person.
"Aggregate Company's Intangibles" means the sum of the
following three line items on any balance sheet of the Company: "Purch Romano
List-RSF Spec", "Covenant Not to Compete" and "Goodwill".
"Balance Sheet Date" means March 31, 1999.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banks in New York City are authorized or obligated by law or
executive order to close.
"Capital Accounts" means the "GAAP Capital Accounts" under
the Operating Agreement.
"Closing Date" means the date of the Closing.
"Company" means Equitrade Partners, LLC, a Delaware limited
liability company and its predecessor, Equitrade Partners, L.P., a New York
partnership.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"8% Subordinated Loan" means the $5,000,000 principal amount
8% Subordinated Loan of NDB to the Company.
"Estimated NDB Group Purchase Price" means the NDB Group
Purchase Price estimated as of the Closing Date based on the Closing Date
Balance Sheet to be paid in accordance with the terms of Section 2.2(b).
"Estimated Purchase Price" means an amount equal to the sum of
the Estimated NDB Purchase Price plus the Estimated Seller Individuals Purchase
Price.
"Estimated Seller Individuals Purchase Price" means the Seller
Individuals Purchase Price estimated as of the Closing Date based on the Closing
Date Balance Sheet to be paid in accordance with the terms of Section 2.2(c).
"Federal Funds Rate" means, on any one day, the rate per annum
equal to the weighted average (rounded upwards, if necessary, to the nearest
1/100th of 1%) of the rate on overnight federal funds transactions with members
of the Federal Reserve System only arranged by federal funds brokers, as
published as of such day by the Federal Reserve Bank of New York, or, if such
rate is not so published, the average of the quotations for such day on such
transactions received by the Buyer (or an Affiliate of the Buyer) from three
funds brokers of recognized standing selected by the Buyer (or an Affiliate of
the Buyer).
"GAAP" means United States generally accepted accounting
principles consistently applied.
"Governmental Entity" means any United States federal, state,
county, local, municipal or foreign government, court, administrative agency or
commission or other governmental or other regulatory or self-regulatory
authority or agency or any arbitration tribunal or other non-governmental
authority with, in the case of such arbitration tribunal or non-governmental
authority, the ability to issue decisions that are legally binding on the
Company or the Buyer or any Seller, as applicable.
"Green Note" means the $900,000 principal amount 7% note
payable by David Green to NDB.
"Indebtedness" means as to any Person (i) long or short term
indebtedness for borrowed money; (ii) long or short term indebtedness for the
deferred purchase price of property or services; (iii) obligations and
liabilities secured by a Lien upon property owned by such Person, whether or not
owing by such Person and even though such Person has not assumed or become
liable for the payment thereof; (iv) obligations and liabilities directly or
indirectly guaranteed by such Person; (v) obligations or liabilities created or
arising under any conditional sales contract or other title retention agreement
with respect to property used and/or acquired by such Person, even though the
rights and remedies of the lessor, seller and/or lender thereunder are limited
to repossession of such property; (vi) obligations under capitalized leases;
(vii) all liabilities in respect of letters of credit, acceptances and similar
obligations created for the account of such Person; (viii) net liabilities of
such Person under interest rate cap agreements, interest rate swap agreements,
foreign currency exchange agreements and other hedging agreements or
arrangements; (ix) accrued dividends on the capital stock of such Person
(including, without limitation, on the common stock or preferred stock of such
Person); (x) any liability of such Person which is past due; and (xi) any
accrued interest on any obligation, liability or other indebtedness set forth in
clauses (i) to (x) above.
"Intellectual Property Right" means any trademark, service
mark, trade name, invention, patent, trade secret, copyright, know-how
(including any registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary intellectual property right.
"Interests" means the aggregate Seller Interests constituting
100% of the outstanding membership interests in profits and losses and capital
of the Company.
"Letter Agreements" means, collectively, (i) the letter
agreement dated December 31, 1998, among Joseph A. Rodriguez, Isidore Fields,
Robert L. Prosser, Sr., Robert L. Prosser, Jr. and Anne M. Prosser, and (ii) the
letter agreement dated December 31, 1998, among James F. Bowen, III, Isidore
Fields, Robert L. Prosser, Sr., Robert L. Prosser, Jr. and Anne M. Prosser.
"Lien" means, with respect to any property or asset, any
mortgage, lien, pledge, charge, security interest, encumbrance or other adverse
claim of any kind in respect of such property or asset. For the purposes of this
Agreement, a Person shall be deemed to own subject to a Lien any property or
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such property or asset.
"Material Adverse Effect" means a material adverse effect on
the financial condition, business, assets, results of operations, properties or
prospects of the Company.
"1934 Act" means the Securities Exchange Act of 1934, and the
rules and regulations promulgated thereunder.
"NDB" means National Discount Brokers Group, Inc., a Delaware
corporation, which is a Seller under this Agreement.
"NDB Group" means, collectively, NDB and SHD, Cynthia Kellogg,
Harvey Silverman and John Duffy.
"NYSE" means the New York Stock Exchange, Inc.
"Operating Agreement" means the Amended and Restated Operating
Agreement of the Company, dated as of December 31, 1998, as in effect on the
date hereof.
"Permitted Liens" means conditional sales contracts on
equipment used by the Company in the ordinary course of business consistent with
past practice.
"Person" means an individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
including a Governmental Entity.
"RSF Group" means Joseph A. Rodriguez, James F. Bowen, III,
Isidore Fields and Robert L. Prosser, Sr., collectively.
"SEC" means the Securities and Exchange Commission.
"Secured Demand Notes" means, collectively, (i) that certain
Secured Demand Note and Collateral Agreement, dated March 23, 1992 between the
Company and Sherwood Securities Corp. and (ii) that certain Secured Demand Note
Collateral Agreement having a maturity date of February 28, 1998, by The
Sherwood Group, Inc., and any related agreements.
"Securities Act" means the Securities Act of 1933, and the
rules and regulations promulgated thereunder.
"Seller Individual" means each Seller other than the NDB
Group.
"Seller Interest" means, with respect to each Seller, the
percentage membership interest in profits and losses and capital of the Company
set forth opposite its name on Schedule I hereto or such other percentage as may
be specified in writing to the Buyer prior to the Closing so long as the
aggregate Seller Interests constitute 100% of the Interests in profits and
losses and capital of the Company.
"Settlement Date" means the fifth Business Day following (i)
the date of delivery to the Sellers of the Final Closing Date Balance Sheet or
(ii) if the Final Closing Date Balance Sheet is subject to dispute pursuant to
Section 2.5, the date of the resolution of such dispute by the Buyer and the
Sellers or the date of the determination of the independent accounting firm
selected by the Buyer and the Sellers pursuant to such Section.
"6% Subordinated Loan" means the $22,000,000 principal amount
6% Subordinated Loan of NDB to the Company.
"SHD" means SHD Corporation, a Delaware corporation, which is
a Seller under this Agreement and is a wholly-owned subsidiary of NDB.
"SLK Loan" means the $15,000,000 principal amount 6% loan of
Spear, Leeds & Kellogg, L.P. to NDB.
"Subsidiary" means any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the time
directly or indirectly owned by the Company.
"Year 2000 Compliant" means the ability to provide specific
dates and calculate spans of dates and record, store, process and provide true
and accurate dates and calculations for dates and spans of dates within the
closed interval January 1, 1700 through December 31, 9999 (the "Interval Dates")
prior to, including and following January 1, 2000, including by: (i) recognizing
_____________, 1999 as a valid date; (ii) prior and up to December 31, 1999,
correctly processing day and date calculations within the Interval Dates; (iii)
on and after January 1, 2000, correctly processing day and date calculations
within the Interval Dates; (iv) recognizing the year 2000 as a leap year having
366 days, and correctly processing February 29, 2000 as a valid leap year date;
(v) recognizing January 1, 2001 as a valid date; (vi) employing only four-digit
year representations in components and systems owned or operated in connection
with the business of the Company; and (vii) incorporating interface programs
sufficient to translate accurately to four-digit year format (without any burden
of interpretation) any two-digit year representations included in components and
systems, including but not limited to external databases, data warehouses,
software systems and user interfaces not owned or operated in connection with
the business of the Company, which electronically or manually send data to or
receive data from components or systems used in such business.
(a)(b) Each of the following terms is defined in the Section
set forth opposite such term:
<TABLE>
<CAPTION>
Term Section
<S> <C>
Allocation Statement 9.8(a)
Balance Sheet 10.2
Buyer Indemnitee 9.1, 11.2
Buyer Tax Loss 9.6(a)
Closing 2.3(a)
Closing Date Assets 9.8(a)
Closing Date Balance Sheet 2.4
COBRA 3.23(j)
Code 9.1
Company Benefit Plans 3.23(a)
Company Securities 3.6(b)
Damages 11.2(a)
DOJ 3.3
ERISA Affiliate 3.23(b)
Filings 3.5(a)
Final Closing Date Balance Sheet 2.5
Final Determination 9.1
5% Holdback Amount 2.3(c)
FTC 3.3
HSR Act 3.3
Indemnified Party 11.3
Indemnifying Party 11.3
Member Delivered Agreements 13.2(a)
Members' Representative 13.1
NDB Group Intangibles 2.2(b)
NDB Group Purchase Price 2.2(b)
Objection Period 9.6(e)
Pension Plan 3.23(c)
Permits 3.18
Pre-Closing Tax Period 9.1
Promissory Note 2.3(b)
Purchase Price 2.1
Reference Date 2.4
Resolution Period 9.6(f)
Seller Indemnitee 9.1, 11.2
Seller Individuals Intangibles 2.2(c)
Seller Individuals Purchase Price 2.2(c)
Seller's Minimum Amount 9.6(g)
Seller Tax Loss 9.6(c)
Supplemental Closing 2.6
Tax 9.1
Tax Indemnification Period for Buyer Indemnitee 9.1
Tax Indemnification Period for Seller Indemnitee 9.1
Tax Return 9.1
Tax Sharing Agreements 9.1
Taxing Authority 9.1
Third Party Suit 9.6(g)
</TABLE>
Reference to the word "knowledge" or "known" (i) with respect
to the NDB Group, means known, after due inquiry, to the chief executive
officer, chief financial officer, general counsel or controller of NDB, (ii)
with respect to any Seller Individual (other than the RSF Group), means known to
Steve Aaron or known, after due inquiry, to such Seller Individual, and (iii)
with respect to any member of the RSF Group, means known to such Seller
Individual.
ARTICLE II.
PURCHASE AND SALE
SECTION 2.1. Purchase and Sale. Upon the terms and subject to
the conditions of this Agreement, each Seller agrees to sell to the Buyer, and
the Buyer agrees to purchase from such Seller, its Seller Interest at the
Closing. The aggregate purchase price (the "Purchase Price") for the Interests
shall be calculated in accordance with Section 2.2, shall be paid as provided in
Section 2.3 and shall be adjusted in accordance with Section 2.5.
SECTION 2.2. Purchase Price. (a) The Purchase Price shall be
equal to the sum of the NDB Group Purchase Price plus the Seller Individuals
Purchase Price.
(a)(b) The aggregate purchase price to be paid for the Seller
Interests of the NDB Group at the Closing (the "NDB Group Purchase Price") shall
be equal to the sum of the following: (A) $46,657,422; plus (B) the NDB Group's
Capital Accounts as reflected on the Closing Date Balance Sheet (minus NDB
Group's pro rata portion of Mark to Market-Off Floor Trading (Unrealized));
minus (C) the NDB Group's aggregate book value of intangibles in the Company
(the "NDB Group Intangibles") (the book value of the NDB Group Intangibles being
equal to 22% of the Aggregate Company's Intangibles) on the Closing Date as
reflected on the Closing Date Balance Sheet. The NDB Group Purchase Price shall
be paid in accordance with Section 2.3(b).
(c) The aggregate purchase price to be paid for the Seller
Interests of the Seller Individuals at the Closing (the "Seller Individuals
Purchase Price") shall be equal to (A) $45,931,400; plus (B) the Seller
Individuals' Capital Accounts as reflected on the Closing Date Balance Sheet
(minus the Seller Individuals' pro rata portion of Mark to Market Off Floor
Trading (unrealized)) minus (C) the Seller Individuals' aggregate book value of
intangibles (the "Seller Individuals Intangibles") (the book value of the Seller
Individuals Intangibles being equal to 78% of the Aggregate Company's
Intangibles, with the Seller Individuals Intangibles together with the NDB Group
Intangibles being equal to the Aggregate Company's Intangibles) on the Closing
Date as reflected on the Closing Date Balance Sheet. The Seller Individuals
Purchase Price shall be paid in accordance with Section 2.3(b). Each Seller
Individual hereby acknowledges and agrees that the Seller Individuals Purchase
Price (and the Estimated Seller Individuals Purchase Price) being paid to such
Seller Individual is fair consideration for the Seller Interests being sold by
such Seller Individual pursuant to this Agreement. Further, each Seller
Individual waives any of the provisions contained in the Operating Agreement
relating to the sale of his Interests. In furtherance of the foregoing, such
Seller Individual agrees that he is not entitled to receive any other amount or
consideration under, pursuant to or in accordance with the Operating Agreement
for his Interests.
SECTION 2.3. Closing.
(a) The closing (the "Closing") of the purchase and sale of
the Interests hereunder shall take place at the offices of Willkie Farr &
Gallagher, 787 Seventh Avenue, New York, New York as soon as possible, but in no
event later than 10 Business Days, after satisfaction of the conditions set
forth in Article X, or at such other time or place as the Buyer, NDB, on behalf
of the NDB Group, and the Members' Representative may agree.
(a)(b) At the Closing, the Buyer shall deliver to: (i) subject
to Section 2.3(c), NDB, on behalf of the NDB Group, the Estimated NDB Group
Purchase Price in immediately available funds by wire transfer to an account
with a bank in New York City designated by NDB, by notice to the Buyer, not
later than two Business Days prior to the Closing Date; (ii) subject to Section
2.3(c), each Seller Individual an amount of cash in immediately available funds
equal to the sum of: (A) the applicable amount set forth opposite the name of
such Seller Individual on Schedule I under "Cash Premium"; plus (B) the Capital
Account of such Seller Individual set forth on the Closing Date Balance Sheet
(minus such Seller Individual's pro rata portion of Mark to Market Off Floor
Trading (unrealized)); minus (C) the percentage of the book value of the Seller
Individuals Intangibles on the Closing Date as reflected on the Closing Date
Balance Sheet attributable to such Seller Individual which percentage is set
forth opposite the name of such Seller Individual on Schedule I under
"Percentage of Book Value of Seller Individuals Intangibles"; (iii) the Members'
Representative, on behalf of each Seller Individual, a promissory note
(substantially in the form attached to this Agreement as Exhibit B) (each, a
"Promissory Note") the principal amount of which shall be equal to the net
present value (discounted at an annual rate of 8% compounded annually over a
period of four years (or three, as provided in the proviso of the last sentence
of this Section 2.3(b))) of the applicable amount set forth opposite the name of
such Seller Individual on Schedule I under "Notes Premium" and (iv) Stephen J.
DiLascio, Gerard J. Dreyer, John F. Nicolosi, and Philip J. Kopp, III, the
amount set forth opposite the name of such Seller Individual on Schedule I under
"Other Payments." Each Promissory Note shall be payable over a period of four
years in equal annual installments; provided, however, that the Promissory Note
payable to David Green and the Promissory Note payable to John F. Nicolosi shall
be payable over a period of three years in equal annual installments.
(c) At the Closing, the Buyer shall withhold 5% of the
Estimated NDB Group Purchase Price and 5% of the portion of the Estimated Seller
Individuals Purchase Price payable pursuant to Section 2.3(b)(ii) (in the
aggregate, the "5% Holdback Amount"). The 5% Holdback Amount shall be applied to
any and all payments required to be made by NDB, on behalf of the NDB Group, or
any Seller Individual pursuant to Sections 2.5 and 2.6. On the Settlement Date,
any portion of the 5% Holdback Amount not applied pursuant to the immediately
preceding sentence shall be returned to NDB, on behalf of the NDB Group, and the
Members' Representative, on behalf of the Seller Individuals, in amounts which
have the same proportion as the payment made under Section 2.3(b)(i) has to the
payment made under Section 2.3(b)(ii). Any and all adjustments between or among
the Sellers required to be made thereafter shall be the sole responsibility of
NDB and the Members' Representative. To the extent the Buyer pays cash
constituting a portion of the 5% Holdback Amount to the Sellers on the
Settlement Date, such cash shall also include interest from the Closing Date to
the Settlement Date at the Federal Funds Rate.
SECTION 2.4. Closing Date Balance Sheet. Not later than two
Business Days prior to the Closing Date, the Sellers shall prepare and deliver
to the Buyer an unaudited pro forma balance sheet of the Company as of a date
not earlier than seven Business Days prior to the Closing Date (the "Reference
Date"), which balance sheet shall be prepared in accordance with GAAP and
consistent with past practice of the Company (except that such balance sheet
shall not be required to have footnotes so long as such balance sheet is only
subject to normal recurring adjustments, none of which are or could reasonably
be expected, individually or in the aggregate, to be material in amount),
together with a schedule reflecting each Seller's Capital Account and the
aggregate Mark to Market-Off Floor Trading (Unrealized), in each case as of the
Reference Date (collectively with such balance sheet, the "Closing Date Balance
Sheet"). Such Closing Date Balance Sheet will be used to calculate the Estimated
Purchase Price.
SECTION 2.5. Final Closing Date Balance Sheet. Not later than
10 Business Days following the Closing Date, the Buyer shall prepare and deliver
to NDB, on behalf of the NDB Group, and the Members' Representative, on behalf
of the Seller Individuals, an unaudited balance sheet of the Company as of the
Closing Date, which balance sheet shall be prepared in accordance with GAAP and
consistent with past practice of the Company (except that such balance sheet
shall not be required to have footnotes so long as such balance sheet is only
subject to normal recurring adjustments, none of which were or are expected,
individually or in the aggregate, to be material in amount), together with a
schedule reflecting each Seller's Capital Account and the aggregate Mark to
Market-Off Floor Trading (Unrealized), in each case as of the Closing Date
(collectively with such balance sheet, the "Final Closing Date Balance Sheet").
The Buyer shall deliver reasonably detailed calculations with the Final Closing
Date Balance Sheet showing adjustments to the Closing Date Balance Sheet. Within
10 Business Days after receipt of such Final Closing Date Balance Sheet, NDB, on
behalf of the NDB Group, or the Members' Representative, on behalf of the Seller
Individuals, may deliver to the Buyer a notice that explains with reasonable
specificity (with reasonably detailed calculations) any adjustments to the Final
Closing Date Balance Sheet that Sellers request. Upon prior written request of
NDB or the Members' Representative made to the Buyer, the Buyer will provide NDB
and the Members' Representative with reasonable access during normal business
hours to relevant working papers used in the preparation of the Final Closing
Date Balance Sheet. If NDB or the Members' Representative does not deliver such
notice to the Buyer within such time, Sellers shall be deemed to have waived any
right to contest or otherwise adjust the Final Closing Date Balance Sheet. If
NDB or the Members' Representative provides the notice described in the
preceding sentence, Sellers and the Buyer will use their reasonable best efforts
to reach a mutual agreement on any appropriate adjustments to be made to the
Final Closing Date Balance Sheet within 10 Business Days of the receipt of such
notice. If Sellers and the Buyer are unable to resolve any disputes within ten
(10) Business Days of receipt of notice from NDB or the Members' Representative,
then such disputes shall be referred to a nationally recognized independent
certified public accounting firm mutually agreed upon by the Buyer, NDB and the
Members' Representative. The accounting firm to which such disputes are referred
shall, within twenty (20) Business Days after such disputes shall have been
referred to it deliver to Sellers and the Buyer a written report indicating its
views on the item or items in dispute and its resolution thereof. The
determination of the independent accounting firm pursuant to the terms of this
Section 2.5 shall be final and binding on the Buyer and the Sellers in the
absence of manifest error (so long as the Buyer has complied with its obligation
to provide NDB and the Members' Representative, upon their prior written
request, with reasonable access during normal business hours to relevant working
papers in accordance with this Section 2.5). In the event that a dispute
regarding the Final Closing Date Balance Sheet is referred to an independent
accounting firm as provided above, the cost thereof shall be divided equally
among the Seller Individuals (to be paid by the Members' Representative), NDB
Group (to be paid by NDB) and the Buyer.
SECTION 2.6. Supplemental Closing Payments. The supplemental
closing (the "Supplemental Closing") shall be held at the same place and time as
is provided in Section 2.3 hereof on the Settlement Date, or at such other place
and time and at such other time and date as may be mutually agreed upon in
writing by the Buyer, NDB and the Members' Representative. At the Supplemental
Closing, the Buyer shall pay (1) NDB, on behalf of the NDB Group, by wire
transfer of immediately available funds, the amount, if any, by which the
Adjusted NDB Group Purchase Price exceeds the amount of the Estimated NDB Group
Purchase Price, and (2) each Seller Individual, by wire transfer of immediately
available funds, the amount, if any, by which the Adjusted Seller Individuals
Purchase Price exceeds the Estimated Seller Individuals Purchase Price. In the
event that the amount of the Estimated Purchase Price shall exceed the Adjusted
Purchase Price, NDB (on behalf of the NDB Group) and the Seller Individuals
shall pay to the Buyer at the Supplemental Closing, by wire transfer of
immediately available funds, the amount of such excess; in such event, payments
by NDB and the Seller Individuals shall be pro rata on the basis of the portion
of the Purchase Price received by the NDB Group and each respective Seller
Individual, unless the adjustment is other than pro rata as provided in a
written notice from the Buyer to NDB and the Members' Representative.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLER INDIVIDUALS
Each Seller Individual (other than the RSF Group) severally
(but not jointly) as to himself or herself but not any other Seller represents
and warrants to the Buyer as of the date hereof and as of the Closing Date that:
SECTION 3.1. Limited Liability Existence and Power. The
Company is a limited liability company duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and has all
limited liability company powers and all governmental licenses, authorizations,
permits, consents and approvals required to carry on its business as now
conducted, except for those licenses, authorizations, permits, consents and
approvals, the absence of which would not, individually or in the aggregate,
have a Material Adverse Effect. The Company is duly qualified to do business and
is in good standing in each jurisdiction where such qualification is necessary
except for those jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect. The Seller
Individuals have heretofore delivered to the Buyer true and complete copies of
the Operating Agreement of the Company as in effect on the date hereof.
SECTION 3.2. Authorization. The execution, delivery and
performance by such Seller Individual of this Agreement are within the powers of
such Seller Individual. This Agreement, when executed and delivered, constitutes
a legal, valid and binding agreement of such Seller Individual enforceable
against such Seller Individual in accordance with its terms.
SECTION 3.3. Governmental Authorization. The execution,
delivery and performance by such Seller Individual of this Agreement require no
action by or in respect of, or filing with, any governmental body, agency,
official, self-regulatory organization or other Governmental Entity by such
Seller Individual or the Company other than (i) review by the Federal Trade
Commission ("FTC") and the Department of Justice ("DOJ") pursuant to the
Hart-Scott Rodino Antitrust Improvement Act of 1976 (the "HSR Act") with respect
to antitrust matters and expiration or early termination of the applicable
waiting period under the HSR Act, (ii) compliance with any applicable filing and
approval requirements of the SEC and the NYSE and (iii) such other action or
filings as have been or will be taken or made by the Company or such Seller
Individual on or before the Closing Date.
SECTION 3.4. Non-Contravention. The execution, delivery and
performance by such Seller Individual of this Agreement do not and will not (i)
violate the Operating Agreement of the Company, (ii) assuming compliance with
the matters referred to in Section 3.3, violate any law, rule, regulation,
judgment, injunction, order or decree applicable to the Company or such Seller
Individual, (iii) require any consent or other action by any Person under,
constitute a default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of such Seller
Individual or the Company to a loss of any benefit to which such Seller
Individual or the Company is entitled under any agreement or other instrument
binding upon such Seller Individual or the Company or any license, franchise,
permit or other similar authorization held by such Seller Individual or the
Company or (iv) result in the creation or imposition of any Lien on any asset of
the Company, except for such violations, conflicts, defaults or Liens which
would not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.5. Regulatory Filings. (a) Since January 1, 1997,
the Company and the Seller Individuals have filed all financial reports and
registrations, reports, statements, notices and other filings required to be
filed by the Company and the Seller Individuals with the SEC, the NYSE or any
other Governmental Entity, including all required amendments or supplements to
any of the above (collectively, including the financial reports, the "Filings"),
except where failure to file such financial reports and registrations,
statements, notices or other filings would not, individually or in the
aggregate, have a Material Adverse Effect.E.
(a)(b) (i) Each Filing complied as to form and substance in
all material respects with the applicable law or regulation requiring such
Filing to be filed and did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading and (ii) each financial report was true, complete and correct in all
material respects, and complied in all material respects with applicable
accounting principles and the regulatory requirements applicable to such report.
(c) The Company and the Seller Individuals have heretofore
delivered to the Buyer copies of all Filings made since January 1, 1997 and all
written correspondence relating to any inquiry or investigation by the SEC, the
NYSE or any other Governmental Authority or to any customer or counterparty
complaint provided to the Company and the Seller Individuals during the past
five years.
SECTION 3.6. Capitalization. (a) As of the Balance Sheet
Date, such Seller Individual's Capital Account in the Company equaled the amount
set forth opposite such Seller Individual's name under the caption "Capital
Account" on Schedule II.
(a)(b) Except as set forth in Schedule 3.6 and after giving
effect to the execution of this Agreement, there are no outstanding (i) voting
securities of the Company, (ii) securities of the Company convertible into or
exchangeable for membership or other equity interests in or voting securities of
the Company or (iii) options or other rights to acquire from the Company, or
other obligations of the Company to issue, any membership or other equity
interests in or voting securities or securities convertible into or exchangeable
for membership or other equity interests in or voting securities of the Company
(the items in clauses (i), (ii) and (iii) being referred to collectively as the
"Company Securities"). Except as set forth on Schedule 3.6 and after giving
effect to the execution of this Agreement, there are no outstanding obligations
of the Company to repurchase, redeem or otherwise acquire any Company
Securities.
SECTION 3.7. Ownership of Interests. Except as qualified on
the signing date of this Agreement by the information set forth in Schedule 3.7,
but without such qualification on the Closing Date, such Seller Individual is
the record and beneficial owner of its Seller Interest set forth in Schedule
3.6, free and clear of any Lien and any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
the Interests) other than those restrictions imposed by the Operating Agreement,
and will transfer and deliver to the Buyer at the Closing valid, good and
marketable title to its Seller Interest free and clear of any Lien and any such
limitation or restriction and, assuming the execution and delivery of this
Agreement by the parties hereto and the due termination of the Operating
Agreement in accordance with the Limited Liability Company Act of the State of
Delaware at the Closing Date (provided, however, that such termination will be
effective immediately after the Closing), free and clear of any restrictions
imposed by the Operating Agreement.
SECTION 3.8. Ownership and Lease of NYSE Seats. The NYSE seats
owned or leased by the Company are owned or leased, as applicable, as set forth
on Schedule 3.8. At the Closing, the Company will have (i) valid, good and
marketable title to the seats owned by the Company, free and clear of any Lien
(except for lease agreements and ABC agreements disclosed in Schedule 3.8), and
(ii) valid, good and marketable leasehold interests to the seats leased by the
Company, free and clear of any Lien (except for lease agreements and ABC
agreements disclosed in Schedule 3.8).
SECTION 3.9. Subsidiaries. The Company has no Subsidiaries.
SECTION 3.10. Financial Statements. The audited balance sheets
of the Company as of December 31, 1996 and December 31, 1997 and the related
statements of income and cash flows for each of the years ended December 31,
1996 and December 31, 1997 and any subsequent financial report of the Company
filed with the SEC, the NYSE or any other Governmental Authority, and the
Balance Sheet (except for the absence of footnotes thereto so long as the
Balance Sheet is only subject to normal recurring adjustments, none of which
were or are expected, individually or in the aggregate, to be material in
amount), present fairly, and the Closing Date Balance Sheet (except for the
absence of footnotes thereto so long as the Closing Date Balance Sheet is only
subject to normal recurring adjustments, none of which were or are expected,
individually or in the aggregate, to be material in amount), will present
fairly, in all material respects, the financial position of the Company as of
the dates thereof and its results of operations and changes in financial
position for the periods then ended in conformity with GAAP and, if applicable,
in conformity with the rules and regulations of the NYSE or other applicable
Governmental Entity.
SECTION 3.11. No Undisclosed Material Liabilities. To the best
of such Seller Individual's knowledge, there are no liabilities of the Company
of any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or set
of circumstances that could reasonably be expected to result in such a
liability, other than:
(a) liabilities provided for in the Balance Sheet or
disclosed in the notes thereto;
(b) liabilities disclosed on Schedule 3.11;
(c) liabilities in connection with short sales of securities
by the Company in stocks in which it acts as an NYSE specialist and otherwise in
the ordinary course of its business consistent with past practice; and
(d) other undisclosed liabilities which would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.12. Intercompany Accounts. Schedule 3.12 contains a
complete list of all intercompany balances as of the Balance Sheet Date between
the Seller Individuals, on the one hand, and the Company, on the other hand.
Since the Balance Sheet Date, there has not been any accrual of liability by the
Company to such Seller Individual or other transaction between the Company and
such Seller Individual, except in the ordinary course of business of the Company
consistent with past practice or as set forth on Schedule 3.12.
SECTION 3.13. Material Contracts. (a) Except as disclosed in
Schedule 3.13, and except for the Operating Agreement and any agreements that
are (x) consistent with the ordinary course of the Company's business and past
practice and (y) terminable on not more than 30 days' notice and without the
payment of any penalty by, or any other material consequence to, the Company,
the Company is not a party to or bound by:
(i) any lease of real property providing for annual rentals
of $10,000 or more;
(ii) any agreement for the purchase of
materials, supplies, goods, services, equipment or other
assets that provides for either (A) annual payments by the
Company of $10,000 or more or (B) aggregate payments by the
Company of $20,000 or more;
(iii) any partnership, joint venture
or other similar agreement or arrangement;
(iv) any agreement relating to the
acquisition or disposition of any business (whether by merger,
sale of stock, sale of assets or otherwise);
(v) any agreement relating to Indebtedness
(whether incurred, assumed, guaranteed or secured by any
asset), except any such agreement with an aggregate
outstanding principal amount not exceeding $20,000 and which
may be prepaid on not more than 30 days' notice without the
payment of any penalty;
(vi) any license, franchise or similar
agreement;
(vii) any agency, dealer, sales
representative, marketing or other similar agreement;
(viii) any agreement that limits the freedom
of the Company to compete in any line of business or with any
Person or in any area or that would so limit the freedom of
the Company after the Closing Date;
(ix) any agreement with (A) Sellers or any
of their Affiliates, (B) any Person directly or indirectly
owning, controlling or holding with power to vote, 5% or more
of the outstanding voting securities of Sellers or any of
their Affiliates, (C) any Person 5% or more of whose
outstanding voting securities are directly or indirectly
owned, controlled or held with power to vote by Sellers or any
of their Affiliates or (D) any director or officer of Sellers
or any of their Affiliates or any "associates" or members of
the "immediate family" (as such terms are respectively defined
in Rule 12b-2 and Rule 16a-1 of the 1934 Act) of any such
director or officer, other than those entered into in the
ordinary course of the trading activities of the Company on
the NYSE with the Buyer or its Affiliates;
(x) any agreement with any member or officer
of the Company or with any "associate" or any member of the
"immediate family" (as such terms are respectively defined in
Rules 12b-2 and 16a-1 of the 1934 Act) of any such director or
officer; or
(xi) any other agreement, commitment,
arrangement or plan not made in the ordinary course of
business consistent with past practice that is material to the
Company.
(a)(b) Each agreement, contract, lease, commitment,
arrangement or plan disclosed in any Schedule to this Agreement or required to
be disclosed pursuant to this Section is a legal, valid and binding agreement of
the Company and is in full force and effect, and the Company is not nor, to the
best of the knowledge of such Seller Individual, is any other party thereto in
default or breach in any material respect under the terms of any such agreement,
contract, plan, lease, arrangement or commitment.
SECTION 3.14. Litigation. (a) Except as disclosed in Schedule
3.14, there is no action, suit, investigation or proceeding pending against, or
to the best of the knowledge of such Seller Individual threatened against or
affecting, the Company or any of its properties before any court or arbitrator
or other Governmental Entity as to which there is a substantial likelihood of a
determination or resolution adverse to the business of the Company and which, if
so adversely determined or resolved, could reasonably be expected to have a
Material Adverse Effect.
(b) Except as disclosed in Schedule 3.14, there is no action,
suit, investigation or proceedings pending against, or to the knowledge of such
Seller Individual threatened or affecting, such Seller Individual or its assets
or properties before any court or arbitrator or other Governmental Entity that,
if adversely determined, reasonably could be expected to have a material adverse
effect on the enforceability of this Agreement, on the ability of such Seller
Individual to perform its obligations under this Agreement, or on the
consummation of the transactions contemplated in this Agreement.
SECTION 3.15. Compliance with Laws and Court Orders; No
Defaults. Except as disclosed on Schedule 3.15: (a) the Company is not in
violation of, and has not since January 1, 1994 violated, any applicable law,
rule, regulation, judgment, injunction, order or decree, including any rule of
the NYSE, except for violations which do not and would not, individually or in
the aggregate, have a Material Adverse Effect.
(a)(b) The Company is not in default under, and no condition
exists that with notice or lapse of time or both would constitute a default
under, any agreement or other instrument binding upon the Company or any
license, franchise, permit or similar authorization held by the Company except
for defaults or conditions which do not and would not, individually or in the
aggregate, have a Material Adverse Effect.
SECTION 3.16. Properties. (a) Except for property and assets
owned by the Company disposed of after the Balance Sheet Date in the ordinary
course of business consistent with past practice, the Company has good title to,
or in the case of leased property has valid leasehold interests in, all property
and assets (whether real or personal, tangible or intangible) reflected on the
Balance Sheet or acquired after the Balance Sheet Date. None of such property or
assets is subject to any Liens, except:
(a) (i) Liens disclosed on the Balance Sheet;
(ii) Liens for taxes not yet due or being
contested in good faith (and for which adequate accruals or
reserves have been established on the Balance Sheet);
(iii) Liens that do not materially detract
from the value or materially interfere with any present or
intended use of such property or assets; or
(iv) Permitted Liens.
(b) Except with respect to securities held in inventory in the
ordinary course of business consistent with past practice, there are no
developments affecting any such property or assets (whether real or personal)
pending or, to the best of the knowledge of the Seller Individual threatened,
that might materially detract from the value of such property or assets or
materially interfere with any present or intended use of any such property or
assets.
(c) The property and assets owned or leased by the Company, or
that it otherwise has the right to use, constitute all of the property and
assets held for use or used in connection with the business of the Company and
are generally adequate to conduct such business as currently conducted and as
currently planned to be conducted.
SECTION 3.17. Intellectual Property. Since January 1, 1994,
the Company has not been a defendant in any action, suit, investigation or
proceeding relating to, or otherwise has been notified of, any alleged claim or
infringement of any intellectual property rights, and such Seller Individual has
no knowledge of any other alleged infringement by the Company. The Seller
Individual has no knowledge of any continuing infringement by any other Person
of the Company's intellectual property rights. None of the Company's
intellectual property rights is subject to any outstanding judgment, injunction,
order, decree or agreement restricting the use thereof by the Company or
restricting the licensing thereof by the Company to any Person. The Company has
not entered into any agreement to indemnify any other Person against any charge
of infringement of any intellectual property rights.
SECTION 3.18. Licenses and Permits. Schedule 3.18 correctly
describes each license, franchise, permit or other similar authorization
affecting, or relating to, the assets or business of the Company (the "Permits")
together with the name of the Governmental Entity issuing such Permit. Except as
set forth on Schedule 3.18, such Permits are valid and in full force and effect
and none of the Permits will be terminated or impaired or become terminable, in
whole or in part, as a result of the transactions contemplated hereby, except in
each case where the termination or impairment of any such Permit would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.19. Certain Assets . Except as provided in Schedule
3.19, no material intangible assets held by the Company on the Closing Date were
held or used by any Seller Individual at any time during the period from July
25, 1991 through August 10, 1993.
SECTION 3.20. Receivables. All accounts, notes receivable and
other receivables (other than receivables collected since the Balance Sheet
Date) reflected on the Balance Sheet are, and all accounts and notes receivable
arising from or otherwise relating to the business of the Company as of the
Closing Date will be, valid, genuine and fully collectible in the aggregate
amount thereof, subject to normal and customary trade discounts, less any
reserves for doubtful accounts recorded on the Balance Sheet or established in
the ordinary course thereafter. All accounts, notes receivable and other
receivables arising out of or relating to such business of the Company as of the
Balance Sheet Date have been included in the Balance Sheet or will be included
in the Closing Date Balance Sheet in accordance with GAAP.
SECTION 3.21. Disclosure by Seller. No representation or
warranty made by such Seller in this Agreement or in any certificate furnished
by such Seller to the Buyer in connection with this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements not misleading in light of the circumstances under which
they were made. There is no fact known to such Seller which materially adversely
affects, or in the future may (so far as can be reasonably foreseen) materially
adversely affect, the financial condition, business, assets, results of
operations, properties, or prospects of the Company which has not been set forth
in this Agreement or the schedules hereto.
SECTION 3.22. Finders' Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of such Seller Individual or the Company which is or who might
be entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.
SECTION 3.23. Employee Plans (a) Schedule 3.23(a) sets forth
all "employee benefit plans", as defined in Section 3(3) of ERISA, and all other
employee benefit arrangements, policies or payroll practices, including, without
limitation, severance pay, sick leave, vacation pay, salary continuation for
disability, retirement, deferred compensation, bonus, stock purchase, stock
option, hospitalization, medical insurance, life insurance, tuition
reimbursement and scholarship programs maintained for the benefit of or to which
contributions are made on behalf of current or former employees of the Company
and the Subsidiaries. Such plans, policies, programs and practices shall
hereinafter be referred to as the "Company Benefit Plans".
(b) None of the Company Benefit Plans is a "multiemployer
plan", as defined in Section 3(37) of ERISA ("Multiemployer Plan"). Neither the
Company nor or any trade or business (whether or not incorporated) which is or
has ever been treated as a single employer with the Company under Section
414(b), (c), (m) or (o) of the Code ("ERISA Affiliate") has incurred any
liability due to a complete or partial withdrawal from a Multiemployer Plan or
due to the termination or reorganization of a Multiemployer Plan, except for any
such liability which has been satisfied in full, and no events have occurred and
no circumstances exist that could reasonably be expected to result in any such
liability to the Company. Neither the Company nor any ERISA Affiliate has
engaged in any transaction described in Section 4212 of ERISA that could result
in liability to the Company with respect to any Multiemployer Plan.
(c) None of the Company Benefit Plans is a "single-employer
plan", as defined in Section 4001(a)(15) of ERISA ("Pension Plan"). With respect
to each Pension Plan sponsored by, or to which contributions are required of,
any ERISA Affiliate, there does not exist any accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of ERISA, whether
or not waived. Neither the Company nor any ERISA Affiliate has any outstanding
liability under Section 4062 of ERISA to the PBGC or to a trustee appointed
under Section 4042 of ERISA, and no events have occurred and no circumstances
exist that could reasonably be expected to result in any such liability to the
Company.
(d) Each of the Company Benefit Plans that are intended to
qualify under Section 401(a) of the Code, and the trusts maintained pursuant
thereto, have been determined to be exempt from federal income taxation under
Section 501 of the Code by the Internal Revenue Service (or remain within the
remedial amendment period for obtaining an initial determination of exemption
from tax), and no material event has occurred with respect to the operation of
any such Company Benefit Plans which could cause the loss of such qualification
or exemption or the imposition of any liability, penalty or tax under ERISA or
the Code.
(e) All contributions (including all employer contributions
and employee contributions) required to have been made under the Company Benefit
Plans or by law to any funds or trusts established thereunder or in connection
therewith have been made by the due date thereof (including any valid
extension), and all contributions for any period ending on or before the Closing
which are not yet due will have been paid or accrued by the Closing.
(f) Except as set forth in Schedule 3.23(f), there has been no
material violation of ERISA or the Code with respect to the filing of applicable
documents, notices or reports (including, but not limited to, annual reports
filed on IRS Form 5500) regarding the Company Benefit Plans with the Department
of Labor and the Internal Revenue Service, or the furnishing of such required
documents to the participants or beneficiaries of the Company Benefit Plans.
(g) True, correct and complete copies of the following
documents, with respect to each of the Company Benefit Plans, have been
delivered to the Buyer: (i) the plan and its related trust document, including
any amendments thereto; (ii) the most recent IRS Forms 5500 filed with the
Internal Revenue Service; (iii) summary plan descriptions; and (iv) written
communications to employees relating to the Company Benefit Plans.
(h) Except as set forth in Schedule 3.23(h), there are no
pending actions, claims or lawsuits which have been asserted or instituted
against the Company Benefit Plans, the assets of any of the trusts under such
Company Benefit Plans or the Company Benefit Plans' sponsor or the Company
Benefit Plans' administrator, or against any fiduciary of the Company Benefit
Plans with respect to such Company Benefit Plans (other than routine benefit
claims), and neither the Company nor any ERISA Affiliate has knowledge of any
facts which could reasonably form the basis for any such actions, claims or
lawsuits.
(i) Except as set forth in Schedule 3.23(i), the Company
Benefit Plans have been maintained, in all material respects, in accordance with
their express terms and with all provisions of ERISA and the Code (including
rules and regulations thereunder) and other applicable federal and state laws
and regulations, and neither the Company, nor any "party in interest" or
"disqualified person" with respect to the Company Benefit Plans has engaged in a
"prohibited transaction", as defined in Section 4975 of the Code or Section 406
of ERISA, or taken any actions, or failed to take any actions, which could
reasonably result in any material liability under ERISA or the Code. Except as
set forth in Schedule 3.23(i), no fiduciary has any liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any of the Company Benefit Plans,
and neither the Company nor any ERISA Affiliate has knowledge of any facts which
could reasonably form the basis for any such liability.
(j) The Company and each ERISA Affiliate that maintains a
"group health plan", as defined in Section 4980B of the Code, has complied in
all material respects with the notice and coverage continuation requirements of
Section 4980B of the Code and Section 601 of ERISA, and the regulations
thereunder ("COBRA"). None of the Company Benefit Plans provide retiree health
or life insurance benefits except as may be required by COBRA or at the expense
of the participant or the participant's beneficiary.
(k) Except as otherwise provided in this Agreement, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will: (i) result in any payment becoming due to
any current or former employee of the Company, (ii) increase any benefits
otherwise payable under any of the Company Benefit Plans or (iii) result in the
acceleration of the time of payment or vesting of any benefits provided under
any of the Company Benefit Plans.
(l) The Company has no contract, plan or commitment, whether
legally binding or not, to create any additional employee benefit plan or to
modify any existing Company Benefit Plans, except with respect to changes
required by ERISA, the Code or other applicable law.
(m) There has been no mass layoff or plant closing as defined
by the Worker Adjustment and Retraining Notification Act or any similar state or
local "plant closing" law with respect to the employees of the Company.
SECTION 3.24. Labor Matters. (a) Except as set forth on
Schedule 3.24(a), the Company is not a party to any labor or collective
bargaining agreement and there are no labor or collective bargaining agreements
which pertain to employees of the Company.
(b) Except as set forth on Schedule 3.24(b), no employees of
the Company are represented by any labor organization. No labor organization or
group of employees of the Company has made a pending demand for recognition or
certification, and there are no representation or certification proceedings
presently pending or threatened in writing to be brought or filed with the
National Labor Relations Board or any other labor relations tribunal or
authority. There are no organizing activities involving the Company pending with
any labor organization or group of employees of the Company.
(c) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor disputes
pending or threatened in writing against or involving the Company. There are no
unfair labor practice charges, grievances or complaints pending or threatened in
writing by or on behalf of any employee or group of employees of the Company
which, if individually or collectively resolved against the Company, could
result in a material liability.
(d) There are no complaints, charges or claims against the
Company pending or threatened in writing to be brought or filed with any public
or governmental authority, arbitrator, court or other Governmental Entity based
on, arising out of, in connection with, or otherwise relating to the employment
or termination of employment by the Company of any individual.
(e) The Company is in compliance with all laws, regulations
and orders relating to the employment of labor, including all such laws,
regulations and orders relating to wages, hours, collective bargaining,
discrimination, civil rights, safety and health, workers' compensation and the
collection and payment of withholding and/or social security taxes and any
similar employment tax except for immaterial non-compliance.
SECTION 3.25. Specialist Securities. On the date hereof, the
Company acts as the NYSE specialist unit for each of the securities listed in
Schedule III hereto. Except as disclosed in Schedule 3.25, such Seller
Individual has no reason to believe and has not been advised that the Company
may be required to cease acting as the NYSE specialist unit for any of such
securities, nor has the Company agreed to act as the NYSE specialist unit for
any security not listed in Schedule III hereto nor will it so agree without the
prior written approval of the Buyer.
SECTION 3.26. Accredited Investor; No Distribution. Such
Seller Individual is an "accredited investor" within the meaning of Rule 501(a)
under the Securities Act. Such Seller Individual is acquiring the promissory
notes forming part of the Seller Individuals Purchase Price to be received by it
pursuant to Section 2.3(b) for its own account for the purpose of investment and
not with a view to or for sale in connection with any distribution thereof in
violation of the Securities Act.
SECTION 3.27. Organizational and Other Documents. Except for
the Operating Agreement, there exists no agreement, document, arrangement or
understanding concerning or relating to the relative powers or rights of Persons
in the Company by way of ownership of Interests or otherwise.
SECTION 3.28. Year 2000 Compliance. The software and hardware
used directly or indirectly by the Company is Year 2000 Compliant (except for
software and hardware of the NYSE the use of which is incidental to the business
of specialist on the NYSE, as to which such Seller makes no representation).
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE RSF GROUP
Each of Joseph A. Rodriguez, James F. Bowen, III, Isidore
Fields and Robert L. Prosser, Sr. severally (but not jointly) as to himself but
not any other Seller represents and warrants to the Buyer as of the date hereof
and as of the Closing Date that:
SECTION 4.1. Authorization. The execution, delivery and
performance by such Seller Individual of this Agreement are within the powers of
such Seller Individual. This Agreement, when executed and delivered, constitutes
a legal, valid and binding agreement of such Seller Individual enforceable
against such Seller Individual in accordance with its terms.
SECTION 4.2. Governmental Authorization. The execution,
delivery and performance by such Seller Individual of this Agreement require no
action by or in respect of, or filing with, any governmental body, agency,
official, self-regulatory organization or other Governmental Entity by such
Seller Individual or the Company other than (i) review by the FTC and the DOJ
pursuant to the HSR Act with respect to antitrust matters and expiration or
early termination of the applicable waiting period under the HSR Act, (ii)
compliance with any applicable filing and approval requirements of the NYSE and
(iii) such other action or filings as have been or will be taken or made by the
Company or such Seller Individual on or before the Closing Date.
SECTION 4.3. Non-Contravention. The execution, delivery and
performance by such Seller Individual of this Agreement do not and will not (i)
violate the Operating Agreement of the Company, (ii) assuming compliance with
the matters referred to in Section 4.2, violate any applicable law, rule,
regulation, judgment, injunction, order or decree applicable to the Company or
such Seller Individual, (iii) require any consent or other action by any Person
under, constitute a default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of such Seller
Individual or the Company to a loss of any benefit to which such Seller
Individual or the Company is entitled under any agreement or other instrument
binding upon such Seller Individual or the Company or any license, franchise,
permit or other similar authorization held by such Seller Individual or the
Company or (iv) result in the creation or imposition of any Lien on any asset of
the Company, except for such violations, conflicts, defaults or Liens which
would not, individually or in the aggregate, have a Material Adverse Effect.
SECTION 4.4. Capitalization. As of the Balance Sheet Date,
such Seller Individual's Capital Account in the Company equaled the amount set
forth opposite such Seller Individual's name under the caption "Capital Account"
on Schedule II.
SECTION 4.5. Ownership of Interests. Except as qualified on
the signing date of this Agreement by the information set forth in Schedule 4.5,
but without such qualification on the Closing Date, such Seller Individual is
the record and beneficial owner of its Seller Interest, free and clear of any
Lien and any other limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of the Interests) other than those
restrictions imposed by the Operating Agreement, and will transfer and deliver
to the Buyer at the Closing valid, good and marketable title to its Seller
Interest free and clear of any Lien and any such limitation or restriction and,
assuming the execution and delivery of this Agreement by the parties hereto and
the due termination of the Operating Agreement in accordance with the Limited
Liability Company Act of the State of Delaware at the Closing Date (provided,
however, that such termination will be effective immediately after the Closing),
free and clear of any restrictions imposed by the Operating Agreement.
SECTION 4.6. Intercompany Accounts. Schedule 4.6 contains a
complete list of all intercompany balances as of the Balance Sheet Date between
the members of the RSF Group on the one hand, and the Company, on the other
hand. Since the Balance Sheet Date, there has not been any accrual of liability
by the Company to such member of the RSF Group or other transaction between the
Company and such member of the RSF Group, except in the ordinary course of
business of the Company consistent with past practice.
SECTION 4.7. Litigation. (a) Except as disclosed in Schedule
3.14, to the knowledge of such Seller Individual, there is no action, suit,
investigation or proceeding pending against, or threatened against or affecting,
the Company or any of its properties before any court or arbitrator or other
Governmental Entity as to which there is a substantial likelihood of a
determination or resolution adverse to the business of the Company and which, if
so adversely determined or resolved, could reasonably be expected to have a
Material Adverse Effect.
(b) Except as disclosed in Schedule 3.14, there is no action,
suit, investigation or proceedings pending against, or to the knowledge of such
Seller Individual threatened or affecting, such Seller Individual or its assets
or properties before any court or arbitrator or other Governmental Entity that,
if adversely determined, reasonably could be expected to have a material adverse
effect on the enforceability of this Agreement, on the ability of such Seller
Individual to perform its obligations under this Agreement, or on the
consummation of the transactions contemplated in this Agreement.
SECTION 4.8. Certain Assets . Except as provided in Schedule
4.8, no material intangible assets held by the Company on the Closing Date were
held or used by any member of the RSF Group at any time during the period from
July 25, 1991 through August 10, 1993.
SECTION 4.9. Disclosure by Seller. No representation or
warranty made by such Seller in this Agreement or in any certificate furnished
by such Seller to the Buyer in connection with this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements not misleading in light of the circumstances under which
they were made. There is no fact known to such Seller which materially adversely
affects, or in the future may (so far as can be reasonably foreseen) materially
adversely affect, the financial condition, business, assets, results of
operations, properties, or prospects of the Company which has not been set forth
in this Agreement or the schedules hereto. The Balance Sheet and the Closing
Date Balance Sheet (except for the absence of footnotes thereto so long as the
Balance Sheet or Closing Date Balance Sheet, as applicable, is only subject to
normal recurring adjustments, none of which were or are expected, individually
or in the aggregate, to be material in amount) present fairly, in all material
respects, the financial position of the Company as of the dates thereof and its
results of operations and changes in financial position for the periods then
ended in conformity with GAAP and, if applicable, in conformity with the rules
and regulations of the NYSE or other applicable Governmental Entity.
SECTION 4.10. Finders' Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of such Seller Individual which is or who might be entitled to
any fee or commission in connection with the transactions contemplated by this
Agreement.
SECTION 4.11. Accredited Investor; No Distribution. Such
Seller Individual is an "accredited investor" within the meaning of Rule 501(a)
under the Securities Act. Such Seller Individual is acquiring the promissory
notes forming part of the Seller Individuals Purchase Price to be received by it
pursuant to Section 2.3(b) (i) for its own account for the purpose of investment
(except as permitted under the proviso contained in Section 7.7) and (ii) not
with a view to or for sale in connection with any distribution thereof in
violation of the Securities Act.
SECTION 4.12. No Actual Knowledge of Misrepresentations. To
the best of such Seller Individual's actual knowledge, each of the
representations and warranties set forth in Article III of this Agreement with
respect to the Company is true, correct and complete in all material respects as
of the date hereof and as of the Closing Date.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF NDB AND SHD
Each of NDB and SHD jointly and severally represents and
warrants to the Buyer as of the date hereof and as of the Closing Date that:
SECTION 5.1. Corporate Existence and Power. Each of NDB and
SHD is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization.
SECTION 5.2. Corporate Authorization. The execution, delivery
and performance by each of NDB and SHD of this Agreement and the transactions
contemplated hereby are within the respective corporate powers of NDB and SHD
and have been (subject to approval by the board of directors of NDB) duly
authorized by all necessary corporate or other action on the part of each of NDB
and SHD. This Agreement, when executed and delivered, constitutes a legal, valid
and binding agreement of each of NDB and SHD enforceable against NDB and SHD in
accordance with its terms.
SECTION 5.3. Governmental Authorization. The execution,
delivery and performance by NDB and SHD of this Agreement and the transactions
contemplated herein require no action by or in respect of, or filing with, any
governmental body, agency, official, self-regulatory organization or any other
Governmental Entity by NDB or SHD other than (i) review by the FTC and the DOJ
pursuant to the HSR Act with respect to antitrust matters and expiration or
early termination of the applicable waiting period under the HSR Act, (ii)
compliance with any applicable filing and approval requirements of the NYSE and
(iii) such other action or filings as have been or will be taken or made by NDB
or SHD on or before the Closing Date.
SECTION 5.4. Non-Contravention. The execution, delivery and
performance by NDB and SHD of this Agreement do not and will not (i) violate the
Operating Agreement of the Company, (ii) assuming compliance with the matters
referred to in Section 5.3, violate any applicable law, rule, regulation,
judgment, injunction, order or decree applicable to the Company, NDB or SHD,
(iii) require any consent or other action by any Person under, constitute a
default by NDB or SHD under, or to the knowledge of NDB or SHD, give rise to any
right of termination, cancellation or acceleration of any right or obligation of
NDB, SHD or the Company to a loss of any benefit to which NDB, SHD or the
Company is entitled under, any agreement or other instrument binding upon NDB,
SHD or the Company or any license, franchise, permit or other similar
authorization held by NDB, SHD or the Company or (iv) to the knowledge of NDB or
SHD, result in the creation or imposition of any Lien on any asset of the
Company, except for such violations, conflicts, defaults or Liens which would
not have a Material Adverse Effect.
SECTION 5.5. Capitalization. As of the Balance Sheet Date,
NDB's and SHD's Capital Accounts in the Company equaled the amount set forth
opposite their respective names under the caption "Capital Account" on Schedule
II.
SECTION 5.6. Ownership of Interests. Each of NDB and SHD is
the record and beneficial owner of its Seller Interest, free and clear of any
Lien and any other limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of the Interests) other than those
restrictions imposed by the Operating Agreement, and will transfer and deliver
to the Buyer at the Closing valid, good and marketable title to its Seller
Interest free and clear of any Lien and any such limitation or restriction and,
assuming the execution and delivery of this Agreement by the parties hereto and
the due termination of the Operating Agreement in accordance with the Limited
Liability Company Act of the State of Delaware at the Closing Date (provided,
however, that such termination will be effective immediately after the Closing),
free and clear of any restrictions imposed by the Operating Agreement.
SECTION 5.7. Ownership and Lease of NYSE Seats. The NYSE seats
owned by the Company are owned as set forth on Schedule 5.7. At the Closing, the
Company will have valid, good and marketable title to the such NYSE seats, free
and clear of any Lien (except lease agreements and ABC agreements disclosed in
Schedule 5.7) or other restriction or limitation.
SECTION 5.8. Litigation. (a) Except as disclosed in Schedule
5.8, there is no action, suit, investigation or proceeding pending against, or
to the knowledge of NDB or SHD threatened against or affecting, the Company or
any of its properties before any court or arbitrator or other Governmental
Entity as to which there is a substantial likelihood of a determination or
resolution adverse to the business of the Company and which, if so adversely
determined or resolved, could reasonably be expected to have a Material Adverse
Effect.
(b) Except as disclosed in Schedule 3.14, there is no action,
suit, investigation or proceedings pending against, or to the knowledge of such
Seller threatened or affecting, such Seller or its assets or properties before
any court or arbitrator or other Governmental Entity that, if adversely
determined, reasonably could be expected to have a material adverse effect on
the enforceability of this Agreement, on the ability of such Seller to perform
its obligations under this Agreement, or on the consummation of the transactions
contemplated in this Agreement.
SECTION 5.9. Certain Assets. Except as provided in Schedule
5.9, no material intangible assets held by the Company on the Closing Date were
held or used by NDB or SHD at any time during the period from July 25, 1991
through August 10, 1993.
SECTION 5.10. Intercompany Accounts. Schedule 5.10 contains a
complete list of all intercompany balances as of the Balance Sheet Date between
NDB, SHD and their Affiliates (except the Buyer and its Affiliates), on the one
hand, and the Company, on the other hand. Since the Balance Sheet Date, there
has not been any accrual of liability by the Company to NDB, SHD or any of their
Affiliates or other transaction between the Company and NDB, SHD or any of their
Affiliates (except the Buyer and its Affiliates), except in the ordinary course
of business of the Company consistent with past practice and except as disclosed
in the financial statements of the Company or the Closing Date Balance Sheet
referred to in Section 3.10.
SECTION 5.11. Disclosure by Seller. No representation or
warranty made by such Seller in this Agreement or in any certificate furnished
by such Seller to the Buyer in connection with this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements not misleading in light of the circumstances under which
they were made. There is no fact known to such Seller which materially adversely
affects the financial condition, business, assets, results of operations,
properties, or prospects of the Company which has not been set forth in this
Agreement or the schedules hereto. The Balance Sheet and the Closing Date
Balance Sheet (except for the absence of footnotes thereto so long as the
Balance Sheet or Closing Date Balance Sheet, as applicable, is only subject to
normal recurring adjustments, none of which were or are expected, individually
or in the aggregate, to be material in amount) present fairly, in all material
respects, the financial position of the Company as of the dates thereof and its
results of operations and changes in financial position for the periods then
ended in conformity with GAAP and, if applicable, in conformity with the rules
and regulations of the NYSE or other applicable Governmental Entity.
SECTION 5.12. Finders' Fees. There is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of NDB or SHD who might be entitled to any fee or commission in
connection with the transactions contemplated by this Agreement.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to each Seller as of the
date hereof and as of the Closing Date that:
SECTION 6.1. Existence and Power. The Buyer is a limited
liability company duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization.
SECTION 6.2. Authorization. The execution, delivery and
performance by the Buyer of this Agreement and the transactions contemplated
hereby are within the limited liability company powers of the Buyer and have
been duly authorized by all necessary action on the part of the Buyer. This
Agreement, when executed and delivered, constitutes a legal, valid and binding
agreement of the Buyer enforceable against the Buyer in accordance with its
terms.
SECTION 6.3. Governmental Authorization. The execution,
delivery and performance by the Buyer of this Agreement and the transactions
contemplated hereby require no action by or in respect of, or filing with, any
governmental body, agency or official or any other Governmental Entity other
than (i) review by the FTC and the DOJ pursuant to the HSR Act with respect to
antitrust matters and expiration or early termination of the applicable waiting
period under the HSR Act, (ii) compliance with any applicable filing and
approval requirements of the NYSE and (iii) such other action or filings as have
been or will be taken or made on or before the Closing Date.
SECTION 6.4. Non-Contravention. The execution, delivery and
performance by the Buyer of this Agreement do not and will not (i) violate the
certificate of formation, Operating Agreement or other organizational documents
of the Buyer or (ii) assuming compliance with the matters referred to in Section
6.3, violate any applicable law, rule, regulation, judgment, injunction, order
or decree.
SECTION 6.5. Finders' Fees. There is no investment banker,
broker, finder or other intermediary that has been retained by or is authorized
to act on behalf of the Buyer who might be entitled to any fee or commission
from any Seller or any of its Affiliates upon consummation of the transactions
contemplated by this Agreement.
SECTION 6.6. Litigation. There is no action, suit,
investigation or proceeding pending against, or to the best of the Buyer's
knowledge, threatened against or affecting, the Buyer before any court or
arbitrator or any Governmental Entity which seeks to enjoin or rescind the
transactions contemplated by this Agreement or otherwise prevent the Buyer from
complying with the terms and provisions of this Agreement as to which there is a
substantial likelihood of a determination or resolution adverse to the Buyer.
SECTION 6.7. Approvals and Financing. The Buyer has no reason
to believe it will not obtain all approvals of the NYSE required to consummate
this Agreement. The Buyer confirms to Sellers that on the date hereof it has
adequate financial resources to provide the capital required to reasonably
obtain NYSE approval on terms satisfactory to it to consummate the transactions
contemplated by this Agreement and make payments to Sellers as required by this
Agreement at the Closing.
ARTICLE VII.
COVENANTS OF THE SELLERS
Each Seller Individual (severally and not jointly) and NDB and
SHD (jointly and severally) agrees as follows:
SECTION 7.1. Conduct of the Company. (a) From the date hereof
until the consummation of the transactions contemplated hereby, each Seller
shall cause the Company to conduct its business in the ordinary course
consistent with past practice and use its best efforts to preserve intact its
business organizations and relationships with third parties and keep available
the services of its present officers and employees. Without limiting the
generality of the foregoing, from the date hereof until the consummation of the
transactions contemplated hereby, each Seller shall cause the Company to not:
(i) make any material change in the conduct
of the business of the Company or enter into any transaction
other than in the ordinary course of business consistent with
past practice;
(ii) adopt or propose any change in its
certificate of formation or Operating Agreement or issue any
additional equity interests or grant any option, warrant or
right to acquire any equity interests or issue any security
convertible into or exchangeable for equity interests or alter
in any way any of its outstanding interests or make any change
in outstanding equity interests, whether by reason of a
reclassification, recapitalization or combination, equity
dividend or otherwise;
(iii) merge or consolidate with any other
Person or acquire a material amount of assets of any other
Person;
(iv) except for securities held in
inventory, sell, lease, license or otherwise dispose of any
material assets or property;
(v) except in the ordinary course of
business consistent with past practice, pay, lend or advance
any amount to, or sell, transfer or lease any properties or
assets to, or enter into any agreement or arrangement with,
any of its Affiliates except as expressly permitted by this
Agreement or as has been approved in writing by the Buyer;
(vi) except as expressly required by the
Operating Agreement, redeem, retire, purchase or otherwise
acquire, directly or indirectly, any ownership interests of
the Company or any other Person or incur any Indebtedness for
any reason;
(vii) except for ordinary course trading
activity on the NYSE, make, enter into, modify, amend in any
material respect or terminate any contract, lease or other
agreement, where such contract, lease or other agreement (A)
entails payments in excess of $25,000 in the aggregate or (B)
has a term in excess of 9 months;
(viii) enter into any new (or amend any
existing) employee benefit plan, program or arrangement or any
new (or amend any existing) employment, severance or
consulting agreement or grant any increase in the compensation
of officers or employees (including any such increase pursuant
to any bonus, pension, profit-sharing or other plan or
commitment); or
(ix) except for interest accrued on the
Capital Accounts in the ordinary course of business (which
interest may be paid by the Company on or prior to the Closing
Date) or as otherwise expressly permitted by this Agreement,
pay any intercompany accounts (including, without limitation,
those set forth on Schedules 3.12, 4.6 and 5.10), or
(x) agree or commit to do any of the
foregoing.
(b) Each Seller shall cause the Company to not (i) take or
agree or commit to take any action that would make any representation and
warranty of such Seller hereunder inaccurate in any material respect at, or as
of any time prior to, the Closing Date or (ii) omit or agree or commit to omit
to take any action necessary to prevent any such representation or warranty from
being inaccurate in any material respect at any such time.
SECTION 7.2. Access to Information. From the date hereof until
the Closing Date, each Seller shall cause the Company to (i) give the Buyer, its
counsel, financial advisors, auditors and other authorized representatives full
access to the offices, properties, books and records of the Company during
normal business hours and upon reasonable prior notice, (ii) furnish to the
Buyer, its counsel, financial advisors, auditors and other authorized
representatives such financial and operating data and other information relating
to the Company as such Persons may reasonably request and (iii) instruct the
employees, counsel and financial advisors of such Seller or the Company to
cooperate with the Buyer in its investigation of the Company, all for the
purpose of enabling the Buyer and its authorized representatives to conduct
business and financial reviews, investigations and studies of the Company. No
investigation by the Buyer or other information received by the Buyer shall
operate as a waiver or otherwise affect any representation, warranty or
agreement given or made by the Company or such Seller hereunder.
SECTION 7.3. Notices of Certain Events. Each Seller shall
cause the Company to promptly notify the Buyer of:
(i) any notice or other communication from
any Person alleging that the consent of such Person is or may
be required in connection with the transactions contemplated
by this Agreement;
(ii) any notice or other communication from
any governmental or regulatory agency or authority or any
other Governmental Entity in connection with the transactions
contemplated by this Agreement; and
(iii) any actions, suits, claims,
investigations or proceedings commenced or, to the best of
their knowledge threatened against, relating to or involving
or otherwise affecting such Seller or the Company that, if
pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 3.14 or
that relate to the consummation of the transactions
contemplated by this Agreement.
SECTION 7.4. Noncompetition. (a) Each Seller Individual agrees
that for a period of one (1) full year from the Closing Date, neither he nor any
of his Affiliates shall engage, either directly or indirectly, as a principal or
for his own account or solely or jointly with others, or as a stockholder in any
corporation or joint stock association, in business as a specialist (or
equivalent status), or apply for registration as a specialist, in any stock or
option in which the Company or the Buyer is engaged, either individually or
jointly with others, as a specialist (or equivalent status) at the date hereof;
provided that nothing herein shall prohibit the acquisition by such Seller
Individual or any of its Affiliates of (i) less than 1% of the securities of a
publicly traded company or (ii) a diversified company having not more than 1% of
its sales (based on its latest published annual audited financial statements)
attributable to such business. Notwithstanding anything to the contrary in this
Section 7.4(a), this Section 7.4(a) shall not be construed to prohibit any
Seller Individual from engaging in business as a specialist employed by, or
otherwise acting on behalf of, the Buyer.
(a)(b) Each of NDB and SHD agrees that for a period of one (1)
full year from the Closing Date, neither it nor any of its Subsidiaries shall
engage, either directly or indirectly, in business as a specialist, or apply for
registration as a specialist, on the New York Stock Exchange in any stock in
which the Company is engaged, as a specialist on the New York Stock Exchange at
the date hereof; provided that nothing herein shall prohibit the acquisition by
NDB or any of its Subsidiaries of (i) less than 5% of the securities of a
publicly traded company or (ii) a diversified company having not more than 1% of
its sales (based on its latest published annual audited financial statements)
attributable to such business.
(c) If any provision contained in this Section shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provisions
of this Section, but this Section shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein. It is the intention
of the parties that if any of the restrictions or covenants contained herein is
held to cover a geographic area or to be for a length of time which is not
permitted by applicable law, or in any way construed to be too broad or to any
extent invalid, such provision shall not be construed to be null, void and of no
effect, but to the extent such provision would be valid or enforceable under
applicable law, a court of competent jurisdiction shall construe and interpret
or reform this Section to provide for a covenant having the maximum enforceable
geographic area, time period and other provisions (not greater than those
contained herein) as shall be valid and enforceable under such applicable law.
Such Seller acknowledges that the Buyer would be irreparably harmed by any
breach of this Section and that there would be no adequate remedy at law or in
damages to compensate the Buyer for any such breach. Such Seller agrees that the
Buyer shall be entitled to injunctive relief requiring specific performance by
such Seller of this Section, and such Seller consents to the entry thereof.
SECTION 7.5. No Transfer of Seller Interests. Each Seller
agrees that it shall not sell, assign, transfer, pledge, abandon or otherwise
convey any Seller Interests (including, without limitation, pursuant to or in
accordance with the Operating Agreement) other than pursuant to this Agreement
or the sale of the membership interests of Cynthia Kellogg, Harvey Silverman and
John Duffy to NDB.
SECTION 7.6. Material Agreements. Each Seller agrees that it
shall not amend, supplement, extend, refinance, replace or otherwise modify any
agreement relating to the Company in any respect (including, without limitation,
the Operating Agreement) without the prior written consent of the Buyer.
SECTION 7.7. No Transfer of Promissory Notes. Each Seller
Individual agrees that it shall not sell, assign, transfer, pledge, abandon or
otherwise convey any of its interest in the promissory note issued to it
pursuant to Section 2.3(b) of this Agreement; provided, however, that, subject
to the terms of their respective promissory notes, Joseph A. Rodriguez and James
F. Bowen, III may sell, assign, transfer or pledge their respective promissory
notes to satisfy in full or in part their respective Indebtedness under the
respective Letter Agreements to which they are a party.
SECTION 7.8. Transfer of Seats. Each of the Sellers agrees to
take all steps necessary or desirable, in the sole discretion of the Buyer, to
implement and effectuate any action requested by the Buyer with respect to the
NYSE seats and/or the lease agreements and ABC agreements relating thereto.
ARTICLE VIII.
COVENANTS OF THE BUYER AND THE SELLERS
The Buyer and the Sellers agree that:
SECTION 8.1. Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, the Buyer and the Sellers shall use their
reasonable best efforts to take, or cause to be taken (and the Sellers shall
cause the Company to take), all actions and to do, or cause to be done, all
things necessary or desirable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement. The Buyer and each
Seller agree to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be
reasonably necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement. Without limiting
the generality of the foregoing, in the event the Buyer determines to effectuate
through a merger the transactions contemplated by this Agreement, the Buyer and
Sellers shall use their reasonable best efforts to take, or cause to be taken
(and the Sellers shall cause the Company to take), all actions and to do, or
cause to be done (and the Sellers shall cause the Company to do), all things
necessary or desirable under applicable laws and regulations to consummate such
merger, and agree to execute and deliver such other documents, certificates,
agreements and other writings and to take such other actions as may be necessary
or desirable in order to consummate or implement such merger.
SECTION 8.2. Certain Filings. The Buyer and each Seller shall
cooperate with one another (a) in determining whether any action by or in
respect of, or filing with, any governmental body, agency, official or authority
or self-regulatory organization or any other Governmental Entity is required, or
any actions, consents, approvals or waivers are required to be obtained from
parties to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (b) in taking such actions or
making any such filings, furnishing information as may be reasonably required in
connection therewith and seeking to timely obtain any such actions, consents,
approvals or waivers.
SECTION 8.3. Public Announcements. The parties agree to
consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the transactions contemplated hereby
and, except as may be required by applicable law or any listing agreement with
any national securities exchange, will not issue any such press release or make
any such public statement prior to such consultation.
SECTION 8.4. Intercompany Accounts. All intercompany accounts
between the Sellers or their Affiliates, on the one hand, and the Company, on
the other hand, as of the Closing shall be settled in accordance with their
terms or in the ordinary course consistent with past practice, as the case may
be.
ARTICLE IX.
SECTION 9.1. Tax Definitions. The following terms, as used
herein, have the following meanings:
"Buyer Indemnitee" means Buyer and any of its successors and
assigns, Affiliates, officers, directors, employees, agents and, effective upon
the Closing, the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Final Determination" means (i) any final determination of
liability in respect of a Tax that, under applicable law, is not subject to
further appeal, review or modification through proceedings or otherwise
(including the expiration of a statute of limitations or a period for the filing
of claims for refunds, amended returns or appeals from adverse determinations)
or (ii) the payment of Tax by the Buyer, any Seller or any of their Affiliates,
whichever is responsible for payment of such Tax under applicable law, with
respect to any item disallowed or adjusted by a Taxing Authority, provided that
such responsible party, determines that no action should be taken to recoup such
payment and the other party agrees.
"Pre-Closing Tax Period" means any Tax period ending on or
before the close of business on the Closing Date and, for a Tax period beginning
before and ending after the Closing Date, the portion of that period ending on
the close of business on the Closing Date.
"Seller Indemnitee" means any and all of the Sellers, and any
of their successors and assigns, Affiliates, officers, directors, employees, and
agents.
"Tax" means (i) any net income, alternative or add-on minimum
tax, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, license, withholding on amounts paid to or by the
Company, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, addition to tax or additional amount
imposed by any Governmental Entity (domestic or foreign) responsible for the
imposition of any such tax (a "Taxing Authority").
"Tax Indemnification Period for Buyer Indemnitee" means any
Pre-Closing Tax Period of the Company.
"Tax Indemnification Period for Seller Indemnitees" means any
Tax Period (or portion thereof) that is not a Pre-Closing Tax Period and that
begins on or after the Closing Date.
"Tax Return" means any return, declaration, report, claim for
refund, information return, form or statement relating to Taxes required to be
filed with or delivered to any Taxing Authority, including any schedule or
attachment thereto, and including any amendment thereof, by or on behalf of the
Company. Any reference in this Article IX to "Tax Returns with respect to any
Pre-Closing Tax Period" shall include any estimated tax returns required to be
filed on or prior to the Closing Date.
"Tax Sharing Agreement" means a Tax sharing agreement or
arrangement (whether or not written) binding on the Company pursuant to which
the Company may be liable for the Tax of another Person or required to make a
payment to another Person with respect to a Tax detriment or a Tax benefit but
not including any operating agreement or partnership agreement of the Company.
SECTION 9.2. Tax Representations. The Sellers represent as
of the date hereof and as of the Closing Date that:
(a) The Company has, at all times during its existence, been
treated as a partnership for federal, state, and local income tax purposes.
(b) Except as set forth on Schedule 9.2:
(i) all Tax Returns with respect to any
Pre-Closing Tax Period due as of the date hereof have been
filed;
(ii) as of the time of filing, the Tax
Returns with respect to any Pre-Closing Tax Period correctly
set forth all information required to be shown therein;
(iii) all Taxes shown as due and payable on
the Tax Returns that have been filed with respect to any
Pre-Closing Tax Period have been timely paid, or withheld and
remitted to the appropriate Taxing Authority;
(iv) the charges, reserves and accruals of
liabilities for Taxes with respect to the Company for any
Pre-Closing Tax Period (including any Pre-Closing Tax Period
for which no Return has yet been filed) reflected on the
Closing Date Balance Sheet (rather than in any notes thereto)
of the Company (excluding any reserve for deferred income
taxes established to reflect timing differences between book
and Tax Income) are adequate to cover such Taxes;
(v) all Tax Returns with respect to any
Pre-Closing Tax Period filed with respect to Tax years of the
Company through the Tax year ended December 31, 1995 have been
examined and closed or are Tax Returns with respect to which
the applicable period for assessment under applicable law,
after giving effect to extensions or waivers, has expired;
(vi) the Company is not delinquent in the
payment of any Tax, and has not requested any extension of
time within which to file any Tax Return with respect to any
Pre-Closing Tax Period;
(vii) the Company has not granted any
extension or waiver of the statute of limitations period
applicable to any Tax Return, which period (after giving
effect to such extension or waiver) has not yet expired;
(viii) to the best of the Sellers' knowledge
there is no claim, audit, action, suit, proceeding, or
investigation now pending or threatened against or with
respect to the Company in respect of any Tax;
(ix) there are no requests for rulings or
determinations in respect of any Tax pending between the
Company and any Taxing Authority;
(x) there are no Liens for Taxes upon the
assets of the Company;
(xi) none of the property owned or used by
the Company is subject to a lease, other than a "true" lease
for federal income tax purposes;
(xii) none of the property owned by the
Company is "tax-exempt use property" within the meaning of
Section 168(h) of the Code;
(xiii) the Company is not a "publicly traded
partnership" as defined under Section 7704 of the Code;
(xiv) the Company is not and never has been
party to or bound by any Tax Sharing Agreement;
(xv) the Company is not and has not been a
member of an affiliated, consolidated, combined or unitary
group;
(xvi) the Company is, and on the Closing
Date will be, in possession of all books and records with
respect to tax matters pertinent to the Company;
(xvii) all information set forth in the
notes to the balance sheet of December 31, 1998 relating to
Tax matters is true and complete; and
(xviii) no sale of any Seller Interest
pursuant to this Agreement shall constitute the disposition of
a United States real property interest by a non-resident alien
individual or a foreign corporation for purposes of section
897 of the Code.
(c) Schedule 9.2(c) contains a list of all jurisdictions
(whether foreign or domestic) to which any Tax is properly payable by the
Company.
SECTION 9.3. Post-Closing Tax Filings and Covenants. (a) All
Tax Returns with respect to any Pre-Closing Tax Period required to be filed
between the date hereof and the Closing Date (i) will be filed when due in
accordance with all applicable laws and (ii) as of the time of filing, will
correctly set forth all the information required to be shown therein.
(a)(b) Sellers shall be responsible for all Taxes payable and
are entitled to all refunds and deductions for all taxable periods relating to
the Company ending on or prior to the Closing Date, except for charges, reserves
and accrual of liabilities reflected on the Closing Date Balance Sheet and
described in Section 9.2(b)(iv). Sellers and the Company shall prepare or cause
to be prepared and file or cause to be filed all Tax Returns for the Company due
prior to the Closing Date.
(c) Without the prior written consent of the Buyer, neither
Sellers nor the Company shall, to the extent it may affect or relate to the
Company for the Tax Indemnification Period for Buyer Indemnitee, make or change,
or allow any Affiliate of any Seller to make or change, any tax election, change
any annual tax accounting period, adopt or change any method of tax accounting,
file any amended Tax Return, enter into any closing agreement, settle any Tax
claim or assessment, surrender any right to claim a Tax refund, consent to any
extension or waiver of the limitations period applicable to any Tax claim or
assessment or take or omit to take any other action, if any such action or
omission would have the effect of increasing the Tax liability of the Company or
any Buyer Indemnitee. Such consent of Buyer, however, shall not be unreasonably
withheld and shall take into account the past tax accounting customs and
practices of the Company.
(d) Without the prior written consent of NDB, on behalf of the
NDB Group, and the Members' Representative, on behalf of the Seller Individuals,
neither Buyer nor the Company shall, to the extent it may affect or relate to
the Company for the Tax Indemnification Period for Seller Indemnitees, make or
change, or allow any Affiliate of the Buyer or of the Company to make or change,
any tax election, change any annual tax accounting period, adopt or change any
method of tax accounting, file any amended Tax Return with respect to any tax
period ending within four years after the Closing Date, enter into any closing
agreement, settle any Tax claim or assessment, surrender any right to claim a
Tax refund, consent to any extension or waiver of the limitations period
applicable to any Tax claim or assessment or take or omit to take any other
action, if any such action or omission would have the effect of increasing the
Tax liability of the Company with respect to any Pre-Closing Tax Period or any
Seller Indemnitee. Such consent of NDB, on behalf of the NDB Group, and the
Members' Representative, on behalf of the Seller Individuals, however, shall not
be unreasonably withheld.
(e) The Company shall not make any payment of Taxes to any
person or any Taxing Authority, except for such Taxes as are due or payable or
have been properly estimated in accordance with applicable law as applied in a
manner consistent with past practices of Sellers or the Company.
(f) Each Seller will, on the Closing Date, provide the Buyer
with a written statement that, in form and substance, satisfies the requirements
of Treasury regulation section 1.1445-2(b)(2) and certifies that such Seller is
not a foreign person within the meaning of Code section 1445(f)(3) and Treasury
regulation section 1.1445-2(b)(2)(i).
(g) NDB and SHD will each recognize gain in an amount equal to
their gain realized for federal income tax purposes on the sale of their
respective property interests resulting from this Agreement and will pay an
amount of federal income tax on such gain equal to such gain multiplied by the
highest marginal rate of tax imposed by the Code on corporations for the taxable
year in which the sale occurs.
SECTION 9.4. Other Tax Matters. All transfer, documentary,
sales, use, stamp, registration, value added and other such Taxes and fees
arising out of the transactions contemplated by this Agreement (including any
New York Real Estate Transfer Tax, New York City Real Property Transfer Tax and
any similar Tax imposed in other states or subdivisions) shall be borne and paid
by Sellers when due, and Sellers will, at their own expense, file all necessary
Tax returns and other documentation with respect to all such Taxes and fees,
and, if required by applicable law, the Buyer will, and will cause its
Affiliates to, join in the execution of any such Tax returns and other
documentation.
SECTION 9.5. Cooperation on Tax Matters. (a) The Buyer shall
prepare or cause to be prepared and file any Tax Returns due after the Closing.
Sellers shall cooperate fully in connection with the preparation and filing of
any such Tax Returns. The Buyer shall notify NDB (on behalf of the NDB Group)
and the Members' Representative of any amounts related to such Tax Returns that
are the responsibility of the Sellers under the provisions of this Article. If
NDB or the Members' Representative, respectively, do not object within 10
Business Days of the receipt of such notice, Sellers shall remit to the Buyer
any such amounts. If NDB or the Members' Representative gives notice to the
Buyer within 10 business days that NDB or the Members' Representative,
respectively objects to the notice, then (a) the parties shall attempt in good
faith to resolve their differences during the ten (10) business day period
following the date of delivery of the notice of objection from the Members'
Representative or NDB (the "Closing Return Resolution Period"), and (b) if the
parties fail to resolve their disagreement during the Closing Return Resolution
Period, each party shall select a representative from a nationally or regionally
recognized accounting firm, and these two individuals shall select a third such
person, and this group of three individuals shall resolve the dispute by a
determination agreed to by a majority of such group within twenty-one (21) days
after the individuals are initially identified in a writing among the parties.
Any resolution of any such dispute entered into in compliance with this
subsection (a) shall also be binding on the parties in the same manner as if a
final judgment or decree had been entered by a court of competent jurisdiction
in the amount of the determination.
Sellers and the Buyer shall cooperate fully in connection with
any audit, litigation, or other proceeding with respect to Taxes. The Buyer
shall retain for three years the records and information that are reasonably
relevant to any such audit, litigation or other proceeding.
(a)(b) The Buyer and Sellers further agree, upon request, to
use all reasonable efforts to obtain any certificate or other document from any
governmental authority or customer of the Company or any other person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including, but not limited to, with respect to the transactions contemplated
hereby).
SECTION 9.6. Tax Indemnification. (a) Each Seller Individual
hereby severally (but not jointly) indemnifies each Buyer Indemnitee against and
agrees to hold each Buyer Indemnitee harmless from any (x) Tax of the Company or
any successor of the Company related to the Tax Indemnification Period for Buyer
Indemnitees, except for charges, reserves and accrual of liabilities reflected
on the Closing Date Balance Sheet and described in Section 9.2(b)(iv), (y) Tax
of the Company or any successor of the Company resulting from a breach of any
provisions of this Article IX, and (z) liabilities, costs, expenses (including,
without limitation, reasonable expenses of investigation and attorneys' fees and
expenses), losses, damages, assessments, settlements or judgments arising out of
or incident to the imposition, assessment, or assertion of any Tax described in
(x) or (y), including those incurred in the contest in good faith in appropriate
proceedings relating to the imposition, assessment or assertion of any such Tax,
and any liability as transferee. The sum of (x), (y) and (z) is referred to
herein as a "Buyer Tax Loss."
(a)(b) Each of NDB and SHD hereby guarantees the full payment,
when due, of the obligations of the Seller Individuals provided for in Section
9.6(a) of this Agreement.
(c) The Buyer hereby indemnifies each Seller Indemnitee
against and agrees to hold each Seller Indemnitee harmless from any (x) Tax of
the Company or any successor of the Company related to the Tax Indemnification
Period for Seller Indemnitee (other than any Tax properly allocable to any
period ending on or before the Closing Date), (y) Tax of the Company or any
successor of the Company resulting from a breach of any provisions of this
Article IX, and (z) liabilities, costs, expenses (including, without limitation,
reasonable expenses of investigation and attorneys' fees and expenses), losses,
damages, assessments, settlements or judgments arising out of or incident to the
imposition, assessment, or assertion of any Tax described in (x) or (y),
including those incurred in the contest in good faith in appropriate proceedings
relating to the imposition, assessment or assertion of any such Tax, and any
liability as transferee. The sum of (x), (y) and (z) is referred to herein as a
"Seller Tax Loss", provided, however, that Buyer shall have no liability under
this Section 9.6 unless and until the aggregate of all Seller Tax Losses exceeds
the sum of $50,000 (the "Seller's Minimum Amount"), in which event Buyer shall
be liable for all Seller Tax Losses, irrespective of the Seller's Minimum
Amount.
(d) For purposes of this Section 9.6, in the case of any Taxes
that are imposed on a periodic basis and are payable for a Tax period that
includes (but does not end on) the Closing Date, the portion of such Tax related
to the portion of such Tax period ending on and including the Closing Date shall
(x) in the case of any Taxes other than gross receipts, sales, withholding, or
use Taxes and Taxes based upon or related to income, be deemed to be the amount
of such Tax for the entire Tax period multiplied by a fraction of the numerator
of which is the number of days in the Tax period ending on and including the
Closing Date and the denominator of which is the number of days in the entire
Tax period, and (y) in the case of any gross receipts, sales, withholdings or
use Taxes or Taxes based upon or related to income, be deemed equal to the
amount which would be payable if the relevant Tax period ended on and included
the Closing Date. The portion of any credits relating to a Tax period that
begins before and ends after the Closing Date shall be determined as though the
relevant Tax period ended on and included the Closing Date.
(e) A party (the "Indemnified Party") may assert a Claim that
it is entitled to, or may become entitled to, indemnification under this Article
IX by giving written notice of its Claim to the party or parties that are, or
may become, required to indemnify the Indemnified Party (the "Indemnifying
Party"), providing reasonable details of the facts giving rise to the Claim and
a statement of the Indemnified Party's loss in connection with the Claim, to the
extent such loss is then known to the Indemnified Party and, otherwise, an
estimate of the amount of the loss that it reasonably anticipates that it will
incur or suffer. If the Indemnifying Party does not object to the Claim during
the twenty (20) day period following the date of delivery of the Indemnified
Party's notice of its Claim (the "Objection Period"), the Claim shall be
considered undisputed and the Indemnified Party shall be entitled to recover the
amount of its Loss. The fact that a Claim is not disputed by the Indemnifying
Party shall not constitute an admission or create any inference that the
asserted Claim is valid for any purpose other than the indemnity obligation of
the Indemnifying Party as to such Claim pursuant to this Section 9.6.
(f) If the Indemnifying Party gives notice to the Indemnified
Party within the Objection Period that the Indemnifying Party objects to the
Claim, then (a) the parties shall attempt in good faith to resolve their
differences during the ten (10) business day period following the date of
delivery of the Indemnifying Party's notice of its objection (the "Resolution
Period"), and (b) if the parties fail to resolve their disagreement during the
Resolution Period, each party shall select a representative from a nationally or
regionally recognized accounting firm, and these two individuals shall select a
third such person, and this group of three individuals shall resolve the dispute
by a determination agreed to by a majority of such group within twenty-one (21)
days after the individuals are initially identified in a writing among the
parties. Any resolution of any such dispute entered into in compliance with this
Section 9.6(f) shall also be binding on the parties in the same manner as if a
final judgment or decree had been entered by a court of competent jurisdiction
in the amount of the determination.
(g) In the case of any third party suit ("Third Party Suit"),
the Indemnifying Party shall control the defense of the Third Party Suit, and
shall be fully responsible for the costs of counsel related thereto; provided,
however, that the Indemnifying Party shall control the defense of the Third
Party Suit only if the Indemnifying Party first admits in a writing, which
writing shall be binding on the Indemnifying Party, delivered to the Indemnified
Party that the Indemnifying Party will be obligated, pursuant to Section 9.6
hereof, to indemnify the Indemnified Party for any liability arising out of such
Third Party Suit. The Indemnifying Party shall consult with the Indemnified
Party with respect to the Third Party Suit upon the Indemnified Party's
reasonable request for consultation, and the Indemnified Party may, at its
expense, participate in (but not control) the defense and employ and pay for
counsel separate from the counsel employed by the Indemnified Party. All parties
shall cooperate in the defense of the Third Party Suit.
(h) If an Indemnified Party is conducting the defense of a
Third Party Suit, the Indemnified Party shall give the Indemnifying Party at
least fifteen (15) days prior written notice of any proposed settlement or
compromise, during which time the Indemnifying Party may assume the defense of
the Third Party Suit and, if it does so (or if the Indemnifying Party has
already assumed control of such Third Party Suit), the proposed settlement or
compromise may not be made without the Indemnified Party's consent, which shall
not be unreasonably withheld. If an Indemnifying Party does not so assume the
defense of the Third Party Suit, the Indemnified Party may enter into the
proposed settlement. Any settlement or compromise of any Third Party Suit by
either the Indemnifying Party or the Indemnified Party entered into in
compliance with this Section 9.6(h) shall also be binding on the other party in
the same manner as if a final judgment or decree had been entered by a court of
competent jurisdiction in the amount of the settlement or compromise.
(i) Any failure by an Indemnified Party to defend a Third
Party Suit shall not relieve the Indemnifying Party of its indemnification
obligations if the Indemnified Party gives the Indemnifying Party at least
thirty (30) days prior written notice of the Indemnified Party's intention not
to defend and affords the Indemnifying Party the opportunity to assume the
defense.
(j) The Buyer and Sellers shall jointly control the defense of
any claim that relates to Taxes payable for a Tax period that includes (but does
not end on) the Closing Date.
(k) An Indemnifying Party shall not be liable under this
Section 9.6 with respect to any Tax resulting from a claim or demand the defense
of which the Indemnifying Party was not offered the opportunity to assume as
provided under Section 9.6(g) to the extent the Indemnifying Party's liability
under this section is adversely affected as a result thereof. No investigation
by an Indemnified Party or any of its Affiliates at or prior to the Closing Date
shall relieve the Indemnifying Party of any liability hereunder.
(l) Any claim of any Buyer Indemnitee (other than the Buyer)
under this section may be made and enforced by the Buyer on behalf of such Buyer
Indemnitee. Any claim under this Section of a Seller Indemnitee related to the
NDB Group rather than a Seller Individual shall be made and enforced only by NDB
on behalf of such Seller Indemnitee. Any claim under this Section of a Seller
Indemnitee related to a Seller Individual shall be made and enforced only by the
Members' Representative on behalf of such Seller Indemnitee.
SECTION 9.7. Audits. (a) Buyer shall notify Sellers promptly
of any examinations, audits, litigation or other proceedings respecting the
Company with respect to any taxable period ending on or prior to the Closing
Date and Seller Individuals shall have the right to control the conduct of any
such examination, audit, litigation or other proceeding. Buyer shall provide, or
shall cause the Company to provide, Sellers with such assistance and
cooperation, including the execution of powers of attorney, as Sellers may
reasonably request in order to enable Sellers to exercise such control.
(a)(b) Buyer shall have the sole right to represent the
Company in any Tax audit or administrative or court proceeding for all taxable
periods ending after the Closing Date, and to employ counsel of choice at its
own expense.
(c) Buyer and Seller shall provide timely notice to the other
party (or parties) in writing of any pending or threatened tax audit with
respect to the Company for a taxable period for which the other party may have a
liability under this Article IX. Buyer and Sellers shall furnish each other with
copies of all correspondence received from any Taxing Authority in connection
with any tax audit or information request with respect to such taxable periods.
SECTION 9.8. Allocation of Purchase Price. (a) As soon as
practicable after the Closing, the Members' Representative shall deliver a
schedule to the Buyer setting forth on a reasonable basis the federal income tax
basis of all of the assets, properties and business of every kind and
description, wherever located, real, personal or mixed, tangible or intangible
owned by the Company as the same shall exist on the Closing Date (the "Closing
Date Assets"). Within a reasonable amount of time thereafter, the Buyer shall
deliver to the Members' Representative a statement (the "Allocation Statement"),
setting forth the value of all of the Closing Date Assets, which shall be used
for the allocation of the Purchase Price. The Allocation Statement will not be
binding on a Seller to the extent Revenue Ruling 99-6, 1999-6 I.R.B 6, or
similar position of the Internal Revenue Service makes the Allocation Statement
not relevant to such Seller.
(a)(b) Any adjustment made with respect to the Purchase Price
of this Agreement shall be allocated in a manner consistent with the methodology
used in preparing the Allocation Statement.
(c) The Sellers and the Buyer agree to act in accordance with
the Allocation Statement in the preparation of financial statements and filing
of all tax returns and in the course of any tax audit, tax review or tax
litigation relating thereto.
SECTION 9.9. Purchase Price Adjustment. Any amount paid by the
Sellers or Buyer under Section 9.6 will be treated either as an adjustment to
the Purchase Price or as a contribution to the Company unless a Final
Determination is inconsistent with such treatment.
SECTION 9.10. Survival. Notwithstanding anything in this
Agreement to the contrary, the provisions of this Article IX shall survive for
the full period of all applicable statutes of limitations (giving effect to any
waiver, mitigation or extension thereof).
ARTICLE X.
SECTION 10.1. Conditions to Obligations of the Buyer and
Sellers. The obligations of the Buyer and each Seller to consummate the Closing
are subject to the satisfaction of the following conditions:
(i) No provision of any applicable law or
regulation and no judgment, injunction, order or decree shall
prohibit the consummation of the Closing.
(ii) All actions by or in respect of or
filings with any Governmental Entity required to permit the
consummation of the Closing shall have been taken, made or
obtained.
SECTION 10.2. Conditions to Obligations of the Buyer. The
obligations of the Buyer to consummate the Closing are subject to the
satisfaction of the following further conditions:
(i) (A) Each Seller and, where applicable,
the Company, shall have performed in all material respects all
of its obligations hereunder required to be performed by it on
or prior to the Closing Date, (B) the representations and
warranties of each Seller contained in this Agreement and in
any certificate or other writing delivered by any Seller or
the Company pursuant hereto, disregarding all qualifications
and exceptions contained therein relating to materiality or
Material Adverse Effect, shall be true at and as of the
Closing Date, as if made at and as of such date with only such
exceptions as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, and
(C) the Buyer shall have received a certificate signed by each
Seller Individual (or the Members' Representative on their
behalf) and NDB (on behalf of the NDB Group) to the foregoing
effect.
(ii) There shall not be threatened,
instituted or pending any action or proceeding (including,
without limitation, an action or proceeding to obtain any
governmental authorization contemplated by Sections 3.3, 4.3
and 5.3) by any Person before any court or governmental
authority or agency, domestic or foreign, (A) seeking to
restrain or prohibit the ownership or operation by the Buyer
or any of its Affiliates of the Interests or all or any
material portion of the business or assets of the Company or
of the Buyer or to compel the Buyer or any of its Affiliates
to dispose of all or any material portion of the Interests or
the business or assets of the Company or of the Buyer, (B)
seeking to impose or confirm any material limitations on the
ability of the Buyer or any of its Affiliates effectively to
exercise full rights of ownership of the Interests, (C)
seeking to require material divestiture by the Buyer or any of
its Affiliates of any Interests or (D) otherwise imposing any
condition which is material and adverse to the Buyer, in its
reasonable discretion.
(iii) There shall not be any action taken,
or any statute, rule, regulation, injunction, order or decree
proposed, enacted, enforced, promulgated, issued or deemed
applicable to the purchase of the Interests, by any court,
government or governmental authority or agency, domestic or
foreign, that, in the reasonable judgment of the Buyer could,
directly or indirectly, result in any of the consequences
referred to in clause (i) or (ii) of this Section 10.2.
(iv) No proceeding challenging this
Agreement or the transactions contemplated hereby or seeking
to prohibit, alter, prevent or materially delay the Closing
shall have been instituted by any Person before any court,
arbitrator or Governmental Entity.
(v) The Sellers shall have received all
consents, authorizations or approvals from governmental
agencies referred to in Sections 3.3, 4.3 and 5.3, in each
case in form and substance reasonably satisfactory to the
Buyer, and no such consent, authorization or approval shall
have been revoked.
(vi) The Buyer shall have received legal
opinions of Frank E. Lawatsch, Jr., General Counsel of NDB and
counsel to SHD, Thomas J. McCabe, counsel to certain Seller
Individuals, Sheldon E. Goldstein, counsel to certain Seller
Individuals, and Richard G. Brodrick, counsel to a certain
Seller Individual, dated the Closing Date covering the matters
set forth on Exhibit A. In rendering such opinion, such
counsel may rely upon certificates of public officers, upon
opinions of counsel reasonably satisfactory to the Buyer as to
matters governed by the laws of jurisdictions other than New
York and the limited liability company laws of Delaware or the
federal laws of the United States of America, and upon
certificates of officers of Sellers or the Company as to
matters of fact, copies of which opinions and certificates
shall be contemporaneously delivered to the Buyer.
(vii) There shall have been no Material
Adverse Effect subsequent to the date hereof. The loss by the
Company of its registration as the specialist for any security
shall not be deemed a material adverse change unless such
security (excluding, for this purpose, BankBoston
Corporation), considered singly or in the aggregate with any
other securities as to which the Company shall have lost
registration subsequent to the date of this Agreement, shall
have accounted for more than 10% of the Company's total billed
agency share trading volume in securities during the twelve
months ended at the month end immediately prior to the date
such registration was lost.
(viii) The Buyer shall be satisfied that the
Sellers have complied with the covenant set forth in Section
7.8.
(ix) The Buyer shall have received the
Secured Demand Notes and all indebtedness in connection
therewith shall have been terminated pursuant to documentation
satisfactory to the Buyer.
(x) The Buyer shall have received all
secured demand notes payable to any Special Member (as defined
in the Operating Agreement) and the secured demand note payabe
to the former wife of Steve DiLascio, and all indebtedness in
connection therewith shall have been terminated pursuant to
documentation satisfactory to the Buyer.
(xi) The Buyer shall have received, (A)
prior to the date of this Agreement, a balance sheet of the
Company as of the Balance Sheet Date prepared in accordance
with GAAP and consistent with past practice of the Company,
together with a schedule reflecting each Seller's Capital
Account and the aggregate Mark to Market-Off Floor Trading
(Unrealized), in each case as of the Balance Sheet Date
(collectively with such balance sheet, the "Balance Sheet")
which Balance Sheet is attached hereto as Schedule V, and (B)
prior to two Business Days before the Closing Date, the
Closing Date Balance Sheet.
(xii) Upon repayment of principal and
accrued interest on the 6% Subordinated Loan and the 8%
Subordinated Loan, NDB shall have delivered to the Buyer all
instruments evidencing the repayment of such Indebtedness.
(xiii) The Buyer shall have received in cash
all principal and accrued and unpaid interest owed in
connection with the SLK Loan.
(xiv) Upon repayment of principal and
accrued interest on the Green Note, NDB shall have delivered
to David Green all instruments evidencing the repayment of
such Indebtedness.
(xv) NDB shall have purchased all the
Interests of the Special Members (as defined in the Operating
Agreement).
(xvi) NDB and SHD shall have duly
authorized, executed and delivered an agreement and general
release substantially in the form attached hereto as Exhibit
C. Each Seller Individual shall have duly authorized, executed
and delivered an agreement and general release substantially
in the form attached hereto as Exhibit D at least seven
Business Days prior to the Closing Date and such agreement and
general release shall not have been rescinded or terminated as
of the Closing Date.
(xvii) The Buyer shall have received all
instruments and documents it may reasonably request in
connection with this Agreement and the transactions
contemplated hereby, all in form and substance reasonably
satisfactory to the Buyer.
SECTION 10.3. Conditions to Obligation of Sellers. The
obligation of each Seller to consummate the Closing is subject to the
satisfaction of the following further conditions:
(i) (A) The Buyer shall have performed in
all material respects all of their obligations hereunder
required to be performed by them on or prior to the Closing
Date (including the delivery of the Promissory Notes and cash
to the Sellers pursuant to Sections 2.2 and 2.3), (B) the
representations and warranties of the Buyer contained in this
Agreement and in any certificate or other writing delivered by
the Buyer pursuant hereto, disregarding all qualifications and
exceptions contained therein relating to materiality or
Material Adverse Effect, shall be true at and as of the
Closing Date, as if made at and as of such date with only such
exceptions as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect and
(C) each Seller shall have received a certificate signed by
the Buyer to the foregoing effect.
(ii) There shall not be threatened,
instituted or pending any action or proceeding by any Person
before any court or governmental authority or agency, domestic
or foreign, seeking to restrain or prohibit any Seller from
selling such Seller's Interests or the performance by a Seller
of such Seller's obligations hereunder.
(iii) There shall not be any action taken,
or any statute, rule, regulation, injunction, order or decree
proposed, enacted, enforced, promulgated, issued or deemed
applicable to the purchase of the Interests, by any court,
government or governmental authority or agency, domestic or
foreign, that, in the reasonable judgment of the Company or
the Members' Representative could, directly or indirectly,
result in any of the consequences referred to in clause (i) or
(ii) of this Section 10.3.
(iv) No proceeding challenging this
Agreement or the transactions contemplated hereby or seeking
to prohibit, alter, prevent or materially delay the Closing
shall have been instituted by any Person before any court,
arbitrator or governmental body, agency or official and be
pending.
(v) The Buyer shall have received all
consents, authorizations or approvals from governmental
agencies referred to in Section 6.3, in each case in form and
substance reasonably satisfactory to such Seller, and no such
consent, authorization or approval shall have been revoked.
(vi) The Buyer shall have paid in cash to
NDB all principal and accrued and unpaid interest owed in
connection with the 8% Subordinated Loan and the 6%
Subordinated Loan.
(vii) Spear, Leeds & Kellogg, L.P. shall
have delivered to NDB all instruments evidencing the repayment
of Indebtedness in connection with the SLK Loan.
(viii) The Buyer shall have paid in cash to
NDB all principal and accrued and unpaid interest owed by
David Green to NDB in connection with the Green Note.
(ix) Spear, Leeds & Kellogg, L.P. shall have
offered membership positions with the Buyer to the applicable
Persons whose names are set forth on Schedule IV.
(x) The Buyer shall have returned to NDB the
securities pledged to support the Secured Demand Notes and
each such Secured Demand Note and the related agreements shall
have been terminated without any further liability of NDB.
(xi) The Buyer shall have returned the
securities pledged to support the three $1,000,000 secured
demand notes payable to the Special Members (as defined in the
Operating Agreement) (one secured demand note per Special
Member) and the $500,000 secured demand note payable to the
former wife of Steve DiLascio and each such secured demand
note and the related agreements shall have been terminated.
(xii) NDB, on behalf of the NDB Group, and
the Members' Representative, on behalf of the Seller
Individuals, shall have received all instruments and documents
any Seller may reasonably request in connection with this
Agreement and the transactions contemplated hereby, all in
form and substance reasonably satisfactory to such Seller.
ARTICLE XI.
SECTION 11.1. Survival. The covenants, agreements,
representations and warranties of the parties hereto contained in this Agreement
or in any certificate or other writing delivered pursuant hereto or in
connection herewith shall survive the Closing for a period of one year;
provided, however, that (i) the covenants and agreements contained in Section
7.4 shall survive for the period set forth therein, (ii) the covenants and
agreements contained in Section 7.7 shall survive for so long as the promissory
notes issued to the Seller Individuals pursuant to Section 2.3(b) of this
Agreement are outstanding, (iii) the covenants, agreements, representations and
warranties contained in Sections 3.23 and 3.24 and Article IX shall survive
until expiration of the statute of limitations applicable to the matters covered
thereby (giving effect to any waiver, mitigation or extension thereof) and (iv)
the representations contained in Sections 3.7, 3.8, 4.5, 5.6 and 5.7 shall
survive without limitation as to time. Notwithstanding the preceding sentence,
any covenant, agreement, representation or warranty in respect of which
indemnity may be sought under this Agreement shall survive the time at which it
would otherwise terminate pursuant to the preceding sentence, if notice of the
inaccuracy or breach thereof giving rise to such right of indemnity shall have
been given to the party against whom such indemnity may be sought prior to such
time.
SECTION 11.2. Indemnification. (a) Each Seller Individual
hereby severally (but not jointly) agrees to indemnify the Buyer, any Affiliate
of the Buyer, or their respective stockholders, partners, members, directors,
officers, agents, employees and representatives, their successors and assigns
and, effective upon the Closing, the Company (the "Buyer Indemnitees") against
and agree to hold each of them harmless from any and all damages, loss,
liability, cost, expense (including without limitation reasonable expenses of
investigation and reasonable attorneys' fees and expenses in connection with any
action, suit or proceeding), deficiency, interest, penalty, imposition,
assessment or fine ("Damages") reasonably and proximately incurred or suffered
by any Buyer Indemnitee arising out of any misrepresentation or breach of
warranty, covenant or agreement made or to be performed by such Seller
Individual pursuant to this Agreement.
(a)(b) Each member of the RSF Group hereby severally (but
not jointly) agrees:
(i) other than with respect to any representation, warranty,
covenant or agreement covered under Section 11.2(b)(ii), to indemnify the Buyer
Indemnitees against and agree to hold each of them harmless from any Damages
reasonably and proximately incurred or suffered by any Buyer Indemnitee arising
out of any misrepresentation or breach of warranty, covenant or agreement made
or to be performed by such Seller pursuant to this Agreement; and
(ii) with respect to any representation, warranty, covenant or
agreement contained in Article III, to indemnify any Buyer Indemnitee and hold
it harmless to the extent any Seller Individual is unable (due to bankruptcy or
for any other reason) to satisfy its obligations under this Section 11.2;
provided, however, that the RSF Group shall have no indemnity obligations as to
Sections 3.2, 3.3, 3.4, 3.5 (with respect to other Seller Individuals), 3.7,
3.12, 3.14, 3.19, 3.21, 3.22 and 3.26. The Buyer agrees to use its reasonable
efforts to collect amounts owed by a Seller Individual under Section 11.2(a)
prior to availing itself of this Section 11.2(b)(ii), and agrees to keep each
member of the RSF Group reasonably informed of such efforts. The RSF Group shall
be subrogated to the rights of an Indemnified Party to the extent of any payment
made to such Indemnified Party pursuant to this Section 11.2(b)(ii).
(c) NDB and SHD hereby jointly and severally agree:
(i) other than with respect to any representation, warranty,
covenant or agreement covered under Section 11.2(c)(ii), to indemnify the Buyer
Indemnitees against and agree to hold each of them harmless from any Damages
reasonably and proximately incurred or suffered by any Buyer Indemnitee arising
out of any misrepresentation or breach of warranty, covenant or agreement made
or to be performed by such Seller pursuant to this Agreement; and
(ii) with respect to any representation, warranty, covenant or
agreement contained in Article III or Article IV, to indemnify any Buyer
Indemnitee and hold it harmless to the extent any Seller Individual is unable
(due to bankruptcy or for any other reason) to satisfy its obligations under
this Section 11.2; provided, however, that NDB and SHD shall have no indemnity
obligations as to Section 3.2, 3.3, 3.4, 3.5 (with respect to Seller
Individuals), 3.7, 3.12, 3.14, 3.19, 3.21, 3.22, 3.26, 4.1, 4.2, 4.5, 4.7, 4.8
and 4.12. The Buyer agrees to use its reasonable efforts to collect amounts owed
by a Seller Individual under Section 11.2(a) prior to availing itself of this
Section 11.2(c)(ii), and agrees to keep NDB (on behalf of the NDB Group)
reasonably informed of such efforts. NDB (on behalf of the NDB Group) shall be
subrogated to the rights of an Indemnified Party to the extent of any payment
made to such Indemnified Party pursuant to this Section 11.2(c)(ii).
(d) The Buyer hereby agrees to indemnify each Seller, any
Affiliate of such Seller, or their respective stockholders, partners, members,
directors, officers, agents, employees and representatives (the "Seller
Indemnitees") against and agrees to hold each of them harmless from any and all
Damages reasonably and proximately incurred or suffered by any Seller Indemnitee
arising out of any misrepresentation or breach of warranty, covenant or
agreement made or to be performed by the Buyer pursuant to this Agreement.
SECTION 11.3. Procedures. The party seeking indemnification
under Section 11.2 (the "Indemnified Party") agrees to give prompt notice to the
party against whom indemnity is sought (the "Indemnifying Party") of the
assertion of any claim, or the commencement of any suit, action or proceeding,
or the existence of any liability, in respect of which indemnity may be sought
under such Section. The failure by an Indemnified Party to so notify an
Indemnifying Party will not relieve the Indemnifying Party of any
indemnification responsibility under this Article X, except to the extent, if
any, that such failure materially prejudices the ability of the Indemnifying
Party to defend such claim, suit, action or proceeding (brought by a Person not
a party to this Agreement). The Indemnifying Party may in its discretion
participate in and control the defense, compromise or settlement of any such
claim, suit, action or proceeding at its own expense. The Indemnified Party
shall not settle any claim, litigation or proceeding without the consent of the
Indemnifying Party, such consent not to be unreasonably withheld.
SECTION 11.4. Indemnification Limits; Notices to Seller
Individuals.
(a) Notwithstanding any other provision of this Agreement, the
Sellers' indemnification obligations under this Section 11.2 shall on a
cumulative basis be limited to an amount equal to the Purchase Price.
(b) Notwithstanding any other provision of this Agreement,
each Seller's indemnification obligations under this Section 11.2 shall on a
cumulative basis be limited to that share of the Purchase Price received by it.
(c) Notwithstanding any other provision of this Agreement, NDB
and SHD, collectively, shall have no obligation to make any payment under
Sections 9.6 or 11.2 unless the aggregate amount to which all Buyer Indemnitees
are entitled by reason of all claims under Sections 9.6 or 11.2 exceeds $50,000;
provided, however, that NDB, on behalf of the NDB Group, shall be obligated to
make all payments under Sections 9.6 and 11.2 to the extent the aggregate amount
to which all Buyer Indemnitees are entitled by reason of all claims against the
NDB Group under Section 9.6 and all claims under Section 11.2 exceeds $50,000.
(d) Notwithstanding any other provision of this Agreement, the
RSF Group's indemnification obligations pursuant to Section 11.2 shall on a
cumulative basis be limited to $2,000,000.
(e) Except as otherwise provided in this Agreement,
indemnification for obligations related to the tax matters is covered by Article
IX.
(f) Any notices to be given to any Seller Individual may be
given to the Members' Representative, on behalf of such Seller Individual.
ARTICLE XII.
TERMINATION
SECTION 12.1. Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(i) by mutual written agreement of NDB (on
behalf of the NDB Group), the Members' Representative and the
Buyer;
(ii) by any of NDB (on behalf of the NDB
Group), the Members' Representative or the Buyer if the
Closing shall not have been consummated on or before July 15,
1999 (as such date may be extended for 30 days by the
agreement of NDB (on behalf of the NDB Group), the Members'
Representative and the Buyer);
(iii) by any of NDB (on behalf of the NDB
Group), the Members' Representative or the Buyer if there
shall be any law or regulation that makes consummation of the
transactions contemplated hereby illegal or otherwise
prohibited or if consummation of the transactions contemplated
hereby would violate any nonappealable final order, decree or
judgment of any court or governmental body having competent
jurisdiction;
(iv) by the Buyer or NDB if NDB's board of
directors does not approve this Agreement by May 20, 1999; or
(v) by NDB (on behalf of the NDB Group), the
Members' Representative or the Buyer if any condition to such
party's obligations hereunder becomes incapable of fulfillment
through no fault of such party and is not waived by such
party.
The party desiring to terminate this Agreement shall give notice of such
termination to each other party.
SECTION 12.2. Effect of Termination. If this Agreement is
terminated as permitted by Section 12.1, termination shall be without liability
of any party (or any stockholder, director, officer, employee, agent, consultant
or representative of such party) to the other parties to this Agreement;
provided, however, that if such termination shall result from the willful: (A)
failure of any party to fulfill a condition to the performance of the
obligations of the other party, (B) failure to perform a covenant of this
Agreement or (C) breach by any party hereto of any representation or warranty or
agreement contained herein, such party shall be fully liable for any and all
Damages incurred or suffered by the other party as a result of such failure or
breach; provided, further, that a termination pursuant to 12.1(iv) shall be
deemed not to be a termination described in any of clause (A), (B) or (C) of
this sentence. The provision of Section 14.3 shall survive any termination
hereof pursuant to Section 12.1.
ARTICLE XIII.
MEMBERS' REPRESENTATIVE
SECTION 13.1. Appointment; Acceptance. By executing this
Agreement, each Seller Individual hereby irrevocably constitutes and appoints
Stephen J. DiLascio, and his successors, acting as hereinafter provided, as its
attorney-in-fact and agent in its name, place and stead in connection with the
transactions and agreements contemplated by this Agreement (the "Members'
Representative"), and acknowledges that such appointment is coupled with an
interest. By executing and delivering this Agreement under the heading "Members'
Representative," the person who is appointed as Members' Representative hereby
(i) accepts his appointment and authorization to act as Members' Representative
as attorney-in-fact and agent on behalf of the Seller Individuals in accordance
with the terms of this Agreement and (ii) agrees to perform its obligations
hereunder, and otherwise comply with this Article XII.
SECTION 13.2. Authority. Each Seller Individual fully and
completely, without restriction:
(a) Authorizes the Members' Representative: (i) to prepare,
finalize, approve and authorize all exhibits, schedules and other attachments to
this Agreement and all other agreements and other documents delivered by the
Seller Individual pursuant to this Agreement (the "Member Delivered Agreements")
and such approval and authorization may be conclusively evidenced by the
Members' Representative and (ii) to execute and deliver, and to accept delivery,
on his behalf of such amendments as may be deemed by the Members' Representative
in its sole discretion to be appropriate under the Member Delivered Agreements.
(b) Agrees to be bound by all notices received and agreements
and determinations made by and documents executed and delivered by the Members'
Representative under the Member Delivered Agreements.
(c) Authorizes the Members' Representative: (i) to dispute or
to refrain from disputing and thereby accept any claim made by the Buyer under
the Member Delivered Agreements; (ii) to negotiate and settle any dispute which
may arise under, and exercise or refrain from exercising remedies available
under the Member Delivered Agreements, to sign any releases or other documents
with respect to such dispute or remedy; (iii) to waive any condition contained
in the Member Delivered Agreements; (iv) to give any and all consents under the
Member Delivered Agreements; and (v) to give such instructions and do such other
things and refrain from doing such things as the Members' Representative shall
deem appropriate to carry out the provisions of the Member Delivered Agreements.
(d) Authorizes and directs the Members' Representative to
receive any and all payments made to the Seller Individuals under this
Agreement, to invest such funds pending their disbursement in such manner as the
Members' Representative in its sole discretion deems appropriate; and to
disburse any payments due the Seller Individuals under this Agreement in
accordance with their interest, after (i) payment of any attorneys',
accountants' and brokers' and other fees and expenses incurred on behalf of the
Seller Individuals in connection with the consummation of the transactions
contemplated by this Agreement and (ii) withholding such amounts to pay costs
and expenses relating to potential disputes arising with respect to
indemnification or other obligations of the Seller Individuals under this
Agreement.
SECTION 13.3. Actions. Each Seller Individual hereby expressly
acknowledges and agrees that (i) the Members' Representative is exclusively
authorized to act on its behalf, notwithstanding any dispute or disagreement
among the Seller Individuals, (ii) the Buyer and any other person or entity
shall be entitled to rely on any and all actions taken by the Members'
Representative under this Agreement and the other Member Delivered Agreements
without any liability to, or obligation to inquire of, any of the Seller
Individuals. All notices, counternotices or other instruments or designations
delivered by any Seller Individual or the Members' Representative shall not be
effective unless, but shall be effective if, signed by the Members'
Representative, and if not, such document shall have no force and effect
whatsoever hereunder and the Buyer and any other person or entity may proceed
without regard to any such document. The Buyer and any other person or entity
are hereby expressly authorized to rely on the genuineness of the signature of
the Members' Representative, and upon receipt of any writing which reasonably
appears to have been signed by the Members' Representative, the Buyer and any
other person or entity may act upon the same without any further duty of
inquiries to the genuineness of the writing.
SECTION 13.4. Effectiveness. The authorization of the Members'
Representative shall be irrevocable and effective until its rights and
obligations under this Agreement terminate by virtue of the termination of any
and all of the obligations of the Seller Individuals to the Buyer under the
Member Delivered Agreements.
SECTION 13.5. Indemnification; Fees and Expenses. The Seller
Individuals hereby jointly and severally agree (i) to indemnify and hold the
Members' Representative harmless from any and all liability, loss, cost, damage
or expense, including attorneys fees (reasonably incurred or suffered as a
result of the performance of its duties under this Agreement), and (ii) that the
Members' Representative shall not have any liability to the Seller Individuals
for any act or omission hereunder, except for gross negligence or willful
misconduct. The fees and expenses of the Members' Representative shall be paid
by the Seller Individuals, and the Buyer shall have no liability with respect to
such fees and expenses.
SECTION 13.6. Successor. If the Members' Representative
resigns or ceases to function in its capacity as such for any reason whatsoever,
such Members' Representative shall immediately give notice to the other parties
to this Agreement. In such event, the Seller Individuals may appoint a successor
and give notice to the other parties to this Agreement; provided, however, that
if for any reason the Seller Individuals do not appoint any successor within
thirty (30) days after the Members' Representative resigns or otherwise ceases
to function, then the Buyer shall have the right to petition a court of
competent jurisdiction for the appointment of one or more successors.
SECTION 13.7. Survival of Authorizations. EACH SELLER
INDIVIDUAL INTENDS FOR THE AUTHORIZATIONS AND AGREEMENTS IN THE FOREGOING
SECTIONS OF THIS ARTICLE XII TO REMAIN IN FORCE AND NOT BE AFFECTED IF SUCH
SELLER INDIVIDUAL SUBSEQUENTLY BECOMES MENTALLY OR PHYSICALLY DISABLED OR
INCOMPETENT, DOES HEREBY AUTHORIZE SUCH RECORDINGS AND FILINGS HEREOF AS A
MEMBERS' REPRESENTATIVE MAY DEEM APPROPRIATE, AND DOES HEREBY DIRECT THAT NO
FILING OF ACCOUNTS OR INVENTORIES OR POSTING OF A SURETY BOND SHALL BE REQUIRED.
ARTICLE XIV.
SECTION 14.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission) and shall be given:
if to the Buyer, to:
Spear, Leeds & Kellogg Specialists LLC
120 Broadway
New York, NY 10271
Attention: Carl H. Hewitt, Esq.
Fax: 212-433-7294
with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
Attention: Serge Benchetrit, Esq.
Fax: 212-728-8111
if to NDB or SHD, to:
National Discount Brokers Group, Inc.
10 Exchange Place Centre
Jersey City, NJ 07302
Attention: President
Fax: 201-946-4510
with a copy to:
National Discount Brokers Group, Inc.
10 Exchange Place Centre
Jersey City, NJ 07302
Attention: Frank E. Lawatsch, Esq.
Fax: 201-946-4510
if to Stephen J. DiLascio, Gerard J. Dreyer, John F.
Nicolosi, Philip J. Kopp III, James Emrich or David
Green, to such Seller Individual at his address set
forth on Schedule I hereto with a copy to:
Law Office of Thomas J. McCabe
61 Broadway
Suite 718
New York, NY 10004
Attention: Thomas J. McCabe, Esq.
Fax: 212-248-2365
if to Joseph A. Rodriguez, James F. Bowen, III or
Robert L. Prosser, Sr., to such Seller Individual at
his address set forth on Schedule I
hereto with a copy to:
The Goldstein Law Group, P.C.
65 Broadway
New York, NY 10006
Attention: Sheldon E. Goldstein, Esq.
Fax: 212-809-4228
if to Isidore Fields, to such Seller Individual at
his address set forth on Schedule I hereto with a
copy to:
Kelly Drye & Warren LLP
2 Stamford Plaza
281 Tresser Blvd.
Stamford, CT 06901
Attention: Richard G. Brodrick, Esq.
Fax: 203-327-2669
All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. in the
place of receipt and such day is a Business Day in the place of receipt.
Otherwise, any such notice, request or communication shall be deemed not to have
been received until the next succeeding Business Day in the place of receipt.
SECTION 14.2. Amendments and Waivers. (a) Any provision of
this Agreement may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each party
to this Agreement, or in the case of a waiver, by the party against whom the
waiver is to be effective.
(a)(b) No failure or delay by any party in exercising any
right, power or privilege hereunder 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 14.3. Expenses. All costs and expenses incurred in
connection with this Agreement shall be paid by the party incurring such cost or
expense. Notwithstanding the foregoing, the Buyer and NDB shall each pay one
half of any filing fees under the HSR Act.
SECTION 14.4. Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto except that the Buyer
may transfer or assign, in whole or from time to time in part, to one or more of
its Affiliates, the right to purchase all or a portion of the Interests, but no
such transfer or assignment will relieve the Buyer of its obligations hereunder.
SECTION 14.5. Governing Law. This Agreement shall be governed
by and construed in accordance with the law of the State of New York, without
regard to the conflicts of law rules of such state.
SECTION 14.6. Counterparts; Third Party Beneficiaries. 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. No provision of this Agreement is intended to confer upon
any Person other than the parties hereto any rights or remedies hereunder.
SECTION 14.7. Confidentiality. Each of the Sellers and the
Buyer agrees to maintain in strict confidence any and all information each party
learns or discovers about the other or its respective Affiliates during the
course of the negotiation, execution and delivery of this Agreement. This
Section 14.7 shall not apply to any information that is, or could reasonably be,
learned or discovered through any independent source that is not obligated to
maintain such information as confidential. Except as required by law, none of
the Sellers shall issue a press release, or make any other public disclosure,
relating to this Agreement without the prior written consent of the Buyer
(except for filing of this Agreement with the SEC and any disclosures hereof in
filings with the SEC). Except as required by law, the Buyer shall not issue a
press release, or make any other public disclosure, relating to this Agreement
without the prior written consent of NDB.
SECTION 14.8. Entire Agreement. This Agreement constitutes the
entire agreement among the parties with respect to the subject matter of this
Agreement and supersedes all prior agreements and understandings, both oral and
written, among the parties with respect to the subject matter of this Agreement.
SECTION 14.9. Waiver of Rights. Each Seller and the Company
hereby waives to the fullest extent permitted by law the following rights,
requirements or restrictions under the Operating Agreement and laws of the State
of Delaware solely with respect to the sale of Interests in the Company by this
Agreement (i) the right to receive prior notice of such sale; (ii) the right to
purchase any Interest; (iii) the requirement of any prior approval of the
Company or any member of the Company or the Management Committee of the Company;
(iv) any restrictions on the transferability of Interests; or (v) any other
right or restriction in Delaware law or in the Operating Agreement respecting
the sale of Interests to the Buyer pursuant to this Agreement.
<PAGE>
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.
SPEAR, LEEDS & KELLOGG
SPECIALISTS LLC
By:_____________________________
Name:
Title:
NATIONAL DISCOUNT BROKERS
GROUP, INC.
By:_____________________________
Name:
Title:
SHD CORPORATION
By:_____________________________
Name:
Title:
--------------------------------
STEPHEN J. DILASCIO
--------------------------------
GERARD J. DREYER
--------------------------------
JOHN F. NICOLOSI
--------------------------------
PHILIP J. KOPP, III
--------------------------------
JAMES C. EMRICH
--------------------------------
DAVID GREEN
--------------------------------
JOSEPH A. RODRIGUEZ
--------------------------------
JAMES F. BOWEN, III
--------------------------------
ISIDORE FIELDS
--------------------------------
ROBERT L. PROSSER, SR.
--------------------------------
CYNTHIA KELLOGG
--------------------------------
HARVEY SILVERMAN
--------------------------------
JOHN DUFFY
EQUITRADE PARTNERS, LLC
(SOLELY WITH RESPECT TO
SECTION 14.9)
By:_____________________________
Name:
Title:
<PAGE>
EXHIBIT 10(a)
NATIONAL DISCOUNT BROKERS GROUP, INC.
1999 NON-QUALIFIED STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of National Discount Brokers Group, Inc. 1999 Stock Option
Plan (the "Plan") is to provide an additional incentive to employees,
independent contractors, agents and consultants of National Discount Brokers
Group, Inc. (the "Company") and its subsidiaries, to aid in attracting and
retaining employees, independent contractors, agents and consultants, and to
closely align their interests with those of shareholders.
SECTION 2. DEFINITIONS
Unless the context clearly indicates otherwise, the following terms,
when used in the Plan, shall have the meanings set forth in this Section 2.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Change in Control". A change in control of the Company shall be
deemed to have occurred if, over the initial opposition of the then-incumbent
Board (whether or not such Board ultimately acquiesces therein), (i) any person
or group of persons shall acquire, directly or indirectly, stock of the Company
having at least 25% of the combined voting power of the Company's
then-outstanding securities, or (ii) any shareholder or group of shareholders
shall elect a majority of the members of the Board in each case after January 1,
1999.
(c) "Code" shall mean the Internal Revenue Code of 1986 and the rules
and regulations thereunder, as it or they may be amended from time to time.
(d) "Committee" shall mean the Compensation Committee of the Board or
such other committee as may be designated by the Board. The Committee shall
consist of two or more members of the Board who are Non-Employee Directors as
such term is defined in Rule 16b-3 of the Exchange Act.
(e) "Date of Exercise" shall mean the earlier of the date on which written
notice of exercise, together with payment in full, is received at the office of
the Secretary of the Company or the date on which such notice and payment are
mailed to the Secretary of the Company at its principal office by certified or
registered mail.
(f) "Employee" shall mean any employee or any officer of the Company or any of
its Subsidiaries, or any other person, who is an independent contractor, agent
or consultant of the Company or any of its Subsidiaries, and excluding any
director of the Company who is not otherwise an employee of the Company.
(g) "Exchange Act" shall mean the Securities and Exchange Act of 1934, as
amended.
(h) "Fair Market Value" shall mean for any day the mean of the highest
and lowest selling prices of the Stock as reported on the Composite Tape for
securities traded on the New York Stock Exchange.
(i) "Grantee" shall mean an Employee granted a Stock Option.
(j) "Granting Date" shall mean the date on which the Committee authorizes the
issuance of a Stock Option for a specified number of shares of Stock to a
specified Employee.
(k) "Nonqualified Stock Option" shall mean a Stock Option granted
within the Plan which is not an incentive stock option, under Section 422 of the
Code or otherwise qualified under similar tax provisions.
(l) "Progressive Stock Options" shall mean Nonqualified Stock Options
granted pursuant to Section 5(h) of this Plan.
(m) "Stock" shall mean the Common Stock, as par value $.01 per share,
of the Company.
(n) "Stock Option" shall mean a Nonqualified Stock Option granted
pursuant to the Plan to purchase shares of Stock.
(o) "Subsidiary" shall mean any subsidiary corporation as defined in
Section 424 of the Code.
SECTION 3. SHARES OF STOCK SUBJECT TO THE PLAN
Subject to adjustment pursuant to Section 8, 1,000,000 shares of Stock
shall be reserved for issuance upon the exercise of Stock Options granted
pursuant to the Plan. Shares delivered under the Plan may be authorized and
unissued shares or issued shares held by the Company in its treasury. If any
Stock Options expire or terminate without having been exercised, the shares of
Stock covered by such Stock Option shall become available again for the grant of
Stock Options hereunder. Shares of Stock covered by Stock Options surrendered
for Stock pursuant to Section 6, however, shall not become available again for
the grant of Stock Options hereunder.
SECTION 4. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Committee. Subject to the
express provisions of the Plan, the Committee shall have authority to interpret
the Plan, to prescribe, amend and rescind rules and regulations relating to it,
to determine the terms and provisions of Stock Option grants, and to make all
other determinations necessary or advisable for the administration of the Plan.
(b) It is intended that the Plan and any transaction hereunder meet all
of the requirements of Rule 16b-3 promulgated by the Securities and Exchange
Commission, as such rule is currently in effect or as hereafter modified or
amended, and all other applicable laws. If any provision of the Plan or any
transaction would disqualify the Plan or such transaction under, or would not
comply with, Rule 16b-3 or other applicable laws, such provision or transaction
shall be construed or deemed amended to conform to Rule 16b-3 or such other
applicable laws or otherwise shall be deemed to be null and void, in each case
to the extent permitted by law and deemed advisable by the Committee.
(c) Any controversy or claim arising out of or related to the Plan
shall be determined unilaterally by and at the sole discretion of the Committee.
SECTION 5. GRANTING OF STOCK OPTIONS
(a) Only Employees shall be eligible to receive Stock Options under the
Plan. Directors of the Company who are not also employees of the Company or one
of its Subsidiaries shall not be eligible for Stock Options.
(b) The option price of each share of Stock subject to a Nonqualified
Stock Option shall be 100% of the Fair Market Value of a share of the Stock on
the Granting Date, or such other price either greater than or less than the Fair
Market Value (but in no event less than the par value of the Stock) as the
Committee shall determine appropriate to the purposes of the Plan and to the
Company's total compensation program.
(c) The Committee shall determine and designate from time to time those
Employees who are to be granted Stock Options and shall also specify the number
of shares covered by and the option price per share of each Stock Option. Each
Stock Option granted under the Plan shall be clearly identified as to its status
as a Nonqualified Stock Option.
(d) A Stock Option shall be exercisable during such period or periods
and in such installments as shall be fixed by the Committee at the time the
Stock Option is granted or in any amendment thereto, but each Stock Option shall
expire not later than ten years from the Granting Date.
(e) The Committee shall have the authority to grant both transferable
Stock Options and nontransferable Stock Options, and to amend outstanding
nontransferable Stock Options to provide for transferability. Each
nontransferable Stock Option intended to qualify under Rule 16b-3 or otherwise
shall provide by its terms that it is not transferable otherwise than by will or
the laws of descent and distribution and is exercisable, during the Grantee's
lifetime, only by the Grantee. Each transferable Stock Option may provide for
such limitations on transferability and exercisability as the Committee may
designate at the time a Stock Option is granted or is otherwise amended to
provide for transferability.
(f) Stock Options may be granted to an Employee who has previously
received Stock Options or other options whether such prior Stock Options or
other options are still outstanding, have previously been exercised or
surrendered in whole or in part, or are canceled in connection with the issuance
of new Stock Options.
(g) Subject to adjustment pursuant to Section 8, the aggregate number
of shares of Stock subject to Stock Options granted to an Employee under the
Plan shall not exceed 125,000 shares (as such number is adjusted pursuant to
Section 8).
(h) Subject to Section 5 (g), without in any way limiting the authority
of the Committee to make grants of Stock Options under the Plan, and in order to
induce Employees to retain ownership of Stock, the Committee shall have the
authority (but not the obligation) to include within any agreement reflecting a
Stock Option a provision entitling the Grantee of such Stock Option to a further
Stock Option (a "Progressive Stock Option") in the event the Grantee exercises
such Nonqualified Stock Option evidenced by such agreement, in whole or in part,
by surrendering other shares of Stock in accordance with this Plan and the terms
and conditions of such agreement. Any such Progressive Stock Option shall be for
a number of shares of Stock equal to the number of surrendered shares, shall
become exerciseable no sooner than six months after the Granting Date of the
Stock Option or such longer period as the Committee may establish, shall have an
option price per share equal to one hundred percent (100%) of the Fair Market
Value of a share of Stock on the Granting Date of the Progressive Stock Option,
and shall be subject to such other terms and conditions as the Committee may
determine.
SECTION 6. EXERCISE OF STOCK OPTIONS
(a) Except as provided in Section 7, no Stock Option may be exercised
at any time unless the Grantee is an Employee on the Date of Exercise.
(b) The Grantee shall pay the option price in full on the Date of
Exercise of a Stock Option in cash, by check, or by delivery of full shares of
Stock of the Company, duly endorsed for transfer to the Company with signature
guaranteed, or by any combination thereof. Stock will be accepted at its Fair
Market Value on the Date of Exercise.
(c) Subject to the approval of the Committee, or of such person to whom
the Committee may delegate such authority ("its designee"), the Company may loan
to the Grantee a sum equal to an amount which is not in excess of 100% of the
purchase price of the shares of Stock acquired upon exercise of a Stock Option,
such loan to be evidenced by the execution and delivery of a promissory note.
Interest shall be paid on the unpaid balance of the promissory note at such
times and at such rate as shall be determined by the Committee or its designee.
Such promissory note shall be secured by the pledge to the Company of shares of
Stock having an aggregate purchase price on the date of purchase equal to or
greater than the amount of such note. A Grantee shall have, as to such pledged
shares of Stock, all rights of ownership including the right to vote such shares
of Stock and to receive dividends paid on such shares of Stock, subject to the
security interest of the Company. Such shares of Stock shall not be released by
the Company from the pledge unless the proportionate amount of the note secured
thereby has been repaid to the Company; provided, however that shares of Stock
subject to a pledge may be used to pay all or part of the purchase price of any
other option granted hereunder or under any other stock incentive plan of the
Company under the terms of which the purchase price of an option may be paid by
the surrender of shares of Stock, subject to the terms and conditions of the
Plan relating to the surrender of shares of Stock in payment of the exercise
price of an option. In such event, that number of the newly purchased shares of
Stock equal to the shares of Stock previously pledged shall be immediately
pledged as substitute security for the pre-existing debt of the Grantee to the
Company, and thereupon shall be subject to the provisions hereof relating to
pledged shares of Stock. All notes executed hereunder shall be payable at such
times and in such amounts and shall contain such other terms as shall be
specified by the Committee or its designee or stated in the option agreement;
provided, however, that such terms shall conform to requirements contained in
any applicable regulations which are issued by any governmental authority.
SECTION 7. TERMINATION OF EMPLOYMENT
Except as otherwise provided by the Committee at the time the Stock
Option is granted or any amendment thereto, if a Grantee ceases to be an
Employee then:
(a) if termination of employment is voluntary or involuntary without
cause, the Grantee may exercise each Stock Option held by the Grantee within
three months after such termination (but not after the expiration date of the
Stock Option) to the extent of the number of shares subject to the Stock Option
which are purchasable pursuant to its terms at the date of termination;
(b) if termination is for cause, all Stock Options held by the Grantee
shall be canceled as of the date of termination;
(c) subject to the provisions of Section 7(d), if termination is (i) by reason
of retirement at a time when the Grantee is entitled to the current receipt of
benefits under any retirement plan maintained
by the Company or any Subsidiary, or (ii) by reason of disability, each Stock
Option held by the Grantee may be exercised by the Grantee at any time (but not
after the expiration date of the Stock Option) to the extent of the number of
shares subject to the Stock Option which were purchasable pursuant to its terms
at the date of termination;
(d) if termination is by reason of the death of the Grantee, or if the
Grantee dies after retirement or disability as referred to in Section 7(c), each
Stock Option held by the Grantee may be exercised by the Grantee's estate, or by
any person who acquires the right to exercise the Stock Option by reason of the
Grantee's death, at any time within a period of three years after death (but not
after the expiration date of the Stock Option) to the extent of the total number
of shares subject to the Stock Option which were purchasable pursuant to its
terms at the date of termination; or
(e) if the Grantee should die within three months after voluntary
termination of employment or involuntary termination without cause, as
contemplated in Section 7(a), each Stock Option held by the Grantee may be
exercised by the Grantee's estate, or by any person who acquires the right to
exercise by reason of the Grantee's death, at any time within a period of one
year after death (but not after the expiration date of the Stock Option) to the
extent of the number of shares subject to the Stock Option which were
purchasable pursuant to its terms at the date of termination.
SECTION 8. ADJUSTMENTS
In the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, stock split or other change in the corporate
structure or capitalization affecting the Stock, there shall be an appropriate
adjustment made by the Board in the number and kind of shares that may be
granted in the aggregate and to individual Employees under the Plan, the number
and kind of shares subject to each outstanding Stock Option and the option
prices. In the event of a transaction involving (i) the liquidation or
dissolution of the Company, (ii) a merger or consolidation in which the Company
is not the surviving corporation or (iii) the sale or disposition of all or
substantially all of the Company's assets, provision shall be made in connection
with such transaction for the assumption of Stock Options theretofore granted
under the Plan, or the substitution for such Stock Options of new options of the
successor corporation, with appropriate adjustment as to the number and kind of
stock and the purchase price for stock thereunder, or, in the discretion of the
Committee, the Plan and the Stock Options issued hereunder shall terminate on
the effective date of such transaction if appropriate provision is made for
payment to the Grantee of an amount in cash equal to the fair market value of a
share of stock multiplied by the number of shares of stock subject to the Stock
Options (to the extent such Stock Options have not been exercised) less the
exercise price for such Stock Options (to the extent such Stock Options have not
been exercised): provided, however, that in no event shall the Committee take
any action or make any determination under this Section 8 which would prevent a
transaction described in clause (ii) or (iii) above from being treated as a
pooling of interests under generally accepted accounting principles.
SECTION 9. TENDER OFFER; CHANGE IN CONTROL
A Stock Option shall become immediately exercisable to the extent of
the total number of shares subject to the Stock Option in the event of (i) a
tender offer by a person or persons other than the Company for all or any part
of the outstanding Stock if, upon consummation of the purchases contemplated,
the offeror or offerors would own, beneficially or of record, an aggregate of
more than 25% of the outstanding Stock, or (ii) a Change in Control of the
Company.
SECTION 10. GENERAL PROVISIONS
(a) Each Stock Option shall be evidenced by a written instrument
containing such terms and conditions, not inconsistent with this Plan, as the
Committee shall approve.
(b) The granting of a Stock Option in any year shall not give the
Grantee any right to similar grants in future years or any right to be retained
in the employ of the Company or any Subsidiary or interfere in any way with the
right of the Company or such Subsidiary to terminate an Employee's employment at
any time.
(c) Notwithstanding any other provision of the Plan, the Company shall
not be required to issue or deliver any certificate or certificates for shares
of Stock under the Plan prior to fulfillment of all of the following conditions:
(i) The listing, or approval for listing upon notice of
issuance, of such shares on the New York Stock Exchange;
(ii) Any registration or other qualification of such shares
under any state or federal law or regulation, or the maintaining in effect of
any such registration or other qualification which the Committee may, in its
discretion upon the advice of counsel, deem necessary or advisable; and
(iii) The obtaining of any other consent, approval or permit
from any state or federal governmental agency which the Committee may, in its
discretion upon the advice of counsel, determine to be necessary or advisable.
(d) The Company shall have the right to deduct from any payment or
distribution under the Plan any federal, state or local taxes of any kind
required by law to be withheld with respect to such payments or to take such
other action as may be necessary to satisfy all obligations for the payment of
such taxes. In case distributions are made in shares of Stock, the Company shall
have the right to retain the value of sufficient shares of Stock to equal the
amount of tax to be withheld for such distributions or require a recipient to
pay the Company for any such taxes required to be withheld on such terms and
conditions prescribed by the Committee.
(e) No Grantee shall have any of the rights of a shareholder by reason
of a Stock Option until it is exercised.
(f) The Plan shall be construed and enforced in accordance with the
laws of the State of Delaware (without regard to the legislative or judicial
conflict of laws rules of any state), except to the extent superseded by federal
law.
SECTION 11. AMENDMENT AND TERMINATION
(a) The Plan shall terminate on April 1, 2008 and no Stock Option shall
be granted hereunder after that date, provided that the Board may terminate the
Plan at any time prior thereto.
(b) The Board may amend the Plan at any time without notice.
(c) No termination or amendment of the Plan may, without the consent of
a Grantee to whom a Stock Option shall theretofore have been granted, adversely
affect the rights of such Grantee under such Stock Option.
11
<PAGE>
EXHIBIT 10(b)
NATIONAL DISCOUNT BROKERS GROUP, INC.
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT dated and entered into effective as of the 3rd
day of May, 1999, by and between National Discount Brokers Group, Inc., a
Delaware corporation (together with any successor, the "Company"), and Matthew
Stadler, residing at the address set forth below his or her signature, (the
"Employee").
WITNESSETH:
WHEREAS, should the Company receive a proposal from, or engage
in discussions with, a third person, whether solicited by the Company or
unsolicited, concerning a possible business combination with or the acquisition
of a substantial portion of voting securities of either party, the Board of
Directors of the Company (the "Board") has deemed it imperative that it and the
Company be able to rely on the Employee to continue to serve in his or her
position, and that the Board and the Company be able to receive and rely upon
his or her advice, if they request it, as to the best interests of the Company
and its shareholders, without concern that the Employee might be distracted by
the personal uncertainties and risks that such a proposal or discussions might
otherwise create; and
WHEREAS, the Company desires to enhance employee morale
and its ability to retain existing management; and
WHEREAS, the Company desires to reward the Employee for his or
her valuable, dedicated service to the Company should his or her service be
terminated under circumstances hereinafter described; and
WHEREAS, the Employee is presently a key employee with whom
the Company has been authorized by the Board to enter into this Agreement;
NOW, THEREFORE, to assure the Company of the Employee's
continued dedication and the availability of his or her advice and counsel in
the event of any such proposal, to induce the Employee to remain in the employ
of the Company, and to reward the Employee for his or her valuable, dedicated
service to the Company should his or her service be terminated under
circumstances hereinafter described, and for other good and valuable
consideration, the receipt and adequacy whereof each party acknowledges, the
Company and the Employee agree as follows:
<PAGE>
1. OPERATION, EFFECTIVE DATE, AND TERM OF AGREEMENT
(a) This Agreement shall commence on the date hereof and
continue in effect until two years after a Change of Control shall occur.
(b) This Agreement is effective and binding on both parties as
of the date hereof. Notwithstanding its present effectiveness, the provisions of
paragraphs 3 and 4 of this Agreement shall become operative only when, as and if
there has been a "Change in Control". For purposes of this Agreement, a "Change
in Control" shall be deemed to have occurred if (X) any "person" (as such term
is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, Mr. Arthur Kontos and
any Affiliate of Mr. Kontos, Mr. Peter Kellogg or an Affiliate of Mr. Kellogg,
or a person engaging in a transaction of the type described in clause (Z) of
this subsection but which does not constitute a change in control under such
clause, is or become the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
20% or more of the combined voting power of the Company's then outstanding
securities; or (Y) during any period of two consecutive years during the term of
this Agreement, individuals who at the beginning of such period constitute the
Board and any new director (other than a director designated by a person who has
entered into an agreement with the Company to effect a transaction described in
clauses (X) or (Z) of this Subsection) whose election by the Board or nomination
for election by the Company shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved ("Continuing Members"), cease for any reason to
constitute a majority thereof; or (Z) the shareholders of the Company approve
or, if no shareholder approval is required or obtained, the Company or a
subsidiary of the Company completes a merger, consolidation or similar
transaction of the Company or such a subsidiary with or into any other
corporation, or a binding share exchange involving the Company's securities,
other than any such transaction which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least 66 2/3% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such transaction, or the shareholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets.
2. EMPLOYMENT OF THE EMPLOYEE
Nothing herein shall affect any right which the Employee or
the Company may otherwise have to terminate the Employee's employment by the
Company at any time in any lawful manner, subject always to the Company's
providing to the Employee the payments and benefits specified in paragraphs 3
and 4 of this Agreement to the extent hereinbelow provided.
In the event any person commences a tender or exchange offer,
circulates a proxy statement to the Company's shareholders or takes other steps
designed to effect a Change in Control as defined in paragraph 1 of this
Agreement, the Employee agrees that he or she will not voluntarily leave the
employ of the Company, and will continue to perform his or her regular duties
and to render the services specified in the recitals of this Agreement, until
such person has abandoned or terminated its efforts to effect a Change in
Control or until a Change in Control has occurred. Should the Employee
voluntarily terminate his or her employment before any such effort to effect a
Change in Control has commenced, or after any such effort has been abandoned or
terminated without effecting a Change in Control and no such effort is then in
process, this Agreement shall lapse and be of no further force or effect.
3. TERMINATION FOLLOWING CHANGE IN CONTROL
(a) If any of the events described in paragraph 1 hereof
constituting a Change in Control shall have occurred, the Employee shall be
entitled to the benefits provided in paragraph 4 hereof upon the subsequent
termination of his or her employment within the applicable period set forth in
paragraph 4 hereof following such Change in Control unless such termination is
(i) due to the Employee's death or Retirement; or (ii) by the Company by reason
of the Employee's Disability or for Cause; or (iii) by the Employee other than
for Good Reason.
(b) If following a Change in Control, the Employee's
employment is terminated by reason of his or her death or Disability, the
Employee shall be entitled to death or long-term disability benefits, as the
case may be, from the Company no less favorable than those benefits to which he
or she would have been entitled had the death or termination for Disability
occurred during the six-month period prior to the Change in Control. If prior to
any such termination for Disability, the Employee fails to perform his or her
duties as a result of incapacity due to physical or mental illness, he or she
shall continue to receive his or her Base Salary less any benefits as may be
available to hereunder the Company's disability plans until his or her
employment is terminated for Disability.
(c) If the Employee's employment shall be terminated by the
Company for Cause or by the Employee other than for Good Reason, the Company
shall pay to the Employee his or her full Base Salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
and the Company shall have no further obligations to the Employee under this
Agreement.
(d) For purposes of this Agreement:
(i) "Disability" shall mean the Employee's
incapacity due to physical or mental illness such that the Employee shall
have become qualified to receive benefits under the Company's long-term
disability plans or any equivalent coverage required to be provided to the
Employee pursuant to any other plan or agreement, whichever is applicable.
(ii) "Retirement" shall mean that the Employee shall
have reached age 65 and shall
voluntarily retire under the Company's retirement plans applicable to such
Employee or any earlier actual voluntary retirement by the Employee from his or
her employment with the Company.
(iii) "Cause" shall mean:
(A) the conviction of the Employee for a felony,
or the willful commission by the Employee of a criminal or other act that in
the judgment of the Board causes or will likely cause substantial economic
damage to the Company or substantial injury to its business reputation;
(B) the commission by the Employee of an act of
fraud in the performance of such Employee's duties on behalf of the Company;
(C) the continuing willful failure of the Employee to
perform the duties of such
Employee to the Company (other than any such failure resulting from the
Employee's incapacity due to physical or mental illness) after written notice
thereof (specifying the particulars thereof in reasonable detail) and a
reasonable opportunity to be heard and cure such failure are given to the
Employee by the compensation committee of the Board; or
(D) the order of a federal or state regulatory agency
or a court of competent
jurisdiction requiring the termination of the Employee's employment.
For purposes of this subparagraph (d)(iii), no act, or failure
to act, on the Employee's part shall be considered "willful" unless done, or
omitted to be done, by him or her not in good faith and without reasonable
belief that his or her action or omission was in the best interests .
(iv) "Good Reason" shall mean:
(A) The assignment by the Company to the Employee of
duties, without the Employee's
express written consent, which (i) are materially different or require travel
significantly more time-consuming or extensive than the Employee's duties or
business travel obligations immediately prior to the Change in Control, or (ii)
result, in either a significant reduction in the Employee's authority and
responsibility as a senior corporate executive when compared to the highest
level of authority and responsibility assigned to the Employee at any time
during the six (6) month period prior to the Change in Control, or, (iii)
without the Employee's express written consent, the removal of the Employee
from, or any failure to reappoint or reelect the Employee to, the highest title
held since the date six (6) months before the Change in Control, except in
connection with a termination of the Employee's employment by the Company for
Cause, or by reason of the Employee's death, Disability or Retirement;
(B) A reduction by the Company of the Employee's Base
Salary, or the failure to grant
increases in the Employee's Base Salary on a basis at least substantially
comparable to those granted to other employees of comparable title, salary and
performance ratings made in good faith;
(C) The relocation of the Company's principal
executive offices to a location outside
the State of New Jersey, or the Company's requiring the Employee to be based
anywhere other than the Company's principal executive offices except for
required travel on the Company's business to an extent substantially consistent
with the Employee's business travel obligations immediately prior to the Change
in Control, or in the event of any relocation of the Employee with the
Employee's express written consent, the failure by the Company to pay (or
reimburse the Employee for) all reasonable moving expenses by the Employee
relating to a change of principal residence in connection with such relocation
and to indemnify the Employee against any loss realized in the sale of the
Employee's principal residence in connection with any such change of residence,
all to the effect that the Employee shall incur no loss upon such sale on an
after tax basis;
(D) The failure by the Company to continue to provide
the Employee with substantially
the same welfare benefits (which for purposes of this Agreement shall mean
benefits under all welfare plans as that term is defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended), and perquisites,
including participation on a comparable basis in the Company's stock options
plan and other plans in which executives of the Company of comparable title and
salary participate and as were provided to the Employee immediately prior to
such Change in Control, or with a package of welfare benefits and perquisites,
that, though one or more of such benefits or perquisites may vary from those,
including participation on a comparable basis in the Company's stock option
plan, is substantially comparable in all material respects to such welfare
benefits and perquisites, including participation on a comparable basis in the
Company's stock option plan taken as a whole; or
(E) The failure of the Company to obtain the express
written assumption of and
agreement to perform this Agreement by any successor as contemplated in
subparagraph 5(d) hereof.
(v) "Dispute" shall mean (i) in the case of
termination of employment of the Employee
with the Company or a Subsidiary by the Company for Disability or Cause, that
the Employee challenges the existence of Disability or Cause and (ii) in the
case of termination of employment of an Employee with the Company by the
Employee for Good Reason, that the Company challenges the existence of Good
Reason.
(vi) "Base Salary" shall mean the amount determined
by multiplying the Employee's
highest semi-monthly or other periodic rate of base pay paid to the Employee
during the twelve-month period immediately prior to the giving of the Notice of
Termination by the number of pay periods per year. The following items are not
part of base pay, as used herein: reimbursed expenses, any amount paid on
account of overtime or holiday work, payment on account of insurance premiums or
other contributions made to other welfare of benefit plans, any year-end or
other bonuses, commissions and gifts.
(vii) "Affiliate" shall have the meaning given such
term in Rule 405 under the
Securities Act of 1933, as amended.
(e) Any purported termination of employment by the Company by
reason of the Employee's Disability or for Cause, or by the Employee for Good
Reason shall be communicated by written Notice of Termination to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a
notice given by the Employee or the Company, as the case may be, which shall
indicate the specific basis for termination and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for determination
of any payments under this Agreement. An Employee shall not be entitled to give
a Notice of Termination that the Employee is terminating his or her employment
with the Company for Good Reason more than two (2) years following the
occurrence of the event alleged to constitute Good Reason.
(f) For purposes of this Agreement, "Date of Termination"
shall mean the date specified in the Notice of Termination, which shall not be
more than ninety (90) days after such Notice of Termination is given, as such
date may be modified pursuant to the following two sentences. If within thirty
(30) days after any Notice of Termination is given, the party who receives such
Notice of Termination notifies the other party that a Dispute (as heretofore
defined) exists, the Date of Termination shall be the date on which the Dispute
is finally determined, either by mutual written agreement of the parties, or by
a final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been perfected);
provided that the Date of Termination shall be extended by a notice of Dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such Dispute with reasonable diligence and provided
further that pending the resolution of any such Dispute, the Company shall
continue to pay the Employee the same Base Salary and to provide the Employee
with the same or substantially comparable welfare benefits and perquisites,
including participation in the Company's stock option plan, that the Employee
was paid and provided immediately prior to the Change in Control. Should a
Dispute ultimately be determined in favor of the Company then all sums paid by
the Company to the Employee from the date of termination specified in the Notice
of Termination until final resolution of the Dispute pursuant to this paragraph
shall be repaid promptly by the Employee to the Company, with interest at 70% of
the prime rate charged from time to time by Citibank, N.A., New York, New York,
all stock options granted to the Employee during such period shall be canceled
or returned to the Company, and no service as an employee shall be credited to
the Employee for such period for pension purposes. The Employee shall not be
obligated to pay back the welfare benefits and perquisites for such period
unless the final judgment, order or decree of a court or other body resolving
the Dispute determines that the Employee acted in bad faith in giving a notice
of Dispute. Should a Dispute ultimately be determined in favor of the Employee,
then the Employee shall be entitled to retain all sums paid to the Employee
under this subparagraph (f) pending resolution of the Dispute and shall be
entitled to receive, in addition, the payments and other benefits provided for
in paragraph 4 hereof to the extent not previously paid hereunder.
4. PAYMENTS UPON TERMINATION
If after a Change of Control and within two years after the
date of this Agreement, the Company shall terminate the Employee's employment
other than by reason of the Employee's death, Disability, Retirement or for
Cause or if the Employee shall terminate his or her employment for Good Reason
then,
(a) the Company will pay to the Employee as compensation for
services rendered, (subject to any applicable payroll or other taxes required to
be withheld) commencing on the first day of the month following the month of
termination, one-twelfth (1/12) of Base Salary of the Employee payable once
monthly until the date which is the second anniversary of the date of this
Agreement. In addition, the Employee shall receive $200,000 minus the amount of
any cash bonus paid to him by the Company. The payment of such bonus to be at
the rate of $100,000 per year and payable at such times as bonuses were paid to
management of the Company immediately prior to the Change of Control.
(b) In the event that any payment or benefit received or to be
received by the Employee in connection with a Change in Control or the
termination of the Employee's employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any
person whose actions result in a Change in Control or any person affiliated with
the Company or such person) (collectively with the payments and benefits
hereunder, "Total Payments") would not be deductible (in whole or part) as a
result of section 280G of the Internal Revenue Code of 1986, as amended and the
regulations thereunder (the "Code") by the Company, an affiliate or other person
making such payment or providing such benefit, the payments and benefits
hereunder shall be reduced until no portion of the Total Payments is not
deductible, or the payments and benefits hereunder are reduced to zero. At the
Company's sole discretion, such reduction may be effected by extending the date
the payment would otherwise be due by not more than one year or by decreasing
the amount of the payment or benefit otherwise due and payable. For purposes of
this limitation (i) no portion of the Total Payments the receipt or enjoyment of
which the Employee shall have effectively waived in writing prior to the date of
payment under subsection (a) shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which, in the opinion of tax counsel
selected by the Employee and acceptable to the Company's independent auditors,
is not likely to constitute a "parachute payment" within the meaning of section
280G(b)(2) of the Code, (iii) the payments and benefits hereunder shall be
reduced only to the extent necessary so that, in the opinion of the tax counsel
referred to in clause (ii), the Total Payments (other than those referred to in
clauses (i) or (ii)) in their entirety are likely to constitute reasonable
compensation for services actually rendered within the meaning of section
280G(b)(4) of the Code or are otherwise not likely to be subject to disallowance
as deductions; and (iv) the value of any non-cash benefit or any deferred
payment or benefit included in the Total Payments shall be determined by the
Company's independent auditors in accordance with the principles of sections
280G(d)(3) and (4) of the Code.
(c) In the event that any payment or benefit received or to be
received by the Employee in connection with a Change in Control or the
termination of the Employee's employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any
person whose actions result in a Change in Control or any person affiliated with
the Company or such person) (collectively with the payments and benefits
hereunder, "Total Payments") would not be deductible (in whole or part) as a
result of Section 162(m) of the Code, or any combination of Section 162(m) and
Section 280G of the Code, by the Company, an affiliate or other person making
such payment or providing such benefit, the payments and benefits hereunder
shall be reduced until no portion of the Total Payments is not deductible, or
the payments and benefits hereunder are reduced to zero. At the Company's sole
discretion, such reduction may be effected by extending the date the payment
would otherwise be due by not more than one year or by decreasing the amount of
the payment or benefit otherwise due and payable. For purposes of this
limitation (i) no portion of the Total Payments the receipt or enjoyment of
which the Employee shall have effectively waived in writing prior to the date of
payment under subsection (a) shall be taken into account, and (ii) the payments
and benefits hereunder shall be reduced only to the extent necessary so that, in
the opinion of tax counsel selected by the Employee and acceptable to the
Company's independent auditors, the Total Payments (other than those referred to
in clause (i)) in their entirety are likely to constitute performance-based
compensation or remuneration payable on a commission basis within the meaning of
Section 162(m)(4) of the Code, do not exceed the $1,000,000 limitation of
Section 162(m)(1) of the Code, or are otherwise not likely to be subject to
disallowance as deductions.
5. GENERAL
(a) The Employee shall retain in confidence any proprietary or
other confidential information known to the Employee concerning the Company and
its business (including the Company's subsidiaries and their businesses) so long
as such information is not publicly disclosed and disclosure is not required by
an order of any governmental body or court.
(b) If litigation or other proceedings shall be brought to
enforce or interpret any provision contained herein or in connection with any
tax audit to the extent attributable to the application of Section 4999 of the
Code to any payment or benefit provided hereunder, the Company shall indemnify
the Employee for his or her reasonable attorney's fees and disbursements
incurred in connection therewith and pay prejudgment interest on any money
judgment obtained by the Employee calculated at Citibank, N.A., New York, prime
rate of interest in effect from time to time from the date that payment should
have been made under the Agreement; provided that if the Employee initiated the
proceedings, the Employee shall not have been found by the court or other fact
finder to have acted in bad faith in initiating such litigation or other
proceeding, which finding must be final without further rights of appeal.
(c) The Company's obligation to pay the Employee the
compensation and to make the arrangements provided herein shall be absolute and
unconditional and shall not be affected by any circumstance, including, without
limitation, any setoff, counterclaim, recoupment, defense or other right which
the Company may have against the Employee or anyone else. All amounts payable by
the Company hereunder shall be paid without notice or demand. Except as
expressly provided herein, the Company waives all rights which it may now have
or may hereafter have conferred upon it, by statute or otherwise, to terminate,
cancel or rescind this Agreement in whole or in part. Except as provided in
paragraph 3(f) herein, each and every payment made hereunder by the Company
shall be final and the Company will not seek to recover for any reason all or
any part of such payment from the Employee or any person entitled thereto. The
Employee shall not be required to mitigate the amount of any payment or other
benefit provided for in this Agreement by seeking other employment or otherwise.
(d) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidated or otherwise) to all or
substantially all of the business and/or assets of the Company, by written
agreement in form and substance satisfactory to the Employee, to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.
As used in this Agreement "Company" shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which executes and delivers the agreement provided for in this
paragraph 5 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
(e) This Agreement shall inure to the benefit of, and be
enforceable by, the Employee's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Employee should die while any amounts would still be payable to the Employee
hereunder if he or she had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the Employee's devisee, legatee or other designee or, if there be no such
designee, to the Employee's estate. The obligations of the Employee hereunder
shall not be assignable by the Employee.
(f) Nothing in this Agreement shall be deemed to entitle the
Employee to continued employment with the Company and the rights of the Company
to terminate the employment of the Employee shall continue as fully as though
this Agreement was not in effect.
<PAGE>
6. NOTICE
For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee:
at the address set forth after the Employee's
signature at the end of this Agreement
If to the Company:
National Discount Brokers Group, Inc.
Ten Exchange Place Centre
Jersey City, New Jersey 07302
Attention: President
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
7. MISCELLANEOUS
No provisions of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing, signed by the Employee and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No assurances or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. However, this
Agreement is in addition to, and not in lieu of, any other plan providing for
payments to or benefits for the Employee or any agreement now existing, or which
hereafter may be entered into, between the Company and the Employee. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of New Jersey.
8. FINANCING
All amounts due and benefits provided under this Agreement
shall constitute general obligations of the Company in accordance with the terms
of this Agreement. The Employee shall have only an unsecured right to payment
thereof out of the general assets of the Company. Notwithstanding the foregoing,
the Company may, by agreement with one or more trustees to be selected by the
Company, create a trust on such terms as the Company shall determine to make
payments to the Employee in accordance with the terms of this Agreement.
9. VALIDITY
The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. Any provision in
this Agreement which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective only to the extent of such prohibition
or unenforceability without invalidating or affecting the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date set forth above.
Employee Name: Matthew Stadler
Employee Address: 12 Brooks Street
Hicksville, NY 11801
NATIONAL DISCOUNT BROKERS GROUP, INC.
By
Name: Arthur Kontos
Title: Chief Executive Officer
<PAGE>
EXHIBIT 10(c)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLES PAGE
<S> <C>
ARTICLE 1 - DEFINITIONS.......................................................................................1
ARTICLE 2 - DEMISE AND TERM...................................................................................8
ARTICLE 3 - RENT..............................................................................................8
ARTICLE 4 - USE OF DEMISED PREMISES...........................................................................9
ARTICLE 5 - PREPARATION OF DEMISED PREMISES..................................................................10
ARTICLE 6 - TAX AND OPERATING EXPENSE PAYMENTS...............................................................12
ARTICLE 7 - COMMON AREAS.....................................................................................14
ARTICLE 8 - SECURITY.........................................................................................15
ARTICLE 9 - SUBORDINATION....................................................................................17
ARTICLE 10 - QUIET ENJOYMENT.................................................................................18
ARTICLE 11 - ASSIGNMENT, SUBLETTING AND MORTGAGING...........................................................18
ARTICLE 12 - COMPLIANCE WITH LAWS............................................................................23
ARTICLE 13 - INSURANCE AND INDEMNITY.........................................................................24
ARTICLE 14 - RULES AND REGULATIONS...........................................................................27
ARTICLE 15 - ALTERATIONS.....................................................................................27
ARTICLE 16 - LANDLORD'S AND TENANT'S PROPERTY................................................................29
ARTICLE 17 - REPAIRS AND MAINTENANCE.........................................................................29
ARTICLE 18 - ELECTRIC ENERGY.................................................................................31
ARTICLE 19 - HEAT, VENTILATION AND AIR-CONDITIONING..........................................................31
ARTICLE 20 - OTHER SERVICES; SERVICE INTERRUPTION............................................................32
ARTICLE 21 - ACCESS, CHANGES AND NAME........................................................................33
ARTICLE 22 - MECHANICS' LIENS AND OTHER LIENS................................................................34
ARTICLE 23 - NON-LIABILITY...................................................................................34
ARTICLE 24 - DAMAGE OR DESTRUCTION...........................................................................35
ARTICLE 25 - EMINENT DOMAIN..................................................................................38
ARTICLE 26 - SURRENDER.......................................................................................39
ARTICLE 27 - CONDITIONS OF LIMITATION........................................................................40
ARTICLE 28 - RE-ENTRY BY LANDLORD............................................................................41
ARTICLE 29 - DAMAGES.........................................................................................42
ARTICLE 30 - AFFIRMATIVE WAIVERS.............................................................................44
ARTICLE 31 - NO WAIVERS......................................................................................45
ARTICLE 32 - CURING TENANT'S DEFAULTS........................................................................45
ARTICLE 33 - BROKER..........................................................................................46
ARTICLE 34 - NOTICES.........................................................................................47
ARTICLE 35 - ESTOPPEL CERTIFICATES...........................................................................47
ARTICLE 36 - ARBITRATION.....................................................................................48
ARTICLE 37 - MEMORANDUM OF LEASE.............................................................................48
ARTICLE 38 - Intentionally Omitted...........................................................................48
ARTICLE 39 - MISCELLANEOUS...................................................................................49
RIDER
EXHIBITS
EXHIBIT A - DEMISED PREMISES
EXHIBIT A-1 - DEVELOPMENT (SEE ATTACHED EXHIBIT)
EXHIBIT B - DESCRIPTION OF LAND
EXHIBIT C - WORKLETTER
EXHIBIT D - RULES AND REGULATIONS
EXHIBIT E - CLEANING SPECIFICATIONS
EXHIBIT F - LETTER OF CREDIT
EXHIBIT G - GENERATOR SPACE
EXHIBIT H - MORTGAGEE NON-DISTURBANCE
EXHIBIT I - SUPERIOR LESSOR NON-DISTURBANCE
EXHIBIT J - WORK SCHEDULE/TENANT POSSESSION DATE
EXHIBIT K - ROOF SPACE
EXHIBIT L - SCHEDULE OF HOLIDAYS
EXHIBIT M - FORM OF LANDLORD'S STATEMENT
EXHIBIT N - TITLE INSURANCE POLICY
EXHIBIT O - TENANT'S DATA CENTER LOCATION
</TABLE>
<PAGE>
LEASE, dated May , 1999, between 90 Hudson Street L.L.C., a New Jersey
Limited Liability Company, having an office at 400 Plaza Drive, Secaucus, New
Jersey 07094-3688 ("Landlord"), and National Discount Brokers Group, Inc., a
Delaware Corporation having an office at 10 Exchange Place Center, 15th Floor,
Jersey City, New Jersey 07302 ("Tenant").
ARTICLE 1 - DEFINITIONS
1.01. As used in this Lease (including in all Exhibits and any Riders
attached hereto, all of which shall be deemed to be part of this Lease) the
following words and phrases shall have the meanings indicated:
A. Advance Rent: An amount equal to one (1) month's Fixed Rent.
B. Additional Charges: All amounts that become payable by Tenant to
Landlord hereunder other than the Fixed Rent.
C. Affiliate: As to Tenant : Any entity which owns or controls or is
owned or controlled by or under common ownership or control with Tenant. The
words "ownership" or "control" as used in the foregoing sentence shall mean more
than a fifty percent (50%) ownership interest in such entity and if such entity
is a partnership or limited liability company Tenant must also have more than a
fifty percent (50%) ownership interest in its general partner, if a partnership,
or its managing member, if a limited liability company; and as to Landlord: any
entity which owns or controls or is owned or controlled by or under common
ownership or control with Landlord. The words "ownership" or "control" as used
with respect to Landlord shall mean more than a fifty percent (50%) direct or
indirect ownership interest in such entity or in its general partner or managing
member.
D. Architect: Kenneth Carl Bonte, or as Landlord may designate.
E. Base Year: 2000
F. Broker: Cushman & Wakefield, Inc.
G. Building: The building or buildings now or hereafter located
on the Land and known or to be known as 90 Hudson Street, Jersey City, New
Jersey.
H. Building Fraction: A fraction the numerator of which is the Floor
Space of the Building (approximately 420,232 square feet) and the denominator of
which is the aggregate Floor Space of the buildings in the Development. If the
aggregate Floor Space of the buildings in the Development shall be changed due
to any construction or alteration, the denominator of the Building Fraction
shall be increased or decreased to reflect such change.
I. Business Days: All days except Saturdays, Sundays, days observed by
the federal or state government as legal holidays and such other holidays as
shall be designated as holidays by the applicable building service union
employees' service contract or by the applicable operating engineers' contract
and such other holidays as are set forth on the Schedule of the days designated
as holidays as of the date of this Lease is annexed hereto as Exhibit L.
J. Business Hours: Generally customary daytime business hours, but
not before 8:00 A.M. or after 6:00 P.M.
K. Calendar Year: Any twelve-month period commencing on a January 1.
L. Commencement Date: The date hereof.
M. Common Areas: All areas, spaces and improvements in the Building and
on the Land which are available from time to time, subject to the provisions of
Section 5.04 and Article 7 of this Lease, for the common use and benefit of the
tenants and occupants of the Building and which are not exclusively available
for use by a single tenant or occupant, including, without limitation, parking
areas, roads, walkways, sidewalks, landscaped and planted areas, community
rooms, if any, the managing agent's office, if any, and public rest rooms, if
any.
N. CPI: The Consumer Price Index of the Bureau of Labor Statistics of
the U.S. Department of Labor (All Urban Consumers), for NY-Northern, NJ and Long
Island, all items (1982-1984=100), or a successor index reasonably selected by
Landlord and appropriately adjusted.
O. Declaration: The Colgate Center Declaration of Covenants and
Restrictions and By-Laws of the Colgate Center Property Owners Association, Inc.
governing the allocation of costs and expenses for the Development Common Areas
in Colgate Center.
P. Demised Premises: The space that is or will be located on a portion
of the grade level and on the fifth floor and part of the sixth floor of the
Building, and that is indicated on the floor plan(s) attached hereto as Exhibit
A, together with the Generator Space (as defined in the Rider to this Lease).
Landlord and Tenant have agreed that the Demised Premises as outlined on Exhibit
A shall be deemed to contain 96,085 square feet of Floor Space, plus the number
of square feet of Generator Space. Any dispute as to square footage may be
submitted to arbitration in accordance with Article 36 of this Lease.
Q. Development: All lands and improvements now existing or
hereafter constructed located in the area outlined on Exhibit A-1.
R. Development Common Areas: All areas in the Development other than
the Common Areas that are available for non-exclusive use by all tenants
including, but not limited to: walkways, landscaped areas, open spaces, roads,
ramps, buildings and riverbank bulkheads.
S. Expiration Date: The date that is the day before the Fifteenth
(15th) anniversary of the Rent Commencement Date if the Rent Commencement Date
is the first day of a month, or the Fifteenth (15th) anniversary of the last day
of the month in which the Rent Commencement Date occurs if the Rent Commencement
Date is not the first day of a month. However, if the Term is extended by
Tenant's effective exercise of Tenant's right, if any, to extend the Term, the
"Expiration Date" shall be changed to the last day of the last extended period
as to which Tenant shall have effectively exercised its right to extend the
Term. For the purposes of this definition, the earlier termination of this Lease
shall not affect the "Expiration Date."
T. Fixed Rent: An amount at the following annual rates per square foot
multiplied by the Floor Space of the Demised Premises: from the Rent
Commencement Date through the date which is the day before the fifth anniversary
of the Rent Commencement Date (i.e. yrs. 1-5) - Thirty-One Dollars ($31.00) per
square foot, per annum; from the fifth anniversary of the Rent Commencement Date
through the date which is the day before the tenth anniversary of the Rent
Commencement Date (i.e. yrs. 6-10) - Thirty-Three Dollars ($33.00) per square
foot, per annum; and from the tenth anniversary of the Rent Commencement Date
through the original Expiration Date (i.e. yrs. 11-15) - Thirty-Five Dollars
($35.00) per square foot, per annum.
U. Floor Space: As to the Demised Premises, the sum of the floor area
stated in square feet bounded by the exterior faces of the exterior walls, or by
the exterior or Common Area face of any wall between the Demised Premises and
any portion of the Common Areas, or by the center line of any wall between the
Demised Premises and space leased or available to be leased to a tenant or
occupant, plus 22.23%. For purposes of determining the Tenant's Fraction, the
Floor Space of the Building shall be measured as provided herein. For purposes
of determining the Building Share the floor area of a Building shall be measured
consistent with the provisions of the Declaration. Any reference to the Floor
Space is intended to refer to the Floor Space of the entire area in question
irrespective of the Person(s) who may be the owner(s) of all or any part
thereof.
V. Guarantor: None.
W. Insurance Requirements: Rules, regulations, orders and other
requirements of the applicable board of underwriters and/or the applicable fire
insurance rating organization and/or any other similar body performing the same
or similar functions and having jurisdiction or cognizance over the Land and
Building, whether now or hereafter in force.
X. Land: The Land upon which the Building and Common Areas are
located. The Land is described on Exhibit B.
Y. Landlord's Work: The materials and work to be furnished,
installed and performed by Landlord at its expense in accordance with the
provisions of Exhibit C.
<PAGE>
Z. Legal Requirements: Laws and ordinances of all federal, state, city,
town, county, borough and village governments, and rules, regulations, orders
and directives of all departments, subdivisions, bureaus, agencies or offices
thereof, and of any other governmental, public or quasi-public authorities
having jurisdiction over the Land and Building, whether now or hereafter in
force, including, but not limited to, those pertaining to environmental matters.
AA. Mortgage: A mortgage and/or a deed of trust.
BB. Mortgagee: A holder of a mortgage or a beneficiary of a deed of
trust.
CC. Operating Expenses: The sum of the following, subject to the
provisions of Section R5 of the Rider to this Lease: (1) the cost and expense
(whether or not within the contemplation of the parties) for the repair,
replacement, maintenance, policing, insurance and operation of the Building and
Land, and (2) the Building Fraction of the sum of (a) the cost and expense for
the repair, replacement, maintenance, policing, insurance and operation of the
Development Common Areas, including, but not limited to the Building Share (as
hereinafter defined) of the Assessments, but not including the Capital Reserve
Assessment (as said terms are currently defined in the Declaration) (as used
herein the term Building Share shall mean the pro-rata share of the costs and
expenses of the Development allocated to the Land and Building pursuant to the
Declaration); and (b) the Real Estate Taxes, if any, attributable to the
Development Common Areas. The "Operating Expenses" shall, include, without
limitation, the following: (i) the cost for rent, casualty, liability, boiler
and fidelity insurance, (ii) if an independent managing agent is employed by
Landlord, the fees payable to such agent (provided the same are competitive with
the fees payable to independent managing agents of comparable facilities in
Hudson County), and (iii) costs and expenses incurred for legal, accounting and
other professional services (including, but not limited to, costs and expenses
for in-house or staff legal counsel or outside counsel at rates not to exceed
the reasonable and customary charges for any such services as would be imposed
in an arms length third party agreement for such services. If Landlord or its
affiliate is itself managing the Building and has not employed an independent
third party for such management, Landlord shall be entitled to an amount (the
"Landlord Management Fee") equal to three percent (3%) of the gross rental of
the Building for Landlord's home office administration and overhead cost and
expense. If a management fee is charged in any year after the Base Year, and was
not charged in the Base Year, then Base Year Operating Expenses shall be
adjusted to include a management fee at not less than the percentage of gross
rents charged in such subsequent year. All items included in Operating Expenses
shall be determined in accordance with generally accepted accounting principles
consistently applied.
DD. Parking Facility: The parking garage to be located in the
Building, as shown on Exhibit B-1.
EE. Permitted Uses: Executive and general administrative offices,
together with incidental related uses in connection with the operation of
Tenant's business, such as trading floor, data center, photocopying, mail room,
messenger station, and meeting rooms, all of a character consistent with that of
a first class office building. With respect to the grade level portion of the
Demised Premises (other than any Generator Space) only, Tenant may in addition
to the uses permitted hereunder with respect to the fifth and sixth floor
portions of the Demised Premises, utilize a portion of the grade level space,
not to exceed 3,000 square feet of Floor Space, as a customer service center
open to Tenant's customers ancillary to Tenant's business.
FF. Person: A natural person or persons, a partnership, a
corporation, or any other form of business or legal association or entity.
GG. Ready Date: The date Landlord's Work is substantially completed to
the extent required such that the non-completion of any remaining Landlord's
Work would not prevent the issuance of a temporary or permanent Certificate of
Occupancy, permitting the continuing, uninterrupted lawful occupancy of the
Demised Premises for the Permitted Uses indicated on the approved plans, upon
substantial completion of Tenant's Work by Tenant. The Ready Date shall be
deemed to have occurred upon the delivery, if available, of a certificate of
completion (or its functional equivalent) by the construction official, or if
such certificate is not available, upon certification to Landlord and Tenant by
the Architect that (i) Ready Date has occurred. In the event of the issuance of
any certificate for Landlord's Work which is temporary, Landlord shall use
reasonable efforts to obtain a permanent certificate as expeditiously as
possible. On or before the Ready Date Landlord shall have substantially
completed the following items (except to the extent any failure to substantially
complete such items is caused by Tenant), to the extent such items form part of
Landlord's Work: (i) taping and spackling of all core area walls, column
enclosures and perimeter walls in the Demised Premises, spackled, and (ii) all
mechanical, electrical and plumbing systems serving the Demised Premises to the
extent same a part of Landlord's Work. Any dispute regarding the Ready Date may
be submitted to arbitration in accordance with Article 36 of this Lease. In the
event of the issuance of any certificate for Landlord's Work which is temporary
as the result of the non-completion of any items for which Landlord is
responsible as part of Landlord's Work, Landlord shall obtain a permanent
certificate as expeditiously as possible. If, after Tenant has commenced doing
business from the Demised Premises, Tenant is prevented by order of the code
enforcement official having jurisdiction over the Demised Premises, from legally
occupying the Demised Premises for the Permitted Uses as the result of
Landlord's failure to obtain such permanent certificate due to the
non-completion of any items for which Landlord is responsible as part of
Landlord's Work, then in addition to all other rights and remedies in this Lease
and at law, Fixed Rent and Additional Charges for Real Estate Taxes and
Operating Expenses shall abate to the extent Tenant does not occupy the Demised
Premises for the period that such occupancy is prevented and thereafter for a
period equal to the period Tenant was prevented from so using the Demised
Premises.
HH. Real Estate Taxes: The real estate taxes, assessments and special
assessments imposed upon the Building and Land by any federal, state, municipal
or other governments or governmental bodies or authorities, and any expenses
reasonably incurred by Landlord in contesting such taxes or assessments and/or
the assessed value of the Building and Land, which expenses shall be allocated
to the period of time to which such expenses relate. If at any time during the
Term the methods of taxation prevailing on the date hereof shall be altered so
that in lieu of, or as an addition to or as a substitute for, the whole or any
part of such real estate taxes, assessments and special assessments now imposed
on real estate there shall be levied, assessed or imposed (a) a tax, assessment,
levy, imposition, license fee or charge wholly or partially as a capital levy or
otherwise on the rents received therefrom, or (b) any other such additional or
substitute tax, assessment, levy, imposition or charge, then all such taxes,
assessments, levies, impositions, fees or charges or the part thereof so
measured or based shall be deemed to be included within the term "Real Estate
Taxes" for the purposes hereof. Provided, however, that absent an alteration in
the method of taxation as set forth above, and except with respect to charges
imposed in lieu of real estate taxes, assessments and special assessments, "Real
Estate Taxes" shall not be deemed to include (i) Landlord's gross personal and
corporate income taxes, inheritance and estate taxes, franchise, gift and
transfer taxes or, any unincorporated business, value-added, transfer, transfer
gains, succession, capital stock, excise, excess profit, foreign ownership or
control, payroll, mortgage recording or stamp tax, or (ii) provided Tenant has
paid all Rent when due, any late penalty or interest as the result of late
payment of such Real Estate Taxes by Landlord. Nothing contained herein shall be
construed as excluding from Real Estate Taxes any charges payable pursuant to
any tax abatement received by Landlord or a Superior Lessor from the City of
Jersey City with respect to the Building or the Land.
II. Rent: The Fixed Rent and the Additional Charges.
JJ. Rent Commencement Date: The later to occur of: (i) Two hundred
fifteen (215) days after the Tenant Possession Date and (ii) the Ready Date.
KK. Rules and Regulations: The reasonable rules and regulations
that may be promulgated by Landlord from time to time, which may be reasonably
changed by Landlord from time to time. The Rules and Regulations now in
effect are attached hereto as Exhibit D.
LL. Security Deposit: Such amount as Tenant has deposited or
hereinafter deposits with Landlord as security under this Lease. Tenant shall
deposit with Landlord, upon execution hereof, a clean irrevocable letter of
credit in the initial amount of three (3) months' Fixed Rent as security
hereunder as of the date hereof, in accordance with the provisions of Article 8
of this Lease.
MM. Substitute Premises: As defined in Section 38.01.
NN. Successor Landlord: As defined in Section 9.03.
OO. Superior Lease: Any ground or underlying lease to which this
Lease is, at the time referred to, subject and subordinate, including, but not
limited to that certain lease between 90 Hudson Street Urban Renewal Associates,
L.L.C. as lessee and Landlord as lessor, and that certain sublease of even date
therewith between 90Hudson Street Urban Renewal Associates, L.L.C. as lessor and
Landlord as lessee.
PP. Superior Lessor: The lessor of a Superior Lease or its successor
in interest, at the time referred to.
QQ. Superior Mortgage: Any Mortgage to which this Lease is, at the time
referred to, subject and subordinate. Landlord represents that attached hereto
as Exhibit N is a true copy of the policy of title insurance issued by Chicago
Title Insurance Company and First American Title Insurance Company with respect
to the Land and the Building in connection with the Superior Mortgage in
existence on the date of this Lease.
RR. Superior Mortgagee: The Mortgagee of a Superior Mortgage at the
time referred to.
SS. Tenant Possession Date: The date upon which Landlord permits Tenant
to enter upon the Demised Premises for the purpose of commencement of Tenant's
Work provided that the items identified on Exhibit J as being scheduled for
construction by the Tenant Possession Date are complete to the degree specified
on said schedule, as reasonably determined by Landlord's Architect. Landlord
shall provide Tenant with not less than thirty (30) days prior written notice of
the date Landlord estimates that the Tenant Possession Date shall occur. Any
dispute regarding the Tenant Possession Date may be submitted to arbitration in
accordance with Article 36 of this Lease.
TT. Tenant's Fraction: The Tenant's Fraction shall mean the fraction,
the numerator of which shall be the Floor Space of the Demised Premises and the
denominator of which shall be the Floor Space of the Building. If the size of
the Demised Premises or the Building shall be changed from the initial size
thereof, due to any taking, any construction or alteration work or otherwise,
the Tenant's Fraction shall be changed to the fraction the numerator of which
shall be the Floor Space of the Demised Premises and the denominator of which
shall be the Floor Space of the Building.
UU. Tenant's Property: As defined in Section 16.02.
VV. Tenant's Work: The facilities, materials and work which may be
undertaken by or for the account of Tenant (other than the Landlord's Work)
to equip, decorate and furnish the Demised Premises for Tenant's
occupancy in accordance with the provisions of Exhibit C.
WW. Term: The period commencing on the Commencement Date and
ending at 11:59 p.m. of the Expiration Date, but in any event the Term shall
end on the date when this Lease is earlier terminated.
XX. Unavoidable Delays: A delay arising from or as a result of a
strike, lockout, or labor difficulty, explosion, sabotage, accident, riot or
civil commotion, act of war, fire or other catastrophe, Legal Requirement or an
act of the other party and any cause beyond the reasonable control of that
party, provided that the party asserting such Unavoidable Delay has exercised
its best efforts to minimize such delay.
ARTICLE 2 - DEMISE AND TERM
2.01. Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, the Demised Premises, for the Term.
ARTICLE 3 - RENT
3.01. Commencing on the Rent Commencement Date, Tenant shall pay the
Fixed Rent in equal monthly installments in advance on the first day of each and
every calendar month during the Term (except that Tenant shall pay, upon the
execution and delivery of this Lease by Tenant, the Advance Rent, to be applied
against the first installment or installments of Fixed Rent becoming due under
this Lease). If the Rent Commencement Date occurs on a day other than the first
day of a calendar month, the Fixed Rent for the partial calendar month at the
commencement of the Term shall be prorated.
3.02. The Rent shall be paid in lawful money of the United States to
Landlord at its office, or such other place, or Landlord's agent, as Landlord
shall designate by notice to Tenant. Tenant shall pay the Rent promptly when due
without notice or demand therefor and without any abatement, deduction or setoff
for any reason whatsoever, except as may be expressly provided in this Lease. If
Tenant makes any payment to Landlord by check, same shall be by check of Tenant
and Landlord shall not be required to accept the check of any other Person, and
any check received by Landlord shall be deemed received subject to collection.
If any check is mailed by Tenant, Tenant shall post such check in sufficient
time prior to the date when payment is due so that such check will be received
by Landlord on or before the date when payment is due. Tenant shall assume the
risk of lateness or failure of delivery of the mails, and no lateness or failure
of the mails will excuse Tenant from its obligation to have made the payment in
question when required under this Lease.
3.03. No payment by Tenant or receipt or acceptance by Landlord of a
lesser amount than the correct Rent shall be deemed to be other than a payment
on account, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment be deemed an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance or pursue any other remedy in this Lease or at law
provided.
3.04. If Tenant is in arrears in payment of Rent, Tenant waives
Tenant's right, if any, to designate the items to which any payments made by
Tenant are to be credited, and Landlord may apply any payments made by Tenant to
such items as Landlord sees fit, irrespective of and notwithstanding any
designation or request by Tenant as to the items to which any such payments
shall be credited.
<PAGE>
3.05. In the event that any installment of Rent due hereunder shall be
overdue, a "Late Charge" equal to four percent (4%) or the maximum rate
permitted by law, whichever is less ("Late Payment Rate") for Rent so overdue
may be charged by Landlord for each month or part thereof that the same remains
overdue. Provided Tenant is not otherwise in default under this Lease beyond
applicable notice and cure periods, Landlord shall waive the Late Charge with
respect to Tenant's first two (2) late payments of Rent within any calendar
year, provided further that Tenant pays such late Rent within ten (10) days
after written notice or invoice that same has not been paid. In the event that
any check tendered by Tenant to Landlord is returned for insufficient funds,
Tenant shall pay to Landlord, in addition to the charge imposed by the preceding
sentence, a fee of $25.00. Any such Late Charges if not previously paid shall,
at the option of the Landlord, be added to and become part of the next
succeeding Rent payment to be made hereunder.
ARTICLE 4 - USE OF DEMISED PREMISES
4.01. Tenant shall use and occupy the Demised Premises for the
Permitted Uses, and Tenant shall not use or permit or suffer the use of the
Demised Premises or any part thereof for any other purpose.
4.02. If any governmental license or permit, including a Certificate of
Occupancy shall be required for the proper and lawful conduct of Tenant's
business in the Demised Premises or any part thereof, Tenant shall duly procure
and thereafter maintain such license or permit and submit the same to Landlord
for inspection. Tenant shall at all times comply with the terms and conditions
of each such license or permit. Tenant shall not at any time use or occupy, or
suffer or permit anyone to use or occupy the Demised Premises, or do or permit
anything to be done in the Demised Premises, in any manner which (a) violates
the Certificate of Occupancy for the Demised Premises or for the Building; (b)
causes a dangerous condition or injury to the Building or any equipment,
facilities or systems therein; (c) constitutes a violation of the Legal
Requirements or Insurance Requirements; (d) materially adversely affects the
character, reputation or appearance of the Building as a first-class office
building; (e) materially adversely affects the proper and economic maintenance,
operation and repair of the Building and/or its equipment, facilities or
systems; or (f) unreasonably inconveniences other tenants or occupants of the
Building. In the event Landlord notifies Tenant of a claimed breach by Tenant of
the provisions of sub-sections (d), (e) or (f) of this Section 4.02 and Tenant
desires in good faith to dispute that such a breach has occurred, Tenant shall
have the right to submit such dispute to arbitration in accordance with the
provisions of Article 36 of this Lease, provided however that Tenant's right to
submit such matter to arbitration shall be conditioned upon Tenant having first
cured such breach and ceased and desisted from the activity or conduct giving
rise to such claim of breach, within thirty (30) days of notice from Landlord of
Tenant's breach of such provisions.
ARTICLE 5 - PREPARATION OF DEMISED PREMISES
5.01. (a) The Demised Premises and the core and shell of the Building
(including without limitation, the Parking Facility, building systems, entrance
area, and lobby shall be completed and prepared by Landlord for Tenant's
occupancy in the manner described in, and subject to the provisions of, this
Article 5, the Rider and Exhibit C of this Lease.
5.01 (b) (i) Tenant shall be responsible for all Tenant Work
required to prepare the Demised Premises for Tenant's occupancy at Tenant's cost
and expense, subject to the provisions of the Rider to this Lease. Such
construction shall be in accordance with Section 39.09 of this Lease. To the
extent Landlord provides access to the Building to Tenant for the commencement
of Tenant's Work prior to the completion of Landlord's Work, Tenant shall
cooperate with Landlord so as not to unreasonably interfere with the timely
completion of Landlord's Work and Landlord shall cooperate with Tenant so as not
to unreasonably interfere with the timely completion of Tenant's Work. Landlord
shall provide Tenant, no later than the Tenant Possession Date, with the plans
upon which Landlord shall base the construction of the Building ("Landlord's
Plans"). Tenant shall submit to Landlord, not later than thirty (30) days prior
to Tenant's Possession Date, for Landlord's approval (not to be unreasonably
withheld, delayed, or conditioned) final plans and specifications for all
construction work by or on behalf of Tenant in the Demised Premises including,
but not limited to layout, mechanical, electrical and plumbing plans and finish
schedules ("Plans and Specifications"). Tenant shall employ licensed
architect(s) and/or engineer(s) for the preparation of the Plans and
Specifications. Landlord shall notify Tenant of Landlord's approval or
disapproval of such Plans and Specifications, and if Landlord does not respond
within seven (7) business days after Tenant's delivery of the Plans and
Specifications, same shall be deemed approved by Landlord. If Landlord
disapproves, Landlord shall specify the reasons for disapproval and Tenant shall
resubmit revised Plans and Specifications that correct such items. Landlord
shall notify Tenant of Landlord's approval or disapproval of such resubmitted
Plans and Specifications within three (3) business days after Tenant's delivery
thereof or same shall be deemed approved.
(ii) Tenant shall obtain and provide all design and
architectural services necessary to perform Tenant's Work. Tenant shall be
responsible for complying with all building codes and Legal Requirements in
connection with Tenant's Work. Tenant shall obtain a permanent certificate of
occupancy of the Demised Premises for those Permitted Uses for which Tenant
shall utilize the Demised Premises. At all times when construction of the
Demised Premises or Tenant Work is in progress, Tenant shall maintain or cause
to be maintained the insurance coverage required under Section 13.02. Landlord
shall obtain and provide all design and architectural services necessary to
perform Landlord's Work. Landlord shall be responsible for complying with all
building codes and Legal Requirements in connection with Landlord's Work.
(iii) Tenant shall be solely responsible for the integrity of
the Tenant's Work and for the adequacy or sufficiency of the Plans and
Specifications and all the improvements depicted thereon or covered thereby, and
Landlord's consent thereto, approval thereof, or incorporation therein of any of
its recommendations shall in no way diminish Tenant's responsibility therefor or
reduce or mitigate Tenant's liability in connection therewith. Landlord shall
have no obligations or liabilities by reason of this Lease in connections with
the performance of construction or of the finish, decorating or installation
work performed by Tenant, or on its behalf, or in connection with the contracts
for the performance thereof entered into by Tenant. Any warranties extended or
available to Tenant in connection with the aforesaid work shall be for the
benefit also of Landlord if available at no additional cost. Tenant further
agrees that once it commences construction, it shall diligently and continuously
proceed with construction to completion with respect to the portion of the
Demised Premises which Tenant intends to occupy immediately.
5.02.If the substantial completion of the Landlord's Work shall be
delayed due to (a) any act or omission of Tenant or any of its employees, agents
or contractors (including, without limitation, [i] any delays due to changes in
or additions to the Landlord's Work, or [ii] any delays by Tenant in the
submission of plans, drawings, specifications or other information or in
approving any working drawings or estimates or in giving any authorizations or
approvals), or (b) any additional time needed for the completion of the
Landlord's Work by the inclusion in the Landlord's Work of any items specified
by Tenant that require long lead time for delivery or installation, then the
Ready Date shall be deemed to have occurred on the date that the Ready Date
would have been ready but for such delay(s). The Demised Premises shall be
conclusively presumed to be in satisfactory condition on the Ready Date except
for the minor or insubstantial details and any matters of which Tenant gives
Landlord notice within (x) thirty (30) days after the Ready Date, as to all
components except HVAC, (y) 60 days after Tenant has commenced using the heating
system and (z) 60 days after Tenant has commenced using the air conditioning,
specifying such details and matters with reasonable particularity.
5.03. Provided and on the condition that Landlord shall incur no
liability whatsoever to Tenant or any other party therefor, Landlord shall use
reasonable efforts to avoid exposing Tenant's Data Center (as hereinafter
defined) to water hazards by reason of the resulting build-out on the seventh
floor area above the Data Center.
5.04. Landlord reserves the right, at any time and from time to time,
to increase, reduce or change the number, type, size, location, elevation,
nature and use of any of the Common Areas and the Building and any other
buildings and other improvements on the Land consistent with a first class
office building, including, without limitation, the right to move and/or remove
same, provided same shall not unreasonably block or interfere with Tenant's use
of the Demised Premises and means of ingress or egress to and from the Demised
Premises. In the event that any such work or repairs shall require Tenant to
either: switch to backup power, or vacate the Demised Premises, Landlord shall,
except in cases of emergency where such notice is not practicable, provide
Tenant with not less than twenty-five (25) days prior notice of such work or
repair to permit Tenant to coordinate utilization of its backup equipment and
facilities, if required.
ARTICLE 6 - TAX AND OPERATING EXPENSE PAYMENTS
6.01. Tenant shall pay to Landlord, as hereinafter provided, Tenant's
Fraction of the Real Estate Taxes. Tenant's Fraction of the Real Estate Taxes
shall be the Real Estate Taxes in respect of the Building for the period in
question, less the Real Estate Taxes attributable to the Base Year, multiplied
by the Tenant's Fraction, plus the Real Estate Taxes in respect of the Land for
the period in question, less the Real Estate Taxes attributable to the Base
Year, multiplied by the Tenant's Fraction. If any portion of the Building shall
be exempt from all or any part of the Real Estate Taxes, then for the period of
time when such exemption is in effect, the Floor Space on such exempt portion
shall be excluded when making the above computations in respect of the part of
the Real Estate Taxes for which such portion shall be exempt. Landlord shall
reasonably estimate the annual amount of Tenant's Fraction of the Real Estate
Taxes (which estimate may be changed by Landlord at any time and from time to
time), and Tenant shall pay to Landlord 1/12th of the amount so estimated on the
first day of each month in advance. Tenant shall also pay to Landlord on demand
from time to time the amount which, together with said monthly installments,
will be sufficient in Landlord's estimation to pay Tenant's Fraction of any Real
Estate Taxes thirty (30) days prior to the date when such Real Estate Taxes
shall first become due. When the amount of any item comprising Real Estate Taxes
is finally determined for a real estate fiscal tax year, Landlord shall submit
to Tenant a statement in reasonable detail of the same, and the figures used for
computing Tenant's Fraction of the same, and if Tenant's Fraction so stated is
more or less than the amount theretofore paid by Tenant for such item based on
Landlord's estimate, Tenant shall pay to Landlord the deficiency within ten (10)
days after submission of such statement, or Landlord shall refund to Tenant the
excess, or at Landlord's option, apply same to future installments of Real
Estate Taxes due hereunder, with the balance of any such overpayment by Tenant,
if any, remaining after such credit to Tenant to be refunded to Tenant within
ten (10) days of Landlord's statement showing such overpayment. Any Real Estate
Taxes for a real estate fiscal tax year, a part of which is included within the
Term and a part of which is not so included, shall be apportioned on the basis
of the number of days in the real estate fiscal tax year included in the Term,
and the real estate fiscal tax year for any improvement assessment will be
deemed to be the one-year period commencing on the date when such assessment is
due, except that if any improvement assessment is payable in installments, the
real estate fiscal tax year for each installment will be deemed to be the
one-year period commencing on the date when such installment is due. The above
computations shall be made by Landlord in accordance with generally accepted
accounting principles, and the Floor Space referred to will be based upon the
average of the Floor Space in existence on the first day of each month during
the period in question. In addition to the foregoing, Tenant shall be
responsible for any increase in Real Estate Taxes attributable to assessments
for improvements installed by or for the account of Tenant at the Demised
Premises. If the Demised Premises are not separately assessed, the amount of any
such increase shall be determined by reference to the records of the tax
assessor.
6.02. Tenant shall pay to Landlord, as hereinafter provided, Tenant's
Fraction of the Operating Expenses. Tenant's Fraction of the Operating Expenses
shall be the Operating Expenses for the period in question, less the Operating
Expenses for the Base Year, multiplied by Tenant's Fraction. Landlord shall
reasonably estimate Tenant's annual Fraction of the Operating Expenses (which
estimate may be reasonably changed by Landlord from time to time), and Tenant
shall pay to Landlord 1/12th of the amount so estimated on the first day of each
month in advance. If at any time Landlord changes its estimate of Tenant's
Fraction of the Operating Expenses for the then current Calendar Year or partial
Calendar Year, Landlord shall give notice to Tenant of such change and within
ten (10) days after such notice Landlord and Tenant shall adjust for any
overpayment or underpayment during the prior months of the then current Calendar
Year or partial Calendar Year. After the end of each Calendar Year, including
any partial Calendar Year at the beginning of the Term, and after the end of the
Term, Landlord shall submit to Tenant a statement in reasonable detail stating
Tenant's Fraction of the Operating Expenses for such Calendar Year, or partial
Calendar Year in the event the Term shall begin on a date other than a January
1st and/or end on a date other than a December 31st, as the case may be, and
stating the Operating Expenses for the period in question and the figures used
for computing Tenant's Fraction, and if Tenant's Fraction so stated for such
period is more or less than the amount paid for such period, Tenant shall pay to
Landlord the deficiency within ten (10) days after submission of such statement,
or Landlord shall refund to Tenant the excess, or at Landlord's option, apply
same to future installments of Operating Expenses due hereunder, with the
balance of any such overpayment by Tenant, if any, remaining after such credit
to Tenant to be refunded to Tenant within ten (10) days of Landlord's statement
showing such overpayment. All computations shall be made in accordance with
generally accepted accounting principles. Landlord's statement shall be
substantially in the form of Exhibit M attached hereto.
6.03. Landlord shall, within thirty (30) days after written request
from Tenant (given no later than sixty (60) days after the issuance of the
Landlord's statement of Real Estate Taxes or Operating Expenses pursuant to
Section 6.01 or 6.02 hereof which Tenant desires to review), provide Tenant with
such information as Tenant may reasonably request to permit Tenant to verify the
charges first appearing in such statement including, without limitation access
to and review of Landlord's relevant books, records and other financial
information. Each such statement given by Landlord pursuant to Section 6.01 or
Section 6.02 shall be conclusive and binding upon Tenant unless before the date
which is one hundred fifty (150) days after the receipt of such statement,
Tenant shall notify Landlord in writing that it disputes the correctness of the
statement or that Landlord has failed to provide Tenant with the relevant,
books, records or other financial information reasonably requested by Tenant,
specifying the particular respects in which the statement is claimed to be
incorrect or which books, records or information has not been furnished. Upon
the furnishing of such books, records, or information, each such statement given
by Landlord pursuant to Section 6.01 or Section 6.02 shall be conclusive and
binding upon Tenant unless before the date which is sixty (60) after the receipt
of such books, records or information, Tenant shall notify Landlord in writing
that it disputes the correctness of the statement If such dispute is not settled
by agreement, either party may submit the dispute to arbitration as provided in
Article 36. Pending the determination of such dispute by agreement or
arbitration as aforesaid, Tenant shall, within ten (10) days after receipt of
such statement, pay the Additional Charges in accordance with such statement,
without prejudice to Tenant's or Landlord's position. If the dispute shall be
determined in Tenant's favor, Landlord shall reimburse Tenant the amount of
Tenant's overpayment resulting from compliance with, and if such overpayment is
the result of an overestimation by Landlord of any Additional Charge by more
than five percent (5%), such overpayment shall be reimbursed to Tenant, within
ten (10) days after such determination, together with interest thereon at the
Prime Rate as announced in the Wall Street Journal (or a successor index
reasonably selected by Landlord) plus two percent (2%), per annum, or at
Landlord's option, apply same to future installments of Operating Expenses due
hereunder, with the balance of any such overpayment by Tenant, if any, remaining
after such credit to Tenant to be refunded to Tenant within ten (10) days of
Landlord's statement showing such overpayment.
6.04. In the event the Building ceases to be covered by the Long Term
Tax exemption granted pursuant to the Financial Agreement with the City of
Jersey City, dated May 13, 1998, as the result of a breach of such Financial
Agreement by Landlord or a Superior Lessor, not caused by a default or breach by
Tenant, then Real Estate Taxes which cease to be covered by such exemption shall
be deemed to be equal to the payments which would have been made under said
Financial Agreement had such Financial Agreement not been terminated early as
the result of such breach, as reasonably determined by Landlord.
ARTICLE 7 - COMMON AREAS
7.01. Subject to the provisions of Section 5.04, Landlord will operate,
manage, equip, light, repair and maintain, or cause to be operated, managed,
equipped, lighted, repaired and maintained, the Common Areas for their intended
purposes. Landlord reserves the right, at any time and from time to time, to
construct within the Common Areas kiosks, fountains, aquariums, planters, pools
and sculptures, and to install vending machines, telephone booths, benches and
the like consistent with a first class office building, provided same shall not
unreasonably block or interfere with Tenant's means of ingress or egress to and
from the Demised Premises.
7.02. Tenant and its subtenants and concessionaires, and their
respective officers, employees, agents, customers and invitees, shall, subject
to the provisions of this Lease, have the non-exclusive right, in common with
Landlord and all others to whom Landlord has granted or may hereafter grant such
right, but subject to the Rules and Regulations, to use the Common Areas.
Landlord reserves the right, at any time and from time to time, to close
temporarily all or any portions of the Common Areas when in Landlord's
reasonable judgment any such closing is necessary or desirable (a) to make
repairs or changes or to effect construction, (b) to prevent the acquisition of
public rights in such areas, (c) to discourage unauthorized parking, or (d) to
protect or preserve natural persons or property. Landlord may do such other acts
in and to the Common Areas as in its judgment may be desirable to improve or
maintain same. In all such events, such repairs and changes shall be commenced
and prosecuted diligently by Landlord in a good and workmanlike manner and with
as little interference as practicable with Tenant's access to and use of the
Building and the Demised Premises. Nothing contained herein shall be construed,
however, as requiring Landlord to perform such work at times other than Monday
through Friday Business Days and during Business Hours except in cases of
emergency. In the event that any such work or repairs shall require Tenant to
either: switch to backup power, or vacate the Demised Premises, Landlord shall,
except in cases of emergency where such notice is not practicable, provide
Tenant with not less than twenty-five (25) days prior notice of such work or
repair to permit Tenant to coordinate utilization of its backup equipment and
facilities, if required.
7.03. Tenant agrees that it, any subtenant or licensee and their
respective officers, employees, contractors and agents will park their
automobiles and other vehicles only where and as permitted by Landlord. Tenant
will, if and when so requested by Landlord, furnish Landlord with the license
numbers of any vehicles of Tenant, any subtenant or licensee and their
respective officers, employees and agents.
ARTICLE 8 - SECURITY
8.01. Tenant has deposited with Landlord the Security Deposit as
security for the full and faithful payment and performance by Tenant of Tenant's
obligations under this Lease. If Tenant defaults in the full and prompt payment
and performance of any of its obligations under this Lease, including, without
limitation, the payment of Rent, Landlord may use, apply or retain the whole or
any part of the Security Deposit to the extent required for the payment of any
Rent or any other sums as to which Tenant is in default or for any sum which
Landlord may expend or may be required to expend by reason of Tenant's default
in respect of any of Tenant's obligations under this Lease, including, without
limitation, any damages or deficiency in the reletting of the Demised Premises,
whether such damages or deficiency accrue before or after summary proceedings or
other re-entry by Landlord. If Landlord shall so use, apply or retain the whole
or any part of the security, Tenant shall upon demand immediately deposit with
Landlord a sum equal to the amount so used, applied and retained, as security as
aforesaid. If Tenant shall fully and faithfully pay and perform all of Tenant's
obligations under this Lease, the Security Deposit or any balance thereof to
which Tenant is entitled shall be returned or paid over to Tenant after the date
on which this Lease shall expire or sooner end or terminate, and after delivery
to Landlord of entire possession of the Demised Premises. In the event of any
sale or leasing of the Land, Landlord shall have the right to transfer the
security to which Tenant is entitled to the vendee or lessee and Landlord shall
thereupon be released by Tenant from all liability for the return or payment
thereof; and Tenant shall look solely to the new landlord for the return or
payment of the same; and the provisions hereof shall apply to every transfer or
assignment made of the same to a new landlord. Tenant shall not assign or
encumber or attempt to assign or encumber the monies deposited herein as
security, and neither Landlord nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
(b). In lieu of the cash security required by this Lease, Tenant shall
provide to Landlord an irrevocable Letter of Credit in the amount of the
Security Deposit in form and substance satisfactory to Landlord and issued by a
financial institution approved by Landlord (which approval shall not be
unreasonably withheld) and otherwise conforming to Exhibit F, annexed hereto and
made a part hereof. Landlord shall have the right, upon written notice to Tenant
(except for Tenant's non-payment of Rent or for Tenant's failure to comply with
Article 8.03 for which no notice shall be required), and regardless of the
exercise of any other remedy the Landlord may have by reason of a default, to
draw upon said Letter of Credit to cure any default of Tenant or for any purpose
authorized by section 8.01(a) of this Lease and if Landlord does so, Tenant
shall, upon demand, additionally fund the Letter of Credit with the amount so
drawn so that Landlord shall have the full deposit on hand at all times during
the Term of the Lease and for a period of thirty (30) days' thereafter. In the
event of a sale of the Building or a lease of the Building subject to this
Lease, Landlord shall have the right to transfer the security to the vendee or
lessee.
8.02. The Letter of Credit shall expire not earlier than thirty (30)
days after the Expiration Date of this Lease. Upon Landlord's prior consent, the
Letter of Credit may be of the type which is automatically renewed on an annual
basis (Annual Renewal Date), provided however, in such event Tenant shall
maintain the Letter of Credit and its renewals in full force and effect during
the entire Term of this Lease (including any renewals or extensions) and for a
period of thirty (30) days thereafter. The Letter of Credit will contain a
provision requiring the issuer thereof to give the beneficiary (Landlord) sixty
(60) days' advance written notice of its intention not to renew the Letter of
Credit on the next Annual Renewal Date.
8.03. In the event Tenant shall fail to deliver to Landlord a
substitute irrevocable Letter of Credit, in the amount stated above, on or
before thirty (30) days prior to the next Annual Renewal Date, Landlord shall be
permitted to draw upon the Letter of Credit without further notice to Tenant. In
addition, said failure shall be deemed a default under this Lease unless Tenant
provides such substitute irrevocable Letter of Credit within the cure period set
forth in Section 27.02(b). Any cash balance remaining after applying the amount
of any draw of such Letter of Credit, shall be held and applied as cash security
under this Article 8. In the event Tenant provides a replacement Letter of
Credit pursuant to this Article, Landlord shall return any unused cash security
remaining after such draw upon the original Letter of Credit.
8.04. Notwithstanding anything to the contrary contained in this
Article 8, in the event that during the Term of this Lease, Tenant's tangible
net worth, as determined in accordance with generally accepted accounting
principals ("Tenant's Net Worth"), is less than One Hundred Thirty Million
Dollars ($130,000,000) then Tenant shall be required to increase the amount of
the Security Deposit and the Letter of Credit for such time as Tenant's Net
Worth is less than $130,000,000 (including all renewal and extensions) to an
amount equal to six (6) months' Fixed Rent then payable under this Lease. At
such time as Tenant's Net Worth is again equal or greater than $130,000,000 for
two (2) consecutive fiscal quarters, the Security Deposit and Letter of Credit
shall be reduced to an amount equal to three (3) months' Fixed Rent then payable
under this Lease. Such increase or decrease to the Letter of Credit, as the case
may be, may be by amendment or replacement with a new Letter of Credit
conforming to the requirements of this Article 8.
ARTICLE 9 - SUBORDINATION
9.01. Provided that (a) a Superior Mortgagee shall execute and deliver
to Tenant an agreement, in recordable form, substantially in the form attached
hereto and made a part hereof as Exhibit H, or if required by such Mortgagee, in
such Mortgagee's substantively equivalent standard form, to the effect that,
provided no default has occurred and is continuing beyond any applicable notice
and cure period provided in this Lease, such Superior Mortgagee will not name or
join Tenant as a party defendant or otherwise in any suit, action or proceeding
to enforce any rights granted to such Superior Mortgagee against Landlord under
its Superior Mortgage, and to the further effect that if there shall be a
foreclosure of its Superior Mortgage, that the Superior Mortgagee will not make
Tenant a party defendant to such foreclosure, evict Tenant, disturb Tenant's
possession under this Lease, or terminate or disturb Tenant's Leasehold estate
or rights, hereunder, or (b) a Superior Lessor shall execute and deliver to
Tenant an agreement, in recordable form, substantially in the form attached
hereto and made a part hereof as Exhibit I, to the effect that, provided no
default has occurred and is continuing beyond any applicable notice and cure
period provided in this Lease, such Superior Lessor will not name or join Tenant
as a party defendant or otherwise in any suit, action or proceeding to enforce
any rights granted to such Superior Lessor against Landlord under its Superior
Lease, and to the further effect that if its Superior Lease shall terminate or
be terminated for any reason, such Superior Lessor will recognize Tenant as the
direct tenant of such Superior Lessor on the same terms as are contained in this
Lease (any such agreement of similar import from a Superior Mortgagee or a
Superior Lessor, as the case may be, being hereinafter referred to as a
"Non-Disturbance Agreement"), this Lease, and all rights of Tenant hereunder,
are and shall be subject and subordinate to all ground leases and underlying
leases of the Land and/or the Building now or hereafter existing and to all
Mortgages which may now or hereafter affect the Land and/or building and/or any
of such leases, whether or not such Mortgages or leases shall also cover other
lands and/or buildings, to each and every advance made or hereafter to be made
under such Mortgages, and to all renewals, modifications, replacements and
extensions of such leases and such Mortgages and spreaders and consolidations of
such Mortgages. The provisions of this Section 9.01 shall be self-operative and
no further instrument of subordination shall be required. In confirmation of
such subordination, Tenant shall promptly execute, acknowledge and deliver any
instrument that Landlord, the lessor under any such lease or the Mortgagee of
any such Mortgage or any of their respective successors in interest may
reasonably request to evidence such subordination.
9.02. If any act or omission of Landlord would give Tenant the right,
immediately or after lapse of a period of time, to cancel or terminate this
Lease, or to claim a partial or total eviction, Tenant shall not exercise such
right (a) until it has given written notice of such act or omission to Landlord
and each Superior Mortgagee and each Superior Lessor whose name and address
shall previously have been furnished to Tenant, and (b) until a thirty (30) day
period for remedying such act or omission shall have elapsed following the
giving of such notice or such longer period as may be reasonably required if
such condition is not susceptible to remedy within such thirty (30) day period
provided such Superior Mortgagee or Superior Lessor commences and diligently
pursues such remedy (which reasonable period shall in no event be less than the
period to which Landlord would be entitled under the Lease, after similar
notice, to effect such remedy, and with respect to any Superior Lessor which is
an Affiliate of Landlord, shall not exceed the period to which Landlord would be
entitled under the Lease).
9.03. If any Superior Lessor or Superior Mortgagee shall succeed to the
rights of Landlord under this Lease, whether through possession or foreclosure
action or delivery of a new lease or deed, then at the request of such party so
succeeding to Landlord's rights ("Successor Landlord") and upon such Successor
Landlord's written agreement to accept Tenant's attornment, Tenant shall attorn
to and recognize such Successor Landlord as Tenant's landlord under this Lease
and shall promptly execute and deliver any instrument that such Successor
Landlord may reasonably request to evidence such attornment. Upon such
attornment this Lease shall continue in full force and effect as a direct lease
between the Successor Landlord and Tenant upon all of the terms, conditions and
covenants as are set forth in this Lease except that the Successor Landlord
(unless such Successor Landlord is an Affiliate of Landlord) shall not (a) be
liable for any previous act or omission of Landlord under this Lease; (b) be
subject to any offset, not expressly provided for in this Lease, which
theretofore shall have accrued to Tenant against Landlord; (c) be liable for the
return of any Security Deposit, in whole or in part, to the extent that same is
not paid over to the Successor Landlord; or (d) be bound by any previous
modification of this Lease or by any previous prepayment of more than one
month's Fixed Rent or Additional Charges, unless such modification or prepayment
shall have been expressly approved in writing by the Superior Lessor of the
Superior Lease or the Mortgagee of the Superior Mortgage through or by reason of
which the Successor Landlord shall have succeeded to the rights of Landlord
under this Lease.
ARTICLE 10 - QUIET ENJOYMENT
10.01. So long as Tenant pays all of the Rent and performs all of
Tenant's other obligations hereunder, Tenant shall peaceably and quietly have,
hold and enjoy the Demised Premises without hindrance, ejection or molestation
by Landlord or any person lawfully claiming through or under Landlord, subject,
nevertheless, to the provisions of this Lease.
ARTICLE 11 - ASSIGNMENT, SUBLETTING AND MORTGAGING
11.01. Tenant shall not, whether voluntarily, involuntarily, or by
operation of law or otherwise, (a) assign or otherwise transfer this Lease, (b)
sublet the Demised Premises or any part thereof, or allow the same to be used,
occupied or utilized by anyone other than Tenant (or Tenant's Affiliates, as
hereinafter provided), or (c) mortgage, pledge, encumber or otherwise
hypothecate this Lease in any manner whatsoever, without in each instance
obtaining the prior written consent of Landlord.
<PAGE>
Landlord agrees not to unreasonably withhold or delay its consent to
the subletting of the Demised Premises or an assignment of this Lease. Landlord
shall reply to Tenant's request for consent to assignment or subletting within
ten (10) business days after receipt of notice of such request. In the event
Landlord denies such consent, Landlord shall, upon request of Tenant, provide
Tenant with the reasons considered by Landlord in denying such consent. In
determining reasonableness, Landlord may take into consideration all relevant
factors surrounding the proposed sublease or assignment, including, without
limitation, the following: (i) The ability and history of the proposed assignee
or subtenant complying with Legal Requirements and lease and business
obligations; (ii) the nature of the business and the proposed use of the Demised
Premises by the proposed assignee or subtenant in relation to the other tenants
or occupants of the Building or Development; (iii) whether the proposed assignee
or subtenant is then a tenant (or subsidiary, affiliate or parent of a tenant)
of other space in the Building or Development (if Landlord or its affiliates
have or anticipate having a substantially equivalent sized space for a
substantially equivalent term available); (iv) the financial condition of the
proposed assignee or subtenant; and (v) any material adverse effect that the
proposed assignee's or subtenant's occupancy or use of the Demised Premises
would have upon the operation and maintenance of the Building and the
Development. In any event, at no time shall Tenant be permitted to have any
sublease (or further sublease) for less than one-half a floor of the Building
with respect to the portions of the Demised Premises located on the fifth and
sixth floors, or more than one subtenant with respect to the grade level space.
Notwithstanding anything to the contrary contained herein, Landlord shall not be
entitled to deny approval by reason of a leasing restriction granted to any
other tenant, other than a restriction with regard to Discover, MasterCard or
Visa.
In the event the Demised Premises are sublet or licensed or this Lease
is assigned or otherwise transferred, Tenant shall pay to Landlord, in addition
to the Rent otherwise payable under this Lease, an Additional Charge (herein the
"Excess Amount") equal to: (i) in the case of an assignment or transfer, fifty
percent (50%) of all sums and other consideration paid to Tenant by the assignee
or transferee for or by reason of such assignment or transfer, and (ii) in the
case of a sublease or license, fifty percent (50%) of the rents, additional
charge and other consideration payable under the sublease to Tenant by the
subtenant in excess of the Fixed Rent and Additional Charges payable under this
Lease (other than the Excess Amount) during the term of the sublease in respect
of the subleased space (at the rate per square foot payable by Tenant under this
Lease). Tenant shall be entitled to a credit against the Excess Amount to be
applied against the first dollars payable on account of the Excess Amount and
continuing until the credit is fully depleted, equal to the total aggregate
actual reasonable expense incurred by Tenant in connection with such assignment
or subletting, licensing or transfer, as substantiated by Tenant, in writing, to
Landlord's reasonable satisfaction, including, without limitation, fit-up costs
and reasonable and actual subtenant lease inducement costs, a reasonable
brokerage fee and reasonable legal fees, as the case may be; provided, however,
in no event shall such credit exceed the Excess Amount paid to Landlord.
Tenant shall not be required to obtain Landlord's consent to an
assignment or sublease to an Affiliate of Tenant, provided however that Tenant
shall be required to comply with the notice and other provisions of this Article
11 with respect to such assignment or sublease. The Tenant shall not be required
to pay the Excess Amount with respect to any assignment or sublease to an
Affiliate of Tenant. Notwithstanding anything contained herein to the contrary
Tenant shall not form or sublet, assign or transfer to a Tenant Affiliate for
the principal or primary purpose of evading the Excess Amount payments otherwise
required hereunder, or the restrictions on subletting, assignment or transfer
otherwise provided in this Lease; in the event of any such transfer Tenant shall
be required to comply with Excess Amount provisions and the restrictions on
subletting, assignment and transfer otherwise provided in this Article 11
(including, but not limited to Landlord's recapture rights pursuant to section
11.08) as if such subtenant, assignee or transferee were not an Affiliate of
Tenant. Landlord acknowledges that Tenant's Affiliate, Triac Services Corp., a
New York corporation, doing business as National Discount Brokers, shall be
permitted to occupy the Demised Premises pursuant to a sublease or other
occupancy agreement between Tenant and such Tenant Affiliate.
If Landlord fails to respond to a request for consent made by Tenant
pursuant to this Section 11.01 within ten (10) Business Days of receipt thereof,
Landlord shall be deemed to have given consent as to such request.
11.02. If at any time (a) the original Tenant named herein, (b) the
then Tenant, (c) any Guarantor, or (d) any Person owning a majority of the
voting stock of, or directly or indirectly controlling, the then Tenant shall be
a corporation or partnership, any transfer of voting stock or partnership
interest resulting in the person(s) who shall have owned a majority of such
corporation's shares of voting stock or the general partners' interest in such
partnership, or member's interest in any limited liability company or similar
entity, as the case may be, immediately before such transfer, ceasing to own a
majority of such shares of voting stock or general partner's interest, or
member's interest, as the case may be, except as the result of transfers by
inheritance, or transfers to an Affiliate of Tenant as provided in this Section
11.02 shall be deemed to be an assignment of this Lease as to which Landlord's
consent shall have been required, and in any such event Tenant shall notify
Landlord. The provisions of this Section 11.02 shall not be applicable to any
corporation all the outstanding voting stock of which is listed on a national
securities exchange (as defined in the Securities Exchange Act of 1934, as
amended) or is traded in the over-the-counter market with quotations reported by
the National Association of Securities Dealers through its automated system for
reporting quotations and shall not apply to, and Landlord's consent shall not be
required for, transactions with a corporation or other entity (w) into or with
which the then Tenant is merged or consolidated, or (x) to which substantially
all of the then Tenant's assets are transferred, or (y) to any corporation or
other entity which controls or is controlled by the then Tenant or is under
common control with the then Tenant, provided that in any of such events (i) the
successor to Tenant has a net worth computed in accordance with generally
accepted accounting principles at least equal to the greater of (1) the net
worth of Tenant immediately prior to such merger, consolidation or transfer, or
(2) the net worth of the original Tenant on the date of this Lease, and (ii)
proof satisfactory to Landlord of such net worth shall have been delivered to
Landlord at least 10 days prior to the effective date of any such transaction.
For the purposes of this Section, the words "voting stock" shall refer to shares
of stock regularly entitled to vote for the election of directors of the
corporation. Landlord shall have the right at any time and from time to time
during the Term to inspect the stock record books of the corporation to which
the provisions of this Section 11.02 apply, and Tenant will produce the same on
request of Landlord.
11.03 If this Lease is assigned, whether or not in violation of this
Lease, Landlord may collect rent from the assignee. If the Demised Premises or
any part thereof are sublet or used or occupied by anybody other than Tenant,
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 subtenant or occupant. In either event, Landlord may apply the net amount
collected to the Rent, but no such assignment, subletting, occupancy or
collection shall be deemed a waiver of any of the provisions of Section 11.01 or
Section 11.02, or the acceptance of the assignee, subtenant or occupant as
tenant, or a release of Tenant from the performance by Tenant of Tenant's
obligations under this Lease. The consent by Landlord to any assignment,
mortgaging, subletting or use or occupancy by others shall not in any way be
considered to relieve Tenant from obtaining the express written consent of
Landlord to any other or further assignment, mortgaging or subletting or use or
occupancy by others not expressly permitted by this Article 11. References in
this Lease to use or occupancy by others (that is, anyone other than Tenant)
shall not be construed as limited to subtenants and those claiming under or
through subtenants but shall be construed as including also licensees and others
claiming under or through Tenant, immediately or remotely.
11.04. Any permitted assignment or transfer, whether made with
Landlord's consent pursuant to Section 11.01 or without Landlord's consent if
permitted by Section 11.02, shall be made only if, and shall not be effective
until, the assignee shall execute, acknowledge and deliver to Landlord an
agreement in form and substance satisfactory to Landlord whereby the assignee
shall assume Tenant's obligations under this Lease and whereby the assignee
shall agree that all of the provisions in this Article 11 shall, notwithstanding
such assignment or transfer, continue to be binding upon it in respect to all
future assignments and transfers. Notwithstanding any assignment or transfer,
whether or not in violation of the provisions of this Lease, and notwithstanding
the acceptance of Rent by Landlord from an assignee, transferee, or any other
party, the original Tenant and any other person)s) who at any time was or were
Tenant shall remain fully liable for the payment of the Rent and for Tenant's
other obligations under this Lease.
11.05. The liability of the original named Tenant and any other
Person(s) (including but not limited to any Guarantor) who at any time are or
become responsible for Tenant's obligations under this Lease shall not be
discharged, released or impaired by any agreement extending the time of, or
modifying any of the terms or obligations under this Lease, or by any waiver or
failure of Landlord to enforce, any of this Lease.
11.06. The listing of any name other than that of Tenant, whether on
the doors of the Demised Premises or the Building directory, or otherwise, shall
not operate to vest any right or interest in this Lease or in the Demised
Premises, nor shall it be deemed to be the consent of Landlord to any assignment
or transfer of this Lease or to any sublease of the Demised Premises or to the
use or occupancy thereof by others. Notwithstanding anything contained in this
Lease to the contrary, Landlord shall have the absolute right to withhold its
consent to an assignment or subletting to a Person who is otherwise a tenant or
occupant of the Building, or of a building in the Development owned or managed
by Landlord or its affiliated entities in the event Landlord or its affiliates
have or anticipate having a substantially equivalent sized space for a
substantially equivalent term available.
11.07. Without limiting any of the provisions of Article 27, if
pursuant to the Federal Bankruptcy Code (or any similar law hereafter enacted
having the same general purpose), Tenant is permitted to assign this Lease
notwithstanding the restrictions contained in this Lease, adequate assurance of
future performance by an assignee expressly permitted under such Code shall be
deemed to mean the deposit of cash security in an amount equal to the sum of one
(1) year's Fixed Rent plus an amount equal to the Additional Charges for the
Calendar Year preceding the year in which such assignment is intended to become
effective, which deposit shall be held by Landlord for the balance of the Term,
without interest, as security for the full performance of all of Tenant's
obligations under this Lease, to be held and applied in the manner specified for
security in Section 8.01.
11.08. If Tenant shall propose to assign or in any manner transfer this
Lease or any interest therein, or sublet the Demised Premises or any part or
parts thereof, or grant any concession or license or otherwise permit occupancy
of all or any part of the Demised Premises by any person, Tenant shall give
notice thereof to Landlord, together with a copy of the proposed instrument that
is to accomplish same and such financial and other information pertaining to the
proposed assignee, transferee, subtenant, concessionaire or licensee as Landlord
shall require. Except with respect to an assignment or sublease to an Affiliate
of Tenant, or a merger or consolidation or transfer of substantially all of the
assets of Tenant as permitted pursuant to Section 11.02, if Tenant proposes to
assign this Lease or to sublet more than fifty percent (50%) of the Floor Space
of the Demised Premises in the aggregate and/or if either (x) such sublease or
assignment is for a term of more than five (5) years, or (y) upon the scheduled
expiration of such sublease or assignment there would then be remaining less
than two (2) years of the Term hereunder. Landlord may, in addition to
Landlord's right to give or withhold consent, terminate this Lease with respect
to the Demised Premises in the event of an assignment, or such portion thereof
as is sublet or licensed in the event of a sublease or license, by notice given
to Tenant within thirty (30) days after receipt of said proposed instrument and
financial and other information, and upon the date specified in such notice,
which date shall be not less than 30 days and not more than 60 days after the
giving of said notice, this Lease shall terminate in case of assignment or, in
case of a sublet or license, the portion of the Demised Premises proposed to be
sublet shall be excluded from this Lease and the Floor Space of the Demised
Premises shall be reduced to reflect such exclusion. If Landlord does not so
terminate this Lease, and (if Landlord consents to the subject transaction or if
Landlord's consent is not required to same) if Tenant does not consummate the
subject transaction within 60 days after the last day on which Landlord might
have so terminated this Lease as a result of such transaction, Tenant shall
again be required to comply with the provisions of this Section 11.08 in
connection with any such transaction as if the notice by Tenant referred to
above in this Section 11.08 had not been given. Notwithstanding anything
contained in this Lease to the contrary, Landlord shall not be obligated to
entertain or consider any request by Tenant to consent to any proposed
assignment of this Lease or sublet of all or any part of the Demised Premises
unless each request by Tenant is accompanied by a non-refundable fee payable to
Landlord in the amount of One Thousand Dollars ($1,000.00) to cover Landlord's
administrative, legal, and other costs and expenses incurred in processing each
of Tenant's requests. Neither Tenant's payment nor Landlord's acceptance of the
foregoing fee shall be construed to impose any obligation whatsoever upon
Landlord to consent to Tenant's request.
ARTICLE 12 - COMPLIANCE WITH LAWS
12.01. Tenant shall comply with all Legal Requirements which shall, in
respect of the Tenant's particular use of the Demised Premises, or the abatement
of any nuisance in, on or about the Demised Premises, Tenant's Work or Tenant's
installations, impose any violation, order or duty on Landlord or Tenant; and
Tenant shall pay all the costs, expenses, fines, penalties and damages which may
be imposed upon Landlord or any Superior Lessor by reason of or arising out of
Tenant's failure to fully and promptly comply with and observe the provisions of
this Section 12.01. However, Tenant need not comply with any such law or
requirement of any public authority so long as Tenant shall be contesting the
validity thereof, or the applicability thereof to the Demised Premises, in
accordance with Section 12.02. The cost of compliance by Landlord with any Legal
Requirements with respect to the Building which are not attributable to Tenant,
its business, Tenant's Work or Tenant's installations, or the Tenant's
particular use of the Demised Premises, shall be performed by Landlord and shall
be included in Operating Expenses, subject to the provisions of Section R5 of
the Rider.
12.02. Tenant may contest, by appropriate proceedings prosecuted
diligently and in good faith, the validity, or applicability to the Demised
Premises, of any Legal Requirement, provided that (a) Landlord shall not be
subject to criminal penalty or to prosecution for a crime, and neither the
Demised Premises nor any part thereof shall be subject to being condemned or
vacated, by reason of non-compliance or otherwise by reason of such contest; (b)
before the commencement of such contest, Tenant shall furnish to Landlord either
(i) the bond of a surety company satisfactory to Landlord, which bond shall be,
as to its provisions and form, satisfactory to Landlord, and shall be in an
amount at least equal to 125% of the cost of such compliance (as estimated by a
reputable contractor designated by Landlord) and shall indemnify Landlord
against the cost thereof and against all liability for damages, interest,
penalties and expenses (including reasonable attorneys' fees and expenses),
resulting from or incurred in connection with such contest or non-compliance, or
(ii) other security in place of such bond satisfactory to Landlord; (c) such
non-compliance or contest shall not constitute or result in any violation of any
Superior Lease or Superior Mortgage, or if any such Superior Lease and/or
Superior Mortgage shall permit such non-compliance or contest on condition of
the taking of action or furnishing of security by Landlord, such action shall be
taken and such security shall be furnished at the expense of Tenant; and (d)
Tenant shall keep Landlord advised as to the status of such proceedings. Without
limiting the application of the above, Landlord shall be deemed subject to
prosecution for a crime if Landlord, or its managing agent, or any officer,
director, partner, shareholder or employee of Landlord or its managing agent, as
an individual, is charged with a crime of any kind or degree whatsoever, whether
by service of a summons or otherwise, unless such charge is withdrawn before
Landlord or its managing agent, or such officer, director, partner, shareholder
or employee of Landlord or its managing agent (as the case may be) is required
to plead or answer thereto. Notwithstanding anything contained in this Lease to
the contrary, Tenant shall not file any Real Estate Tax Appeal with respect to
the Land, Building or the Demised Premises.
ARTICLE 13 - INSURANCE AND INDEMNITY
13.01. Landlord shall maintain or cause to be maintained All Risk
insurance in respect of the Building and other improvements on the Land normally
covered by such insurance (except for the property Tenant is required to cover
with insurance under Section 13.02 and similar property of other tenants and
occupants of the Building or buildings and other improvements which are on land
neither owned by nor leased to Landlord) for the benefit of Landlord, any
Superior Lessors, any Superior Mortgagees and any other parties Landlord may at
any time and from time to time designate, as their interests may appear, but not
for the benefit of Tenant, and shall maintain rent insurance as required by any
Superior Lessor or any Superior Mortgagee. The All Risk insurance will be in the
amounts required by any Superior Lessor or any Superior Mortgagee but not less
than the replacement cost of the Building (exclusive of footings and
foundations). Landlord may also maintain any other forms and types of insurance
as Landlord may reasonably determine in respect of the Building and Land.
Landlord shall have the right to provide any insurance maintained or caused to
be maintained by it under blanket policies.
13.02. Tenant shall maintain the following insurance: (a) comprehensive
general public liability insurance in respect of the Demised Premises and the
conduct and operation of business therein, having not less than a $5,000,000.00
combined single limit per occurrence for bodily injury or death to any one
person and for bodily injury or death to any number of persons in any one
occurrence, and for property damage, including water damage and sprinkler
leakage legal liability (coverage to include but not be limited to (i) premises
operation, completed operations, broad form contractual liability and product
liability, (ii) comprehensive automobile, truck and vehicle liability insurance
covering all owned, hired and non-owned vehicles used by the contractor(s) in
connection with their work and any loading of such vehicles, with limits as
stated above and (iii) worker's compensation, employers liability and
occupational disease insurance as required by statutes, but in any event not
less than $500,000.00 for Coverage B covering all damages and injuries arising
from each accident or occupational disease); and (b) All Risk insurance in
respect of Tenant's stock in trade, fixtures, furniture, furnishings, removable
floor coverings, equipment, signs and all other property of Tenant in the
Demised Premises in any amounts required by any Superior Lessor or any Superior
Mortgagee but not less than the replacement cost of the property covered and not
more than the amount sufficient to avoid the effect of the co-insurance
provisions of the applicable policy or policies, and (c) such other insurance as
is commonly required by landlords of tenants for the benefit of landlords in
buildings of similar character, quality and location. Landlord may at any time
and from time to time, but not more frequently than once every five (5) years
during the Term) require that the limits for the comprehensive general public
liability insurance to be maintained by Tenant be increased to the limits that
new tenants in the Building are required by Landlord to maintain. Tenant shall
deliver to Landlord and any additional named insured(s) certificates for such
fully paid-for policies upon execution hereof. Tenant shall procure and pay for
renewals of such insurance from time to time before the expiration thereof, and
Tenant shall deliver to Landlord and any additional insured(s) certificates
therefor at least thirty (30) days before the expiration of any existing policy.
All such policies shall be issued by companies of recognized responsibility,
having a Bests Key Rating Guide of not less than A, Class VII, licensed to do
business in New Jersey, and all such policies shall contain a provision whereby
the same cannot be canceled unless Landlord and any additional insured(s) are
given at least thirty (30) days' prior written notice of such cancellation. The
certificates of insurance to be delivered to Landlord by Tenant shall (with
respect to policies under a(i), a(ii) and, where applicable,(c)) name Landlord
as an additional insured and, at Landlord's request, shall also name any
Superior Lessors or Superior Mortgagees as additional insureds, and the
following phrase must be typed on the certificate of insurance: "Hartz Mountain
Industries, Inc., and its respective subsidiaries, affiliates, associates, joint
ventures, and partnerships, are hereby named as additional insureds as their
interests may appear (and if Landlord has so requested, Tenant shall include any
Superior Lessors and Superior Mortgagees as additional insured(s)). It is
intended for this insurance to be primary and non-contributing." Tenant shall
give Landlord at least thirty (30) days' prior written notice that any such
policy is being canceled or replaced. Any dispute regarding the coverages to be
required under subsection (c) of this Section 13.02 may be submitted to
arbitration in accordance with Article 36 of this Lease.
13.03. Tenant shall not do, permit or suffer to be done any act,
matter, thing or failure to act in respect of the Demised Premises or use or
occupy the Demised Premises or conduct or operate Tenant's business in any
manner objectionable to any insurance company or companies whereby the fire
insurance or any other insurance then in effect in respect of the Land and
Building or any part thereof shall become void or suspended or whereby any
premiums in respect of insurance maintained by Landlord shall be higher than
those which would normally have been in effect for the occupancy contemplated
under the Permitted Uses. In case of a breach of the provisions of this Section
13.03, in addition to all other rights and remedies of Landlord hereunder,
Tenant shall (a) indemnify Landlord and the Superior Lessors and hold Landlord
and the Superior Lessors harmless from and against any loss which would have
been covered by insurance which shall have become void or suspended because of
such breach by Tenant and (b) pay to Landlord any and all increases of premiums
on any insurance, including, without limitation, rent insurance, resulting from
any such breach.
13.04 (a). Tenant shall indemnify and hold harmless Landlord and all
Superior Lessors and its and their respective partners, joint venturers,
directors, officers, agents, servants and employees from and against any and all
claims arising from or in connection with (a) the conduct or management of the
Demised Premises or of any business therein, or any work or thing whatsoever
done, or any condition created (other than by Landlord) in the Demised Premises
during the Term or during the period of time, if any, prior to the Commencement
Date that Tenant may have been given access to the Demised Premises; (b) any
act, omission or negligence of Tenant or any of its subtenants or licensees or
its or their partners, joint venturers, directors, officers, agents, employees
or contractors; and (c) any accident, injury or damage whatever (unless caused
solely by Landlord's negligence) occurring in the Demised Premises; together
with all costs, expenses and liabilities incurred in or in connection with each
such claim or action or proceeding brought thereon, including, without
limitation, all attorneys' fees and expenses. In case any action or proceeding
is brought against Landlord and/or any Superior Lessor and/or its or their
partners, joint venturers, directors, officers, agents and/or employees by
reason of any such claim, Tenant, upon notice from Landlord or such Superior
Lessor, shall resist and defend such action or proceeding by counsel reasonably
satisfactory to Landlord.
(b). Landlord shall indemnify and hold harmless Tenant and its
partners, directors, officers, agents, servants and employees from and against
any and all claims arising from any tortious act or omission of Landlord, or
negligence of Landlord or its agents or partners, joint ventures, directors,
officers, or employees in the conduct or management of the Common Areas;
together with all costs, expenses and liabilities incurred in or in connection
with each such claim or action or proceeding brought thereon, including ,
without limitation, reasonable attorneys' fees and expenses. In the event any
action or proceeding is brought against Tenant and/or its directors, officers,
agents and/or employees by reason of any such claim, Landlord, upon notice from
Tenant, shall resist and defend such action or proceeding by counsel reasonably
satisfactory to Tenant. Counsel satisfactory to Landlord's insurance carrier
shall be deemed satisfactory to Tenant for purposes of this paragraph.
13.05 (a). Neither Landlord nor any Superior Lessor shall be liable or
responsible for, and Tenant hereby releases Landlord and each Superior Lessor
from, all liability and responsibility to Tenant and any person claiming by,
through or under Tenant, by way of subrogation or otherwise, for any injury,
loss or damage to any person or property in or around the Demised Premises or to
Tenant's business irrespective of the cause of such injury, loss or damage, and
Tenant shall require its insurers to include in all of Tenant's insurance
policies which could give rise to a right of subrogation against Landlord or any
Superior Lessor a clause or endorsement whereby the insurer waives any rights of
subrogation against Landlord and such Superior Lessors or permits the insured,
prior to any loss, to agree with a third party to waive any claim it may have
against said third party without invalidating the coverage under the insurance
policy.
(b). Tenant shall not be liable or responsible for, and Landlord hereby
releases Tenant from, all liability and responsibility to Landlord and any
person claiming by, through or under Landlord, by way of subrogation or
otherwise, for any injury, loss or damage to any person or property in or around
the Building or Land to Landlord's business irrespective of the cause of such
injury, loss or damage, and Landlord shall require its insurers to include in
all of Landlord's insurance policies which could give rise to a right of
subrogation against Tenant a clause or endorsement whereby the insurer waives
any rights of subrogation against or permits the insured, prior to any loss, to
agree with a third party to waive any claim it may have against said third party
without invalidating the coverage under the insurance policy.
ARTICLE 14 - RULES AND REGULATIONS
14.01. Tenant and its employees and agents shall faithfully observe and
comply with the Rules and Regulations and such reasonable changes therein
(whether by modification, elimination or addition) as Landlord at any time or
times hereafter may make and communicate to Tenant, which in Landlord's
judgment, shall be necessary for the reputation, safety, care or appearance of
the Land and Building, or the preservation of good order therein, or the
operation or maintenance of the Building or its equipment and fixtures, or the
Common Areas; provided, however, that in case of any conflict or inconsistency
between the provisions of this Lease and any of the Rules and Regulations, the
provisions of this Lease shall control. Nothing in this Lease contained shall be
construed to impose upon Landlord any duty or obligation to enforce the Rules
and Regulations against any other tenant or any employees or agents of any other
tenant, and Landlord shall not be liable to Tenant for violation of the Rules
and Regulations by any other tenant or its employees, agents, invitees or
licensees. Landlord shall not discriminatorily enforce any Rule or Regulation
against Tenant which Landlord is not enforcing, to the extent applicable,
against the other tenants in the Building.
ARTICLE 15 - ALTERATIONS
15.01 Tenant shall not make any structural alterations or additions to
the Demised Premises, or make any holes or cuts in the walls, ceilings, roofs,
or floors thereof, or change the exterior color or architectural treatment of
the Demised Premises, or make any non-structural alterations costing One Hundred
Thousand Dollars ($100,000.00) or more (exclusive of the cost of carpeting or
decoration) in the aggregate with respect to each project (herein referred to as
the "Threshold Amount"), without on each occasion first obtaining the consent of
Landlord, which consent with respect to non-structural alterations shall not be
unreasonably withheld or delayed or conditioned. Landlord's consent shall not be
required for proposed non-structural alterations costing, in the aggregate per
project, less than the Threshold Amount; provided however that in all events
Tenant shall submit to Landlord plans and specifications for such work at the
time Landlord's consent is sought, or if no consent is required, prior to
commencement of such proposed alterations. Tenant shall pay to Landlord upon
demand the actual cost and expense of Landlord in (a) reviewing said plans and
specifications and (b) inspecting the alterations to determine whether the same
are being performed in accordance with the approved plans and specifications and
all Legal Requirements and Insurance Requirements, including, without
limitation, the fees of any architect or engineer employed by Landlord for such
purpose (any dispute as to such cost may be submitted to arbitration in
accordance with Article 36). Before proceeding with any permitted alteration
project which will cost more than the Threshold Amount, as estimated by a
reputable contractor designated by Landlord, Tenant shall obtain and deliver to
Landlord either (i) a performance bond and a labor and materials payment bond
(issued by a corporate surety licensed to do business in New Jersey), each in an
amount equal to 125% of such estimated cost and in form satisfactory to
Landlord, or (ii) such other security as shall be satisfactory to Landlord.
Tenant shall fully and promptly comply with and observe the Rules and
Regulations then in force in respect of the making of alterations. The Threshold
Amount shall be increased by $50,000 on the tenth anniversary of the Rent
Commencement Date and on each tenth anniversary thereafter during the Term (as
extended by the exercise of any renewal options by Tenant hereunder). Any review
or approval by Landlord of any plans and/or specifications with respect to any
alterations is solely for Landlord's benefit, and without any representation or
warranty whatsoever to Tenant in respect of the adequacy, correctness or
efficiency thereof or otherwise. At the time Landlord replies to Tenant's
request for consent to an alteration, or if no consent is required, within ten
(10) business days after Tenant notifies Landlord of a proposed alteration,
Landlord will notify Tenant whether or not such alteration must be removed and
the Demised Premises restored at the end of the Term.
15.02. Tenant shall obtain all necessary governmental permits and
certificates for the commencement and prosecution of permitted alterations and
for final approval thereof upon completion, and shall cause alterations to be
performed in compliance therewith and with all applicable Legal Requirements and
Insurance Requirements. Alterations shall be diligently performed in a good and
workmanlike manner, using new materials and equipment at least equal in quality
and class to the better of (a) the original installations of the Building, or
(b) the then standards for the Building reasonably established by Landlord.
Alterations shall be performed by contractors first approved by Landlord;
provided, however, that any alterations in or to the mechanical, electrical,
sanitary, heating, ventilating, air conditioning or other systems of the
Building shall be performed either by the contractor(s) designated by Landlord
or by Tenant's contractor(s) jointly in consultation with the contractor(s)
designated by Landlord. Alterations shall be made in such manner as not to
unreasonably interfere with or delay and as not to impose any additional expense
upon Landlord in the construction, maintenance, repair or operation of the
Building; and if any such additional expense shall be incurred by Landlord as a
result of Tenant's making of any alterations, Tenant shall pay any such
additional expense upon demand. Throughout the making of alterations, Tenant
shall carry, or cause to be carried, worker's compensation insurance in
statutory limits and general liability insurance, with completed operation
endorsement, for any occurrence in or about the Building, under which Landlord
and its managing agent and any Superior Lessor whose name and address shall
previously have been furnished to Tenant shall be named as parties insured, in
such limits as Landlord may reasonably require, with insurers reasonably
satisfactory to Landlord. Tenant shall furnish Landlord with reasonably
satisfactory evidence that such insurance is in effect at or before the
commencement of alterations and, on request, at reasonable intervals thereafter
during the making of alterations.
15.03. In performing Tenant's Work or any alterations pursuant to this
Lease Tenant shall be permitted to utilize a general contractor or construction
manager of Tenant's choosing, subject to Landlord's approval which shall not be
unreasonably withheld or delayed. Landlord shall not charge Tenant a
construction supervisory fee for any Tenant's Work or alterations performed by
Tenant's general contractor, or Tenant's construction manager. In the event
Landlord provides Tenant with temporary power, HVAC, elevator, or hoist use
during such work, the charges by Landlord to Tenant for such services shall be
limited to Landlord's cost, except as provided in Section R12 of the Rider.
ARTICLE 16 - LANDLORD'S AND TENANT'S PROPERTY
16.01 All fixtures, equipment, improvements and appurtenances attached
to or built into the Demised Premises at the commencement of or during the Term,
whether or not by or at the expense of Tenant, shall be and remain a part of the
Demised Premises, shall be deemed to be the property of Landlord and shall not
be removed by Tenant, except as provided in Section 16.02. Further, any
carpeting or other personal property in the Demised Premises on the Commencement
Date, unless installed and paid for by Tenant, shall be and shall remain
Landlord's property and shall not be removed by Tenant.
16.02. All movable partitions, business and trade fixtures, machinery
and equipment, communications equipment and office equipment, whether or not
attached to or built into the Demised Premises, which are installed in the
Demised Premises by or for the account of Tenant without expense to Landlord and
can be removed without structural damage to the Building and all furniture,
furnishings, and other movable personal property owned by Tenant and located in
the Demised Premises (collectively, "Tenant's Property") shall be and shall
remain the property of Tenant and may be removed by Tenant at any time during
the Term; provided that if any of the Tenant's Property is removed, Tenant shall
repair or pay the cost of repairing any damage to the Demised Premises, the
Building or the Common Areas resulting from the installation and/or removal
thereof.
16.03. At or before the Expiration Date or the date of any earlier
termination of this Lease, or within fifteen (15) days after such an earlier
termination date, Tenant shall remove from the Demised Premises all of the
Tenant's Property (except such items thereof as Landlord shall have expressly
permitted to remain, which property shall become the property of Landlord if not
removed), and Tenant shall repair any damage to the Demised Premises, the
Building and the Common Areas resulting from any installation and/or removal of
the Tenant's Property. Any items of the Tenant's Property which shall remain in
the Demised Premises after the Expiration Date or after a period of fifteen (15)
days following an earlier termination date, may, at the option of Landlord, be
deemed to have been abandoned, and in such case such items may be retained by
Landlord as its property or disposed of by Landlord, without accountability, in
such manner as Landlord shall reasonably determine at Tenant's Expense.
ARTICLE 17 - REPAIRS AND MAINTENANCE
17.01. Tenant shall, throughout the Term, take good care of the Demised
Premises, the fixtures and appurtenances therein. Tenant shall be responsible
for all repairs, interior and exterior, structural and nonstructural, ordinary
and extraordinary, in and to the Demised Premises, and the Building (including
the facilities and systems thereof) and the Common Areas the need for which
arises out of (a) the performance or existence of the Tenant's Work or
alterations, (b) the installation, use or operation of the Tenant's Property in
the Demised Premises, (c) the moving of the Tenant's Property in or out of the
Building, or (d) the wrongful act or omission, or the misuse or neglect of
Tenant or any of its subtenants or its or their employees, agents, contractors
or invitees. Tenant shall promptly replace all scratched, damaged or broken
doors and glass in and about the Demised Premises and shall be responsible for
all repairs, maintenance and replacement of wall and floor coverings in the
Demised Premises and for the repair and maintenance of all sanitary and
electrical fixtures and equipment therein. Tenant shall promptly make all
repairs in or to the Demised Premises for which Tenant is responsible, and any
repairs required to be made by Tenant to the mechanical, electrical, sanitary,
heating, ventilating, air-conditioning or other systems of the Building shall be
performed only by contractor(s) designated by Landlord. Any other repairs in or
to the Building and the facilities and systems thereof for which Tenant is
responsible shall be performed by Landlord at Tenant's expense; but Landlord
may, at its option, before commencing any such work or at any time thereafter,
require Tenant to furnish to Landlord such security, in form (including, without
limitation, a bond issued by a corporate surety licensed to do business in New
Jersey) and amount, as Landlord shall reasonably deem necessary to assure the
payment for such work by Tenant. Tenant shall not permit or suffer the
overloading of the floors of the Demised Premises beyond 100 pounds per square
foot live load.
17.02. Landlord shall be responsible for all repairs and maintenance in
and to the Building (including the facilities and systems thereof), except for
those repairs and maintenance for which Tenant is responsible pursuant to any of
the provisions of this Lease.
17.03. Except as otherwise expressly provided in this Lease, Landlord
shall have no liability to Tenant, nor shall Tenant's covenants and obligations
under this Lease be reduced or abated in any manner whatsoever, by reason of any
inconvenience, annoyance, interruption or injury to business arising from
Landlord's doing any repairs, maintenance, or changes which Landlord is required
or permitted by this Lease, or required by Law, to make in or to any portion of
the Building. Landlord shall perform all repairs, maintenance or changes
diligently, with as little interference as practicable to Tenant's access to and
occupancy and use of the Building and Demised Premises. Nothing contained herein
shall be construed, however, as requiring Landlord to perform such work at times
other than Monday through Friday Business Days and during Business Hours, except
in cases of emergency. In the event that any such work or repairs shall require
Tenant to either: switch to backup power, or vacate the Demised Premises,
Landlord shall, except in cases of emergency where such notice is not
practicable, provide Tenant with not less than twenty-five (25) days prior
notice of such work or repair to permit Tenant to coordinate utilization of its
backup equipment and facilities, if required.
<PAGE>
ARTICLE 18 - ELECTRIC ENERGY
18.01. Tenant shall purchase the electric energy required by it in the
Demised Premises at its own expense on a direct-metered basis from the public
utility servicing the Building, and Landlord shall permit the risers, conduits
and feeders in the Building, to the extent available, suitable and safely
capable, to be used for the purpose of transmitting such electric energy to the
Demised Premises. Landlord shall not be liable for any failure, inadequacy or
defect in the character or supply of electric current furnished to the Demised
Premises.
18.02. Tenant's use of electric energy in the Demised Premises shall
not at any time exceed the capacity of any of the electrical conductors and
equipment in or otherwise serving the Demised Premises. In order to insure that
such capacity is not exceeded and to avert possible adverse effect upon the
Building's electric service, if and when Tenant's cumulative maximum peak demand
exceeds the amount stipulated in Exhibit C, then Tenant shall not, except as
contemplated by Exhibit C, without Landlord's prior consent in each instance
(which shall not be unreasonably withheld or delayed), connect any fixtures,
appliances or equipment to the Building's electric distribution system or make
any alteration or addition to the electric system of the Demised Premises
existing on the Tenant Possession Date. Should Landlord grant such consent, all
additional risers or other equipment required therefor shall be provided by
Landlord and the cost thereof shall be paid by Tenant to Landlord on demand.
ARTICLE 19 - HEAT, VENTILATION AND AIR-CONDITIONING
19.01. So long as Tenant is not in default under this Lease beyond any
applicable notice or cure periods, Landlord shall maintain and operate the
heating, ventilating and air-conditioning systems installed by Landlord as part
of Landlord's Work ("HVAC") serving the Demised Premises, and shall furnish HVAC
in the Demised Premises as may be reasonably required (except as otherwise
provided in this Lease and except for any special requirements of Tenant arising
from its particular use of the Demised Premises) for reasonably comfortable
occupancy of the Demised Premises, during Business Hours on Business Days within
the limits prescribed by the Legal Requirements and as specified in Exhibit C.
If Tenant shall require HVAC at any other time, Landlord agrees that access to
such service will be provided to Tenant through use of a key switch or remote or
telephone access to computerized building system (with each floor above grade
consisting of two (2) zones of approximately one-half (1/2) floor, with the
grade level portion of the Demised Premises space consisting of one zone and the
sixth floor portion of the Demised Premises consisting of one zone), and Tenant
shall pay to Landlord, within thirty (30) days of invoice or demand, an
Additional Charge for such service at the rate of Thirty-seven and 50/100
Dollars ($37.50) per hour, per zone of the Demised Premises for such services;
Landlord shall also make available to Tenant supplemental condenser water
capacity to provide up to 100 tons of supplemental cooling 24 hours per day, 365
days per year at the initial rate of Six & 00/100 ($6.00) Dollars per hour
utilized (such rates for HVAC and supplemental condenser water being referred to
herein as the "HVAC Rates"). The HVAC Rates shall be subject to increase (but
not decrease) upon each anniversary of the Rent Commencement Date, by the
greater of (a) the percentage increase (but not decrease) in the CPI in effect
on such anniversary over the CPI in effect on date which is twelve months prior
to the date for which such increase is being calculated, or (b) the percentage
increase (but not decrease) in the utility rates in effect with respect to the
Building in effect on such anniversary over the utility rates in effect with
respect to the Building on date which is twelve months prior to the date for
which such increase is being calculated.
19.02. The performance by Landlord of its obligation under Section
19.01 in respect of HVAC is conditioned on the connected electric load within
the Demised Premises not exceeding the specifications set forth in Exhibit C.
Use of the Demised Premises, or any part thereof, in a manner exceeding the HVAC
design conditions (including occupancy and connected electrical load), or
rearrangement of partitioning which interferes with normal operation of the HVAC
in the Demised Premises, or the use of computer or data processing machines or
other machines or equipment, may require changes in the HVAC systems servicing
the Demised Premises, in order to provide comfortable occupancy. Such changes,
so occasioned, shall be made by Tenant, at its expense, as alterations in
accordance with the provisions of Article 15, but only to the extent permitted
and upon the conditions set forth in Article 15.
ARTICLE 20 - OTHER SERVICES; SERVICE INTERRUPTION
20.01. Landlord shall provide elevator service to the Demised Premises
during Business Hours on Business Days, and Landlord shall have at least one (1)
elevator subject to call at all other times. The use of the elevators shall be
subject to the Rules and Regulations.
20.02. So long as Tenant is not in default under this Lease beyond any
applicable notice or cure period, Landlord shall cause the Demised Premises,
including the exterior and the interior of the windows thereof, to be cleaned in
a manner standard to the Building and in accordance with the standards set forth
in Exhibit E. Tenant shall pay to Landlord on demand the costs incurred by
Landlord for (a) extra cleaning work in the Demised Premises required because of
(i) wrongful acts or omissions or the misuse or neglect on the part of Tenant or
its subtenants or its or their employees or visitors, (ii) use of portions of
the Demised Premises for preparation, serving, consumption of food or beverages,
training rooms, data processing or reproducing operations, private lavatories or
toilets or other special purposes requiring greater or more difficult cleaning
work than office areas, (iii) interior glass partitions or unusual quantity of
interior glass surfaces, and (iv) non-building standard materials or finishes
installed by Tenant or at its request, and (b) removal from the Demised Premises
and the Building of any refuse and rubbish of Tenant in excess of that
ordinarily accumulated in business office occupancy or at times other than
Landlord's standard cleaning times, and (c) the use of the Demised Premises by
Tenant other than during Business Hours on Business Days.
20.03. Landlord, its cleaning contractor and their employees shall have
access to the Demised Premises after 6:00 P.M. and before 11:00 P.M. and shall
have the right to use, without charge therefor, all light, power and water in
the Demised Premises reasonably required to clean the Demised Premises as
required under Section 20.02.
20.04. Landlord shall furnish adequate hot and cold water to the
Demised Premises for drinking, lavatory and cleaning purposes. If Tenant uses
water for any other purpose Landlord may install and maintain, at Tenant's
expense, meters to measure Tenant's consumption of cold water and/or hot water
for such other purpose. Tenant shall reimburse Landlord for the quantities of
cold water and hot water shown on such meters on demand.
ARTICLE 21 - ACCESS, CHANGES AND NAME
21.01. Except for the space within the inside surfaces of all walls,
hung ceilings, floors, windows and doors bounding the Demised Premises, all of
the Building, including, without limitation, exterior Building walls, core
corridor walls and doors and any core corridor entrance, any terraces or roofs
adjacent to the Demised Premises, and any space in or adjacent to the Demised
Premises used for shafts, stacks, pipes, conduits, fan rooms, ducts, electric or
other utilities, sinks or other Building facilities and the use thereof, as well
as access thereto through the Demised Premises (subject to the provisions of
Section 21.04 hereof) for the purpose of operating, maintenance, decoration and
repair, are reserved to Landlord. Landlord also reserves the right, to install,
erect, use and maintain pipes, ducts and conduits in and through the Demised
Premises, provided such are properly enclosed, do not materially reduce Tenant's
usable facilities or unreasonably interfere with Tenant's use of the Demised
Premises. Any dispute with regard thereto may be submitted to arbitration in
accordance with Article 36.
.
21.02. Landlord and its agents shall have the right to enter and/or
pass through the Demised Premises at any time or times, upon not less than one
(1) days prior notice (except that no such notice shall be required in cases of
emergency) (a) to examine the Demised Premises and to show them to actual and
prospective Superior Lessors, Superior Mortgagees, or prospective purchasers of
the Building, and (b) to make such repairs, alterations, additions and
improvements in or to the Demised Premises and/or in or to the Building or its
facilities and equipment as Landlord is required or desires to make (subject to
the provisions of Section 21.04 hereof). Landlord shall (subject to the
provisions of Section 21.04 hereof) be allowed to take all materials into and
upon the Demised Premises that may be required in connection therewith, without
any liability to Tenant and without any reduction of Tenant's obligations
hereunder. During the period of twelve (12) months prior to the Expiration Date,
Landlord and its agents may exhibit the Demised Premises to prospective tenants.
21.03. If at any time any windows of the Demised Premises are
temporarily darkened or obstructed by reason of any repairs, improvements,
maintenance and/or cleaning in or about the Building, or if any part of the
Building or the Common Areas, other than the Demised Premises, is temporarily or
permanently closed or inoperable, the same shall not be deemed a constructive
eviction and shall not result in any reduction or diminution of Tenant's
obligations under this Lease.
21.04. Landlord reserves the right, at any time and from time to time,
to make such changes, alterations, additions and improvements in or to the
Building and the fixtures and equipment thereof as Landlord shall deem necessary
or desirable. In all such events, such repairs and changes shall be commenced
and prosecuted diligently by Landlord in a good and workmanlike manner and with
as little interference as practicable with Tenant's access to and use of the
Building and the Demised Premises. Nothing contained herein shall be construed,
however, as requiring Landlord to perform such work at times other than Monday
through Friday Business Days and during Business Hours except in cases of
emergency. In the event that any such work or repairs shall require Tenant to
either: switch to backup power, or vacate the Demised Premises, Landlord shall,
except in cases of emergency where such notice is not practicable, provide
Tenant with not less than twenty-five (25) days prior notice of such work or
repair to permit Tenant to coordinate utilization of its backup equipment and
facilities, if required.
21.05. Landlord may adopt any name for the Building. Landlord reserves
the right to change the name and/or address of the Building at any time.
ARTICLE 22 - MECHANICS' LIENS AND OTHER LIENS
22.01. Nothing contained in this Lease shall be deemed, construed or
interpreted to imply any consent or agreement on the part of Landlord to subject
Landlord's interest or estate to any liability under any mechanic's or other
lien law. If any mechanic's or other lien or any notice of intention to file a
lien is filed against the Land, or any part thereof, or the Demised Premises, or
any part thereof, for any work, labor, service or materials claimed to have been
performed or furnished for or on behalf of Tenant or anyone holding any part of
the Demised Premises through or under Tenant, Tenant shall cause the same to be
canceled and discharged of record by payment, bond or order of a court of
competent jurisdiction promptly, but in no event later than (20) days after
notice by Landlord to Tenant.
ARTICLE 23 - NON-LIABILITY
23.01. Subject to the provisions of Section 13.04 (b) of this Lease,
neither Landlord nor any partner, joint venturer, director, officer, agent,
servant or employee of Landlord shall be liable to Tenant for any loss, injury
or damage to Tenant or to any other Person, or to its or their property,
irrespective of the cause of such injury, damage or loss, unless caused by or
resulting from the negligence or intentional tortious act of Landlord, its
agents, servants or employees in the operation or maintenance of the Land or
Building without negligence or other tortious conduct on the part of Tenant or
any of its subtenants or licensees or its or their employees, agents or
contractors. Further, neither Landlord nor any partner, joint venturer,
director, officer, agent, servant or employee of Landlord shall be liable for,
nor shall the provisions of Section 13.04(b) apply with respect to (a) any such
damage caused by other tenants or Persons in, upon or about the Land or
Building, or caused by operations in construction of any private, public or
quasi-public work; or (b) even if negligent or culpable, for consequential
damages arising out of any loss of use of the Demised Premises or any equipment
or facilities therein by Tenant or any Person claiming through or under Tenant.
23.02. [Intentionally Omitted.]
23.03. Notwithstanding any provision to the contrary, Tenant shall look
solely to the estate and property of Landlord in and to the Land and Building
(and the proceeds of insurance maintained with respect to the Building, or
received by Landlord from a sale of such estate and property, but not the
proceeds of any financing or refinancing thereof) in the event of any claim
against Landlord arising out of or in connection with this Lease, the
relationship of Landlord and Tenant or Tenant's use of the Demised Premises or
the Common Areas, and Tenant agrees that the liability of Landlord arising out
of or in connection with this Lease, the relationship of Landlord and Tenant or
Tenant's use of the Demised Premises or the Common Areas shall be limited to
such estate and property of Landlord (or such insurance or sale proceeds). No
other properties or assets of Landlord or any partner, joint venturer, director,
officer, agent, servant or employee of Landlord shall be subject to levy,
execution or other enforcement procedures for the satisfaction of any judgement
(or other judicial process) or for the satisfaction of any other remedy of
Tenant arising out of, or in connection with, this Lease, the relationship of
Landlord and Tenant or Tenant's use of the Demised Premises or the Common Areas
and if Tenant shall acquire a lien on or interest in any other properties or
assets by judgment or otherwise, Tenant shall promptly release such lien on or
interest in such other properties and assets by executing, acknowledging and
delivering to Landlord an instrument to that effect prepared by Landlord's
attorneys. Tenant hereby waives the right of specific performance and any other
remedy allowed in equity if specific performance or such other remedy could
result in any liability of Landlord for the payment of money to Tenant, or to
any court or governmental authority (by way of fines or otherwise) for
Landlord's failure or refusal to observe a judicial decree or determination, or
to any third party.
ARTICLE 24 - DAMAGE OR DESTRUCTION
24.01. If the Building or the Demised Premises shall be partially or
totally damaged or destroyed by fire or other casualty (and if this Lease shall
not be terminated as in this Article 24 hereinafter provided), Landlord shall
repair the damage and restore and rebuild the Building and/or the Demised
Premises (except for the Tenant's Property) with reasonable dispatch after
notice to it of the damage or destruction and the collection of the insurance
proceeds attributable to such damage.
24.02. Subject to the provisions of Section 24.05, if all or part of
the Demised Premises shall be damaged or destroyed or rendered completely or
partially untenantable on account of fire or other casualty, or if a portion of
the Building shall be damaged or destroyed or rendered completely or partially
untenantable on account of fire or other casualty and such damage or destruction
prevents Tenant from occupying the Demised Premises, the Rent shall be abated or
reduced, as the case may be, in the proportion that the untenantable area of the
Demised Premises bears to the total area of the Demised Premises, for the period
from the date of the damage or destruction to (a) the date the damage to the
Demised Premises shall be substantially repaired, or (b) if the Building and not
the Demised Premises is so damaged or destroyed, the date on which the Demised
Premises shall be made tenantable; provided, however, should Tenant reoccupy a
portion of the Demised Premises during the period the repair or restoration work
is taking place and prior to the date that the Demised Premises are
substantially repaired or made tenantable the Rent allocable to such reoccupied
portion, based upon the proportion which the area of the reoccupied portion of
the Demised Premises bears to the total area of the Demised Premises, shall be
payable by Tenant from the date of such occupancy.
24.03. If (a) the Building or the Demised Premises shall be totally
damaged or destroyed by fire or other casualty, or (b) the Building shall be so
damaged or destroyed by fire or other casualty (whether or not the Demised
Premises are damaged or destroyed) that its repair or restoration requires the
expenditure, as estimated by a reputable contractor or architect designated by
Landlord, of more than twenty percent (20%) (or ten percent [10%] if such
casualty occurs during the last two [2] years of the Term) of the full insurable
value of the Building immediately prior to the casualty, then in either such
case Landlord may terminate this Lease by giving Tenant notice to such effect
within ninety (90) days after the date of the fire or other casualty. Landlord's
right to terminate the Lease pursuant to this paragraph 24.03 in the event of
damage or destruction which does not include the Demised Premises, shall be
conditioned on Landlord terminating all other space leases in the Building to
the extent Landlord shall have such right.
24.04. Tenant shall not be entitled to terminate this Lease (except as
provided in Section 24.08), as the result of any damage or destruction of the
Building or the Demised Premises. No damages, compensation or claim shall be
payable by Landlord for inconvenience, loss of business or annoyance arising
from any repair or restoration of any portion of the Demised Premises or of the
Building pursuant to this Article 24. Landlord shall use its best efforts to
make such repair or restoration promptly and in such manner as not unreasonably
to interfere with Tenant's use and occupancy of the Demised Premises, but
Landlord shall not be required to do such repair or restoration work except
during Business Hours on Business Days. In the event that any such work or
repairs shall require Tenant to either: switch to backup power, or vacate the
Demised Premises, Landlord shall, except in cases of emergency where such notice
is not practicable, provide Tenant with not less than twenty-five (25) days
prior notice of such work or repair to permit Tenant to coordinate utilization
of its backup equipment and facilities, if required.
24.05. Notwithstanding any of the foregoing provisions of this Article
24, if by reason of some act or omission on the part of Tenant or any of its
subtenants or its or their partners, directors, officers, servants, employees,
agents or contractors, either (a) Landlord or any Superior Lessor or any
Superior Mortgagee shall be unable to collect all of the insurance proceeds
(including, without limitation, rent insurance proceeds) applicable to damage or
destruction of the Demised Premises or the Building by fire or other casualty,
or (b) the Demised Premises or the Building shall be damaged or destroyed or
rendered completely or partially untenantable on account of fire or other
casualty, then, without prejudice to any other remedies which may be available
against Tenant, there shall be no abatement or reduction of the Rent, except to
the extent Landlord receives the proceeds of rent insurance with respect to the
Rent which would have been payable by Tenant with respect to Demised Premises.
Further, nothing contained in this Article 24 shall relieve Tenant from any
liability that may exist as a result of any damage or destruction by fire or
other casualty.
24.06. Landlord will not carry insurance of any kind on the Tenant's
Property, and, except as provided by law or by reason of Landlord's breach of
any of its obligations hereunder, shall not be obligated to repair any damage to
or replace the Tenant's Property.
24.07. The provisions of this Article 24 shall be deemed an express
agreement governing any case of damage or destruction of the Demised Premises
and/or Building by fire or other casualty, and any law providing for such a
contingency in the absence of an express agreement, now or hereafter in force,
shall have no application in such case.
24.08 In the event of (i) damage or destruction with respect to the
Demised Premises which prevents the use and occupancy of more than fifty (50%)
of the Demised Premises by Tenant, or (ii) damage or destruction with respect to
the Building the repair or restoration of which requires the expenditure, as
estimated by a reputable contractor or architect designated by Landlord, of more
than twenty-five percent (25%) of the full insurable value of the Building
immediately prior to the casualty, then in either of such events Landlord shall
and Tenant (provided Tenant is not in monetary default under this Lease beyond
any applicable notice and cure period and such damage or destruction prevents
the use and occupancy of the Demised Premises by Tenant) shall have the right to
request within thirty (30) days after such event the Architect to determine the
estimated time for restoration. The Landlord shall cause the Architect to
provide notice to Landlord and Tenant of such determination (the "Architect's
Notice") within thirty (30) days after notice from Landlord or Tenant requesting
such determination. Any dispute with respect to such determination may be
submitted to arbitration pursuant to Article 36 of this Lease. If the Architect
determines that the restoration of same is estimated to take more than twelve
(12) months from the date of the casualty, Landlord and Tenant shall each
(provided, however that Tenant's right shall be conditioned upon (i) Tenant not
being in monetary or material non-monetary default under this Lease beyond any
applicable notice and cure period and (ii) Tenant being prevented from using and
occupying the Demised Premises for a period of not less than twelve months as
estimated by such contractor or architect; and Landlord's right shall be
conditioned on Landlord terminating all other space leases in the Building to
the extent Landlord shall have such right) have the right to terminate this
Lease, upon thirty (30) days prior written notice to the other, given within
thirty (30) days of the Architect's Notice. Landlord's right to terminate the
Lease pursuant to this Section shall be in addition to and not in limitation of
Landlord's other rights pursuant to this Article 24. Nothing contained herein
shall be construed as limiting Landlord's right to collect the full amount of
the proceeds of rent insurance or business interruption insurance. If, such
restoration is not substantially completed with respect to the Demised Premises
within eleven (11) months from the date of the casualty (which period may be
extended by Landlord up to six (6) months by reason of Unavoidable Delays)
(herein the "Restoration Period"), Tenant shall have the right, upon not less
than thirty (30) days prior written notice given not later than the thirty (30)
days prior to the expiration of the Restoration Period, to terminate this Lease,
unless Landlord is diligently proceeding with such repairs and such restoration
is substantially completed within such thirty (30) day notice period.
ARTICLE 25 - EMINENT DOMAIN
25.01 If the whole of the Demised Premises shall be taken by any public
or quasi-public authority under the power of condemnation, eminent domain or
expropriation, or in the event of conveyance of the whole of the Demised
Premises in lieu thereof, this Lease shall terminate as of the day possession
shall be taken by such authority. If 25% or less of the Floor Space of the
Demised Premises shall be so taken or conveyed, this Lease shall terminate only
in respect of the part so taken or conveyed as of the day possession shall be
taken by such authority. If more than 25% of the Floor Space of the Demised
Premises shall be so taken or conveyed, this Lease shall terminate only in
respect of the part so taken or conveyed as of the day possession shall be taken
by such authority, but either party shall have the right to terminate this Lease
upon notice given to the other party within 30 days after such taking
possession. If more than 25% of the Floor Space of the Building shall be so
taken or conveyed, Landlord may, by notice to Tenant, terminate this Lease as of
the day possession shall be taken. If so much of the parking facilities shall be
so taken or conveyed that the number of parking spaces necessary, in Landlord's
reasonable judgment, for the continued operation of the Building shall not be
available, Landlord shall, by notice to Tenant, terminate this Lease as of the
day possession shall be taken. If this Lease shall continue in effect as to any
portion of the Demised Premises not so taken or conveyed, the Rent shall be
computed as of the day possession shall be taken on the basis of the remaining
Floor Space of the Demised Premises. Except as specifically provided herein, in
the event of any such taking or conveyance there shall be no reduction in Rent.
If this Lease shall continue in effect, Landlord shall, at its expense, but
shall be obligated only to the extent of the net award or other compensation
(after deducting all expenses in connection with obtaining same) available to
Landlord for the improvements taken or conveyed (excluding any award or other
compensation for land or for the unexpired portion of the term of any Superior
Lease), make all necessary alterations so as to constitute the remaining
Building a complete architectural and tenantable unit, except for the Tenant's
Property, and Tenant shall make all alterations or replacements to the Tenant's
Property and decorations in the Demised Premises. All awards and compensation
for any taking or conveyance, whether for the whole or a part of the Land or
Building, the Demised Premised or otherwise, shall be the property of Landlord,
and Tenant hereby assigns to Landlord all of Tenant's right, title and interest
in and to any and all such awards and compensation, including, without
limitation, any award or compensation for the value of the unexpired portion of
the Term. Tenant shall be entitled to claim, prove and receive in the
condemnation proceeding such award or compensation as may be allowed for the
Tenant's Property and for loss of business, good will, and depreciation or
injury to and cost of removal of the Tenant's Property, but only if such award
or compensation shall be made by the condemning authority in addition to, and
shall not result in a reduction of, the award or compensation made by it to
Landlord.
25.02. If the temporary use or occupancy of all or any part of the
Demised Premises shall be taken during the Term, Tenant shall be entitled,
except as hereinafter set forth, to receive that portion of the award or payment
for such taking which represents compensation for the use and occupancy of the
Demised Premises, for the taking of the Tenant's Property and for moving
expenses, and Landlord shall be entitled to receive that portion which
represents reimbursement for the cost of restoration of the Demised Premises.
This Lease shall be and remain unaffected by such taking and Tenant shall
continue to be responsible for all of its obligations hereunder insofar as such
obligations are not affected by such taking and shall continue to pay the Rent
in full when due. If the period of temporary use or occupancy shall extend
beyond the Expiration Date, that part of the award or payment which represents
compensation for the use and occupancy of the Demised Premises (or a part
thereof) shall be divided between Landlord and Tenant so that Tenant shall
receive (except as otherwise provided below) so much thereof as represents
compensation for the period up to and including the Expiration Date and Landlord
shall receive so much thereof as represents compensation for the period after
the Expiration Date. All monies to be paid to Tenant as, or as part of, an award
or payment for temporary use and occupancy for a period beyond the date to which
the Rent has been paid shall be received, held and applied by the first Superior
Mortgagee (or if there is no Superior Mortgagee, by Landlord as a trust fund)
for payment of the Rent becoming due hereunder.
ARTICLE 26 - SURRENDER
26.01. On the Expiration Date, or upon any earlier termination of this
Lease, or upon any re-entry by Landlord upon the Demised Premises, Tenant shall
quit and surrender the Demised Premises to Landlord "broom-clean" and in good
order, condition and repair, except for ordinary wear and tear and such damage
or destruction as Landlord is required to repair or restore under this Lease,
and Tenant shall remove all of Tenant's Property therefrom except as otherwise
expressly provided in this Lease.
26.02. If Tenant remains in possession of the Demised Premises after
the expiration of the Term, Tenant shall be deemed to be occupying the Demised
Premises at the sufferance of Landlord subject to all of the provisions of this
Lease, except that the monthly Fixed Rent shall be one and one quarter times the
Fixed Rent in effect during the last month of the Term for the first month of
such holdover, one and one half times the Fixed Rent in effect during the last
month of the Term for the second month of such holdover, one and three quarters
times the Fixed Rent in effect during the last month of the Term for the third
month of such holdover, and thereafter twice the Fixed Rent in effect during the
last month of the Term.
26.03. No act or thing done by Landlord or its agents shall be deemed
an acceptance of a surrender of the Demised Premises, and no agreement to accept
such surrender shall be valid unless in writing and signed by Landlord.
ARTICLE 27 - CONDITIONS OF LIMITATION
27.01. This Lease is subject to the limitation that whenever Tenant or
any Guarantor (a) shall make an assignment for the benefit of creditors, or (b)
shall commence a voluntary case or have entered against it an order for relief
under any chapter of the Federal Bankruptcy Code (Title 11 of the United States
Code) or any similar order or decree under any federal or state law, now in
existence, or hereafter enacted having the same general purpose, and such order
or decree shall have not been stayed or vacated within 60 days after entry, or
(c) shall cause, suffer, permit or consent to the appointment of a receiver,
trustee, administrator, conservator, sequestrator, liquidator or similar
official in any federal, state or foreign judicial or nonjudicial proceeding, to
hold, administer and/or liquidate all or substantially all of its assets, and
such appointment shall not have been revoked, terminated, stayed or vacated and
such official discharged of his duties within 60 days of his appointment, then
Landlord, at any time after the occurrence of any such event, may give Tenant a
notice of intention to end the Term at the expiration of five (5) days from the
date of service of such notice of intention, and upon the expiration of said
five (5) day period, whether or not the Term shall theretofore have commenced,
this Lease shall terminate with the same effect as if that day were the
expiration date of this Lease, but Tenant shall remain liable for damages as
provided in Article 29.
27.02. This Lease is subject to the further limitations that: (a) if
Tenant shall default in the payment of any Rent and such Rent shall not be paid
within five (5) days after notice or invoice, or (b) if Tenant shall, whether by
action or inaction, be in default of any of its obligations under this Lease
(other than a default in the payment of Rent) and such default shall continue
and not be remedied within twenty (20) days after Landlord shall have given to
Tenant a notice specifying the same, or, in the case of a default which cannot
with due diligence be cured within a period of twenty (20) days and the
continuance of which for the period required for cure will not subject Landlord
or any Superior Lessor to prosecution for a crime (as more particularly
described in the last sentence of Section 12.02) or termination of any Superior
Lease or foreclosure of any Superior Mortgage, if Tenant shall not, (i) within
said twenty (20) day period advise Landlord of Tenant's intention to take all
steps necessary to remedy such default, (ii) duly commence within said twenty
(20) day period, and thereafter diligently prosecute to completion all steps
necessary to remedy the default, and (iii) complete such remedy within a
reasonable time after the date of said notice by Landlord, or (c) if any event
shall occur or any contingency shall arise whereby this Lease would, by
operation of law or otherwise, devolve upon or pass to any person, firm or
corporation other than Tenant, except as expressly permitted by Article 11, then
in any of said cases Landlord may give to Tenant a notice of intention to end
the Term at the expiration of five (5) days from the date of the service of such
notice of intention, and upon the expiration of said five (5) days, whether or
not the Term shall theretofore have commenced, this Lease shall terminate with
the same effect as if that day were the expiration date of this Lease, but
Tenant shall remain liable for damages as provided in Article 29.
ARTICLE 28 - RE-ENTRY BY LANDLORD
28.01. If Tenant shall default in the payment of any Rent and such Rent
shall not be paid within five (5) days after notice or invoice, or if this Lease
shall terminate as provided in Article 27, Landlord or Landlord's agents and
employees may immediately or at any time thereafter re-enter the Demised
Premises, or any part thereof, either by summary dispossess proceedings or by
any suitable action or proceeding at law without being liable to indictment,
prosecution or damages therefor, and may repossess the same, and may remove any
Person therefrom, to the end that Landlord may have, hold and enjoy the Demised
Premises. The word "re-enter," as used herein, is not restricted to its
technical legal meaning. If this Lease is terminated under the provisions of
Article 27, or if Landlord shall re-enter the Demised Premises under the
provisions of this Article 28, or in the event of the termination of this Lease,
or of re-entry, by or under any summary dispossess or other proceedings or
action by reason of default hereunder on the part of Tenant, Tenant shall
thereupon pay to Landlord the Rent payable up to the time of such termination of
this Lease, or of such recovery of possession of the Demised Premises by
Landlord, as the case may be, and shall also pay to Landlord damages as provided
in Article 29.
28.02. In the event of a breach or threatened breach by Tenant of any
of its obligations under this Lease, Landlord shall also have the right of
injunction. The special remedies to which Landlord may resort hereunder are
cumulative and are not intended to be exclusive of any other remedies to which
Landlord may lawfully be entitled at any time and Landlord may invoke any remedy
allowed at law or in equity as if specific remedies were not provided for
herein.
28.03. If this Lease shall terminate under the provisions of Article
27, or if Landlord shall re-enter the Demised Premises under the provisions of
this Article 28, or in the event of the termination of this Lease, or of
re-entry, by or under any summary dispossess or other proceeding or action by
reason of default hereunder on the part of Tenant, Landlord shall be entitled to
retain all monies, if any, paid by Tenant to Landlord, whether as Advance Rent,
security or otherwise, but such monies shall be credited by Landlord against any
Rent due from Tenant at the time of such termination or re-entry or, at
Landlord's option, against any damages payable by Tenant under Article 29 or
pursuant to law.
ARTICLE 29 - DAMAGES
29.01. If this Lease is terminated under the provisions of Article 27,
or if Landlord shall re-enter the Demised Premises under the provisions of
Article 28, or in the event of the termination of this Lease, or of re-entry, by
or under any summary dispossess or other proceeding or action or any provision
of law by reason of default hereunder on the part of Tenant, Tenant shall pay as
Additional Charges to Landlord, at the election of Landlord, either or any
combination (but without duplication) of:
(a) a sum which at the time of such termination of this Lease or at the
time of any such re-entry by Landlord, as the case may be, represents
the then value of the excess, if any, of (i) the aggregate amount of
the Rent which would have been payable by Tenant (conclusively
presuming the average monthly Additional Charges to be the same as were
the average monthly Additional Charges payable for the year, or if less
than 365 days have then elapsed since the Commencement Date, the
partial year, immediately preceding such termination or re-entry) for
the period commencing with such earlier termination of this Lease or
the date of any such re-entry, as the case may be, and ending with the
Expiration Date, over (ii) the aggregate rental value of the Demised
Premises for the same period; or
(b) sums equal to the Fixed Rent and the Additional Charges which would
have been payable by Tenant had this Lease not so terminated, or had
Landlord not so re-entered the Demised Premises, payable upon the due
dates therefor specified herein following such termination or such
re-entry and until the Expiration Date, provided, however, that if
Landlord shall relet the Demised Premises during said period, Landlord
shall credit Tenant with the net rents received by Landlord from such
reletting, such net rents to be determined by first deducting from the
gross rents as and when received by Landlord from such reletting the
expenses incurred or paid by Landlord in terminating this Lease or in
re-entering the Demised Premises and in securing possession thereof, as
well as the expenses of reletting, including, without limitation,
altering and preparing the Demised Premises for new tenants, brokers'
commissions, legal fees, and all other expenses properly chargeable
against the Demised Premises and the rental therefrom, it being
understood that any such reletting may be for a period shorter or
longer than the period ending on the Expiration Date; but in no event
shall Tenant be entitled to receive any excess of such net rents over
the sums payable by Tenant to Landlord hereunder, nor shall Tenant be
entitled in any suit for the collection of damages pursuant to this
subsection (b) to a credit in respect of any rents from a reletting,
except to the extent that such net rents are actually received by
Landlord. If the Demised Premises or any part thereof should be relet
in combination with other space, then proper apportionment on a square
foot basis shall be made of the rent received from such reletting and
of the expenses of reletting.
If the Demised Premises or any part thereof should be relet by Landlord
before presentation of proof of such damages to any court, commission or
tribunal, the amount of rent reserved upon such reletting shall be presumed to
be the fair and reasonable rental value for the Demised Premises, or part
thereof, so relet during the term of the reletting. Landlord shall not be liable
in any way whatsoever for its failure to relet the Demised Premises or any part
thereof, or if the Demised Premises or any part thereof are relet, for its
failure to collect the rent under such reletting, and no such failure to relet
or failure to collect rent shall release or affect Tenant's liability for
damages or otherwise under this Lease. Landlord shall use commercially
reasonable efforts to relet the Demised Premises to mitigate Landlord's damages.
In addition to any other damages recoverable by Landlord pursuant to Section
29.01 hereof, Landlord shall be entitled, in addition to such costs and expenses
as Landlord may incur or be entitled to recover from Tenant, a reletting fee in
amount equal to two and one half percent (2-1/2%) of the gross rentals payable
under any lease(s) entered into with any replacement tenant(s) for the Demised
Premises or any part thereof for the portion of the term of the lease entered
into with the replacement tenant which is co-terminous with the term of this
Lease (herein the "Reletting Override"). The parties agree that the Reletting
Override is fair and reasonable and that such fee shall be in addition to any
brokerage fees or commissions payable to third parties. For the purposes hereof,
"commercially reasonable efforts" shall mean the following actions, which
actions shall create an irrebuttable presumption that Landlord has fulfilled
such obligation: (i) Landlord shall include the availability of the Demised
Premises in Landlord's monthly listing to brokers (if any), commencing with the
first such report (if any) issued following Landlord's recovery of possession of
the Demised Premises, and ending upon re-leasing of the Demised Premises; and
(ii) Landlord shall include the availability of the Demised Premises in
Landlord's periodic real estate guide (if any), commencing with the first such
guide (if any) issued following Landlord's recovery of possession of the Demised
Premises, and ending upon re-leasing of the Demised Premises; and (iii) Landlord
shall hold an "Open House" for the Demised Premises within sixty (60) days of
Landlord's recovery of possession of the Demised Premises, or (iv) in lieu of
(i), (ii) and (iii) of this paragraph, upon Tenant's written request, Landlord
shall engage an independent commercial real estate broker to relet the Demised
Premises, the cost and expense of which shall be an element of Landlord's
damages in addition to any other damages recoverable pursuant to Section 29.01
hereof. Nothing contained herein shall require Landlord to relet the Demised
Premises prior to or with any preference over the leasing of any other similar
premises of Landlord or any affiliate of Landlord, nor shall any rental of such
other premises reduce the damages which Landlord would be entitled to recover
from Tenant. In the event Tenant, on behalf of itself or any and all persons
claiming through or under Tenant, attempts to raise a defense or assert any
affirmative obligations on Landlord's part to mitigate such damages or relet the
Demised Premises other than a defense or assertion that Landlord has failed to
mitigate damages as expressly provided in this Section, Tenant shall reimburse
Landlord for any costs and expenses incurred by Landlord as a result of any such
defense or assertion, including but not limited to Landlord's attorneys' fees
incurred in connection therewith.
29.02. Suit or suits for the recovery of such damages or, any
installments thereof, may be brought by Landlord at any time and from time to
time at its election, and nothing contained herein shall be deemed to require
Landlord to postpone suit until the date when the Term would have expired if it
had not been so terminated under the provisions of Article 27, or under any
provision of law, or had Landlord not re-entered the Demised Premises. Nothing
herein contained shall be construed to limit or preclude recovery by Landlord
against Tenant of any sums or damages to which, in addition to the damages
particularly provided above, Landlord may lawfully be entitled by reason of any
default hereunder on the part of Tenant. Nothing herein contained shall be
construed to limit or prejudice the right of Landlord to prove for and obtain as
damages by reason of the termination of this Lease or re-entry of the Demised
Premises for the default of Tenant under this Lease, an amount equal to the
maximum allowed by any statute or rule of law in effect at the time, whether or
not such amount be greater than, equal to, or less than any of the sums referred
to in Section 29.01. 29.03. In addition, if this Lease is terminated under the
provisions of Article 27, or if Landlord shall re-enter the Demised Premises
under the provisions of Article 28, Tenant covenants that: (a) the Demised
Premises then shall be in the same condition as that in which Tenant has agreed
to surrender the same to Landlord at the Expiration Date; (b) Tenant shall have
performed prior to any such termination any obligation of Tenant contained in
this Lease for the making of any alteration or for restoring or rebuilding the
Demised Premises or the Building, or any part thereof; and (c) for the breach of
any covenant of Tenant set forth above in this Section 29.03, Landlord shall be
entitled immediately, without notice or other action by Landlord, to recover,
and Tenant shall pay, as and for liquidated damages therefor, the cost of
performing such covenant (as estimated by an independent contractor selected by
Landlord).
29.04. In addition to any other remedies Landlord may have under this
Lease, and without reducing or adversely affecting any of Landlord's rights and
remedies under this Article 29, if any Rent or damages payable hereunder by
Tenant to Landlord are not paid upon demand therefor, the same shall bear
interest at the Late Payment Rate or the maximum rate permitted by law,
whichever is less, from the due date thereof until paid, and the amounts of such
interest shall be Additional Charges hereunder.
29.05. In addition to any remedies which Landlord may have under this
Lease, if there shall be a default hereunder by Tenant which shall not have been
remedied within the applicable grace period, Landlord shall not be obligated to
furnish to Tenant or the Demised Premises any HVAC services outside of Business
Hours or Business Days, or any extra or additional cleaning services; and the
discontinuance of any one or more such services shall be without liability by
Landlord to Tenant and shall not reduce, diminish or otherwise affect any of
Tenant's covenants and obligations under this Lease.
ARTICLE 30 - AFFIRMATIVE WAIVERS
30.01. Tenant, on behalf of itself and any and all persons claiming
through or under Tenant, does hereby waive and surrender all right and privilege
which it, they or any of them might have under or by reason of any present or
future law, to redeem the Demised Premises or to have a continuance of this
Lease after being dispossessed or ejected from the Demised Premises by process
of law or under the terms of this Lease or after the termination of this Lease
as provided in this Lease.
30.02. Landlord and Tenant hereby waive trial by jury in any action,
proceeding or counterclaim brought by either against the other on any matter
whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, and Tenant's use or occupancy of the
Demised Premises and use of the Common Area, including, without limitation, any
claim of injury or damage, and any emergency and other statutory remedy with
respect thereto. Tenant shall not interpose any counterclaim of any kind in any
action or proceeding commenced by Landlord to recover possession of the Demised
Premises, other than mandatory or compulsory counterclaims.
.
ARTICLE 31 - NO WAIVERS
31.01. The failure of either party to insist in any one or more
instances upon the strict performance of any one or more of the obligations of
this Lease, or to exercise any election herein contained, shall not be construed
as a waiver or relinquishment for the future of the performance of such one or
more obligations of this Lease or of the right to exercise such election, but
the same shall continue and remain in full force and effect with respect to any
subsequent breach, act or omission. The receipt by Landlord of Fixed Rent or
Additional Charges with knowledge of breach by Tenant of any obligation of this
Lease shall not be deemed a waiver of such breach.
ARTICLE 32 - CURING TENANT'S DEFAULTS
32.01. If Tenant shall default in the performance of any of Tenant's
obligations under this Lease beyond any applicable notice and cure periods,
Landlord, without thereby waiving such default, may (but shall not be obligated
to) perform the same for the account and at the expense of Tenant, without
notice in a case of emergency, and in any other case only if such default
continues after the expiration of twenty (20) days from the date Landlord gives
Tenant notice of the default. Any costs or expenses incurred by Landlord in
connection with any such performance by it for the account of Tenant, and
interest on all sums advanced by Landlord under this Article at the Late Payment
Rate or the maximum rate permitted by law, whichever is less, shall be payable
by Tenant within thirty (30) days of demand and, in addition to any other rights
or remedies of Landlord under this Lease, any bills received by Landlord for
same may be sent by Landlord to Tenant for payment by Tenant monthly, or
immediately, at Landlord's option.
32.02. If Landlord shall default in the performance of any of
Landlord's obligations under this Lease beyond any applicable notice or cure
period, Tenant, without thereby waiving such default, may (but shall not be
obligated to) perform the same for the account and at the expense of Landlord,
without notice in a case of emergency posing a threat to life or safety, and in
any other case only if such default continues after the expiration of sixty (60)
days from the date Tenant gives Landlord notice of the default, unless Landlord
has commenced and is then diligently pursuing such cure. In the event of an
emergency (such emergency posing a threat to life or safety) Tenant shall have
the right to perform such obligation itself and seek reimbursement from
Landlord, but Tenant shall, where practicable, endeavor to give Landlord
reasonable notice and the opportunity to cure such emergency. Any costs or
expenses incurred by Tenant in connection with any such performance by it for
the account of Landlord, and interest on all sums advanced by Tenant under this
Article at the rate of ten percent (10%) per annum, or the maximum rate
permitted by law, whichever is less, shall be payable by Landlord within thirty
(30) days of demand and, in addition to any other rights or remedies of Tenant
under this Lease, any bills received by Tenant for same may be sent by Tenant to
Landlord for payment by Landlord monthly, or immediately, at Tenant's option. In
no event shall the failure of Landlord to perform any repair or other obligation
which is the subject matter hereof, whether or not requested by Tenant, be
deemed to be an acknowledgment that the Landlord had a duty or obligation to
perform the same. In the event Landlord disputes the necessity of the
performance of the repair or other obligation in question, its obligations to
make same, or the cost thereof, or if Landlord fails to pay same when due
hereunder, Tenant's remedy shall, subject to Landlord's and Tenant's option to
require arbitration of such claim under Article 36 hereof, be an action at law
to recover such claimed amount and Tenant shall not, in any case, be entitled to
any offsets or deductions from Rent. Nothing contained in this Section 32.02
shall be construed to allow or permit Tenant to deduct or offset or reduce any
amounts due against any Rent under this Lease.
32.03. In any litigation between the parties regarding this Lease, the
losing party shall pay to the prevailing party all reasonable expenses and court
costs including reasonable attorney's fees incurred by the prevailing party. A
party shall be considered the prevailing party if:
(i) it initiated the litigation and substantially obtains the
relief it sought, either through a judgment or the losing party's voluntary
action before arbitration (after it is scheduled), trial, or judgment; or
(ii) the other party withdraws its action without
substantially obtaining the relief it sought.
ARTICLE 33 - BROKER
33.01. Tenant represents that no broker except the Broker was
instrumental in bringing about or consummating this Lease and that Tenant had no
conversations or negotiations with any broker except the Broker concerning the
leasing of the Demised Premises. Tenant agrees to indemnify and hold harmless
Landlord against and from any claims for any brokerage commissions and all
costs, expenses and liabilities in connection therewith, including, without
limitation, attorneys' fees and expenses, arising out of any conversations or
negotiations had by Tenant with any broker other than the Broker. Landlord shall
pay any brokerage commissions due the Broker pursuant to a separate agreement
between Landlord and the Broker.
ARTICLE 34 - NOTICES
34.01. Any notice, statement, demand, consent, approval or other
communication required or permitted to be given, rendered or made by either
party to the other, pursuant to this Lease or pursuant to any applicable Legal
Requirement, shall be in writing and shall be deemed to have been properly
given, rendered or made only if hand delivered, sent by recognized overnight
courier providing receipted delivery, such as Federal Express, or UPS, or sent
by United States registered or certified mail, return receipt requested,
addressed to the other party at the address hereinabove set forth (except that
after the Commencement Date, Tenant's address, unless Tenant shall give notice
to the contrary, shall be the Building), as to Tenant to the attention of
General Counsel and as to Landlord, to the attention of General Counsel with a
concurrent notice to the attention of Controller, and shall be deemed to have
been given, rendered or made on the day of delivery or refusal. Either party
may, by notice as aforesaid, designate a different address or addresses for
notices, statements, demands, consents, approvals or other communications
intended for it. In addition, upon and to the extent requested by Landlord,
copies of notices shall be sent to the Superior Mortgagee.
ARTICLE 35 - ESTOPPEL CERTIFICATES
35.01. Each party shall, at any time and from time to time, as
requested by the other party, upon not less than ten (10) days' prior notice,
execute and deliver to the requesting party a statement certifying that this
Lease is unmodified and in full force and effect (or if there have been
modifications, that the same is in full force and effect as modified and stating
the modifications), certifying the dates to which the Fixed Rent and Additional
Charges have been paid, stating whether or not, to the best knowledge of the
party giving the statement, the requesting party is in default in performance of
any of its obligations under this Lease, and, if so, specifying each such
default of which the party giving the statement shall have knowledge, and
stating whether or not, to the best knowledge of the party giving the statement,
any event has occurred which with the giving of notice or passage of time, or
both, would constitute such a default of the requesting party, and, if so,
specifying each such event; any such statement delivered pursuant hereto shall
be deemed a representation and warranty to be relied upon by the party
requesting the certificate and by others with whom such party may be dealing,
regardless of independent investigation. Tenant also shall include in any such
statement such other information concerning this Lease as Landlord may
reasonably request.
<PAGE>
ARTICLE 36 - ARBITRATION
36.01. Landlord may at any time request arbitration, and Tenant may at
any time when not in default in the payment of any Rent request arbitration, of
any matter in dispute but only where arbitration is expressly provided for in
this Lease. If Tenant desires to arbitrate any demand by Landlord for compliance
with any provision of this Lease, Tenant shall as a condition of Tenant's right
to require arbitration, comply with such demand during the pendency of such
arbitration proceeding. The party requesting arbitration shall do so by giving
notice to that effect to the other party, specifying in said notice the nature
of the dispute, and said dispute shall be determined in Newark, New Jersey, in
accordance with the rules then obtaining of the American Arbitration Association
(or any comparable organization designated by Landlord). The award in such
arbitration may be enforced on the application of either party by the order or
judgment of a court of competent jurisdiction. The fees and expenses of any
arbitration shall be borne by the parties equally, but each party shall bear the
expense of its own attorneys and experts and the additional expenses of
presenting its own proof. If Tenant gives notice requesting arbitration as
provided in this Article, Tenant shall simultaneously serve a duplicate of the
notice on each Superior Mortgagee and Superior Lessor whose name and address
shall previously have been furnished to Tenant, and such Superior Mortgagees and
Superior Lessor shall have the right to participate in such arbitration. In the
event such arbitration is with respect to a matter concerning a determination by
the Architect, such arbitration shall be conducted in accordance with the
construction industry rules of the American Arbitration Association on an
expedited bases (or their substantial equivalent, if such arbitration is
conducted by an alternative organization providing alternative dispute
resolution services).
ARTICLE 37 - MEMORANDUM OF LEASE
37.01. Tenant shall not record this Lease. However, at the request of
Landlord or Tenant, each party shall promptly execute, acknowledge and deliver
to the other a memorandum of lease in respect of this Lease sufficient for
recording. Such memorandum shall not be deemed to change or otherwise affect any
of the obligations or provisions of this Lease. Whichever party records such
memorandum of Lease shall pay all recording costs and expenses, including any
taxes that are due upon such recording.
ARTICLE 38 - INTENTIONALLY OMITTED
<PAGE>
ARTICLE 39 - MISCELLANEOUS
39.01. Tenant expressly acknowledges and agrees that Landlord has not
made and is not making, and Tenant, in executing and delivering this Lease, is
not relying upon, any warranties, representations, promises or statements,
except to the extent that the same are expressly set forth in this Lease or in
any other written agreement(s) which may be made between the parties
concurrently with the execution and delivery of this Lease. All understandings
and agreements heretofore had between the parties are merged in this Lease and
any other written agreement(s) made concurrently herewith, which alone fully and
completely express the agreement of the parties and which are entered into after
full investigation. Neither party has relied upon any statement or
representation not embodied in this Lease or in any other written agreement(s)
made concurrently herewith. The submission of this Lease to Tenant does not
constitute by Landlord a reservation of, or an option to Tenant for, the Demised
Premises, or an offer to lease on the terms set forth herein and this Lease
shall become effective as a lease agreement only upon execution and delivery
thereof by Landlord and Tenant.
39.02. No agreement shall be effective to change, modify, waive,
release, discharge, terminate or effect an abandonment of this Lease, in whole
or in part, unless such agreement is in writing, refers expressly to this Lease
and is signed by the party against whom enforcement of the change, modification,
waiver, release, discharge, termination or effectuation of abandonment is
sought.
39.03. If Tenant shall at any time request Landlord to sublet or let
the Demised Premises for Tenant's account, Landlord or its agent is authorized
to receive keys for such purposes without releasing Tenant from any of its
obligations under this Lease, and Tenant hereby releases Landlord of any
liability for loss or damage to any of the Tenant's Property in connection with
such subletting or letting.
39.04. Except as otherwise expressly provided in this Lease, the
obligations under this Lease shall bind and benefit the successors and assigns
of the parties hereto with the same effect as if mentioned in each instance
where a party is named or referred to; provided, however, that (a) no violation
of the provisions of Article 11 shall operate to vest any rights in any
successor or assignee of Tenant and (b) the provisions of this Section 39.04
shall not be construed as modifying the conditions of limitation contained in
Article 27.
39.05. Except for Tenant's obligations to pay Rent, the time for
Landlord or Tenant, as the case may be, to perform any of its respective
obligations hereunder shall be extended if and to the extent that the
performance thereof shall be prevented due to any Unavoidable Delay (subject to
the limits on extensions for Unavoidable Delay expressly provided for in this
Lease). The extension shall be limited to the duration of the Unavoidable Delay
measured from the date notice thereof is given by one party to the other. Except
as expressly provided to the contrary, the obligations of Tenant hereunder shall
not be affected, impaired or excused, nor shall Landlord have any liability
whatsoever to Tenant, (a) because Landlord is unable to fulfill, or is delayed
in fulfilling, any of its obligations under this Lease due to any of the matters
set forth in the first sentence of this Section 39.05, or (b) because of any
failure or defect in the supply, quality or character of electricity, water or
any other utility or service furnished to the Demised Premises for any reason
beyond Landlord's reasonable control.
39.06. Any liability for payments hereunder (including, without
limitation, Additional Charges) shall survive the expiration of the Term or
earlier termination of this Lease.
39.07. If Tenant shall request Landlord's consent and Landlord shall
fail or refuse to give such consent, Tenant shall not be entitled to any damages
for any withholding by Landlord of its consent; Tenant's sole remedy shall be an
action for specific performance or injunction, and such remedy shall be
available only in those cases where Landlord has expressly agreed in writing not
to unreasonably withhold or delay its consent or where as a matter of law
Landlord may not unreasonably withhold its consent. Notwithstanding the
foregoing to the contrary, in the event Landlord wrongfully withholds its
consent to a proposed assignment or subletting, Tenant shall have the right to
pursue an action for its actual direct damages. In no event shall Landlord be
liable for any consequential or exemplary damages, or any damages in excess of
the Fixed Rent and Additional Charges (other than Tenant's share of the Excess
Amount) payable by Tenant for the period of such proposed sublease or
assignment.
39.08. If an excavation shall be made upon land adjacent to or under
the Building, or shall be authorized to be made, Tenant shall afford to the
Person causing or authorized to cause such excavation, license to enter the
Demised Premises for the purpose of performing such work as said Person shall
reasonably deem necessary or desirable to preserve and protect the Building from
injury or damage and to support the same by proper foundations, without any
claim for damages or liability against Landlord and without reducing or
otherwise affecting Tenant's obligations under this Lease.
39.09. Tenant shall not exercise its rights under Article 15 or any
other provision of this Lease in a manner which would violate Landlord's union
contracts or create any work stoppage, picketing, labor disruption or dispute or
any interference with the business of Landlord or any tenant or occupant of the
Building.
39.10. Tenant shall give prompt notice to Landlord of (a) any
occurrence in or about the Demised Premises for which Landlord might be liable,
(b) any fire or other casualty in the Demised Premises, (c) any damage to or
defect in the Demised Premises, including the fixtures and equipment thereof,
for the repair of which Landlord might be responsible, and (d) any damage to or
defect in any part of the Building's sanitary, electrical, heating, ventilating,
air-conditioning, elevator or other systems located in or passing through the
Demised Premises or any part thereof.
39.11. This Lease shall be governed by and construed in accordance with
the laws of the State of New Jersey. Tenant hereby irrevocably agrees that any
legal action or proceeding arising out of or relating to this Lease may be
brought in the Courts of the State of New Jersey, or the Federal District Court
for the District of New Jersey, as Landlord may elect. By execution and delivery
of this Lease, Tenant hereby irrevocably accepts and submits generally and
unconditionally for itself and with respect to its properties, to the
jurisdiction of any such court in any such action or proceeding, and hereby
waives in the case of any such action or proceeding brought in the courts of the
State of New Jersey, or Federal District Court for the District of New Jersey,
any defenses based on jurisdiction, venue or forum non conveniens. If any
provision of this Lease shall be invalid or unenforceable, the remainder of this
Lease shall not be affected and shall be enforced to the extent permitted by
law. The table of contents, captions, headings and titles in this Lease are
solely for convenience of reference and shall not affect its interpretation.
This Lease shall be construed without regard to any presumption or other rule
requiring construction against the party causing this Lease to be drafted. If
any words or phrases in this Lease shall have been stricken out or otherwise
eliminated, whether or not any other words or phrases have been added, this
Lease shall be construed as if the words or phrases so stricken out or otherwise
eliminated were never included in this Lease and no implication or inference
shall be drawn from the fact that said words or phrases were so stricken out or
otherwise eliminated. Each covenant, agreement, obligation or other provision of
this Lease on Tenant's part to be performed, shall be deemed and construed as a
separate and independent covenant of Tenant, not dependent on any other
provision of this Lease. All terms and words used in this Lease, regardless of
the number or gender in which they are used, shall be deemed to include any
other number and any other gender as the context may require. In the event
Landlord permits Tenant to examine Landlord's books and records with respect to
any Additional Charge imposed under this Lease, such examination shall be
conducted at Tenant's sole cost and expense and shall be conditioned upon Tenant
performing such examination utilizing Tenant's own employees or retaining an
independent accounting firm for such purposes who or which shall not be
compensated on any type of contingent fee basis with respect to such
examination. Wherever in this Lease or by law Landlord or Tenant is authorized
to charge or recover costs and expenses for legal services or attorneys' fees,
same shall include, without limitation, the costs and expenses for in-house or
staff legal counsel or outside counsel at rates not to exceed the reasonable and
customary charges for any such services as would be imposed in an arms length
third party agreement for such services.
<PAGE>
39.12. Within thirty (30) days of each anniversary date of this Lease,
Tenant shall annually furnish to Landlord a copy of its then current audited
financial statement which shall be employed by Landlord for purposes of
financing the Premises and not distributed otherwise without prior authorization
of Tenant.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease
as of the day and year first above written.
Landlord
90 Hudson Street L.L.C., a New Jersey
limited liability company
By: Hartz Mountain Industries, Inc.,
a New York corporation,
its managing member
By:___________________________________
Name: Irwin A. Horowitz
Title: Executive Vice President
Tenant
National Discount Brokers Group, Inc.,
A Delaware corporation
By:___________________________________
Name:
Title:
<PAGE>
RIDER TO LEASE AGREEMENT DATED MAY__, 1999 BETWEEN 90 HUDSON STREET L.L.C.
("LANDLORD") AND NATIONAL DISCOUNT BROKERS GROUP, INC. ("TENANT")
- ---------------------------------------------------------------------------
R1. Rider Governs. If any of the provisions of this Rider shall
conflict with any of the provisions, printed or typewritten, of this Lease, such
conflict shall be resolved in every instance in favor of the provisions of this
Rider.
R2. Renewal Options. Provided Tenant is not in default of its monetary
or material non-monetary obligations under this Lease beyond any applicable
notice and cure periods, Tenant, shall, subject to the provisions of sub-section
5 hereof, have two (2) options to extend the Term of its lease of the Demised
Premises, from the date upon which this Lease would otherwise expire for an
extended period of five (5) years (each herein referred to as an "Extended
Period", the first of which referred to as the "First Extended Period" and the
second referred to as the "Second Extended Period" respectively), upon the
following terms and conditions:
1. If Tenant elects to exercise any one or both of said
options, it shall do so by giving notice of such election to Landlord
on or before the date which is one (1) year before the beginning of the
Extended Period for which the Term is to be extended by the exercise of
such option. Tenant agrees that it shall have forever waived its right
to exercise any such option if it shall fail for any reason whatsoever
to give such notice to Landlord by the time provided herein for the
giving of such notice, whether such failure is inadvertent or
intentional, time being of the essence as to the exercise of each such
option.
2. If Tenant elects to exercise any one or both of said
options, the Term shall be automatically extended for the Extended
Period covered by the option so exercised without execution of an
extension or renewal lease. Within ten (10) days after request of
either party following the effective exercise of any such option,
however, Landlord and Tenant shall execute, acknowledge and deliver to
each other duplicate originals of an instrument in recordable form
confirming that such option was effectively exercised.
3. Each Extended Period shall be upon the same terms and
conditions as are in effect immediately preceding the commencement of
such Extended Period; provided, however, that Tenant shall have no
right or option to extend the Term for any period of time beyond the
expiration of the Second Extended Period and, provided further, that in
the Extended Period(s) the Fixed Rent shall be as follows:
The Fixed Rent during the Extended Periods shall be at
ninety-five percent (95%) of Fair Market Value ("FMV"). FMV
shall be determined by mutual agreement of the parties. If the
parties are unable to agree on the FMV within thirty (30) days
of Tenant's exercise of its option, the parties shall choose a
licensed Real Estate Appraiser who shall determine the FMV.
The cost of said Real Estate Appraiser shall be borne equally
by the parties. If the parties are unable to agree on a
licensed Real Estate Appraiser within forty-five (45) days of
Tenant's exercise of its option, each party shall select one
Appraiser to appraise the FMV. All appraisals shall be
rendered within thirty (30) days of appointment of the
respective Appraiser appointed under this paragraph. If the
difference between the two appraisals is 20% or less of the
lower appraisal, then the FMV shall be the average of the two
appraisals. If the difference between the two appraisals is
greater than 20% of the lower appraisal, the two Appraisers
shall select a third licensed Real Estate Appraiser to
appraise the FMV. The FMV shall in such case be the average of
the three appraisals. The cost of the third appraisal shall be
borne equally by the parties.
Anything to the contrary contained herein notwithstanding, the
Fixed Rent for the Extended Periods shall not be less than the
Fixed Rent for the period immediately preceding the Extended
Period for which the Fixed Rent is being calculated.
4. Any termination, expiration, cancellation or surrender of this Lease
shall terminate any right or option for the Extended Period(s) not yet
exercised.
5. If Tenant at any time during the Term (including, but not limited to
the First Extended Period has (other than to an Affiliate of Tenant) assigned
this Lease or sublet all or more than fifty percent (50%) of the Demised
Premises and is itself not in occupation and conducting business in at least one
half (1/2) of the Demised Premises in accordance with the terms of this Lease,
the renewal options granted pursuant to this Section R2 shall be limited to the
First Extended, if such sublease, assignment or failure to occupy occurs during
the original Term; and if such sublease, assignment, or failure to occupy occurs
during the First Extended Period; the Second Extended Period shall expire on the
date which is five (5) years after the date of such sublease or assignment.
6. The options provided herein to extend the Term of the Lease may not
be severed from the Lease or separately sold, assigned or otherwise transferred.
R3. Tenant Allowance. Landlord agrees that provided this Lease is in
full force and effect, Landlord shall contribute the sum of Twenty-seven &00/100
Dollars ($27.00) multiplied by the Floor Space of the Demised Premises
(Landlord's Contribution) towards the cost of Tenant's Work and Tenant's
furniture, fixtures and equipment to be installed at the Demised Premises, and
the ancillary costs actually incurred by Tenant in connection with Tenant's
preparation of and move to the Demised Premises, including Tenant's moving
costs, and Tenant's architectural, engineering and filing fees (collectively,
"Ancillary Costs"), on the terms set forth below:
(A) Landlord's Contribution shall be paid monthly as work progress, in
proportion to the total work to be completed, subject to certification by
Tenant's architect (i) as to the percentage completed and (ii) that the total
amount of Tenant's Work completed (inclusive of Tenant's Ancillary Costs) is
estimated to be not less than Twenty-seven &00/100 Dollars ($27.00) multiplied
by the number of square feet of Floor Space of the Demised Premises. At,
Tenant's option, Landlord shall pay Landlord's Contribution directly to Tenant's
contractors, suppliers or materialmen, as directed by Tenant.
(B) Prior to and as a condition precedent to Landlord's obligation to
make such payments, Tenant shall deliver to Landlord: (i) lien waivers executed
by Tenant's general contractor and all subcontractors, materialmen and
suppliers, such partial lien waivers to be accompanied by affidavits of Tenant's
general contractor setting forth the names of all such subcontractors,
materialmen and suppliers; (ii) an affidavit from the architect having
supervision over Tenant's Work, to the effect that such Tenant's Work has been
performed in accordance with the plans and specifications approved by Landlord
and in compliance with all Legal Requirements.
(C) In addition to Landlord's Contribution Landlord agrees that
provided this Lease is in full force and effect, Landlord shall contribute the
sum of $156,948 (the "Raised Floor Allowance") to be applied to the cost of the
installation of an eight inch concrete filled raised floor by Tenant on the
portion of the Demised Premises located on the fifth floor of the Building on
the terms set forth below: Landlord's Raised Floor Allowance shall be paid upon
lien free completion of such installation by Tenant as certified by Tenant's
architect. Prior to and as a condition precedent to Landlord's obligation to
make such payment, Tenant shall deliver to Landlord: (i) lien waivers executed
by Tenant's general contractor and all subcontractors, materialmen and
suppliers, such partial lien waivers to be accompanied by affidavits of Tenant's
general contractor setting forth the names of all such subcontractors,
materialmen and suppliers; (ii) an affidavit from the architect having
supervision over Tenant's Work, to the effect that such installation has been
performed in accordance with the plans and specifications approved by Landlord
and in compliance with all Legal Requirements.
(D) If Landlord defaults in the payment of Landlord's Contribution or
the Raised Floor Allowance, and such default is not cured within thirty (30)
days after notice, then Tenant shall have the right to recoup, by offsetting
against the next installment(s) of Fixed Rent and Additional Charges due
hereunder, an amount equal to any portion of the Landlord's Contribution or the
Raised Floor Allowance as to which Landlord is in default, together with
interest at the rate of ten percent (10%) per annum on any outstanding amount
not so offset.
R4. Delivery of Demised Premises; Milestone Dates. Landlord shall use
its reasonable efforts to cause the Tenant Possession Date to occur by June 1,
1999, subject to delays caused by Tenant or its agents or contractors, or other
Unavoidable Delays. Landlord shall use its reasonable efforts to cause the Ready
Date to occur by January 1, 2000, subject to delays caused by Tenant or its
agents or contractors, or other Unavoidable Delays. In the event that the Tenant
Possession Date does not occur by January 1, 2000 (the "Outside Date for
Possession") Tenant shall have the right upon thirty (30) days prior written
notice to terminate this Lease, provided however that the Outside Date for
Possession may be extended by Landlord for Unavoidable Delays to July 1, 2000.
The following items of Landlord's Work will be performed in accordance
with a timing schedule listed below, by item. In the event these items of
Landlord's Work are not completed by the dates designated, the Rent Commencement
Date shall be postponed (but without duplication of any postponement or
abatement otherwise provided in this Lease as the result of late completion of
Landlord's Work) by one (1) day for each day of delay, in the event such delay
is the cause of a corresponding delay in Tenant's ability to obtain a
certificate of occupancy for the Demised Premises, for up to sixty (60) days of
delay, and by two (2) days for each day of delay thereafter, in the event such
delay is the cause of a corresponding delay in Tenant's ability to obtain a
certificate of occupancy for the Demised Premises:
(a) Landlord shall increase the capacity of the existing men's room design
in compliance with ADA requirements, in accordance with Exhibit J.
(b) Landlord will provide Tenant with access to the Generator Space by June 1,
1999.
(c) Landlord to deliver an additional tonnage of condensed water for
supplemental HVAC, to be substantially completed as per Exhibit J or
within sixty (60) days from receipt and approval of Tenant's
construction drawings, which ever is later.
(d) Main sprinkler loop to be substantially completed as per Exhibit J or
within sixty (60) days from receipt and approval of Tenant's
construction drawings, which ever is later.
R5. Operating Expense Exclusions. The items making up Operating
Expenses shall not include the following:
(i) Amounts by which such costs to Landlord are actually reduced by
refunds, credits, reductions or other allowances actually received by Landlord
or for which Landlord is reimbursed by Tenant (other than through operating
expense provisions);
(ii) Interest or principal on mortgages of the Land and Building, if
any, and costs relating to financing or refinancing, rents under underlying
leases, and other charges under underlying leases not otherwise includable in
Operating Expenses;
(iii) Rent concessions or expenditures for any alteration, renovation,
redecoration or finish of any other tenant space in the Building whether
performed in connection with the occupancy of such space by a new tenant or in
connection with a renewal of a lease for such space by the existing tenant
thereof or the relocation of a tenant or otherwise;
(iv) Leasing commissions, marketing and advertising costs related to
leasing space in the Building and all finder's fees and all other leasing
expenses incurred in procuring tenants, including without limitation, tenant
space preparation and relocation costs;
(v) The cost of repairs, replacements or other work incurred by reason
of fire, casualty, or condemnation to the extent same is reimbursed by insurance
proceeds, provided that if any non-reimbursement is due to Landlord's failure to
pay the applicable insurance premiums or Landlord is otherwise at fault for such
non-reimbursement, then such non-reimbursed amounts shall not be included
Operating Expenses;
(vi) Any operating expenses, not otherwise provided for in this Lease,
representing an amount paid to a related corporation, entity, or person which is
in excess of the amount which would be paid in the absence of such relationship;
(vii) Costs and expenses for legal, accounting and other professional
services (including, but not limited to, costs and expenses for in-house or
staff legal counsel or outside counsel) incurred in connection with any
negotiation of any lease in the Building, enforcement of lease provisions (other
than relating to Common Areas or Rules and Regulations) or the collection of
rent;
(viii) (A) Capital improvements in connection with the foundation,
structural steel and concrete of the Building, steel and concrete components of
the roof structure, and the Building facade, and (B) Capital improvements by
Landlord except as follows: to the extent any of the expenditures by Landlord
making up Operating Expenses hereunder would be classified as capital
expenditure items pursuant to generally accepted accounting principles, and are
not included in the immediately preceding clause (A) above, then only an amount,
per annum, equal to the cost of such item amortized over the useful life of such
item, as reasonably determined by Landlord, together with interest thereon at
the Prime Rate as announced in the Wall Street Journal (or a successor index
reasonably selected by Landlord), plus 2% per annum, shall be included annually
in Operating Expenses with respect to such item(s);
(ix) Income and franchise taxes of Landlord including corporate,
unincorporated business, estate or inheritance, value-added, transfer, transfer
gains, succession, capital stock, excise, excess profit, gift, foreign ownership
or control, payroll, mortgage recording or stamp tax or any other similar tax or
charges imposed upon or assessed against Landlord, including any other tax,
assessment, charge or levy on the rent reserved under leases, including this
Lease, provided however, that nothing in this R8.(ix) shall be deemed to limit
the provisions of Section 6.01 hereof;
(x) Lease takeover or termination costs incurred by Landlord in
connection with any other lease in the Building, including any payments required
to be made in connection with the termination of such lease.
(xi) Depreciation and amortization in connection with the Building or
the Building equipment, fixtures, or systems except as otherwise specifically
provided in Section R5(viii);
(xii) The cost of electricity (including applicable taxes) and other
utilities furnished directly to leased areas of the Building (other than the
Demised Premises and the Common Areas) as measured by meters, or if there be no
meters, as determined by a reputable independent electrical consultant, and the
cost of other utilities furnished to such other leased areas of the Building as
measured by meters or, if there be no meters, as determined by a reputable
independent consultant;
(xiii) Salaries, fringe benefits, administrative expenses and any other
compensation of personnel above the grade of vice president, property management
or equally held positions;
(xiv) Real Estate Taxes (which are provided for in Section 6.01 hereof);
(xv) Costs incurred in operating the Parking Facilities for the Building, except
to the extent the cost of operating the Parking Facilities exceeds the revenues
generated from operating the Parking Facilities;
(xvi) Costs incurred by Landlord in preparing the Demised Premises for Tenant's
initial occupancy;
(xvii) Any bad debt loss, rent loss, or reserves for bad debts or rent loss;
(xviii) Costs arising from Landlord's political or charitable contributions;
(xix) Compensation paid to clerks, attendants, or other persons in
commercial concessions operated by Landlord;
(xx) Any interest, fine, penalty or other late charge payable by
Landlord (other than if caused by the act of Tenant, or Tenant's agents or
invitees) except to the extent that the cost of avoiding liability for such
interest, fine, penalty or other late charge exceeds the amount thereof or any
increase in insurance premium or charge resulting from Landlord's violation of
any Legal Requirements or insurance requirement;
(xxi) Items and services that Landlord provides selectively to one or
more tenants of the Building other than Tenant, without reimbursement;
(xxii) Costs incurred to test, survey, cleanup, contain, abate, remove,
or otherwise remedy hazardous wastes or asbestos containing materials from the
Land unless the wastes or asbestos containing materials were in or on the Land
because of Tenant's negligence or intentional acts; and
(xxiii) Landlord's general corporate overhead including costs
associated with operating the business of the Landlord entity, as distinguished
from the costs of operating the Building and the Land, including accounting and
legal matters, costs of selling or syndication of any of Landlord's interest in
the Building, including attorneys' fees and costs of settlement, judgments and
payments in lieu thereof, arising from claims, disputes or potential disputes in
connection with potential or actual claims, litigation or arbitration pertaining
to Landlord (other than those relating to the operation of the Building and
Land).
R6. Parking. Tenant shall be allocated, during the Term, sixty (60)
automobile parking spaces, in the Parking Facility in locations to be designated
by Landlord from time to time for the parking of automobiles for Tenant's
employees and related ancillary parking for Tenant's visitors, in accordance
with the plan annexed hereto as Exhibit B-1; Landlord shall reserve five (5) of
such spaces for Tenant in locations which shall be in reasonably close proximity
to the Parking Facility elevator and reserve, out of the sixty (60) spaces
allocated to Tenant, three (3) additional spaces adjacent to the Generator
Space. In the event that up to five additional automobile parking spaces shall
become available, Landlord shall have the right to cause Tenant to lease such
spaces on the terms and provisions provided for in this Paragraph R6. Tenant
shall pay to Landlord as additional Fixed Rent the following amounts: from the
Rent Commencement Date through the date which is the day before the fifth
anniversary of the Rent Commencement Date (i.e. yrs. 1-5) - Two Hundred Dollars
($200.00) per parking space, per month; from the fifth anniversary of the Rent
Commencement Date through the date which is the day before the tenth anniversary
of the Rent Commencement Date (i.e. yrs. 6-10) - Two Hundred Thirty Dollars
($230.00) per parking space, per month; from the tenth anniversary of the Rent
Commencement Date through the date which is the day before the original
Expiration Date (i.e. yrs. 11-15) - Two Hundred Sixty-four & 50/100 Dollars
($264.50) per parking space, per month. Any use by Tenant of the Parking
Facility at times other than on Business Days and during Business Hours shall be
at Tenant's sole risk and cost and without additional cost or expense to
Landlord. In the event Tenant elects to install backup generators or related
equipment in the Parking Facility in accordance with Section R7 hereof, any
space occupied by such generator(s) or equipment (including, but not limited to
the space designated on Exhibit G), shall reduce the parking spaces allocated to
Tenant.
Landlord reserves the right to temporarily relocate all or any portion
of the Tenant Spaces during such time as Landlord is constructing any
alterations or additions to the Building or the Development. In the event of
such temporary relocation, same shall be upon not less than thirty (30) days
prior written notice to Tenant and alternate parking facilities shall be
provided within a reasonable distance of the Building subject to Tenant's
approval, which shall not be unreasonably withheld or delayed.
R7. Backup Generator. Tenant shall have the right, subject to the
provisions of Article 15 and Section 39.09 of this Lease, to utilize, at
Tenant's sole cost and expense, a portion of the P2 parking level of the
Building for the installation and maintenance of [two 350 KVA generators (or one
800 KVA generator if it is capable of fitting in the space provided for the 350
KVA generators) to service the Demised Premises. Such generator(s) shall be
located in an area designated in Exhibit G or such other space reasonably
designated by Landlord (herein the "Generator Space"). In addition Tenant shall
have the right, subject to the provisions of Article 15 and Section 39.09 of
this Lease, to utilize, at Tenant's sole cost and expense, an additional portion
of the P2 parking level of the Building, in the area designated on Exhibit G,
for the installation and maintenance of up to two additional 800 KVA generators,
if they are capable of fitting in such space, to service the Demised Premises
(herein the "Additional Generator Space"). Tenant shall pay Fixed Rent and
Additional Charges to Landlord for the space included in the Generator Space and
the Additional Generator Space at the same rental rates in effect per square
foot of Floor Space of the Demised Premises. Tenant shall indemnify and hold
Landlord any all Superior Lessors and Superior Mortgagees harmless from all
loss, damage, cost, liability and expense arising out of or related to the
installation, maintenance, existence or operation of such generator(s).
R8. Gross-up of Operating Expenses. If the Building is not ninety-five
percent (95%) occupied during the Base Year or any period for which Operating
Expenses are being calculated, Landlord will, for purposes of determining
Tenant's Fraction of Operating Expenses, make a mathematical adjustment to such
Operating Expenses to approximate what they would have been in Landlord's
reasonable judgment had the Building been ninety-five percent (95%) occupied
during such period.
R9. Twenty-Four Hour Access. Tenant shall be permitted access to the
Building twenty-four hours per day, seven days per week, subject however to any
temporary closure required do to emergency or to effect repairs or maintenance
to the Building in accordance with the terms of this Lease.
R10. Tenant Directories. Tenant shall, subject to the provisions of
Article 15 have the right to list its name and the name of its employees,
affiliates and subsidiaries on the directories in the Building, if any.
R11. Satellite Antenna. Subject to the provisions of Article 15 of this
Lease, Tenant shall have the right, at Tenant's sole cost and expense, to
install and maintain satellite dish and/or microwave antenna on the roof of the
Building in a location to be designated by Landlord, as more particularly set
forth on Exhibit K, provided, however that (i) such satellite dish and antennae
shall be for Tenant's sole and exclusive use, and (ii) the size and location of
such units shall not adversely effect the structural or architectural integrity
of the Building, or adversely affect the roof structure or roof membrane. Tenant
shall indemnify and hold Landlord and any Superior Lessors and Superior
Mortgagees harmless from all loss, damage, cost, liability and expense arising
out of or related to the installation, maintenance, existence or operation of
such satellite dish or antenna or any other equipment of Tenant as may be
located on the roof or in the penthouse of the Building.
R12. Tenant Use of Construction Hoist. Landlord agrees to provide
Tenant with non-exclusive access to the Landlord's construction hoist, or other
elevator as may be designated by Landlord for the performance of Tenant's Work,
for up to three hours each day (or as otherwise reasonably requested by Tenant,)
during normal Business Hours, after the commencement of Tenant's Work, but not
before the Tenant Possession Date, at such times as Landlord may designate;
provided, however, that the use of such hoist or elevator for the performance of
Tenant's Work shall be at no cost or expense to Tenant (except that Tenant shall
reimburse Landlord for Landlord's actually incurred reasonable incremental costs
due to Tenant's use of the construction hoist or elevator during non-Business
Hours).
R13. Tenant Stairwell. Subject to the provisions of Article 15 of this
Lease, Tenant shall have the right, at Tenant's sole cost and expense, to
penetrate the slab of the Building between Tenant occupied floors of the Demised
Premises for the express purpose of installing and maintaining an internal
staircase(s), within the Demised Premises, provided, however, that the size and
location of such staircase(s) would not in Landlord's reasonable judgment
adversely affect the structural or architectural integrity of the Building, and
shall in all respects be subject to Landlord's reasonable approval. Tenant shall
indemnify and hold Landlord and any Superior Lessors and Superior Mortgagees
harmless from all loss, damage, cost, liability and expense arising out of or
related to the installation, maintenance and existence of such staircase(s).
Tenant shall, at Landlord's option remove such stairwell and repair such
penetrations, at Tenant's sole cost and expense, upon the expiration or earlier
termination of this Lease. Landlord shall upon approval of Tenant's plans for
such stairwell, notify Tenant of Landlord's election to either permit such
staircase to remain or to require removal of such staircase and the repair of
such penetration upon the expiration or earlier termination of this Lease.
R14. Landlord's Lien. Provided Tenant is not in default of its
obligations under this Lease beyond any applicable notice and cure periods and
provided Tenant has not (other than to an Affiliate of Tenant) assigned this
Lease or sublet all of the Demised Premises and is itself in occupation and
conducting business in the Demised Premises, Landlord agrees, upon written
request of Tenant, to subordinate its rights to enforce its Landlord's Lien on
Tenant's furniture, fixtures and equipment to the extent they constitute
Tenant's Property under this Lease to the rights of Tenant's secured lender to
enforce its lien thereon, provided such lender is a banking institution or
recognized commercial lender, licensed or authorized to do business in New
Jersey, is not a Tenant Affiliate, and holds a perfected security interest in
such Tenant's Property (herein a " Tenant's Lender"). Tenant's Lender shall have
rights only to Tenant's Property that can be removed without damage to the
Demised Premises or the Building. Tenant's Lender may, upon prior written notice
to Landlord, remove such Tenant's Property from the Premises at any time while
Tenant has legal possession of the Demised Premises or within fifteen (15) days
after termination of this Lease, provided Tenant's Lender first pays Landlord
all Rent due under the Lease (as defined therein) for such period, time being of
the essence in connection with the preceding obligations of Tenant's Lender.
Tenant's Lender shall be responsible for paying the cost of repairing any damage
to the Demised Premises and the Building in which its collateral is located
resulting from the removal of any such Tenant's Property or the acts, omissions
or negligence of Tenant's Lender or its agents or representatives, and shall
leave the Demised Premises in broom clean condition. As a condition to the
subordination provided herein, Tenant's Lender shall indemnify and hold harmless
Landlord and its Superior Lessors and Superior Mortgagees against all loss,
damage, costs, claims, suits, liabilities and expenses, including but not
limited to reasonable attorney's fees arising from or in connection with the
acts, omissions or negligence of Tenant's Lender or its agents or
representatives or the enforcement or claim of such lien. Prior to removal of
such Tenant's Property, Tenant's Lender shall provide Landlord with appropriate
proof of its security interest therein and entitlement thereto, as well as proof
of liability insurance in the amount of at least $5,000,000.00 covering such
entry into the Premises and removal of Tenant's Property, and shall name
Landlord and, at Landlord's request, any Superior Lessors and Superior
Mortgagees as additional insureds. Nothing contained herein shall be deemed to
be an assignment of this Lease or a consent to an assignment of the Lease.
R15. Mortgagee Approval. Landlord shall use reasonable efforts to
obtain (i) a Non-Disturbance Agreement as provided in this Lease from the
existing Mortgagee and (ii) a Non-Disturbance Agreement as provided in this
Lease from the proposed Mortgagee having issued a loan commitment (i.e. Teachers
Insurance and Annuity Association of America) (or, an agreement from such
proposed Mortgagee to issue a Non-Disturbance Agreement upon closing of its
mortgage loan) all in accordance with the provisions of Article 9 hereof. Tenant
shall, upon execution of this Lease execute and deliver to Landlord Superior
Mortgage Non-Disturbance Agreements in the forms annexed hereto as Exhibit H. In
the event said Mortgagees do not provide such agreements to Tenant by the date
which is fourteen (14) days after the date hereof (the "Contingency Period"),
Tenant shall have the right upon written notice to Landlord given not later than
the expiration of the initial Contingency Period to either (i) terminate this
Lease, or (ii) extend the Contingency Period for up to sixty (60) days, or (iii)
waive the contingency contained herein for obtaining Non-Disturbance Agreements.
If Tenant does not exercise its right under this Paragraph R15 to terminate this
Lease by the expiration of the Contingency Period, as the same may be extended,
such termination right shall be waived and be deemed null and void and of no
further force or effect. Landlord agrees that it shall not offer the Demised
Premises for lease to other prospective tenants during the pendency of the
Contingency Period, as the same may be extended pursuant to this Paragraph R15.
R16. Recapture of Certain Grade Level Areas. Landlord shall have the
right, upon written notice to Tenant on or before the date which is forty-five
days after the date hereof, to recapture either or both of the portions of the
grade level portions of the Demised Premises outlined on Exhibit A annexed
hereto and referred to thereon as "Area No. 2" and "Area No. 3" respectively,
for use as building system areas, or mechanical rooms or food or convenience
service areas, as the case may be, and upon the giving of such notice, the
portion(s) of the grade level area of the Demised Premises identified in such
notice shall be excluded from this Lease and the Floor Space of the Demised
Premises shall be reduced to reflect such exclusion. Landlord will erect
demising walls with respect to the grade level portions of the Demised Premises
as part of Landlord's Work. Area No. 2 shall contain not more than 1500 square
feet of usable space and that Area No. 3 shall contain not more than 2000 square
feet of usable space.
R17. Tenant Use of Temporary Power. Landlord agrees to provide Tenant
with non-exclusive access to the Landlord's temporary power and or Building
power when available for the performance of Tenant's Work, during normal
Business Hours, after the commencement of Tenant's Work, after the Tenant
Possession Date; provided, however, that the use of such temporary power or
Building power for the performance of Tenant's Work shall be at no cost or
expense to Tenant (except that Tenant shall reimburse Landlord for Landlord's
actually incurred costs due to the operation of any HVAC by Tenant and for
Landlord's costs in connection with any standby steam fitter or electrician
required as the result of Tenant's usage thereof).
R18. Access to Premises. (a) Notwithstanding anything to the contrary
contained in Sections 5.04, 7.02, 17.03, 21.04 or 24.04 of this Lease, Tenant
shall not be required by Landlord to vacate Tenant's Data Center (as hereinafter
defined) or be denied access thereto by reason of the rights reserved to
Landlord under said sections, except in cases of bona fide emergency, and then
only to the minimum extent necessary. For the purposes hereof "Data Center"
shall mean that certain portion of the Demised Premises located on the sixth
floor containing Tenant's primary computer data facility, as more particularly
shown on Exhibit O hereto.
(b) In the event that Tenant is denied access to or is unable to
utilize (i) the Data Center, or (ii) five (5%) percent or more of the Demised
Premises, for three (3) consecutive Business Days or more, by reason of the
rights reserved to Landlord under the sections identified in subsection (a) of
this Paragraph R18, then Rent shall be abated on the Demised Premises or the
portions thereof to which Tenant has been denied access or is unable to utilize
until the earlier to occur of (x) the date such access is restored; or (y) the
Tenant reoccupies such space.
R19. Restoration. Landlord and Tenant agree that the bonding and
approval provisions of Section 15.01 of this Lease shall not apply to Tenant's
Work with respect to Tenant's initial installation preparatory to Tenant's
initial use and occupancy of the Demised Premises and that the provisions of
Article 5 hereof and the applicable provisions of this Rider shall govern with
respect thereto. Upon expiration or earlier termination of this Lease, Tenant
shall not be required to remove any such items installed as part of Tenant's
Work with respect to Tenant's initial installation, except that Tenant shall, at
Landlord's option, be required to remove any equipment or fixtures installed
with respect to Tenant's Data Center (excluding the rooftop cooling tower) and
the Tenant stairwell as provided in Paragraph R13 of this Lease.
R20. Signage. Tenant shall be permitted to erect signage comparable in
size, location and prominence with the signage any other tenant is allowed in
the ground floor and elevator lobbies, subject to Landlord's approval of
Tenant's signage plans with respect thereto, which approval shall not be
unreasonably withheld or delayed. Tenant shall be permitted a window sign and
interior sign in Tenant's ground floor space, subject to Landlord's approval of
Tenant's signage plans with respect thereto, which approval shall not be
unreasonably withheld or delayed.
R21. Hazardous Materials. Tenant covenants that the Tenant shall not to
introduce or maintain in, on or about any portion of the Demised Premises, any
asbestos, polychlorinated biphenyls or any other hazardous or toxic materials,
wastes and substances (all of the foregoing, collectively, "Hazardous
Materials") which are defined, determined or identified as such (including
petroleum products if they are defined, determined or identified as such)
pursuant to any Legal Requirements (whether now existing or hereafter enacted or
promulgated) or any judicial or administrative interpretation of any thereof,
including any judicial or administrative orders or judgments (collectively,
"Laws"), except for Hazardous Materials of types and in quantities as may be
used or stored in the Demised Premises (i) in the normal course of Tenant's
business (in accordance with the Permitted Use) and (ii) in accordance with
applicable Laws.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed
this Rider as of the day and year first above written.
Landlord
90 Hudson Street L.L.C., a New Jersey
limited liability company
By: Hartz Mountain Industries, Inc.,
a New York corporation,
its managing member
By:_________________________________
Name: Irwin A. Horowitz
Title: Executive Vice President
Tenant
National Discount Brokers Group, Inc.,
A Delaware corporation
By:__________________________________
Name:
Title:
