<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: July 1, 1997
----------------------------
MEDIALINK WORLDWIDE INCORPORATED
--------------------------------
(Exact name of registrant as specified in its charter)
Delaware
--------
(State of Incorporation)
0-21989
-------
(Commission File Number)
52-1481284
----------
(IRS Employer Identification Number)
708 Third Avenue, New York, New York 10017
------------------------------------------
(Address of principal executive offices)
212-682-8300
------------
(Registrant's Telephone Number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
The Registrant, Medialink Worldwide Incorporated, a Delaware
corporation ("Medialink"), acquired certain assets of Corporate TV Group,
Inc., a New York corporation ("CTV"), on June 16, 1997 (the "Closing") in
accordance with the terms and conditions of an asset purchase agreement
(the "Agreement"), dated June 16, 1997, by and among the Registrant,
CTV and Richard Frisch. Medialink will continue to utilize the assets and
conduct the business previously conducted by CTV in a similar manner as
part of its MCT Division.
Pursuant to the terms of the Agreement, the maximum aggregate
purchase price to be paid to CTV shall be up to $10,177,900, including a
payment of $300,000 under the Non-Compete Agreement, as hereinafter defined, in
the event the revenues of the MCT Division of Medialink equal or exceed certain
specified amounts and in the event the pre-tax net income of the MCT Division
exceeds certain target amounts. The consideration received by CTV and Richard
Frisch at the Closing in connection with the Agreement, the amount of which was
arrived at after arms length negotiation among unrelated parties, consisted of:
(i) $3,366,667 in cash to CTV; and (ii) 37,037 shares (the "Shares") of the
Registrant's common stock, par value $.01 per share (the "Common Stock"). The
number of shares issued and delivered to CTV was determined based on a value of
$9.00 per share.
The source of funds for the acquisition of CTV by the
Registrant was the working capital of the Registrant. The Shares were newly
issued shares of the Common Stock of the Registrant.
In connection with the transaction, Medialink entered into a
five year employment agreement with Richard Frisch (the "Employment
Agreement"). The Employment Agreement provides for the payment of a base salary
of $250,000 per annum (subject to adjustment upward on an annual basis) and
certain bonuses if the pre-tax net income goals specified in the Employment
Agreement are achieved. In consideration of CTV's and Richard Frisch's
covenant not to compete with Medialink for seven and one-half years as set
forth in the Non-Compete Agreement (the "Non-Compete Agreement"), Richard
Frisch received upon execution thereof, a payment of $300,000.
At the Closing, Medialink assumed CTV's obligations under a
lease agreement (the "Lease") with Sage Realty Corporation ("Sage") dated July,
1996. The Lease provides that CTV shall lease from Sage the premises for a
period of ten years and seven months from the commencement date of the Lease.
Rental payments due under the Lease are $143,024 per annum during the first
five years of the Lease and $151,462 per annum during the period beginning on
the fifth anniversary of the Lease commencement date through the balance of the
term of the Lease, exclusive of increases in real estate taxes or other
adjustments in rent. CTV occupied the premises on December 1, 1996 and will
continue to occupy the premises pursuant to the terms of the Lease.
1
<PAGE>
At the Closing, Medialink and CTV entered into a loan
agreement pursuant to which Medialink loaned CTV the principal amount of
$300,000, maturing on December 31, 1997, bearing interest at the per annum rate
equal to the rate of interest announced by The Chase Manhattan Bank, N.A. as
its prime commercial lending rate plus two (2%) percent, and secured by the
tangible and intangible assets of CTV.
At the Closing, the Registrant entered into a registration
rights agreement (the "Registration Rights Agreement") with Richard Frisch
pursuant to which Richard Frisch was granted certain piggyback registration
rights with respect to the Shares.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
1. Report of Independent Auditors.
2. Balance Sheet as of April 30, 1997, December
31, 1996 and December 31, 1995.
3. Statement of Income For Period from
January 1, 1997 through April 30, 1997;
Year ended December 31, 1996; and Period
from August 1, 1995 (date operations
commenced) through December 31, 1995.
4. Statement of Stockholder's Equity For
Period From January 1, 1997 through April
30, 1997; Year ended December 31, 1996;
and Period from August 1, 1995 (date
operations commenced) through April 30,
1997.
5. Statement of Cash Flows For Period from
January 1, 1997 through April 30, 1997;
Year ended December 31, 1996; and Period
from August 1, 1995 (date operations
commenced) through December 31, 1995.
6. Notes to Financial Statements.
(b) Pro Forma Financial Information. It is
impracticable to provide the required pro forma financial information of CTV at
the present date. The required pro forma financial information shall be filed
no later than August 29, 1997.
2
<PAGE>
(c) Exhibits.
Exhibit Number Description
-------------- -----------------------------
2.1 Asset Purchase Agreement
24.1 Independent Auditor's Consent
28.1 Employment Agreement
28.2 Non-Compete Agreement
28.3 Indenture of Lease
28.4 Registration Rights Agreement
The undersigned Registrant hereby agrees to furnish
supplementally to the Commission a copy of any omitted schedule to the
Agreement upon request.
3
<PAGE>
SIGNATURES
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 thereunto duly authorized.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ Laurence Moskowitz
--------------------------------------
Laurence Moskowitz,
President, Chief Executive Officer and
Chairman of the Board
Dated: July 1, 1997
4
<PAGE>
CORPORATE TV GROUP, INC.
FINANCIAL STATEMENTS
APRIL 30, 1997
<PAGE>
CORPORATE TV GROUP, INC.
CONTENTS
April 30, 1997
- --------------------------------------------------------------------------------
Independent Auditor's Report 1
Financial Statements:
Balance Sheet 2
Statement of Income 3
Statement of Stockholder's Equity 4
Statement of Cash Flows 5
Notes to Financial Statements 6 - 10
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholder
Corporate TV Group, Inc.
We have audited the accompanying balance sheets of Corporate TV Group, Inc. as
of April 30, 1997 and December 31, 1996 and 1995, and the related statements of
income, stockholder's equity, and cash flows for the period from January 1, 1997
through April 30, 1997, the year ended December 31, 1996 and for the period from
August 1, 1995 (date operations commenced) through December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Corporate TV Group, Inc. as of
April 30, 1997 and December 31, 1996 and 1995, and the results of its operations
and its cash flows for the period from January 1, 1997 through April 30, 1997,
the year ended December 31, 1996 and for the period from August 1, 1995 (date
operations commenced) through December 31, 1995 in conformity with generally
accepted accounting principles.
/s/ Goldstein Golub Kessler & Company, P.C.
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York
June 6, 1997
<PAGE>
CORPORATE TV GROUP, INC.
BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
April 30, December 31, December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents (Note 1) $ 796,101 $ 200,250 $ 591,318
Accounts receivable (Notes 1 and 7) 1,773,517 1,718,349 1,100,059
Due from stockholder 81,494 81,494 96,800
Prepaid expenses and other current assets 6,608 95,359 12,035
- ----------------------------------------------------------------------------------------------------------------------
Total current assets 2,657,720 2,095,452 1,800,212
Property and Equipment - at cost, net
(Notes 1 and 2) 175,095 128,818 54,546
Organization Costs, net of accumulated
amortization of $27,504, $18,062 and $5,312,
respectively (Note 1) 36,243 45,685 58,435
- ----------------------------------------------------------------------------------------------------------------------
Total Assets $2,869,058 $2,269,955 $1,913,193
======================================================================================================================
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accounts payable and accrued expenses (Note 3) $ 542,094 $ 206,584 $ 361,405
Accrued fee sharing (Note 4) 178,074 440,510 610,362
Notes payable - Reuters (Note 4) 376,185 456,280 663,490
Deferred income taxes (Note 8) 98,000 95,000
- ----------------------------------------------------------------------------------------------------------------------
Total current liabilities 1,194,353 1,198,374 1,635,257
- ----------------------------------------------------------------------------------------------------------------------
Commitments (Notes 5 and 6)
Stockholder's Equity:
Common stock - no par value; authorized
200 shares, issued and outstanding 100 shares 200 200 200
Retained earnings 1,674,505 1,071,381 277,736
- ----------------------------------------------------------------------------------------------------------------------
Total stockholder's equity 1,674,705 1,071,581 277,936
- ----------------------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholder's Equity $2,869,058 $2,269,955 $1,913,193
======================================================================================================================
</TABLE>
See Notes to Financial Statements
2
<PAGE>
CORPORATE TV GROUP, INC.
STATEMENT OF INCOME
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
August 1, 1995
(date operations
Period from commenced)
January 1, 1997 Year ended through
through April 30, December 31, December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net fees (Notes 1, 4 and 7) $2,778,775 $6,509,107 $2,996,379
Production costs 1,017,320 3,394,536 1,889,780
- ----------------------------------------------------------------------------------------------------------------------
Gross profit 1,761,455 3,114,571 1,106,599
Selling, general and administrative expenses
including interest expense of $12,437, $51,598
and $18,788, respectively 940,016 2,241,456 821,650
- ----------------------------------------------------------------------------------------------------------------------
Income from operations 821,439 873,115 284,949
Other income 70,095 110,000 8,787
- ----------------------------------------------------------------------------------------------------------------------
Income before provision for income taxes 891,534 983,115 293,736
Provision for income taxes (Notes 1 and 8) 80,000 103,000 16,000
- ----------------------------------------------------------------------------------------------------------------------
Net income $ 811,534 $ 880,115 $ 277,736
======================================================================================================================
Net income per common share $ 8,115.34 $ 8,801.15 $ 2,777.36
======================================================================================================================
Number of common shares outstanding
(Note 1) 100 100 100
======================================================================================================================
Pro forma information (unaudited) (Note 8):
Net income $ 535,534 $ 581,115 $ 183,736
======================================================================================================================
Net income per common share $ 5,355.34 $ 5,811.15 $ 1,837.36
======================================================================================================================
Number of common shares outstanding (Note 1) 100 100 100
======================================================================================================================
</TABLE>
See Notes to Financial Statements
3
<PAGE>
CORPORATE TV GROUP, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from August 1, 1995 Common Stock Total
(date operations commenced) Number of Retained Stockholder's
through April 30, 1997 Shares Amount Earnings Equity
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Issuance of common stock 100 $200 $ 200
Net income - - $ 277,736 277,736
- ----------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1995 100 200 277,736 277,936
Net income - - 880,115 880,115
Distributions to stockholder (86,470) (86,470)
- ----------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1996 100 200 1,071,381 1,071,581
Net income - - 811,534 811,534
Distributions to stockholder (208,410) (208,410)
- ----------------------------------------------------------------------------------------------------------------------
Balance at April 30, 1997 100 $200 $1,674,505 $1,674,705
======================================================================================================================
</TABLE>
See Notes to Financial Statements
4
<PAGE>
CORPORATE TV GROUP, INC.
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from
August 1, 1995
(date operations
Period from commenced)
January 1, 1997 Year ended through
through April 30, December 31, December 31,
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 811,534 $ 880,115 $ 277,736
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 24,509 42,215 9,878
Deferred income taxes 3,000 95,000
Changes in operating assets and liabilities:
Increase in accounts receivable (55,168) (618,290) (1,100,059)
(Increase) decrease in prepaid expenses and
other current assets 88,751 (83,324) (12,035)
Increase in organization costs (63,747)
Increase (decrease) in accrued fee sharing (262,436) (169,852) 610,362
Increase (decrease ) in accounts payable and
accrued expenses 335,510 (154,821) 361,405
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in)
operating activities 945,700 (8,957) 83,540
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property and equipment (61,344) (103,737) (59,112)
Loans to stockholder (96,800)
Repayments from stockholder 15,306
- ----------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (61,344) (88,431) (155,912)
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net proceeds from notes payable - Reuters 750,000
Proceeds from the issuance of common stock 200
Payments on notes payable - Reuters (80,095) (207,210) (86,510)
Distributions to stockholder (208,410) (86,470)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities (288,505) (293,680) 663,690
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 595,851 (391,068) 591,318
Cash and cash equivalents at beginning of period 200,250 591,318
- ----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 796,101 $ 200,250 $ 591,318
======================================================================================================================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 12,437 $ 51,598 $ 18,788
- ----------------------------------------------------------------------------------------------------------------------
Taxes $ 12,560 $ 325 $ 15,876
======================================================================================================================
</TABLE>
See Notes to Financial Statements
5
<PAGE>
CORPORATE TV GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
1. PRINCIPAL BUSINESS The principal business activity of the Corporate
ACTIVITY AND SUMMARY TV Group, Inc. (the "Company") is the production
OF SIGNIFICANT of videos relating to promotional services,
ACCOUNTING POLICIES: business operations and corporate planning.
Revenue is recognized when services are performed.
Depreciation of property and equipment is provided
for based upon the provisions of the Internal
Revenue Code (the "Code"). Such depreciation does
not differ materially from that which would be
recorded under generally accepted accounting
principles. Amortization of leasehold improvements
is provided for by the straight-line method over
the term of the lease.
The Company maintains cash in bank deposit
accounts which, at times, exceed federally insured
limits. The Company has not experienced any losses
on these accounts.
Cash equivalents consist of a money market fund
and a cash management fund.
The preparation of financial statements in
conformity with generally accepted accounting
principles requires the use of estimates by
management. Actual results could differ from these
estimates.
Organization costs are being amortized on a
straight-line basis over five years.
The Company has elected to be treated as an S
Corporation for federal and state income tax
purposes. Accordingly, there is no provision for
federal income taxes as such earnings will flow
through directly to the stockholder, and New York
State franchise taxes are payable at reduced
rates. The Company is subject to New York City
corporate income tax.
The Company files its tax returns on the cash
basis (see Note 8).
Included in accounts receivable at April 30, 1997,
December 31, 1996 and December 31, 1995 are earned
and unbilled receivables amounting to
approximately $135,000, $163,000 and $41,000,
respectively.
Net income per common share is calculated by
dividing net income by the number of shares of
common stock outstanding during the period.
6
<PAGE>
CORPORATE TV GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
2. PROPERTY AND EQUIPMENT: Property and equipment, at cost, consists of the
following:
<TABLE>
<CAPTION>
April 30, December 31, December 31, Recovery
1997 1996 1995 Period
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Office equipment $126,007 $114,594 $57,158 5 years
Furniture and fixtures 56,336 48,255 1,954 7 years
Leasehold improvements 41,850 10 years
----------------------------------------------------------------------------------------
224,193 162,849 59,112
Less accumulated
depreciation 49,098 34,031 4,566
----------------------------------------------------------------------------------------
$175,095 $128,818 $54,546
========================================================================================
</TABLE>
3. ACCOUNTS PAYABLE AND Accounts payable and accrued expenses consists of
ACCRUED EXPENSES: the following:
<TABLE>
<CAPTION>
April 30, December 31, December 31,
1997 1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Accounts payable $167,238 $ 271
Accrued production costs 160,521 $122,000 120,000
Income taxes payable 85,000 8,000
Sales taxes payable 84,335 58,884 47,137
Accrued selling, general and
administrative expenses 45,000 17,700 24,005
Advances due to Reuters 156,000
Other 13,992
----------------------------------------------------------------------------------------
$542,094 $206,584 $361,405
========================================================================================
</TABLE>
4. NOTES PAYABLE - In 1995, the Company entered into an agreement
REUTERS: obligating it under two loans to Reuters Newmedia,
Inc. ("Reuters"). These loans bear interest at the
rate of 8.75% per annum. The Company is required
to make monthly payments, including principal
and interest, of approximately $23,000 through
July 1997 plus a final installment of
approximately $315,000 in August 1997.
The fair value of the notes payable - Reuters
approximates the carrying value based on rates of
interest currently available.
In addition to the loans, the Company entered into
a fee-sharing arrangement with Reuters. The
Company was required to remit a percentage of
fees, as defined in the agreement, through
December 31, 1996. For the year ended December 31,
1996 and the period ended December 31, 1995, the
Company incurred costs for fee sharing in the
amount of approximately $1,184,000 and $610,000,
respectively.
7
<PAGE>
CORPORATE TV GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
5. COMMITMENTS: In 1997, the Company entered into a noncancelable
operating lease for office space expiring in 2006.
The aggregate minimum future payments under this
lease are payable as follows:
<TABLE>
<S> <C>
Eight-month period ending December 31, 1997 $ 73,551
Year ending December 31,
1998 121,226
1999 121,226
2000 143,024
2001 143,024
Thereafter 757,310
---------------------------------------------------------
$1,359,361
=========================================================
</TABLE>
The lease is subject to escalation for the
Company's proportionate share of increases in real
estate taxes and other operating expenses. Rent
expense charged to operations for the period ended
April 30, 1997, the year ended December 31, 1996
and the period ended December 31, 1995 amounted to
approximately $39,000, $70,000 and $23,000,
respectively.
6. EMPLOYEE
BENEFIT PLANS: The Company has a defined contribution plan under
Section 401(k) of the Code covering all qualified
employees. An officer of the Company serves as
trustee of the plan. Company contributions to the
plan for the period ended April 30, 1997, the year
ended December 31, 1996 and the period ended
December 31, 1995 amounted to $5,642, $9,556 and
$1,191, respectively.
7. MAJOR CUSTOMERS: During the period ended April 30, 1997,
approximately 44%, 12%, 10% and 10% of net fees
were to four customers. During the year ended
December 31, 1996, approximately 62%, 23% and 12%
of net fees were to three customers. During the
period ended December 31, 1995, approximately 53%
and 28% of net fees were to two customers. Major
customers comprise approximately 72% of the
Company's accounts receivable at April 30, 1997.
8
<PAGE>
CORPORATE TV GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
8. INCOME TAXES: The provision for local income taxes consists of
the following:
<TABLE>
<CAPTION>
Period from
August 1, 1995
(date operations
Period from commenced)
January 1, 1997 Year ended through
through April 30, December 31, December 31,
1997 1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current $77,000 $ 8,000 $16,000
Deferred 3,000 95,000
----------------------------------------------------------------------------------------
$80,000 $103,000 $16,000
========================================================================================
</TABLE>
The provision for income taxes differs from the
amount computed using the federal statutory rate
of 34% as a result of the following:
<TABLE>
<CAPTION>
Period from
Period from August 1, 1995
January 1, 1997 Year ended through
through April 30, December 31, December 31,
1997 1996 1995
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tax at federal
statutory rate 34 % 34 % 34 %
Flow-through of S
Corporation taxable
income to shareholder (34) (34) (34)
State and local
income taxes 9 10 5
----------------------------------------------------------------------------------------
9 % 10 % 5 %
========================================================================================
</TABLE>
The tax effects of temporary differences that give
rise to the net deferred income taxes payable are
presented below:
<TABLE>
<CAPTION>
April 30, December 31,
1997 1996
----------------------------------------------------------------------------------------
<S> <C> <C>
Accounts receivable $157,000 $151,000
Prepaid expenses and other current assets 1,000 1,000
Accounts payable and accrued expenses (44,000) (18,000)
Accrued fee sharing (16,000) (39,000)
----------------------------------------------------------------------------------------
Deferred income taxes payable $ 98,000 $ 95,000
========================================================================================
</TABLE>
9
<PAGE>
CORPORATE TV GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
- --------------------------------------------------------------------------------
Pro forma net income reflects an income tax
provision for the period ended April 30, 1997, the
year ended December 31, 1996 and the period ended
December 31, 1995 as if the Company had not
elected S Corporation status.
Pro forma net income for the period ended April
30, 1997, the year ended December 31, 1996 and the
period ended December 31, 1995 reflects an
additional income tax provision of approximately
$276,000, $299,000 and $94,000, respectively.
The Company reports its income and expenses on the
cash basis for income tax purposes and on the
accrual basis for financial reporting purposes.
Deferred income taxes have been provided to
reflect the tax effect of temporary differences in
assets and liabilities for income tax and
financial statement purposes.
9. SUBSEQUENT EVENT
(unaudited): In June 1997, the Company entered into an
agreement to sell certain assets and certain
liabilities to Medialink Worldwide Incorporated
for an estimated purchase price not to
exceed $10,178,000 including the amount of
$300,000 payable under a noncompete agreement
between the buyer, the Company and the stockholder
of the Company.
10
<PAGE>
EXHIBIT 2.1
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of June 16, 1997, by
and among MEDIALINK WORLDWIDE INCORPORATED ("Purchaser"), a Delaware
corporation with offices at 708 Third Avenue, New York, New York 10017,
CORPORATE TV GROUP, INC., a New York corporation with offices at 747 Third
Avenue, New York, NY 10017 ("Seller") and RICHARD FRISCH, the principal
shareholder of Seller, having an address c/o Corporate TV Group, Inc., 747
Third Avenue, New York, NY 10017 ("Shareholder").
W I T N E S S E T H :
WHEREAS, Seller conducts a business which strategizes and
consults with business entities on their business objectives and produces video
communications programs both live and taped, including the production and
distribution of video and audio news releases, press conferences and satellite
media tours (such business as conducted since August 1, 1995 being hereinafter
referred to as the "Business"); and
WHEREAS, Purchaser desires to purchase, and Seller desires to
sell, all of Seller's right, title and interest in and to the Acquired Assets
(as hereinafter defined) upon the terms and subject to the conditions of this
Agreement and in connection with and as partial consideration for the sale of
the Acquired Assets (as hereinafter defined) Seller and Shareholder shall each
enter into a Non-Compete Agreement and a Confidentiality Agreement with
Purchaser in the form of Exhibits A and B attached hereto (the "Non-Compete
Agreements" and the "Confidentiality Agreements").
NOW THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
Section 1. Certain Definitions. For purposes of this
Agreement, the words and terms listed below shall have the following means:
(a) "MCT Division" shall mean the Medialink
CTV Division of the Purchaser.
(b) "MCT Division Pre-Tax Net Income" shall
mean the MCT Division Revenue attributable to the performance of services by
the MCT Division less (i) Direct Costs, as hereinafter defined, (ii) Salary and
Related Costs, as
<PAGE>
hereinafter defined, (iii) Telephone Charges, as hereinafter defined, (iv)
General and Administrative Costs, as hereinafter defined, and (v) Corporate
Overhead, as hereinafter defined. The MCT Division Pre-Tax Net Income shall be
calculated on the operating results of the MCT Division on an accrual basis
using Purchaser's standard accounting practices and policies, excluding
goodwill amortization and gains and losses arising from the disposition of
assets not in the ordinary course of business.
"Direct Costs" shall mean those costs incurred solely for the
purpose of a specific revenue generating project. Direct costs include, but are
not limited to, camera crews and equipment, playout, uplink and satellite time,
tape dubbing and distribution charges, editing and studio costs. In addition,
direct costs include the use of third party labor for production, editing etc.
In the event that the MCT Division uses Purchaser's employees for production
etc. they will be charged to the MCT Division on the basis of the rates on
Schedule A hereto. The Schedule A rates will be increased at the beginning of
each of Year Two through Year Five by the CPI, as hereinafter defined. The MCT
Division will be charged for the use of the Purchaser's services such as video
and audio distribution in accordance with Schedule A. Direct costs will also
include sales commissions on MCT Division Revenue including commissions paid to
the Purchaser's sales people arising from that portion of the MCT Division
Revenue set forth in subparagraph (iv) of the definition of MCT Division
Revenue.
"Salary and Related Costs" shall mean all employment costs of
MCT Division employees, including but not limited to, salaries and bonuses,
medical, dental and disability premiums, employers contributions as to any 401K
or other pension plan together with the costs of administering such plans and
employment taxes. Wherever practicable, such costs will be allocated to MCT
Division on an actual basis. In all other instances, the cost will be allocated
to MCT Division on a pro rata basis calculated by multiplying (x) the actual
cost of the Purchaser (including the MCT Division) by (y) (i) the number of MCT
Division employees associated with that cost divided by (ii) the total number
of Purchaser employees (including the MCT Division employees) associated with
that cost ("Employee Allocation Method"). Any compensation charged to MCT
Division employees arising from the exercise of stock options granted to such
employees by the Purchaser shall not be deducted from MCT Division Pre-Tax Net
Income.
"Telephone Charges" shall mean the actual charges therefor,
if possible, and if not possible shall be allocated to the MCT Division on a
pro rata basis calculated by multiplying (x) the total telephone charges of
Purchaser by (y) a fraction, the numerator of which is the MCT Division Revenue
and the denominator of which is the total United States revenue of Purchaser
(including the MCT Division Revenue) ("Revenue Allocation Method").
"General and Administrative Costs" shall mean all other costs
incurred by MCT Division that were not included in Direct Costs or Salary and
Related Costs and excluding interest expense. General and Administrative Costs
incurred solely for the MCT Division will be charged directly to MCT Division
on an actual basis wherever
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practicable ("Directly Charged Costs"). In all other instances the cost will be
allocated to MCT Division on a pro rata basis in accordance with Schedule B
attached hereto.
"Corporate Overhead" shall mean a management fee charged by
Purchaser to the MCT Division to cover administrative costs, marketing support,
management time and the cost of employment of Mary Gyurindak, accountant, and
Bobbie Levine, officer manager, calculated as the greater of (i) a base amount
of $110,000 (per annum ("Base Amount Charge") for each of Year One through Year
Five) or (ii) 1.8% of MCT Division Revenue in Year One through Year Five;
provided that such Base Amount Charge to revenue shall increase by 15% per
annum compounded annually for each of Year 2, Year 3, Year 4 and Year 5.
(c) "MCT Division Revenue" shall mean all
revenue derived from (i) existing clients of CTV, (ii) revenue from new clients
of the MCT Division, excluding revenue from the Purchaser's existing clients,
(iii) revenue generated by the MCT Division edit suite, and the MCT Division
will charge Purchaser for the use of the edit suite in accordance with Schedule
A; and (iv) revenue from clients of Purchaser introduced to the MCT Division
earned as follows: (a) MCT Division revenue will be credited for all "non-media
video" revenue, such as corporate identity tapes, lobbying tapes, videos for
corporate events; (b) for all traditional broadcast revenue, such as Video News
Releases, Audio News Releases, Satellite Media Tours and Radio Media Tours, the
MCT Division will be credited for revenue in excess of the average of the
previous two years broadcast revenue of the Purchaser from such clients for
such services; and (c) one-half of all Purchaser's revenue from
videoconferences will be credited to the MCT Division and one-half shall be
credited to the Purchaser.
(d) "Value" shall mean the last reported
closing price of the Medialink Shares, as defined in Section 4.1(a)(i) hereof,
as reported on a National Securities Exchange or on the NASDAQ system on the
last trading day which is two business days prior to the delivery of the
Medialink Shares.
(e) "Year One" shall mean the twelve month
period commencing on the first day of the month following the Closing Date.
(f) "Year Two" shall mean the twelve month
period commencing on the day after the end of Year One.
(g) "Year Three" shall mean the twelve
month period commencing on the day after the end of Year Two.
(h) "Year Four" shall mean the twelve month
period commencing on the day after the end of Year Three.
(i) "Year Five" shall mean the twelve month
period commencing on the day after the end of Year Four.
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ARTICLE II
Section 2. Purchase and Sale.
2.1. Assets to be Acquired. Subject to the terms and
conditions of this Agreement, Seller hereby agrees to sell, assign, transfer,
convey and deliver to Purchaser, and Purchaser hereby agrees to purchase and
accept from Seller, on the Closing Date, as hereinafter defined, those certain
assets, tangible and intangible (the "Assets") relating to the Business,
wherever the same may be located, whether in Seller's possession or in the
possession of third parties (the "Acquired Assets") as follows:
(a) All inventory of the Business as set
forth on Schedule 2(a) attached hereto owned by Seller including
work-in-process and finished goods (the "Inventory");
(b) All right, title and interest of Seller
in and to the equipment as set forth on Schedule 2(b) attached hereto owned by
Seller;
(c) All right, title and interest of Seller
in and to trademarks, copyrights, trade names and trademark applications
related to the Business (the "Acquired Intellectual Property"), including all
goodwill associated therewith, all as more specifically described on Schedule
2(c) attached hereto;
(d) All market research data, promotional
and advertising materials in Seller's or any of its agencies' possession,
including but not limited to, catalog sheets of Seller used in, developed for
use in or held for use in the Business; and
(e) All technology, plans, know-how,
production details, software, artwork, research data, tape library, data, books
and records, regulatory files, customer contracts, customer lists and files,
distributor lists and files, vendor lists and files, data processing records
and goodwill of the Seller relating exclusively to the Business, including,
without limitation, all files and documents relating to the Acquired
Intellectual Property, including registrations, applications, prosecution
files, files relating to conflicts, demands and challenges in each case in
whatever form, including computer discs and electronic storage (the "Acquired
Books and Records").
It is hereby expressly understood and agreed that
the foregoing Acquired Assets are to be transferred and conveyed to Purchaser
as above specified, by good and sufficient bill of sale, and other documents of
transfer, as provided in Section 8 hereof, free and clear of all liens,
charges, encumbrances, debts, liabilities and obligations whatsoever, except as
specifically described herein.
2.2. Assets Not Being Acquired. Excluded from the
Acquired Assets to be sold, conveyed, transferred and assigned by Seller, and
purchased and
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accepted by Purchaser under Section 2 hereof, are the following (collectively
referred to herein as the "Excluded Assets"):
(a) All cash and cash equivalents (such as
certificates of deposit, treasury bills and marketable securities) of Seller;
(b) All accounts or notes receivable of any
type of Seller;
(c) All of Seller's rights to any Federal,
state or local tax refunds; and
(d) All of Seller's stock records,
corporate documents, minutes, tax returns or any other records or documents
which Seller is required by law or governmental regulation to keep in its
possession (subject to Section 7.4 hereof).
ARTICLE III
Section 3. Retained Obligations and Liabilities of Seller and
Shareholder; Assumed Liabilities of Purchaser.
3.1. Assumption of Certain Obligations and
Liabilities by Purchaser. On the Closing Date Purchaser shall assume and be
solely and exclusively liable with respect to, and shall pay, perform or
discharge in accordance with their respective terms, only the obligations of
Seller incurred after the Closing Date under the acquired agreements (the
"Acquired Agreements") listed on and incorporated by reference in Schedule 3.1
attached hereto (the "Assumed Liabilities").
3.2. Retention of Obligations and Liabilities by
Seller. Except for the Assumed Liabilities, Purchaser shall not assume, pay,
perform or discharge, or take subject to, and Seller and Shareholder shall
jointly and severally indemnify Purchaser from and against, any obligations or
liabilities related to the Business of any nature whatsoever, whether fixed or
contingent, known or unknown, including, without limitation Taxes (as
hereinafter defined) and all liabilities, costs and expenses resulting from all
actions, claims, and proceedings against Seller and Shareholder for all periods
prior to the Closing Date; liabilities and obligations to employees or arising
out or under any employee benefit plan or program or policy or any employment
agreement, including all accrued vacation time of any employee, except those
agreements listed on and incorporated by reference in Schedule 3.2 attached
hereto; obligations and liabilities of Seller related in any manner whatsoever
to a breach by Seller or Shareholder of any of their representations and
warranties set forth herein; any and all taxes assessed on either Seller or
Shareholder relating to the transactions contemplated hereby; or any and all
legal, accounting and other professional fees of the professionals representing
Seller and Shareholder in the transactions contemplated hereby; and liabilities
or obligations arising out of the production and distribution of video news
releases and audio news releases, press releases and satellite media tours
prior to the Closing Date (collectively the "Retained Liabilities").
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The indemnification obligation hereunder shall be governed by the provisions of
Section 11 hereof.
ARTICLE IV
Section 4. Purchase Price.
4.1. Payment Terms.
(a) Subject to the terms and conditions of
this Agreement, Purchaser hereby agrees to purchase the Acquired Assets for a
maximum aggregate purchase price of up to Ten Million One Hundred and Seventy
Seven Thousand Nine Hundred ($10,177,900) Dollars ("Purchase Price"), including
the amount of Three Hundred Thousand ($300,000) Dollars, payable under the Non-
Compete Agreement, as hereinafter defined ("Non-Compete Payment"), to be paid
as follows:
(i) Three Million One Hundred
Sixty-Six Thousand Three Hundred and Sixty-Seven
($3,366,667) Dollars plus Three Hundred Thousand
($300,000) Dollars, representing the Non-Compete
Payment to be paid in cash on the Closing Date in a
bank cashier check or by wire transfer and such
number of shares of the common stock of Medialink
Worldwide Incorporated, par value $.01 per share
("Medialink Shares") having a Value equal to Three
Hundred Thirty-Three Thousand Three Hundred and
Thirty-Three ($333,333) Dollars, as of the close on
the last trading day which is two (2) business days
prior to the Closing Date; and
(ii) (a) during Year One, Three
Hundred Thirty-Six Thousand Seven Hundred ($336,700)
Dollars, provided, that the MCT Division Revenue for
such year equals or exceeds Four Million Five
Hundred Thousand ($4,500,000) Dollars. Such amount
shall be payable in the amount of $28,058.33 for
each month during Year One that the MCT Division
Revenue for a month during Year One equals or
exceeds $375,000. In the event the MCT Division
Revenue for a month is less than $375,000, the
monthly payment for such month shall be
proportionately reduced. By way of illustration, if
the MCT Division Revenue in Year One equals or
exceeds $4,500,000, Seller shall receive for a month
during Year One the amount of $28,058.33 ($336,700
[divide] 12). By way of illustration, if the MCT
Division Revenue in Year One equals $2,250,000,
Seller shall receive for a month during Year One
the amount of $14,029.17 ($168,350 [divide] 12); and
(b) for Year Two, within
sixty (60) days following the end of Year Two such
number of Medialink Shares
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having a Value equal to Three Hundred Forty Thousand
Two Hundred ($340,200) Dollars and for Year Three,
within sixty (60) days following the end of Year
Three, such number of Medialink Shares having a
Value equal to Three Hundred and Forty-Three
Thousand Seven Hundred ($343,700) Dollars; provided,
that the MCT Division Revenue for each of such years
equals or exceeds Four Million Five Hundred Thousand
($4,500,000) Dollars; and further, provided that in
the event that in Year Two or Year Three the MCT
Division Revenue is less than Four Million Five
Hundred Thousand ($4,500,000) Dollars, then the cash
payable and the Medialink Shares payable above shall
be proportionally reduced. By way of illustration,
if the MCT Division Revenue in Year Two equals
$2,250,000, within sixty (60) days following the end
of Year Two, Seller shall receive such number of
Medialink Shares having a Value equal to $170,000;
and
(iii) up to an additional aggregate
payment of Five Million One Hundred Fifty-Seven
Thousand Three Hundred ($5,157,300) Dollars (the
"Contingent Consideration") at a rate not to exceed
One Million Eleven Thousand ($1,011,000) Dollars in
Year One, One Million Twenty-One Thousand Seven
Hundred ($1,021,700) Dollars in Year Two, One
Million Thirty-Two Thousand and Two Hundred
($1,032,200) Dollars in Year Three, One Million
Forty-Two Thousand ($1,042,000) Dollars in Year Four
and One Million Fifty Thousand and Four Hundred
($1,050,400) Dollars in Year Five (each such payment
being hereafter referred to as the "Maximum
Payment"); provided, that the MCT Division Pre-Tax
Net Income exceeds the amounts for each of Year One
through Year Five determined as follows:
(1) Two Million ($2,000,000) Dollars in
Year One;
(2) Two Million Two Hundred and Fifty
Thousand ($2,250,000) Dollars in
Year Two;
(3) Two Million Five Hundred Thousand
($2,500,000) Dollars in Year Three;
(4) Two Million Five Hundred Thousand
($2,500,000) Dollars in Year Four;
and
(5) Two Million Five Hundred Thousand
($2,500,000) Dollars in Year Five.
Such amounts are collectively referred to herein as the "Target Amounts" and
individually as the "Target Amount".
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(b) In the event MCT Division does not
reach the Target Amount for Year One, the portion of the Contingent
Consideration to be paid by Purchaser to Seller shall be as follows:
(i) If the actual pre-tax net
income attained by the MCT Division ("Actual Pre-Tax
Net Income") is greater than or equal to $1,800,000
(a) an amount equal to the Actual Pre-Tax Net Income
for Year One divided by the Target Amount for such
year ("Target Amount Fraction") multiplied by (b)
the Maximum Payment for Year One multiplied by (c)
the Target Amount Fraction. By way of illustration,
if the MCT Division Pre-Tax Net Income in Year One
equals $1,800,000, Seller shall receive
$1,800,000/$2,000,000 X $1,011,000 X
$1,800,000/$2,000,000 or $818,910.
(ii) If Actual Pre-Tax Net Income
for Year One is less than $1,800,000 (a) an amount
equal to the Maximum Payment multiplied by (b) the
Target Amount Fraction multiplied by (c) .95 minus
the Penalty Adjustment Amount (as hereinafter
defined). The Penalty Adjustment Amount shall be
calculated by subtracting the Actual Pre-Tax Net
Income from the Target Amount and dividing the
result by two times the Target Amount. By way of
illustration, if the MCT Division Pre-Tax Net Income
in Year One equals $1,500,000, Seller shall receive
$1,011,000 X ($1,500,000/$2,000,000) X (.95-
($2,000,000- $1,500,000)/($2,000,000X2)) or
$625,556.
(c) In the event the MCT Division does not
reach the Target Amount for any year from Year Two to Year Five, the portion of
the Contingent Consideration to be paid by Medialink to Seller shall be (a) an
amount equal to the Target Amount Fraction multiplied by (b) the Maximum
Payment multiplied by (c) the Target Amount Fraction. By way of illustration,
if the MCT Division Pre-Tax Net Income in Year Two equals $2,000,000, Seller
shall receive $2,000,000/$2,250,000 X $1,021,700 X $2,000,000/$2,250,000 or
$807,269.
(d) In no event shall the Seller receive
under Section 4.1 (a)(iii), (b) or (c) hereof an amount greater than the
Maximum Payment for each of Year One through Year Five.
(e) The Contingent Consideration shall be
paid by Medialink to Seller eighty (80%) percent in a bank cashier check or by
wire transfer and twenty (20%) percent in Medialink Shares, the amount of which
shall be determined based on the definition of Value set forth in Section 1(d)
hereof, not later than sixty (60) days following the delivery to Seller of
Purchaser's financial statements for Year One to Year Five, which delivery
shall be no later than ninety (90) days following the end of each Year, as the
case may be (the "Target Payment Date"). For purposes of reviewing Purchaser's
calculation of the MCT Division Pre-Tax Net
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Income, Medialink shall permit Seller or its authorized agents at the election
of Seller, after reasonable prior written notice, to have access during normal
business hours to Purchaser's books solely as they relate to the MCT Division
Pre-Tax Net Income. If within such sixty (60) days following such review Seller
and Purchaser shall agree on the calculation of the MCT Division Pre-Tax Net
Income, then the determination of Seller and Purchaser shall be final, binding
and conclusive upon the parties hereto. If within sixty (60) days following
such review, Seller shall disagree as to the calculation of the MCT Division
Pre-Tax Net Income, then Seller shall provide prompt notice thereof to
Purchaser within such sixty (60) day period and Ernst & Young (the "Selected
Firm") shall then be authorized to audit the MCT Division Pre-Tax Net Income
and such audit shall be completed within 60 days. The audit by the Selected
Firm shall be final, binding and conclusive upon the parties hereto. The cost
of the Selected Firm's audit of the MCT Division Pre-Tax Net Income shall be
borne by the Seller in the event the Selected Firm determines that the MCT
Division Pre-Tax Net Income is equal to or less than the Purchaser's
calculation thereof or by Purchaser in the event such audit determines that the
MCT Division Pre-Tax Net Income is greater than the Purchaser's calculation
thereof.
4.2. Allocation of Purchase Price. The parties agree
that the Purchase Price shall be allocated as specified in Exhibit D annexed
hereto and made a part hereof except that the allocations for goodwill of the
Business and Seller's customer list shall be mutually agreed to by Seller and
Purchaser within thirty (30) days from the Closing Date. The parties agree to
report this transaction and the allocations for income tax purposes in a manner
consistent with this Agreement. Purchaser and Seller each agrees to file
Internal Revenue Service Form 8594, and all Federal, state, local and foreign
Tax Returns, in accordance with the allocation schedule. Purchaser and Seller
each agrees to provide the other promptly with any other information required
to complete Form 8594.
4.3. Reliance on the Non-Compete Agreement. Seller
and Shareholder hereby acknowledge that Purchaser would not have entered into
this Agreement but for the execution by each of them of the Non-Compete
Agreement. The terms of the Non-Compete Agreement are incorporated herein by
reference and made a part hereof.
ARTICLE V
Section 5. Representations and Warranties by Seller and
Shareholder. Seller and Shareholder jointly and severally represent and warrant
to Purchaser as set forth below:
5.1. Organization, Existence and Authority of
Seller. Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of New York and has all requisite
corporate power and authority to carry on its operations as now being conducted
and to execute, deliver and perform this Agreement and the other agreements and
instruments to be executed and delivered
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by Seller pursuant hereto and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement by Seller and
Shareholder does not, and the consummation of the transactions contemplated
hereby will not, violate any provisions of (a) Seller's Certificate of
Incorporation or By-Laws or (b) any law or regulation applicable to Seller or
Shareholder, the Business or the Acquired Assets or (c) the provisions of any
agreement, mortgage, lease, instrument, order, arbitration award, judgment or
decree to which Seller or Shareholder is a party or by which Seller or
Shareholder or any of the Acquired Assets is bound or affected.
5.2. Power and Authority. Seller has the corporate
power and corporate authority to execute, deliver and perform this Agreement
and the other agreements and instruments to be executed and delivered by Seller
pursuant hereto, and Seller has taken all action required by law or otherwise,
including, but not limited to, approval by its Board of Directors and its
shareholders, to authorize such execution, delivery and performance. This
Agreement has been duly executed and delivered by Seller and Shareholder and
constitutes, and such other agreements and instruments when duly executed and
delivered by Seller and Shareholder will constitute, legal, valid and binding
obligations enforceable in accordance with their respective terms, except that
(a) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other laws, now or hereafter
in effect, relating to or limiting creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought. The execution, delivery
and performance by Seller and Shareholder of this Agreement and such other
agreements and instruments and its consummation of the transactions
contemplated hereby and thereby will not violate, conflict with or result in
any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or result in the creation of a
lien on any of the Acquired Assets under, any agreement by which Seller or the
Shareholder or any of the Acquired Assets may be bound or affected.
5.3. Consents. No consent, filing or approval of any
Federal, state or local governmental agency or department or any other person
not a party to this Agreement is required or necessary in connection with the
execution, delivery and performance of this Agreement or to consummate the
transactions contemplated hereby, excluding from the foregoing such consents,
filings or approvals the failure of which to secure would not have a material
adverse effect on the Business ("Material Adverse Effect") and would not have a
Material Adverse Effect on the ability of Seller or Shareholder to consummate
the transactions contemplated by this Agreement.
5.4. Title to and Condition of Acquired Assets.
Seller is, and on the Closing Date will be, the owner of the Acquired Assets
free and clear of all liens, encumbrances, claims, security interests and
charges ("Liens") of any kind whatsoever, except for those Liens disclosed on
Schedule 5.4(a) attached hereto, all of which liens will be released and fully
discharged of record on the Closing Date. Seller is, and on the Closing Date
will be, the owner of all right, title and interest in and to its trademarks
free and clear of all Liens. The Inventory is of good and
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merchantable quality and is of quality, quantity and condition that is usable
or saleable in the ordinary course of business. No affiliate of Seller provides
any goods or services which are used in or necessary for the operation of the
Business or the ownership or use of the Acquired Assets. The Acquired Assets
and the services set forth on Schedule 5.4(b) are all of the assets tangible or
intangible currently used, or used in the Business since Seller's inception
except for assets of de minimis value or utility in the operation of the
Business.
5.5. Compliance with Agreements. Schedules 5.5 and
7.6 contain lists of all written and oral contracts, agreements and commitments
used in or relating to the Business or any of the Acquired Assets. True and
complete copies of all such written contracts and other agreements have been
delivered to Purchaser prior to the execution of this Agreement. Seller, and to
the best of Seller's knowledge, each such other party to each such contract and
agreement, has complied in all material respects with the provisions of each
such contract and other agreement and is not, and at the time of the Closing
will not be, in default under any of them nor in breach of any obligations
thereunder. Such contracts and other agreements are on the date hereof and will
be on the Closing Date valid, binding and in full force and effect and
enforceable in accordance with its terms.
5.6. Taxes. Seller has filed or will file when due
all Federal, state and local tax returns required by law and shall pay and
remit any and all Federal, state and municipal income, Federal and state
withholding, FICA, FUTA, state unemployment taxes, state and municipal sales
and use taxes, license fees and other taxes, fees or charges ("Taxes") levied
or imposed upon Seller or the Acquired Assets as the result of the ownership
and use of the Acquired Assets or the operation of the Business that are
payable or have accrued on or prior to the Closing Date. Seller has not
incurred any tax liability, including interest, penalties or assessments, which
may result in the imposition of any lien, charge, security interest or any
other encumbrance on the Acquired Assets other than liens for Taxes not yet due
and payable or that are being contested in good faith.
5.7. Litigation or Disputes. Except as set forth in
Schedule 5.7, there is no action at law or in equity, governmental proceeding,
arbitration, claim, suit, administrative hearing, investigation or other
dispute, litigation, or proceeding pending, or to the best of Seller's
knowledge threatened, against Seller relating to the Business or any of the
Acquired Assets or which challenges the validity or enforceability of this
Agreement. Seller is not in default with respect to any judgment, order, writ,
injunction or decree of any court or administrative body or in violation of any
statute, ordinance or regulation relating to the Acquired Assets. There is no
judgment, injunction, award or order binding upon Seller to which Seller is a
party relating to the Business or any of the Acquired Assets. Notwithstanding
the disclosure of any action set forth on Schedule 5.7, Seller and Shareholder
each indemnify Purchaser under Section 11 hereof for all actions, suits,
litigation or disputes, whether or not pending, based on such matters that
occurred prior to the Closing Date.
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5.8. Financial Information. Seller has delivered to
Purchaser audited balance sheets of Seller at December 31, 1995 and 1996 and
the related income statements and statements of shareholders' equity and cash
flows for the years then ended and interim audited financial statements for the
four (4) month period ended April 30, 1997 (collectively, "Financial Data").
The Financial Data has been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
("GAAP"), is true and correct in all material respects and was prepared from
the books and records of Seller, and except as set forth on Schedule 5.8,
fairly presents in all material respects the assets and liabilities of the
Business at the dates specified and the results of operations, shareholders'
equity and cash flows for the years then ended. The Financial Data accurately
reflect and record, in all material respects, insofar as required in accordance
with GAAP, all of the assets used in or held for use in the Business, all
transactions between Seller and any affiliates and related parties and all
expenses of or relating to the Business. Except as disclosed in the notes to
the Financial Data, no material revenues or expenses of the Business are
derived from or funded by affiliates of Seller or Shareholder.
5.9. Trademarks, Licenses, Etc. Schedule 2(b) sets
forth a list of all registered trademarks, patents, copyrights and applications
for use in the Business since Seller's inception including the record owner,
registration or application number, jurisdiction, application or registration
date and expiration date. Since Seller's inception, no claim has been asserted
or, to the best knowledge of Seller, threatened against Seller or any affiliate
of Seller to the effect that the operation of the Business or the use of the
Acquired Assets infringes upon or conflicts with the rights of any person, and
no claim has been asserted that any person infringes any of the Acquired
Intellectual Property. Seller owns free and clear of any rights or claims of
others the rights to use all trademarks, service marks, copyrights and
registrations thereof and applications therefor and all trade names, licenses,
franchises, permits, processes, trade secrets, inventions and royalties, and
rights with respect thereto, and all technical know-how, customer lists,
research and development projects and data and non-competition covenants
accruing to the benefit of Seller used in, held for use in or under development
for use in or necessary for the conduct of the Business as now conducted and
conducted since Seller's inception (collectively, "Business Rights") without
any conflict or infringement with the rights of others, including officers,
directors or shareholders of Seller, and Seller has not received notice of any
claim or assertion that any of the Acquired Assets or Business Rights infringe
or conflict with the rights of others, and, to the best of Seller's knowledge,
there is no infringement or violation by any other person of the Business
Rights.
5.10. No Material Adverse Change. Since December 31,
1996:
(a) there has been no material adverse
change in the Business or results of operations or financial condition of the
Business;
(b) the Business has been operated in the
ordinary course, consistent with past practice;
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(c) no customers which in the aggregate
account for more than 10% of gross sales for 1996 have advised or threatened
Seller that they will discontinue or decrease materially the services provided
by Seller;
(d) no material supplier has advised
Seller, or to the best knowledge of Seller, threatened Seller that it will
discontinue its supply of products or materially increase prices or materially
change terms in any way adverse to Seller;
(e) there has been no event, occurrence or
condition which could reasonably be expected to result in a Material Adverse
Effect; and
(f) Seller has not taken any action or
failed to take any action nor has any event occurred which would, in any case,
have been restricted by Section 7.5 if it had taken place during the period
between the execution of this Agreement and the Closing Date.
5.11. Employees. Schedule 5.11(a) lists those
employees and consultants of Seller or any of its affiliates, that perform or
since Seller's inception performed services for the Business including name,
date of hire, position, salary and bonus eligibility (the "Eligible
Employees"). Schedule 5.11(b) lists all medical, dental, life or other
insurance coverage, disability benefit, vacation, perquisite and fringe benefit
plans, programs or policies in which any of the Eligible Employees participate.
5.12. Employee Plans.
(a) For purposes of this Agreement, the
term "Employee Plan" means each employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and each other bonus, incentive compensation, deferred compensation,
severance or similar plan, policy or payroll practice providing compensation or
employee benefits maintained by Seller or to which Seller is a participating
employer or is obligated to contribute or has any legally enforceable liability
and under which any person presently employed by Seller as an employee or
consultant or formerly employed by Seller or its predecessors as an employee or
consultant of the Seller (a "Former Employee") participates or has accrued any
rights or under which Seller is liable in respect of a Eligible Employee or
Former Employee. The terms "Eligible Employee" and "Former Employees, will
include, where applicable, the beneficiaries, spouses and dependents of a
Eligible Employee or Former Employee. Schedule 5.12(a) lists or describes all
Employee Plans of Seller. Each Employee Plan has been maintained in all
respects in accordance with its terms and with applicable law. Except as set
forth on Schedule 5.12(a), each Employee Plan (including the related trust)
which is intended to qualify under Section 401(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), or comparable foreign law, does so qualify
and is exempt from taxation pursuant to Section 501(a) of the Code. None of the
Employee Plans listed on Schedule 5.12(a) are Multi-employer Plans (as defined
within the meaning of
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Section 3(37) of ERISA) and Seller has no liability under or with respect to,
and does not contribute to, any Multi-employer Plan.
(b) As of the Closing Date, Seller will
have made or will make full payment by direct contributions of all amounts
which Seller is required to make under the terms of each Employee Plan in
respect of periods ending on or prior to the Closing Date.
(c) There is no accumulated funding
deficiency (as defined in Section 412 of the Code), waived funding deficiency
(as defined in Section 412 of the Code), or failure to make any payment on or
before a required installment due date (as defined in Section 412(m) of the
Code) with respect to any defined benefit plan (as defined in Section 3(35) of
ERISA) maintained by Seller or any member of the controlled group (within the
meaning of Sections 414(b), (c), (m), (n) and (o) of the Code ("Controlled
Group") of which Seller is a member, that is or could after the Closing Date
become a liability of Purchaser.
(d) Neither Seller nor any member of
Seller's Controlled Group has incurred or reasonably expects to incur any
liability under Title IV of ERISA (or comparable foreign law) arising in
connection with the termination of, or withdrawal from, any plan covered or
previously covered by Title IV of ERISA (or comparable foreign law) that is or
could become a liability of Purchaser after the Closing Date.
(e) No event has occurred that could
subject Seller or Purchaser to an excise tax under Section 4975 of the Code or
a civil penalty under Section 502(i) of ERISA or any comparable section under
any foreign law.
(f) There exists no condition or set of
circumstances which could result in the imposition of any liability under ERISA
(including, without limitation, Title I or Title IV thereof), the Code or other
applicable law with respect to the Employee Plans. From and after the Closing,
Seller shall, subject to Section 10 hereof, indemnify and hold Purchaser
harmless from, all liabilities and obligations arising at any time with respect
to Eligible Employees or Former Employees of Seller under Employee Plans (and
all related reporting requirements), and any other employee benefits mandated
by law, regardless of the applicable funding arrangements, attributable to
periods of employment by Seller of its employees prior to the Closing Date.
5.13. Compliance With Law. Seller has conducted and
currently conducts the Business and its operations and the Acquired Assets
comply with all material applicable Federal, state and local laws, ordinances,
regulations and requirements, and Seller possesses all approvals, consents,
licenses and permits required for the conduct of the Business. Seller has not
received any notice relating to changes in the requirements for such approvals,
consents, licenses or permits which might be deemed to affect such operations
nor has Seller received notice of any challenge, investigation or proceeding in
connection with any applicable regulation,
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guidelines, ordinance or other law, order, regulation or requirement relating
to the Business and its operations or the Acquired Assets.
5.14. Obligation to Update Schedules. Seller shall
promptly disclose to Purchaser any information contained in its representations
and warranties or Schedules which, because of an event occurring after the date
hereof, is materially incomplete or is no longer materially correct as of all
times after the date hereof until the Closing Date or any material adverse
development affecting the results of operations of the Business; provided,
however, that none of such disclosures shall be deemed to modify, amend or
supplement the representations and warranties of Seller or the Schedules
attached hereto unless Purchaser shall have consented thereto in writing.
5.15. Representations and Warranties. Neither the
representations and warranties of Seller contained (i) herein or (ii) in any
certificate, Exhibit, Schedule or other writing required by the terms hereof to
be delivered by Seller (and so delivered) contained any untrue statement of a
material fact or, to the best of Seller's knowledge taken together, omit to
state a material fact necessary in order to make the statements herein and
therein not misleading in light of the circumstances in which made.
5.16. Absence of Unlawful Payments. Neither the
Seller nor any of its affiliates, or, to Seller's knowledge, any other person,
entity or corporation, acting on behalf of it has accepted, received or made
any unlawful contributions, payments, gifts or expenditures.
ARTICLE VI
Section 6. Representations and Warranties by Purchaser.
Purchaser represents and warrants to Seller and Shareholder as set forth below:
6.1. Organization, Existence and Authority of
Purchaser. Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its operations as now being
conducted, and to execute, deliver and perform this Agreement and the other
agreements and instruments to be executed and delivered by Purchaser pursuant
hereto and to consummate the transactions contemplated hereby and thereby,
except where any such failure would not individually or in the aggregate have a
material adverse effect on the business, operations or financial condition of
Purchaser taken as a whole. The execution and delivery of this Agreement by
Purchaser does not, and the consummation of the transactions contemplated
hereby will not, violate any provisions of (a) Purchaser's Certificate of
Incorporation or By-Laws or (b) any law or regulation applicable to Purchaser
or the provisions of any agreement, mortgage, lease, instrument, order,
arbitration award, judgment or decree to which Purchaser is a party or by which
Purchaser is bound.
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6.2. Power and Authority. Purchaser has the
corporate power and corporate authority to execute, deliver and perform this
Agreement and the other agreements and instruments to be executed and delivered
by Purchaser pursuant hereto, and Purchaser has taken all action required by
law or otherwise, including but not limited to approval by its Board of
Directors, to authorize such execution, delivery and performance. This
Agreement has been duly executed and delivered by Purchaser and constitutes,
and such other agreements and instruments when duly executed and delivered by
Purchaser will constitute, legal, valid and binding obligations enforceable
against it in accordance with their respective terms, except that (a) such
enforcement may be subject to any bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other laws, now or hereafter in effect,
relating to or limiting creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought. The execution, delivery and performance
by Purchaser of this Agreement and such other agreements and instruments and
its consummation of the transactions contemplated hereby and thereby will not
violate, conflict with or result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, any agreement by which the Purchaser may be bound or affected.
6.3. Consents. No consent, filing or approval of any
Federal, state or local governmental agency or department or any other person
not a party to this Agreement is required or necessary in connection with the
execution, delivery and performance of this Agreement or to consummate the
transactions contemplated hereby, excluding from the foregoing such consents,
filings or approvals which would not have a Material Adverse Effect and would
not have a material adverse effect on the ability of Purchaser to consummate
the transactions contemplated by this Agreement.
6.4. Litigation. There is no action, claim or
proceeding pending or, to the best knowledge of Purchaser, threatened, against
Purchaser, by or before any court, governmental or regulatory authority or by
any third party which challenges the validity of this Agreement.
6.5. Representations and Warranties. Neither the
representations and warranties of Purchaser contained (i) herein or (ii) in any
certificate, Exhibit, Schedule or other writing required by the terms hereof to
be delivered by Purchaser (and so delivered) contained any untrue statement of
a material fact or, to the best of Purchaser's knowledge taken together, omit
to state a material fact necessary in order to make the statements herein and
therein not misleading in light of the circumstances in which made.
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ARTICLE VII
Section 7. Additional Covenants and Agreements.
7.1. Bulk Sales Law. Compliance with the laws of any
jurisdiction relating to the bulk sale of assets, if applicable, is waived and
Seller and Shareholder shall indemnify and hold Purchaser harmless from any
liability or claim arising from a failure to comply with such laws. The
indemnification obligations hereunder shall be governed by the provisions of
Section 11 hereof.
7.2. Reasonable Access By Purchaser Pending Closing.
Seller will give to Purchaser, its counsel, accountants, financial advisers and
lenders, and other representatives, after reasonable notice, reasonable access,
during normal business hours, throughout the period prior to the Closing, to
all of the properties, books, contracts, commitments and records relating
exclusively to the Business, and shall fully cooperate with Purchaser and its
accountants in connection with the preparation of timely and complete audited
financial statements relating to the financial disclosure of the acquisition of
the Business in accordance with the rules under Regulation S-X and Form 8-K
promulgated under the Securities Exchange Act of 1934, as amended, and
applicable registration statement forms under the Securities Act of 1933, as
amended. Purchaser agrees that any information provided pursuant to this
Section will not be used for any purpose other than in connection with the
transactions contemplated by this Agreement, will not be revealed to third
parties but will be kept strictly confidential and will be returned, together
with all copies of such information, to Seller if, for any reason, the Closing
does not take place.
7.3. Taxes. Seller and Shareholder shall be liable
for and shall indemnify and hold Purchaser harmless from and against all Taxes
with respect to the Business and the Acquired Assets for all periods up to the
Closing Date, including all penalties and interest relating thereto, and shall
be responsible for filing all Tax Returns and responding to all audits with
respect thereto. Purchaser shall be liable for all Taxes with respect to the
Acquired Assets for all periods from and after the Closing Date and shall be
responsible for filing all Tax Returns and responding to all audits with
respect thereto. The indemnification obligations hereunder shall be governed by
the provisions of Section 11 hereof.
Each party shall deliver to the other such
information and other data relating to Tax returns and Taxes with respect to
the Business and the Acquired Assets and shall make available such of its
employees as the other party may reasonably request, including providing the
information and other data customarily required, to cause the completion and
filing of all Tax Returns for which it has responsibility or liability under
this Agreement or to respond to audits by any taxing authorities with respect
to any Tax Returns or taxable periods for which it has any responsibility or
liability under this Agreement or to otherwise enable it (or any of its
affiliates) to satisfy its reasonable accounting or Tax requirements.
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For purposes of this Agreement, "Taxes"
shall mean all taxes, charges, fees, levies or other assessments, including,
without limitation, income, excise, property, real estate, sales, purchase,
use, value added, payroll (including required withholdings), compensation and
franchise taxes imposed by any governmental entity with respect to the
Business, the Seller or any of the Acquired Assets and any interest, penalties
or additions payable in connection with such taxes, charges, fees, levies or
other assessments. For purposes of this Agreement, "Tax Returns" shall mean all
returns, declarations, reports, statements and other documents required to be
filed with any governmental entity in respect of any Tax.
7.4. Books and Records. Until the expiration of the
applicable statutory period of limitations, or for such longer period if such
statutory period is extended, each of the parties hereto will to the extent
necessary in connection with any tax or other matters relating to the Business
(i) retain and, as each may reasonably request, permit the other and their
agents to inspect and copy, all books and records relating to the Business and
provide such information from such books and records as may be reasonably
requested and (ii) furnish to the other party the information necessary to file
required returns with respect to Taxes for which such party is responsible
under this Agreement.
7.5. Conduct of Business Pending the Closing. From
the date hereof until the Closing Date, Seller shall conduct the Business only
in the ordinary course and consistent with past practice and will:
(a) preserve intact the Acquired Assets and
its current business operations and properties;
(b) take no action or fail to take such
action the consequence of which will cause a breach of or default in any
representation, warranty or covenant in this Agreement or in any contract,
agreement, commitment or obligation to which it is a party or by which it may
be bound;
(c) keep at all times full and complete
books and records, both consistently and in accordance with GAAP;
(d) use its best efforts to preserve the
form, structure and goodwill of its business organization in tact and preserve
its relationship with suppliers, customers and others having business relations
with it;
(e) not enter into any agreements including
any with suppliers or brokers except any which are terminable for not more than
30 days notice without payment of any penalty;
(f) not change any salary, wage, bonus or
severance terms with Eligible Employees or any of the terms of any consulting
agreements relating to the Business except as described on Schedule 5.11
attached hereto; and
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(g) not sell, transfer or otherwise dispose
of any of the Acquired Assets.
7.6. Employees. Purchaser shall employ the Eligible
Employees. Subject to the following sentence, Purchaser shall be responsible
for all salary, benefits and other obligations with respect to any Eligible
Employees for periods from and after their employment with Purchaser. Seller
and Shareholder shall be responsible for and shall indemnify and hold Purchaser
harmless from and against all obligations and liabilities with respect to
Eligible Employees for the period prior to the Closing Date. The
indemnification obligations hereunder shall be governed by the provisions of
Section 11 hereof.
7.7. Confidentiality. From and after the Closing
Date, Seller and Shareholder will treat and hold as confidential any
information concerning the Business which is either non-public, confidential or
proprietary in nature, including analyses, compilations, studies or other
documents prepared by Seller, Shareholder and their affiliates or any of their
agents or employees ("Confidential Information"), refrain from using any of the
Confidential Information and deliver promptly to Purchaser or destroy, at the
request and option of Purchaser, all tangible embodiments (and all copies) of
Confidential Information which are in their possession. In the event that
Seller or Shareholder is required by legal proceeding, interrogatory, subpoena,
civil investigative demand or similar process to disclose any Confidential
Information, Seller or Shareholder will notify Purchaser promptly of the
request so that Purchaser may at its expense seek an appropriate protective
order or waive compliance with the provisions hereof.
7.8. Corporate Name. Promptly after the Closing
Date, Seller shall wind up its business as of the Closing Date and shall pay
all of its outstanding obligations as soon as is reasonably practicable after
the Closing Date. For a period of ninety (90) days from the Closing Date,
Seller shall be entitled to use the name "Corporate TV". Promptly thereafter
Seller and Shareholder hereby agree to deliver to Purchaser an executed
certificate of amendment to Seller's certificate of incorporation whereby it
shall change its name to a name dissimilar to "Corporate TV".
ARTICLE VIII
Section 8. Conditions to Closing.
8.1. Conditions to Purchaser's Obligations. All the
obligations of Purchaser under this Agreement are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions, any or all of
which (other than the condition set forth in clause (d) below) Purchaser may
waive in writing:
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(a) Seller and Shareholder shall have
performed in all material respects all of their obligations under this
Agreement required to be performed at or before the Closing, and there shall
have been delivered to Purchaser a certificate of the Shareholder and an
officer of Seller, dated the Closing Date, to such effect;
(b) The representations and warranties of
Seller and Shareholder contained in Section 5 of this Agreement shall be true
and correct in all material respects as of the date hereof and as of the
Closing Date with the same force and effect as though such representations and
warranties had been made as of the Closing Date, and there shall have been
delivered to Purchaser a certificate of an executive officer of Seller and
Shareholder, dated the Closing Date, to such effect;
(c) No action or proceeding to enjoin any
transaction contemplated by this Agreement shall have been instituted, and no
injunction or restraining order in any action or proceeding against any such
transaction shall then be in effect;
(d) Seller shall have delivered to
Purchaser documents in form and substance reasonably satisfactory to Purchaser
demonstrating the release of all Liens on the Acquired Assets;
(e) No change that has had a Material
Adverse Effect on the Business shall have occurred and shall not be threatened
in any way as a result of any event or occurrence; and
(f) Purchaser shall enter into an
employment agreement with Marcie Simon in form and substance satisfactory to
Purchaser in its sole discretion.
8.2. Conditions to Seller's Obligations. All the
obligations of Seller under this Agreement are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions, any or all of
which (other than the condition set forth in clause (d) below, Seller may waive
in writing:
(a) Purchaser shall have performed in all
material respects all of its obligations under this Agreement required to be
performed at or before the Closing, and there shall have been delivered to
Seller a certificate of an executive officer of Purchaser, dated the Closing
Date, to such effect;
(b) The representations and warranties of
Purchaser contained in Section 6 of this Agreement shall be true and correct in
all material respects as of the date hereof and as of the Closing Date with the
same force and effect as though such representations and warranties had been
made as of the Closing Date, and there shall have been delivered to Seller a
certificate of an officer of Purchaser, dated the Closing Date, to such effect;
and
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(c) No action or proceeding to enjoin any
transaction contemplated by this Agreement shall have been instituted, and no
injunction or restraining order in any action or proceeding against any such
transaction shall then be in effect.
ARTICLE IX
Section 9. Closing Documents to be Delivered by Seller and
Shareholder. On the Closing Date and as a further condition to the obligations
of Purchaser and Seller to close hereunder, Seller and Shareholder shall
deliver to Purchaser:
(a) A bill of sale in substantially the
form of Exhibit H hereto, conveying to Purchaser good and marketable title to
all of the tangible assets to be acquired by Purchaser hereunder;
(b) One or more assignments in
substantially the form of Exhibit I hereto, with all consents necessary for
Purchaser's unencumbered enjoyment of the Acquired Assets to be transferred
hereunder, assigning to Purchaser all of the Acquired Agreements and all other
intangible rights to be assigned to Purchaser hereunder;
(c) Assignments in substantially the form
of Exhibit J hereto, assigning to Purchaser all of Seller's right, title and
interest in and to Seller's trademarks, Business Rights and Seller's other
intangible assets included within the Acquired Assets;
(d) The originals of the Acquired
Agreements to be assigned to Purchaser hereunder;
(e) Certificates of the appropriate
officers of the Seller, dated as of the Closing Date, certifying as to the
fulfillment of the conditions set forth in Section 8.1;
(f) The Non-Compete Agreement executed by
Seller and Shareholder;
(g) The Confidentiality Agreement executed
by Seller and Shareholder;
(h) The employment agreement executed by
Shareholder with Purchaser in the form of Exhibit C attached hereto (the
"Employment Agreement");
(i) The loan agreement and security
agreement executed by Seller in connection with a bridge loan to be made by
Purchaser to Seller
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in the amount of $300,000 (the "Bridge Loan") in the form of Exhibit E attached
hereto (the "Loan Agreement and Security Agreement");
(j) A non-negotiable promissory note and
guarantee executed by Seller and Shareholder, respectively, in connection with
the Bridge Loan in the form of Exhibits F and G attached hereto;
(k) An opinion of Seller's counsel, in a
form reasonably satisfactory to Purchaser's counsel, with respect to the
matters described in Sections 5.1, 5.2, 5.3, 5.7 and 5.13 hereof; and
(l) An assignment, assumption and amendment
agreement, dated the Closing Date, with Marcy Simon; and
(m) Any other documents or instruments
which may reasonably be required to give the transactions contemplated herein
full force and effect.
Unless otherwise provided in this Agreement, all
documents and instruments delivered hereunder shall be dated the Closing Date
and shall be reasonably satisfactory as to form and content to each party and
its respective counsel.
ARTICLE X
Section 10. Closing Documents to be Delivered by Purchaser.
On the Closing Date and as a further condition to the obligations of Purchaser
and Seller to close hereunder Purchaser shall deliver to Seller:
(a) The Purchase Price set forth in Section
4 hereof in certified funds or by means of wire transfer;
(b) One or more agreements of assumption
whereby Purchaser assumes all of Seller's and Shareholder's liabilities and
obligations to be assumed by Purchaser hereunder;
(c) Certificates of the appropriate
officers of the Purchaser, dated as of the Closing Date, certifying as to the
fulfillment of the conditions set forth in Section 8.2;
(d) The Non-Compete Agreement;
(e) The Confidentiality Agreement;
(f) The Loan Agreement and Security
Agreement;
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(g) The Employment Agreement executed by
Purchaser;
(h) An opinion of Purchaser's counsel, in a
form reasonably satisfactory to Seller's counsel, with respect to the matters
described in Sections 6.1, 6.2, 6.3 and 6.4 hereof;
(i) A key-man life insurance policy on the
life of Richard Frisch. Purchaser shall have the right to purchase ordinary or
term life insurance on the life of Richard Frisch. Any such life insurance and
any policy evidencing such insurance shall be owned by, and shall be for the
benefit of, the Purchaser. Mr. Frisch shall cooperate in all respects in the
securing of such insurance; and
(j) Any other documents or instruments
which may reasonably be required to give the transactions contemplated herein
full force and effect.
Unless otherwise provided in this Agreement, all
documents and instruments delivered hereunder shall be dated the Closing Date
and shall be reasonably satisfactory as to form and content to each party and
its respective counsel.
ARTICLE XI
Section 11. Indemnification; Survival.
11.1. Survival; Remedy for Breach. The covenants,
agreements, representations and warranties of the parties hereto contained
herein or in any certificate, Schedule or other writing attached hereto, or
required by the terms hereof to be delivered (and so delivered), by the parties
on the Closing Date shall survive the Closing Date for a period equal to three
(3) years, except for the representations in Sections 5.4, 5.6, 5.12 and 7.3
which shall survive until the expiration of the statute of limitations and any
waivers or extensions thereof (the period of survival shall be referred to as
the "Survival Period"). No action or proceeding may be brought with respect to
any of the representations and warranties unless written notice of the claimed
misrepresentation or breach of warranty shall have been delivered prior to the
expiration of the Survival Period.
11.2. Indemnification by Seller and Shareholder.
(a) Subject to the terms and conditions set
forth herein, Seller and Shareholder, jointly and severally, indemnify
Purchaser against and agree to hold it harmless from any and all damage, loss,
liability, expense (including, without limitation, reasonable attorneys' fees
and expenses in connection with any action, suit or proceeding brought against
or involving Purchaser) and cost (collectively, "Purchaser Indemnified
Amounts") incurred or suffered by Purchaser arising out of (i) any
misrepresentation or breach of warranty, or breach of any covenant or
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agreement to be performed by Seller and Shareholder pursuant to this Agreement,
(ii) all Taxes with respect to the Business and the Acquired Assets for all
periods up to and including the Closing Date; (iii) the Retained Liabilities;
and (iv) except for the Assumed Liabilities, any and all damages, losses,
expenses, obligations, liabilities or deficiencies incurred or paid by
Purchaser as a result of a claim of any kind arising from or based upon the
operation, business or ownership of the Acquired Assets or the Business on or
prior to the Closing Date. The agreements and indemnities of Seller and
Shareholder contained herein shall be cumulative, except that Purchaser shall
not recover more than once for the same Purchaser Indemnified Amount.
(b) Purchaser agrees to give notice to
Seller and the Shareholder promptly after learning of the assertion of any
claim, or the commencement of any suit, action or proceeding, in respect of
which indemnity may be sought hereunder. The failure of Purchaser to give such
notice shall not affect Seller's and Shareholder's obligations unless Seller
and Shareholder are actually prejudiced in the defense of such claim, suit,
action or proceeding in which case such failure to provide such notice shall
constitute a waiver of Purchaser's rights hereunder in respect of the claim,
suit, action or proceeding with respect to which such notice was required to
have been given hereunder to the extent Seller and Shareholder have been
actually prejudiced by such late notice.
(c) Except as otherwise provided in Section
11.5, Seller and Shareholder shall not be liable under this Section 11.2 for
any settlement of any claim, litigation or proceeding effected without their
consent in respect of which indemnity may be sought hereunder.
(d) The amount required to be paid to
Purchaser by Seller and Shareholder for any Purchaser Indemnified Amounts
hereunder shall be an amount reduced by (i) the tax benefits available to
Purchaser and (ii) any amount received by Purchaser under any insurance
coverage or from any other party alleged to be responsible therefor. Such
amounts shall be paid not later than thirty (30) days after receipt by Seller
and Shareholder of written notice from Purchaser stating that such Purchaser
Indemnified Amounts have been incurred (and, in the case of claims of third
parties, paid) and the amount thereof and of the related indemnity payment;
provided, however, that any disputed amounts shall be due and payable within
thirty (30) days after such amounts are finally determined to be owing by
Seller and Shareholder to Purchaser.
11.3. Set-Off for Indemnified Amounts. Purchaser may
at any time, set off from the payments of cash or Medialink Shares due and
payable to Seller and Shareholder under this Agreement, and the payments under
the Non-Compete Agreement, any amount or amounts which Purchaser, in its sole
and absolute discretion, shall determine may be necessary to satisfy (i) any
Seller Indemnified Amount or (ii) any prospective, pending or threatened loss,
liability, expense or cost which may reasonably be expected to give rise to an
indemnity obligation of the Seller and Shareholder hereunder, including but not
limited to payments due under the Bridge Loan (collectively, a "Set-Off
Amount"). Any amounts so set off shall be
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delivered and paid into an interest-bearing escrow account to be established
pursuant to the terms of an escrow agreement, in substantially the form of
Exhibit K attached hereto (the "Escrow Agreement"). The terms of the Escrow
Agreement shall provide that Purchaser's counsel shall serve as escrow agent
thereunder (the "Escrow Agent"). Purchaser may exercise such right of set-off
against (i) all or a portion of the Medialink Shares and/or (ii) all or a
portion of the payments due and payable to Seller and Shareholder under this
Agreement and/or the Non-Compete Agreement, by giving written notice (the
"Set-Off Notice") of the exercise of such right of set-off to the Seller and
Shareholder, with a copy of such notice to be delivered to the Escrow Agent.
Such Set-Off Notice shall indicate that Purchaser has exercised its right of
set-off hereunder. Seller and Shareholder shall have the right, by written
notice, time being of the essence, within five (5) business days after receipt
of notice from Purchaser of their intention to seek to receive such Seller
Indemnified Amounts or Set-Off Amounts, to direct Purchaser or the Escrow Agent
to satisfy such Seller Indemnified Amount or Set-Off Amount from all or a
portion of either the Medialink Shares, or the payments under this Agreement or
the Non-Compete Agreement. Nothing herein shall be deemed to impair, diminish
or restrict the Purchaser's indemnification rights or set-off rights.
11.4. Indemnification by Purchaser.
(a) Subject to the terms and conditions set
forth herein, Purchaser indemnifies Seller and Shareholder against and agrees
to hold them harmless from any and all damage, loss, liability, expense
(including, without limitation, reasonable attorneys' fees and expenses in
connection with any action, suit or proceeding brought against or involving
Seller and Shareholder) and cost (collectively, "Seller Indemnified Amounts"
and together with Purchaser Indemnified Amounts, the "Indemnified Amounts")
incurred or suffered by Seller and Shareholder arising out of (i) any
misrepresentation or breach of warranty, or breach of any covenant or agreement
to be performed by Purchaser pursuant to this Agreement; (ii) any Assumed
Liabilities; (iii) all Taxes with respect to the Business and the Acquired
Assets for all periods following the Closing Date; (iv) except as otherwise
expressly provided in this Agreement, any and all damages, losses, expenses,
obligations, liabilities or deficiencies incurred or paid by Seller and
Shareholder as a result of a claim of any kind arising from the operation,
business or ownership of the Acquired Assets or the Business after the Closing
Date. The agreements and indemnities of Purchaser contained herein shall be
cumulative, except that Purchaser shall not recover more than once for the same
Seller Indemnified Amount.
(b) Seller agrees to give notice to
Purchaser promptly after learning of the assertion of any claim, or the
commencement of any suit, action or proceeding, in respect of which indemnity
may be sought hereunder. The failure of Seller to give such notice shall not
affect Purchaser's obligations unless Purchaser is actually prejudiced in the
defense of such claim, suit, action or proceeding in which case such failure to
provide such notice shall constitute a waiver of Seller's and Shareholder's
rights hereunder in respect of the claim, suit, action or proceeding with
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respect to which such notice was required to have been given hereunder to the
extent Purchaser has been actually prejudiced by such late notice.
(c) Except as otherwise provided in Section
11.4, Purchaser shall not be liable under this Section 11.4 for any settlement
of any claim, litigation or proceeding effected without its consent in respect
of which indemnity may be sought hereunder.
(d) The amount required to be paid to
Seller and Shareholder by Purchaser for any Seller Indemnified Amounts
hereunder shall be an amount reduced by (i) the tax benefits available to
Seller and Shareholder and (ii) any amount received by Seller under any
insurance coverage or from any other party alleged to be responsible therefor.
Such amounts shall be paid not later than thirty (30) days after receipt by
Purchaser of written notice from Seller stating that such Seller Indemnified
Amounts have been incurred and the amount thereof and of the related indemnity
payment; provided, however, that any disputed amounts shall be due and payable
within thirty (30) days after such amounts are finally determined to be owing
by Purchaser to Seller and Shareholder.
11.5. Conduct of Litigation. Each party indemnified
under the provisions of this Agreement, upon receipt of written notice of any
claim or the service of a summons or other initial legal process upon it in any
action instituted against it in respect of matters for which it is entitled to
indemnity under this Agreement, shall promptly give written notice of such
claim, or the commencement of such action, or threat thereof, to the party from
whom indemnity shall be sought hereunder. In the event such claim involves a
claim by a third party against the indemnified party, the indemnifying party
shall have ten (10) days after receipt of such notice to decide whether it will
undertake, conduct and control, through counsel of its own choosing and
reasonably acceptable to the indemnified party and at its own expense the
settlement or defense thereof, and if it shall so decide to undertake the
defense thereof, the indemnified party shall cooperate with it in connection
therewith, provided that the indemnified party may participate (subject to the
indemnifying party's control) in such settlement or defense through counsel
chosen by it, and provided further that the fees and expenses of such
indemnified party's counsel shall be borne by the indemnified party. If the
indemnifying party does not indicate or indicates that it will not undertake
the defense of such third party claim within the ten (10) day period above, the
indemnified party shall undertake and control the defense thereof and the
indemnifying party shall be liable for all fees and expenses of such defense,
including the fees and expenses of such indemnified party's counsel. The
indemnifying party may, without the consent of the indemnified party, settle or
compromise or consent to the entry of any judgment in any action involving only
the payment of money and which does not involve any undertaking which would
affect the operation of the Business or the use of the Acquired Assets by the
Purchaser after the Closing Date, which includes as an unconditional term
thereof the delivery by the claimant or plaintiff to the indemnified party of a
written release from all liability in respect of such action, which written
release shall be reasonably satisfactory in form and substance to counsel for
the indemnified party. The indemnifying party shall not, without the written
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consent of the indemnified party, settle or compromise any action involving
relief other than the payment of money in any manner that, in the reasonable
judgment of the indemnified party, would adversely affect the indemnified
party; provided, however, that if the indemnified party shall fail or refuse to
consent to a settlement, compromise or judgment proposed by the indemnifying
party and approved by the third person in any such action and a judgment
thereafter shall be entered or a settlement or compromise thereafter shall be
effected on terms less favorable in the aggregate to the indemnified party than
the settlement, compromise or judgment proposed by the indemnifying party, then
notwithstanding any other provision hereof the indemnifying party shall have no
liability hereunder with respect to any losses and damages in excess of those
that were provided for in the settlement, compromise or judgment proposed by
the indemnifying party or any costs or expenses related to such claim arising
after the date such settlement, compromise or judgment was so proposed. If the
indemnifying party does not notify the indemnified party within ten (10) days
after the receipt of the indemnified party's notice of a claim of indemnity
hereunder that it elects to undertake the defense thereof, the indemnified
party shall have the right to contest, settle or compromise the claim but shall
not thereby waive any right to indemnity therefor pursuant to this Agreement.
So long as the indemnifying party is contesting any such claim in good faith,
the indemnified party shall not pay or settle any such claim, unless such
settlement includes as an unconditional term thereof the delivery by the
claimant or plaintiff and by the indemnified party to the indemnifying party of
duly executed written releases of the indemnifying party from all liability in
respect of such claim, which written releases shall be reasonably satisfactory
in form and substance to counsel for the indemnifying party. The indemnified
party shall cooperate fully in all aspects of any investigation, defense,
pre-trial activities, trial, compromise, settlement or discharge of any claim
in respect of which indemnity is sought pursuant to Article XI.
11.6. Limitations on Indemnification. The Seller and
Shareholder shall be obligated to indemnify the Purchaser for the applicable
Indemnified Amounts hereunder up to a maximum aggregate amount equal to the
Purchase Price and Non-Compete Payment received by Seller and Shareholder.
11.7. Insurance. Each of the Purchaser and Seller
shall use their best efforts to collect the insurance proceeds pursuant to
Subsections 11.2(d) and 11.4(d) hereof. If the Purchaser or Seller, as the case
may be, receives an amount under insurance coverage, an amount is paid on its
behalf under insurance coverage, or from any other party with respect to the
Indemnified Amounts at any time subsequent to any indemnification provided by
Seller and Shareholder or Purchaser pursuant to Sections 11.2 and 11.3 hereof,
then Purchaser or Seller and Shareholder, as the case may be, shall promptly
reimburse the other for any payment made or expense incurred by the
indemnifying party in connection with providing such indemnification up to such
amount received by the indemnified party.
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ARTICLE XII
Section 12. Notices. Any notices or other communications
required or permitted hereunder shall be sufficiently given if sent by
registered or certified mail or overnight special delivery, postage prepaid,
addressed as follows:
To Seller:
Corporate TV Group, Inc.
747 Third Avenue
New York, NY 10017
Attention: Mr. Richard Frisch, President
To Shareholder:
Mr. Richard Frisch
Corporate TV Group, Inc.
747 Third Avenue
New York, NY 10017
Copy to:
Finkelstein Bruckman Wohl Most & Rothman, LLP
575 Lexington Avenue
New York, NY 10022-6102
Attention: Jack L. Most, Esq.
To Purchaser:
Medialink CTV
Division of Medialink Worldwide Incorporated
708 Third Avenue
New York, NY 10017
Attention: Mr. Laurence Moskowitz, President
Copy to:
Tashlik, Kreutzer & Goldwyn P.C.
833 Northern Boulevard
Great Neck, NY 11021
Attention: Theodore Wm. Tashlik, Esq.
or such other addresses as shall be furnished by like notice by such party. Any
such notice or communication shall be effective two days after it is sent.
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ARTICLE XIII
Section 13. Miscellaneous.
13.1. Nondisclosure of Agreement. Purchaser and
Seller shall make no public disclosure regarding the negotiations between the
parties, the existence of this Agreement or the specific financial and other
terms and conditions of this Agreement, unless such disclosure is agreed upon
by prior written approval of the parties hereto or unless required by law (in
which case the disclosing party shall, if practicable, prior to disclosure,
advise and consult with the other party and its counsel concerning such
disclosure), except by Seller to its brokers, employees, suppliers, customers,
broadcasters and other third parties in the ordinary course to advise them of
the transaction. No press release regarding this Agreement shall be made by
either party until such press release is approved in writing by both parties.
13.2. Brokers. Seller and Purchaser each represents
to the other that it has not dealt with any broker for this transaction and has
not employed any investment banker, broker, finder or intermediary in
connection with the transactions contemplated hereby who might be entitled to a
fee or a commission upon the consummation of the transactions contemplated
hereby. Purchaser and Seller agree to indemnify and hold each other harmless
from and against any loss, damage, liability, cost or expense (including
reasonable attorneys' fees) suffered or incurred as a result of any breach of
the foregoing representations.
13.3. Expenses. All legal, accounting and other
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses. Notwithstanding the foregoing, except for the fees of the Selected
Firm pursuant to Section 4.1(d) hereof, all audit expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid in accordance with the terms of that certain agreement between
Purchaser and Goldstein Golub Kessler & Company, P.C. dated April 11, 1997.
Purchaser shall be responsible for and shall pay the costs of any transfer
taxes as a result of the transfer of the Acquired Assets.
13.4. Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns. This Agreement may be assigned by
either party only with the prior written consent of the other party except that
Purchaser (or any affiliate of Purchaser) may assign, delegate or otherwise
transfer any or all of its rights or obligations under this Agreement to any of
its affiliates (including without limitation assignment of Purchaser's rights
to acquire the Acquired Assets to a subsidiary incorporated in the United
States or to any successor in interest to the Business by purchase of stock or
assets or by merger or consolidation, provided that such successor expressly in
writing assumes all obligations and liabilities of Purchaser hereunder.
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13.5. Entire Agreement; Amendment. This Agreement
and the Confidentiality Agreement embody the entire agreement of the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect thereto. This
Agreement may be amended, and any provision hereof waived, but only in a
writing signed by each of the parties hereto.
13.6. Counterparts. This Agreement may be executed
in counterparts, all of which shall together constitute one and the same
instrument. All documents and signatures required hereunder may be delivered or
exchanged by telecopy and telecopied signatures shall be effective as originals
thereof.
13.7. Agreement to Take Necessary and Desirable
Actions. Seller, Shareholder and Purchaser each agree to use its best efforts
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.
13.8. Headings. The headings of Articles and
Sections herein are inserted for convenience of reference only and shall be
ignored in the construction or interpretation hereof.
13.9. Governing Law. This Agreement shall be
governed by and interpreted and enforced under the laws of the State of New
York applicable to contracts made and to be performed therein between residents
of New York. Except in respect of any action commenced by a third party in
another jurisdiction, the parties hereto agree that any legal suit, action or
proceeding against them arising out of or relating to this Agreement shall be
brought exclusively in the United States Federal Courts or New York Supreme
Court, in the State of New York. The parties hereto hereby accept the
jurisdictions of such courts for the purpose of any such action or proceeding,
and agree that venue for any action or proceeding brought in the State of New
York shall lie in the Southern District of New York or Supreme Court, New York
or Nassau County, as the case may be. Each of the parties hereto hereby
irrevocably consents to the service of process in any action or proceeding in
such courts by the mailing thereof by United States registered or certified
mail postage prepaid to such party at its address set forth herein.
13.10. Consents. Seller and Purchaser shall each, on
and prior to the Closing Date, use its best efforts to obtain from each person,
firm, association, corporation and governmental authority all consents and
approvals which are necessary to authorize and validate the sale, transfer and
assignment of the Acquired Assets to be assigned to Purchaser, and otherwise to
effectuate the purposes of this Agreement.
13.11. No Implied Waiver. No failure or delay on the
part of the parties hereto to exercise any right, power or privilege hereunder
or under any
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instrument executed pursuant hereto shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. All rights and remedies granted herein shall be in addition to
other rights and remedies to which the parties may be entitled at law or in
equity.
IN WITNESS WHEREOF, this Agreement has been duly executed on
behalf of each of the parties hereto by their duly authorized officers as of
the day and year first above written.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ Laurence Moskowitz
----------------------------------
Laurence Moskowitz
Title: President
CORPORATE TV GROUP, INC.
By: /s/ Richard Frisch
----------------------------------
Richard Frisch
Title: President
/s/Richard Frisch
--------------------------------------
Richard Frisch, individually
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EXHIBIT 24.1
<PAGE>
INDEPENDENT AUDITOR'S CONSENT
To the Board Of Directors
Medialink Worldwide Incorporated
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement of Medialink Worldwide
Incorporated on Form S-8 of our report dated June 6, 1997 on the financial
statements of Corporate TV Group, Inc. as of April 30, 1997 and December 31,
1996 and 1995 and for the period from January 1, 1997 through April 30, 1997,
the year ended December 31, 1996 and for the period from August 1, 1995 (date
operations commenced) through December 31, 1995.
/s/ Goldstein Golub Kessler & Company, P.C.
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C.
New York, New York
June 26, 1997
<PAGE>
EXHIBIT 28.1
<PAGE>
EMPLOYMENT AGREEMENT (the "Agreement"), dated as of June 16,
1997, by and between MEDIALINK WORLDWIDE INCORPORATED, a Delaware corporation
with offices at 708 Third Avenue, New York, New York 10017 (the "Corporation"),
and RICHARD FRISCH, an individual having an address c/o Corporate TV Group,
Inc., 747 Third Avenue, New York, NY 10017 (the "Employee").
W I T N E S S E T H:
WHEREAS, the Corporation and Corporate TV Group, Inc.
("CTV"), a New York corporation owned by the Employee, are parties to that
certain asset purchase agreement dated of even date herewith, (the "Asset
Purchase Agreement");
WHEREAS, the Corporation acquired substantially all of the
assets of CTV and such business is to be operated by the Medialink MCT Division
of the Corporation ("MCT");
WHEREAS, the Corporation desires to retain the services of the
Employee upon the terms and conditions hereinafter set forth; and
WHEREAS, the Employee desires to render services to the
Corporation upon the terms and conditions hereinafter set forth.
NOW, WHEREFORE, the parties mutually agree as follows:
Section 1. Employment. On the date hereof (the "Effective
Date") the Corporation employs the Employee and the Employee on the Effective
Date accepts such employment, as an executive of the Corporation, subject to
the terms and conditions set forth in this Agreement.
<PAGE>
Section 2. Duties.
2.1. Title, Duties and MCT Services. The Employee
shall be employed as a Senior Vice President of the Corporation and the
President and Chief Executive Officer of MCT. The Employee shall properly
perform the duties of the Chief Executive Officer of MCT and shall report only
to the Corporation's Chief Executive Officer and the Board of Directors of the
Corporation. During the term of this Agreement, the Employee shall devote all
of his available business time to the performance of his duties hereunder. MCT
shall be the video communications, consulting and production group of the
Corporation. It shall provide internal and external video communications
services and consulting for corporations, the public relations industry and
non-profit groups. The external services of MCT shall include video news
releases, video conferences, video primers, corporate image films and any video
presentation tool targeted to a designated audience. The internal services
shall include live and taped employee communications programs, management
presentations and advising clients on strategy and development of programming
to reach desired audiences. MCT's clients shall initially be derived from the
existing CTV client base with new sales derived from MCT's sales and marketing
staff and, with the approval of the Corporation, the Corporation's client base.
Clients referred to MCT from the Corporation shall be those who, in the opinion
of the Corporation's management, show potential for development as MCT clients.
2.2. Duties as MCT President. The Employee shall be
responsible for the creative content and operations (including the hiring and
firing of personnel, establishing compensation, including salary and bonuses,
in each case with
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the approval of the Chief Executive Officer of the Corporation) of MCT, all in
accordance with an agreed budget for MCT. Employee will use his best efforts to
manage the client accounts of MCT to achieve the highest standards of corporate
video communications. The Employee shall supervise the production and
operations staff of MCT, with responsibility and authority over the work effort
and product results and shall have the opportunity to produce high quality
productions. The Employee, working with the Corporation's sales and marketing
and operations executives, will develop a plan for referrals of the
Corporation's clients to MCT. Employee will also train and advise the
Corporations's account executives in the processes and procedures required to
qualify, present clients and refer accounts to MCT. The Employee will be
required to identify, hire and train, as approved by the Corporation,
additional MCT media consultants as business growth requires and to develop the
appropriate production capabilities needed for client assignments, with the
goal being to achieve maximum consolidation with the Corporation's operations,
when possible. The Employee shall regularly communicate with the senior sales,
operations and international staff of the Corporation to continually analyze
and develop cross-referrals of MCT client organizations and other customers and
clients of the Corporation. The Employee shall use his best efforts to maximize
the resources of the Corporation and MCT to enhance the revenues and
profitability of the Corporation. The Corporation shall take all appropriate
steps to ensure that the Employee shall be invited to attend all Corporation
senior executive meetings and all meetings of the Corporation's Board of
Directors in order to maximize the continuity and cooperation of all segments
of the Corporation with MCT.
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2.3. Duties as Corporate Senior Vice President. The
Employee shall be presented with all business planning, marketing, sales
operations and administrative function proposals and plans of the Corporation
to provide his suggestions and advice. The Employee will attend all senior
management meetings and all appropriate meetings of all departments in order to
participate in all aspects of planning, development and operations,
particularly in order to assist in developing new and alternative business
strategies and the implementation of approved plans, with the intent of
maximizing the business results of the Corporation.
Section 3. Term of Employment. The term of the
Employee's employment shall commence on the Effective Date and shall continue
for five (5) years or until terminated pursuant to Section 5 hereof.
Section 4. Compensation of Employee.
4.1. Compensation. The Corporation shall pay to the
Employee as annual compensation for his services hereunder a salary ("Salary")
in an amount equal to Two Hundred Fifty Thousand ($250,000) Dollars per annum.
The Salary shall be increased on the anniversary date of this Agreement by the
percentage increase, if any, in the Consumer Price Index, as defined herein,
for the most recent calendar month for which the Consumer Price Index has been
published over the Consumer Price Index for the same calendar month in the
immediately preceding year. As used herein, the "Consumer Price Index" shall
mean the Consumer Price Index for All Urban Consumers, New York - Northeastern
New Jersey area (1982-84=100) issued by the Bureau of Labor Statistics of the
United States Department of Labor; provided
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that in the event the Consumer Price Index shall hereafter be converted to a
different standard reference base or otherwise revised, the determination of
the salary increase shall be made with the use of such conversion factor,
formula or table for converting the Consumer Price Index as may be published by
the Bureau of Labor Statistics. The Salary shall be payable bi-weekly less such
deductions as shall be required to be withheld by applicable law and
regulations. The Employee shall be eligible to participate in the Corporation's
annual bonus plan. Such annual bonus (the "Annual Bonus") shall be determined
by the Corporation's Compensation Committee; provided, however, that the
Employee's minimum Annual Bonus on the first anniversary date of this Agreement
shall be $125,000 and the minimum Annual Bonus on each anniversary date of the
Agreement thereafter shall be increased by the percentage increase, if any, in
the Consumer Price Index for the most recent calendar month for which the
Consumer Price Index has been published over the Consumer Price Index for the
same calendar month in the immediately preceding year.
4.2. Additional Bonus. In addition to his Salary and
Annual Bonus, the Employee shall receive an additional bonus (the "Additional
Bonus") with respect to each year of employment hereunder equal to (a) five
(5%) percent of MCT's Pre-Tax Net Income (as hereinafter defined) in excess of
(i) $2,000,000 for Year One, (ii) $2,250,000 for Year Two, (iii) $2,500,000 for
Year Three, (iv) $2,500,000 for Year Four and (v) $2,500,000 for Year Five (as
such terms are defined in the Asset Purchase Agreement) plus (b) an amount
based on the Corporation's then current Executive Bonus Pool for executive
officers of the Corporation calculated based upon
5
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(x) 1% of the increase in the Corporation's Revenue, (y) .75% of the increase
in the Corporation's operating income and (z) .75% the Corporation's operating
income less (xx) (5%) percent of the Target Amount, as defined in the Asset
Purchase Agreement, for each of Year One through and including Year Five. Such
amount shall be reduced on a pro rata basis in the event the aggregate amount
of the bonuses of the executive officers of the Corporation participating in
the Corporation's Executive Bonus Plan exceeds ten (10%) percent of the
Corporation's operating income. For purposes of calculating the Executive Bonus
Payment, operating income shall be net of goodwill amortization.
By way of illustration, assuming (x) the increase in the
Corporation's revenue is $7,169,000; (y) the increase in operating income is
$2,149,085 and (z) the Corporation's operating income is $4,500,000 after
deducting $100,000 or 5% of the Target Amount for Year One, the Employee shall
be entitled to receive an Executive Bonus Payment under Section 4.2(b) hereof
in Year One in the amount of $21,558.00. Notwithstanding the foregoing, the
Executive Bonus Pool may be amended from time to time by the Board of Directors
or Compensation Committee of the Corporation; provided, that no such amendment
shall cause Employee to receive less compensation than he would have received
based on the Executive Bonus Payment as described herein. The portion of the
Additional Bonus pursuant to Section 4.2(a) hereof (the "4.2(a) Additional
Bonus") shall be payable within thirty (30) days after the Corporation's
determination of the Pre-Tax Net Income of MCT, as hereinafter defined, for
each such Year. Such determination shall be made within sixty (60) days of the
end of such Year and a copy of such determination shall be submitted to the
Employee within such 60 day period. If within thirty (30) days of receipt of
such copy,
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Employee shall disagree as to the calculation of the 4.2(a) Additional Bonus
then the Employee shall provide prompt notice thereof to the Corporation within
such thirty (30) day period and Ernst & Young or successor (the "Selected
Firm") shall then be authorized to determine the 4.2(a) Additional Bonus. The
audit by the Selected Firm shall be completed within sixty (60) days after
their audit appointment and shall be final, binding and conclusive upon the
parties hereto. The cost of the Selected Firm's audit of the 4.2(a) Additional
Bonus shall be borne by the Employee in the event the Selected Firm determines
that the 4.2(a) Additional Bonus is equal to or less than the Corporation's
calculation thereof or by the Corporation in the event such audit determines
that the 4.2(a) Additional Bonus is greater than the Corporation's calculation
of the 4.2(a) Additional Bonus. A portion of the Additional Bonus pursuant to
Section 4.2(b) hereof shall be payable (i) on a semi-annual basis at such time
that executive bonus payments are made to the executive officers of the
Corporation participating in the Executive Bonus Plan and (ii) the balance
thereof within thirty (30) days after the publication of the Corporation's
audited financial statements.
4.3. (i) Pre-Tax Net Income Defined. The term
"Pre-Tax Net Income" as used in this Agreement shall mean the MCT Division
Revenue, as such term is hereinafter defined, attributable to the performance
of services by the MCT Division less (i) Direct Costs, as hereinafter defined,
(ii) Salary and Related Costs, as hereinafter defined, (iii) Telephone Charges,
as hereinafter defined, (iv) General and Administrative Costs, as hereinafter
defined and (v) Corporate Overhead, as hereinafter defined, prior to the
payment or provision for any Federal, state or local income or other taxes, but
after all expenses incurred or allocated to MCT and after deducting the
Executive's Salary and Annual Bonus for each such Year, as computed
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<PAGE>
by the Corporation's Accountants. The MCT Division Pre-Tax Net Income shall be
calculated on the operating results of the MCT Division on an accrual basis
using the Corporation's standard accounting practices and policies, excluding
goodwill amortization and gains and losses arising from the disposition of
assets not in the ordinary course of business.
"Direct Costs" shall mean those costs incurred solely for the
purpose of a specific revenue generating project. Direct costs include, but are
not limited to, camera crews and equipment, playout, uplink and satellite time,
tape dubbing and distribution charges, editing and studio costs. In addition,
direct costs include the use of third party labor for production, editing etc.
In the event that the MCT Division uses the Corporation's employees for
production etc. they will be charged to the MCT Division on the basis of the
rates on Schedule A hereto. The Schedule A rates will be increased at the
beginning of each of Year Two through Year Five by the CPI, as hereinafter
defined. The MCT Division will be charged for the use of the Corporation's
services such as video and audio distribution in accordance with Schedule A.
Direct costs will also include sales commissions on MCT Division Revenue
including commissions paid to the Corporation's sales people arising from that
portion of the MCT Division Revenue set forth in subparagraph (iv) of the
definition of MCT Division Revenue.
"Salary and Related Costs" shall mean all employment costs of
MCT Division employees, including but not limited to, salaries and bonuses,
medical, dental and disability premiums, employers contributions as to any 401K
or other pension plan together with the costs of administering such plans and
employment taxes. Wherever practicable, such costs will be allocated to MCT
Division on an actual basis. In all
8
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other instances, the cost will be allocated to MCT Division on a pro rata basis
calculated by multiplying (x) the actual cost of the Corporation (including the
MCT Division) by (y) (i) the number of MCT Division employees associated with
that cost divided by (ii) the total number of the Corporation's employees
(including the MCT Division employees) associated with that cost ("Employee
Allocation Method"). Any compensation charged to MCT Division employees arising
from the exercise of stock options granted to such employees by the Purchaser
shall not be deducted from Pre-Tax Net Income.
"Telephone Charges" shall mean the actual charges therefor,
if possible, and if not possible shall be allocated to the MCT Division on a
pro rata basis calculated by multiplying (x) the total telephone charges of the
Corporation by (y) a fraction, the numerator of which is the MCT Division
Revenue and the denominator of which is the total United States revenue of the
Corporation (including the MCT Division Revenue) ("Revenue Allocation Method").
"General and Administrative Costs" shall mean all other costs
incurred by MCT Division that were not included in Direct Costs or Salary and
Related Costs and excluding interest expense. General and Administrative Costs
incurred solely for the MCT Division will be charged directly to MCT Division
on an actual basis wherever practicable ("Directly Charged Costs"). In all
other instances the cost will be allocated to MCT Division on a pro rata basis
in accordance with Schedule B attached hereto.
"Corporate Overhead" shall mean a management fee charged by
the Corporation to the MCT Division to cover administrative costs, marketing
support, management time, and the cost of employment of Mary Gyurindak,
accountant, and Bobbie Levine, office manager, calculated as the greater of (i)
a base amount of
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$110,000 (per annum ("Base Amount Charge") for each of Year One through Year
Five, as defined in the Asset Purchase Agreement) or (ii) 1.8% of MCT Division
Revenue in Year One through Year Five; provided that such Base Amount Charge to
revenue shall increase by 15% per annum compounded annually for each of Year 2,
Year 3, Year 4 and Year 5.
(ii) "MCT Division Revenue" shall mean all revenue
derived from (i) existing clients of CTV, (ii) revenue from new clients of the
MCT Division, excluding revenue from the Corporation's existing clients, (iii)
revenue generated by the MCT Division edit suite, and the MCT Division will
charge the Corporation for the use of the edit suite in accordance with
Schedule A; and (iv) revenue from clients of the Corporation introduced to the
MCT Division earned as follows: (a) MCT Division revenue will be credited for
all "non-media video" revenue, such as corporate identity tapes, lobbying
tapes, videos for corporate events; (b) for all traditional broadcast revenue,
such as Video News Releases, Audio News Releases, Satellite Media Tours and
Radio Media Tours, the MCT Division will be credited for revenue in excess of
the average of the previous two years broadcast revenue of the Corporation from
such clients for such services; and (c) one-half of all the Corporation's
revenue from videoconferences will be credited to the MCT Division and one-half
shall be credited to the Corporation.
4.4. Expenses. The Corporation shall pay or
reimburse the Employee for all reasonable and necessary business, travel or
other expenses
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incurred by him with the prior consent of the Corporation, upon proper
documentation thereof, which may be incurred by him in connection with the
rendition of the services contemplated hereunder.
4.5. Benefits. During the term of this Agreement,
the Employee shall be entitled to participate in such pension, profit sharing,
group insurance, option plans, hospitalization, group health benefit plans and
all other benefits and plans as the Corporation provides to its senior
executive officers. Any air travel by Employee in connection with his duties
hereunder shall be on business class and shall be at the expense of the
Corporation. During the term of his employment hereunder, the Corporation shall
lease an automobile for the Employee in connection with his duties hereunder.
The aggregate monthly expense of the Corporation for such automobile lease
payments, and associated maintenance and insurance payments, shall not exceed
$1,400 per month. The Corporation shall reimburse Employee for all costs
associated with a telephone and facsimile line in each of the Employee's two
(2) residences, a car telephone in his automobile and mobile cellular
telephone, all of which shall be used exclusively for business related matters.
Section 5. Termination.
5.1. Termination of Employment. This Agreement shall
terminate upon the death, Disability, as hereinafter defined, termination of
employment of the Employee For Cause, as hereinafter defined, termination of
the employment of Employee without cause or because Employee wrongfully leaves
his employment hereunder.
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5.2. Termination For Cause. In the event of a
termination For Cause or because Employee wrongfully leaves his employment
hereunder, the Corporation shall pay Employee all accrued and unpaid Salary and
vacation through the date of termination.
5.3. Termination Without Cause. In the event of a
termination without cause, the Employee shall be entitled to continue to
participate in the hospitalization, group health benefit and disability plans
of the Corporation on the same terms and conditions as immediately prior to his
termination and shall receive his Salary, Annual Bonus and Additional Bonus, if
any, both for a period equal to the earlier of (i) the date the Employee
commences employment elsewhere; or (ii) the date the term would have expired
pursuant to Section 3 of this Agreement had the Employee not been terminated.
5.4. Termination Upon Death. In the event of a
termination upon the death of Employee, the Corporation shall pay to the
Employee, any person designated by the Employee in writing or if no such person
is designated, to his estate, as the case may be, the Salary, Annual Bonus and
Additional Bonus, if any, which would otherwise be payable to the Employee for
a period of one (1) year from the date of such death. In the event of a
termination upon the death of Employee, the Corporation shall pay for a period
of six (6) months after such death, on behalf of the Employee's surviving
dependents, the COBRA insurance premiums of such dependents.
5.5. Termination Upon Disability. In the event of a
termination upon the Disability of Employee, the Corporation shall pay to the
Employee or any person designated by the Employee, (i) during the first month
immediately after the
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termination of employment due to such Disability, the Salary which would
otherwise by payable to the Employee and (ii) during the second and third
months immediately after the termination of employment due to such Disability,
the difference between the Salary which would otherwise be payable to the
Employee and the disability insurance payments received by Employee for such
period.
5.6. Definition of "For Cause". As used herein, the
term "For Cause" shall mean (i) Employee's indictment, plea or conviction in a
court of law of any crime or offense involving willful misappropriation of
money or other property or any other crime involving moral turpitude which
constitutes felony, whether or not involving the Corporation; or (ii)
disobedience of a lawful directive which is not cured within fifteen (15) days
after notice, other than a directive to relocate to an office of the
Corporation more than fifty (50) miles from the office where Executive is
employed pursuant to this Agreement, from the Chief Executive Officer or Board
of Directors of the Corporation consistent with Employee's duties hereunder or
(iii) breach of his responsibilities under this Agreement.
Section 6. Disability
6.1. Definition. In the event the Employee is
mentally or physically incapable or unable to perform his regular and customary
duties of employment with the Corporation for a period of seventy-five (75)
days in any one hundred twenty (120) day period during the term, the Employee
shall be deemed to be suffering from a "Disability".
6.2. Payment During Disability. In the event the
Employee is unable to perform his duties hereunder by reason of a disability,
which disability does not constitute a Disability, the Corporation shall
continue to pay the Employee his
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Salary, Annual Bonus, Additional Bonus, if any, and benefits during the
continuance of such disability.
Section 7. Vacations and Personal Days. The Employee shall be
entitled to four (4) weeks vacation and personal days in accordance with
Corporation policy. The Employee's Salary shall be paid in full during his
vacation and personal days. The Employee shall take his vacation at such time
or times as the Employee and the Corporation shall determine is mutually
convenient.
Section 8. Disclosure of Confidential Information and
Non-Compete.
(a) The Employee hereby acknowledges that
the principal business of the Corporation is the production of video and audio
public relations materials for distribution to news media and the distribution
by satellite or other means to television and radio stations and news media
services; distribution of public relations text, audio and video to news media
and the general public via satellite, cassette, Internet, wire or other means;
distribution of press releases by mail and facsimile; the maintenance of
databases of media contacts for and on behalf of clients; analysis and written
appraisal of public relations and public affairs campaigns as determined
through press clipping review, either on paper, video or audio tape or
electronic database searches and such other businesses as the Corporation may
conduct from time to time (the "Business"). Employee acknowledges that he has
knowledge of the Business and will be acquiring confidential information
concerning the Corporation and the Business and that, among other things, his
knowledge of the Business will be enhanced through his employment by the
Corporation. Employee acknowledges that such information is of great value to
the Corporation, is the sole property of the Corporation, and has been and will
be acquired by him in confidence.
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In consideration of the obligations undertaken by the Corporation herein,
Employee will not, at any time, during or after the term of this Agreement,
reveal, divulge or make known to any person, any information which is treated
as confidential by the Corporation and not otherwise in the public domain or
previously known to him.
(b) Reference is made to a Confidentiality
Agreement (the "Confidentiality Agreement"), dated of even date herewith, by
and between the Corporation and the Employee. The terms and conditions of the
Confidentiality Agreement shall be in addition to and not in lieu of the
provisions of this Section 8.
(c) The Confidentiality Agreement and the
provisions of this Section 8 shall survive Employee's employment hereunder.
(d) Reference is made to a Non-Compete
Agreement (the "Non-Compete Agreement"), dated of even date herewith, by and
among CTV, the Corporation and the Employee. The terms and conditions of the
Non-Compete Agreement shall be in addition to and not in lieu of the provisions
of this Section 8.
(e) The Non-Compete Agreement shall survive
the termination of Employee's employment hereunder.
Section 9. Rights and Remedies Upon Breach of Section 8.
Employee acknowledges that the services to be rendered under the provisions of
this Agreement are of a special, unique and extraordinary character and that it
would be difficult or impossible to replace such services. Accordingly,
Employee agrees that any breach or threatened breach by him of Section 8 of
this Agreement shall entitle the Corporation, in addition to all other legal
remedies available to it, to apply to any court of competent jurisdiction to
enjoin such breach or threatened breach without posting a bond or showing
special damages. The parties understand and intend that each
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restriction agreed to by Employee hereinabove shall be construed as separable
and divisible from every other restriction, that the unenforceability of any
restriction shall not limit the enforceability, in whole or in part, of any
other restriction, and that one or more of all of such restrictions may be
enforced in whole or in part as the circumstances warrant. In the event that
any restriction in this Agreement is more restrictive than permitted by law in
the jurisdiction in which the Corporation seeks enforcement thereof, such
restriction shall be limited to the extent permitted by law.
Section 10. Miscellaneous.
10.1. Assignment. The Employee may not assign or
delegate any of his rights or duties under this Agreement.
10.2. Entire Agreement. This Agreement constitutes
and embodies the full and complete understanding and agreement of the parties
with respect to the Employee's employment by the Corporation, and with the
exception of the Confidentiality Agreement and the Non-Compete Agreement,
supersedes all prior understandings and agreements, including employment
agreements, if any, whether oral or written, between the Employee and the
Corporation regarding employment and shall not be amended, modified or changed
except by an instrument in writing executed by the party to be charged. The
invalidity or partial invalidity of one or more provisions of this Agreement
shall not invalidate any other provision of this Agreement. No waiver by either
party of any provision or condition to be performed shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or any prior or
subsequent time.
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10.3. Binding Effect. This Agreement shall inure to
the benefit of, be binding upon and enforceable against, the parties hereto and
their respective successors and permitted assigns.
10.4. Captions. The captions contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
10.5. Notices. All notices, requests, demands and
other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered
or sent by certified mail, postage prepaid, or overnight delivery to the party
at the address set forth above or to such other address as either party may
hereafter give notice of in accordance with the provisions hereof.
10.6. Governing Law. This Agreement shall be
governed by, enforced and interpreted under the laws of the State of New York
applicable to contracts made and to be performed therein without giving effect
to the principles of conflict of laws thereof. Except in respect of any action
commenced by a third party in another jurisdiction, the parties hereto agree
that any legal suit, action, or proceeding against them arising out of or
relating to this Agreement shall be brought exclusively in the United States
Federal Courts or New York Supreme Court, as the case may be, in the State of
New York. The parties hereto hereby accept the jurisdictions of such courts for
the purpose of any such action or proceeding and agree that venue for any
action or proceeding brought in the State of New York shall lie in the Southern
District of New York or Supreme Curt, New York or Nassau County, as the case
may be.
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Each of the parties hereto hereby irrevocably consents to the service of
process in any action or proceeding in such courts by the mailing thereof by
United States registered or certified mail postage prepaid at its address set
forth herein.
10.7. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. All documents and signatures required hereunder may be delivered or
exchanged by telecopy and telecopied signatures shall be effective as originals
thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ Laurence Moskowitz
-------------------------------
/s/ Richard Frisch
-----------------------------------
RICHARD FRISCH
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SCHEDULE A
This Schedule will be mutually agreed to by the Corporation
and the Employee within 60 days from the date hereof based upon reasonable and
customary charges of the Corporation and MCT.
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SCHEDULE B
General and Administrative Cost Allocation Method
- ------------------------------- -----------------
Advertising Directly Charged Costs
Couriers Directly Charged Costs
Postage Employee Allocation Method
Rent Employee Allocation Method
Travel Directly Charged Costs
Entertainment Directly Charged Costs
Marketing Directly Charged Costs
Sales promotion Directly Charged Costs
Telephone Revenue Allocation Method
Equipment rentals Directly Charged Costs
Equipment leases Directly Charged Costs
Depreciation Directly Charged Costs
Amortization Directly Charged Costs
Repairs and maintenance Directly Charged Costs
Dues and subscriptions Directly Charged Costs
Office supplies Employee Allocation Method
Hotels Directly Charged Costs
Meals Directly Charged Costs
Personnel Directly Charged Costs
Miscellaneous Directly Charged Costs
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EXHIBIT 28.2
<PAGE>
NON-COMPETE AGREEMENT
NON-COMPETE AGREEMENT, dated as of June 16, 1997, by and
between MEDIALINK WORLDWIDE INCORPORATED, a Delaware corporation with offices
at 708 Third Avenue, New York, New York 10017 ("Medialink"), CORPORATE TV
GROUP, INC., a New York corporation with offices at 747 Third Avenue, 24th
Floor, New York, New York 10017 ("Corporate TV") and RICHARD FRISCH, an
individual having an address c/o Corporate TV at 747 Third Avenue, 24th Floor,
New York, New York 10017 ("Frisch"). All capitalized terms not defined herein
shall have the meaning ascribed to them in the Asset Purchase Agreement, as
hereinafter defined.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Asset Purchase Agreement
(the "Asset Purchase Agreement"), dated as of the date hereof, by and among
Medialink, Corporate TV Group, Inc. ("Corporate TV") and Frisch, Medialink has
acquired substantially all of the assets of Corporate TV; and
WHEREAS, Frisch was the President of Corporate TV and the
sole shareholder of Corporate TV, a corporation engaged in the business of
providing value added services constituting strategic promotional services,
including the production and distribution of video and audio news releases,
press conferences and satellite media tours; and
WHEREAS, as an additional inducement to Medialink to
consummate the transactions contemplated by the Asset Purchase Agreement,
Corporate TV and Frisch have agreed to enter into this Non-Compete Agreement,
on the terms and subject to the conditions herein contained.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Covenant Not To Compete and Confidentiality
Covenant.
1.1. Non-Compete. Frisch hereby acknowledges that he
was a director, officer, employee and the sole shareholder of Corporate TV.
Frisch and
<PAGE>
Corporate TV acknowledge that (i) the principal business of Medialink is
providing video and audio production and distribution services for businesses
and other organizations seeking to communicate their news through television,
radio and other media (the "Medialink Business"), and such other businesses as
Medialink may conduct from time to time during the Restricted Period, as
defined herein; (ii) the principal business of Corporate TV is providing value
added services constituting strategic promotional services, including the
production and distribution of video and audio news releases, press conferences
and satellite media tours (such business as shall be conducted by Medialink
shall be referred to herein as the "MCT Division" and, together with the
Medialink Business, collectively, the "Business"); (iii) Frisch's work for and
position with the MCT Division and his position with Medialink has given him
and will give him access to the confidential affairs and proprietary
information of Medialink and MCT Division and their affiliates not readily
available to the public; and (iv) the agreements and covenants of Frisch and
Corporate TV contained in this Section 1 are essential to the business and
goodwill of Medialink and the MCT Division and Medialink would not consummate
the Asset Purchase Agreement without the non-compete covenants contained
herein. Accordingly, each of Frisch and Corporate TV does hereby agree, that,
each of them will not, nor will their respective affiliates, directly or
indirectly, as a shareholder, director, officer, partner, joint venturer,
employee, consultant or agent, in the Territory, as hereinafter defined, at any
time during the Restricted Period, as hereinafter defined:
(a) engage in the Business for his or its
account or render any services which constitute engaging in the Business, in
any capacity to any entity; or become interested in any entity engaged in the
Business either on his or its own behalf or as an officer, director,
stockholder, partner, principal, consultant, associate, employee, agent,
creditor, independent contractor, or co-venturer of any third party or in any
other relationship or capacity;
(b) employ or engage, or cause or
authorize, directly or indirectly, to be employed, or engaged, for or on behalf
of himself, itself or any third party, any employee, representative or agent of
Medialink;
(c) solicit, directly or indirectly, on
behalf of himself, itself or any third party, any client or vendor of Medialink
and its affiliates; or
(d) have an interest as an owner, lender,
independent contractor, co-venturer, partner, participant, associate or in any
other capacity, render services to or participate in the affairs of, any
business which is competitive with, or substantially similar to, the Business
and its affiliates as presently conducted and as may be conducted by Medialink
during the Restricted Period.
This Section 1.1 shall not be construed to prevent Frisch
from owning, directly and indirectly, in the aggregate, an amount not exceeding
two percent (2%) of the issued and outstanding voting securities of any class
of any corporation whose
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voting capital stock is traded on a national securities exchange or in the
over-the-counter market.
Notwithstanding anything to the contrary set forth in this
Section 1.1, Frisch and Corporate TV (i) shall not be prohibited from rendering
services for news organizations, or public relations departments or public
relations agencies; (ii) may act as a news reporter or manager for an entity
whose primary function is journalism; (iii) may act as a member of the internal
public relations staff of any corporation or entity who performs services for
only that corporation or its affiliates, including parent corporations,
subsidiaries, and joint ventures; and/or (iv) may act as an account executive
or manager at a public relations agency directly serving that agency's clients.
Notwithstanding the prior sentence, however, Frisch and Corporate TV may not
render services, directly or indirectly, (i) for any organization, department,
or affiliate of such news organizations, corporate public relations
departments, or public relations agencies, whose primary purpose is to provide
the production and distribution of video or audio news releases, satellite
media tours and related Internet services that are competitive with, or
substantially similar to, the Business, and (ii) for any organization,
department, or affiliate of such news organizations, corporate public relations
departments, or public relations agencies, whose primary purpose is to provide
the research and analysis of public relations and public affairs campaigns as
determined through press clipping review, either on paper, video or audio tape
or electronic database searches that are competitive with or substantially
similar to the Business.
1.2. Unenforceability. If any of the restrictions
contained in this Section 1 shall be deemed to be unenforceable by reason of
the extent, duration or geographical scope thereof, or otherwise, then after
such restrictions have been reduced so as to be enforceable, in its reduced
form this Section shall then be enforceable in the manner contemplated hereby.
1.3. Restricted Period. The term "Restricted Period"
as used in this Section 1, shall mean the seven and one-half (7 1/2) year
period commencing on the date hereof and ending on December 16, 2004.
1.4. Territory Defined. The term "Territory" as used
herein shall mean the entire world.
1.5. Confidentiality. Each of Frisch and Corporate
TV does hereby agree that each of them will not, nor will their respective
affiliates, directly or indirectly, at any time during or after the Restricted
Period, except for the benefit of Medialink, reveal, divulge or make known to
any person, firm or corporation, or in any way use for their own benefit or for
the benefit of any affiliate, any trade secrets or confidential information,
obtained from Medialink, the MCT Division or their affiliates at any time.
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Section 2. Injunctive Relief. Frisch and Corporate TV
acknowledge that any breach or threatened breach by him or it of Section 1 of
this Agreement shall entitle Medialink and their affiliates, in addition to any
other legal remedies available to them, (i) to apply to any court of competent
jurisdiction to enjoin such breach or threatened breach without the requirement
of posting a bond or a showing of special damages and (ii) the right and remedy
to require Frisch, Corporate TV and their respective affiliates to account for
and pay over to Medialink, in their sole discretion, all compensation, profits,
monies, accruals, increments or other benefits (collectively, "Benefits")
derived or received by them as the result of any transactions constituting a
breach of the restrictive covenants of Section 1 hereof, and Frisch, Corporate
TV and their respective affiliates shall account for and pay over such Benefits
to Medialink and if specifically set forth in a judgment the right and remedy
to require Frisch to forfeit his right to receive compensation remaining to be
paid to him pursuant to Section 4 of the employment agreement with Medialink.
In addition, if Frisch or Corporate TV breaches or threatens to commit a breach
of Section 1 of this Agreement, (i) Frisch's unvested stock options shall
immediately lapse and (ii) Medialink shall have the right to purchase from
Frisch, Frisch's vested stock options for the book value of the shares of
Common Stock underlying such vested options less the exercise price of such
vested options. Medialink may set off any amounts due to Medialink under this
Non- Compete Agreement against any amounts owed to the Employee by Medialink.
Frisch acknowledges and agrees (i) he has had an opportunity to seek advice of
counsel in connection with this Agreement and (ii) the non-compete covenants
are reasonable by reason of the extent, duration and geographical scope and in
all other respects. In the event of a breach or threatened breach of this
Agreement, Medialink shall give prior written notice to Frisch or Corporate TV
setting forth the specific reasons for alleging such breach or threatened
breach, signed by an officer of Medialink (the "Notice"). To the extent that
the threatened breach can be cured by Frisch or Corporate TV within thirty (30)
days after receipt by either of them of the Notice, time of the essence, such
threatened breach shall not be deemed a breach hereunder if so cured. The
parties understand and intend that each restriction agreed to by Frisch or
Corporate TV hereinabove shall be construed as separable and divisible from
every other restriction, that the unenforceability of any one restriction shall
not limit the enforceability, in whole or in part, of any other restriction,
and that one or more or all of such restrictions may be enforced in whole or in
part as the circumstances warrant. In the event that any restriction in this
Agreement is more restrictive than permitted by the laws of the jurisdiction in
which Medialink or its affiliates seek enforcement thereof, such restriction
shall be limited to the extent permitted by law.
Section 3. No Employment or Equity Rights. This Agreement
shall not be deemed to confer any rights on Frisch to employment with
Medialink.
Section 4. Non-Compete Fee. As an additional inducement to
Frisch and Corporate TV to enter into the transactions contemplated by the
Asset Purchase Agreement, Frisch and Corporate TV have agreed to enter into
this Non-Compete Agreement, on the terms and subject to the conditions herein
contained. In
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consideration of the covenants contained herein Medialink shall pay to Frisch
and Corporate TV the sum of Three Hundred Thousand ($300,000) Dollars, payable
on the execution of this Agreement.
Section 5. Miscellaneous.
5.1. Entire Agreement. This Agreement constitutes
and embodies the full and complete understanding and agreement of the parties
with respect to the matters covered hereby, supersedes all prior understandings
and agreements, if any, whether oral or written, between Medialink, Corporate
TV and Frisch and shall not be amended, modified or changed except by an
instrument in writing executed by the party to be charged. The invalidity or
partial invalidity of one or more provisions of this Agreement shall not
invalidate any other provision of this Agreement. No waiver by either party of
any provision or condition to be performed shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or any prior or subsequent
time.
5.2. Binding Effect. This Agreement shall inure to
the benefit of, be binding upon and enforceable against, the parties hereto and
their respective successors. No assignment of any party's rights or obligations
shall be effective without the prior written consent of the other party hereto.
5.3. Captions. The captions contained in this
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
5.4. Notices. All notices, requests, demands and
other communications required or permitted to be given hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered
or sent by certified mail, postage prepaid, or special overnight delivery, to
the party at the address set forth above or to such other address as either
party may thereafter give notice of in accordance with the provisions hereof.
5.5. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. All documents and signatures required hereunder may be delivered or
exchanged by telecopy and telecopied signatures shall be effective as originals
thereof.
5.6. Governing Law. This Agreement shall be governed
by and interpreted and enforceable under the laws of the State of New York
applicable to contracts made and to be performed therein without giving effect
to the principles of conflict of laws thereof. Except in respect of any action
commenced by a third party in another jurisdiction, the parties hereto agree
that any legal suit, action, or proceeding against them arising out of or
relating to this Agreement shall be brought exclusively in
5
<PAGE>
the United States Federal Courts or New York State Supreme Court, in the State
of New York. The parties hereto hereby accept the jurisdictions of such courts
for the purpose of any such action or proceeding, and agree that venue for any
action or proceeding brought in the State of New York shall lie in the Southern
District of New York or New York Supreme Court, Nassau County or New York
County, as the case many be. Each of the parties hereto hereby irrevocably
consents to the service of process in any action or proceeding in such courts
by the mailing thereof by United States registered or certified mail postage
prepaid at its address set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth above.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ Laurence Moskowitz
----------------------------------
Laurence Moskowitz, President
CORPORATE TV GROUP, INC.
By: /s/ Richard Frisch
----------------------------------
/s/ Richard Frisch
--------------------------------------
Richard Frisch, individually
6
<PAGE>
SAGE REALTY CORPORATION, AGENT
LANDLORD
and
CORPORATE TV GROUP, INC.
TENANT
INDENTURE OF LEASE
PREMISES: Part of the 24th Floor
747 Third Avenue
New York, New York 10017
<PAGE>
TABLE OF CONTENTS
Article Page
- ------- ----
1 DEFINITIONS, TERM....................................................... 1
2 COMMENCEMENT OF TERM.................................................... 2
3 FIXED RENT, ADDITIONAL RENTS AND RENT ADJUSTMENTS....................... 3
A. Operating Expense Adjustment.............................. 5
B. Real Estate Tax Adjustment................................ 6
4 ELECTRICITY............................................................. 8
5 USE..................................................................... 12
6 REPAIRS, ALTERATIONS AND LIENS.......................................... 13
7 FLOOR LOAD, NOISE, WINDOW CLEANING...................................... 18
8 LAWS, ORDINANCES, REQUIREMENTS OF PUBLIC AUTHORITIES.................... 18
9 INSURANCE, PROPERTY LOSS, REIMBURSEMENT................................. 19
10 DAMAGE OR DESTRUCTION BY FIRE OR OTHER CAUSE............................ 22
11 ASSIGNMENT, SUBLETTING, MORTGAGING...................................... 24
12 NO LIABILITY ON LANDLORD................................................ 30
13 MOVING OF HEAVY EQUIPMENT............................................... 30
14 CONDEMNATION............................................................ 31
15 ENTRY, RIGHT TO CHANGE PUBLIC PORTIONS OF THE BUILDING.................. 32
16 BANKRUPTCY.............................................................. 33
17 DEFAULTS AND REMEDIES AND WAIVER OF REDEMPTION.......................... 34
18 LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS........................ 37
19 COVENANT OF QUIET ENJOYMENT............................................. 38
20 EXCAVATION.............................................................. 38
21 SERVICES AND EQUIPMENT.................................................. 38
22 DEFINITION OF LANDLORD.................................................. 42
23 INVALIDITY OF ANY PROVISION............................................. 42
24 BROKER.................................................................. 43
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25 SUBORDINATION........................................................... 43
26 ESTOPPEL CERTIFICATE.................................................... 44
27 LEGAL PROCEEDINGS, WAIVER OF JURY TRIAL................................. 45
28 SURRENDER OF PREMISES/HOLDOVER.......................................... 47
29 RULES AND REGULATIONS................................................... 48
30 NOTICES................................................................. 48
31 NO WAIVER: ENTIRE AGREEMENT............................................. 49
32 CAPTIONS................................................................ 50
33 INABILITY TO PERFORM.................................................... 50
34 NO REPRESENTATION BY LANDLORD........................................... 50
35 NAME OF BUILDING........................................................ 51
36 SUCCESSORS AND ASSIGNS.................................................. 51
37 DEFERRED COLLECTIONS.................................................... 51
38 FEES/INTEREST/LATE CHARGES.............................................. 51
39 ABATEMENT OF RENT....................................................... 52
40 TENANT'S EXPANSION OPTION............................................... 52
41 TENANT'S TERMINATION OPTION............................................. 55
Schedule A Floor Plan
Schedule B Work Letter
Schedule C Rules and Regulations
Schedule D Cleaning Specifications
ii
<PAGE>
INDENTURE OF LEASE made as of this ____ day of July 1996, between SAGE
REALTY CORPORATION, a New York corporation having its principal office at 777
Third Avenue, New York, New York 10017, Agent for the owner of the Building
hereinafter mentioned (herein "Landlord"), and CORPORATE TV GROUP, INC., a New
York corporation having its office at 825 Eighth Avenue, New York, New York
10019 (herein "Tenant").
W I T N E S S E T H:
ARTICLE 1
DEFINITIONS, TERM
Section 1.01. The terms defined in this Article shall, for all purposes
of this Lease and all agreements supplemental thereto, have the meanings herein
specified unless the context otherwise requires.
(a) "Building" shall mean the office building known as 747
Third Avenue, in the Borough of Manhattan, City and State of New York. The plot
of land on which the Building is erected is hereinafter called the "Land."
(b) "Business Days" shall mean all days excluding Saturdays,
Sundays and days observed by the State of New York or Federal Government as
legal holidays, and further excluding holidays established by any union contract
applicable to employees at the Building.
(c) "Commencement Date" shall have the meaning set forth in
Section 2.02.
(d) "Demised Premises" shall mean a portion of the
twenty-fourth (24th) floor of the Building, as shown on the Floor Plan annexed
hereto as Schedule A and made a part of this Lease, including all fixtures and
equipment which at the Commencement Date or during the Term of this Lease are
attached thereto and which become a part thereof.
(e) "Expiration Date" shall mean the last day of the month in
which occurs the day which is ten (10) years and seven (7) months following the
Commencement Date, or any sooner date of termination pursuant to the provisions
hereof.
(f) "Fixed Rent" shall mean the annual rental payable by
Tenant for the Demised Premises in equal monthly installments as provided for in
Article 3 of this Lease.
(g) "Interest Rate" shall mean the lesser of (i) 2% above the
prime commercial lending rate of Marine Midland Bank, N.A. in effect from time
to time or (ii) the maximum applicable legal rate, if any.
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(h) "Landlord's Work" shall mean the work agreed to be done by
Landlord in the Demised Premises as provided for in Schedule B hereof.
(i) "Lease" shall mean this Indenture of Lease and any and all
Schedules annexed hereto.
(j) "Term of this Lease" and "Term" shall mean the term of
years commencing on the Commencement Date and expiring on the Expiration Date,
subject to the terms and conditions hereinafter set forth.
Section 1.02. Landlord hereby leases to Tenant, and Tenant hereby rents
from Landlord, the Demised Premises, subject to the provisions hereinafter set
forth, together with appurtenances, including the right to use in common with
others the lobbies, elevators and other public portions of the Building.
TO HAVE AND TO HOLD unto Tenant, its successors and permitted assigns,
for the Term of this Lease or until the Term of this Lease sooner terminates as
hereinafter provided.
ARTICLE 2
COMMENCEMENT OF TERM
Section 2.01. Tenant acknowledges that it has examined the Demised
Premises and is taking same "as is" as of the Commencement Date. Tenant
acknowledges that Landlord is not required to do any work with respect thereto,
except as set forth in Schedule B hereof.
Section 2.02. The Term of this Lease and the payment of rent shall
commence on the date that the Demised Premises shall be "substantially
completed" as defined in Schedule B (herein the "Commencement Date"). Promptly
after the Commencement Date, Landlord and Tenant agree to execute an agreement
("Commencement Date Agreement") in form and substance satisfactory to Landlord
setting forth, among other things, the Commencement Date and the Expiration Date
of this Lease.
The taking of possession by Tenant of the Demised Premises shall be
deemed an acceptance of same by Tenant and shall be conclusively deemed
Substantial Completion (as defined in Schedule B) of Landlord's Work. Such
taking of possession shall also be conclusive evidence, as against Tenant, that
the Demised Premises and the Building of which the same form a part were in good
and satisfactory condition at the time of such occupancy and that the Demised
Premises were substantially as shown on Schedule A. Landlord shall, however,
thereafter complete any "punchlist" items required for completion of Landlord's
Work as described in Schedule B.
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Section 2.03. If Landlord shall be unable to give possession of the
Demised Premises on the date anticipated for the commencement of the Term hereof
for any reason whatsoever, Landlord shall not be subject to any liability, nor
shall the validity of this Lease nor the obligations of Tenant hereunder be
thereby affected. Landlord shall use diligent efforts to substantially complete
the work necessary to deliver possession of the Demised Premises promptly,
subject to any delays beyond the reasonable control of Landlord. In the event
that Landlord's Work shall not be deemed substantially complete on or before
November 30, 1996 (the "Outside Completion Date") (subject to extension for a
period of three (3) months in the aggregate by reason of force majeure [set
forth immediately below]), Tenant may cancel and terminate this Lease by giving
notice thereof to Landlord on or prior to the Outside Completion Date, in which
event this Lease shall terminate upon the giving of such notice, and the parties
hereto shall have no further liabilities or obligations to each other hereunder.
Any delay in Landlord's substantial completion of Landlord's Work caused by
labor trouble, governmental controls, act of God, or any other cause beyond
Landlord's reasonable control shall extend such time period for Landlord to
substantially complete Landlord's Work and give possession of the Demised
Premises to Tenant. Without limiting the foregoing, the parties hereto expressly
negate the provisions of Section 223-a of the Real Property Law and agree that
such Section shall be inapplicable hereto. Tenant agrees that the provisions of
this Article are intended to constitute "an express provision to the contrary"
within the meaning of Section 223-a. If by reason of such delay, the Term of
this Lease shall commence subsequent to such anticipated date, the Term of this
Lease shall be deemed extended for the same period.
ARTICLE 3
FIXED RENT, ADDITIONAL RENTS AND RENT ADJUSTMENTS
Section 3.01. During the Term of this Lease, Tenant shall pay, at
Landlord's address as herein set forth, or at such other address that Landlord
may from time to time designate, a Fixed Rent payable in lawful money of the
United States of America (by check of Tenant drawn on a bank that is a member of
the New York Clearinghouse Association) in equal monthly installments in advance
on the first day of each calendar month, without notice or demand, and without
setoff or deduction whatsoever at annual rates as follow (subject to adjustment
pursuant to Article 4 hereof):
(a) $143,024.10 during the period beginning on the
Commencement Date and continuing through the day prior to the fifth (5th)
anniversary of the Commencement Date;
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(b) $151,462.10 during the period beginning on the fifth (5th)
anniversary of the Commencement Date and continuing through the balance of the
Term.
If Tenant's obligation to pay Fixed Rent shall commence on a
date other than the first day of a calendar month, the first installment of
Fixed Rent shall be in an amount equal to that required to cover the period up
to and including the last day of the month wherein the obligation to pay Fixed
Rent occurs, computed on a per diem basis.
Section 3.02. The Fixed Rent does not take into account increases of
real estate taxes and/or expenses during the Term of this Lease or other
adjustments in rent, or other payments to be made by Tenant, during the Term of
this Lease. Provision therefor is hereinafter made.
Section 3.03. All costs, expenses, adjustments and payments which
Tenant is obligated to pay to Landlord pursuant to this Lease and/or its
Schedules shall be deemed additional rent whether or not denominated as such
and, in the event of nonpayment thereof, Landlord shall have all rights and
remedies with respect thereto as herein provided for in case of nonpayment of
Fixed Rent.
Tenant covenants and agrees to pay the Fixed Rent and additional rent
as in this Lease provided, when due.
Section 3.04. For the purposes of this Section 3.04, the following
definitions shall apply:
(a) The term "Base Tax Year" as hereinafter set forth for the
determination of real estate tax escalation shall mean the period commencing on
July 1, 1996 and ending on June 30, 1997.
(b) The term "the Percentage" shall mean 1.17%.
(c) The term "Real Estate Taxes" shall mean all real estate
taxes, assessments, water and sewer rents, governmental levies, county taxes or
any other governmental charges, general or special, ordinary or extraordinary,
unforeseen as well as foreseen, of any kind or nature whatsoever, which are or
may be assessed or imposed upon the Land, the Building and the sidewalks, plazas
or streets in front of or adjacent thereto, including any tax, excise or fee
measured by or payable with respect to any rent, and levied against Landlord
and/or the Land and/or Building, under the laws of the United States, the State
of New York, or any political subdivision thereof, or by the City of New York,
or any political subdivision thereof. If, due to a future change in the method
of taxation or in the taxing authority, a franchise, income, transit, profit or
other tax or governmental imposition, however designated, shall
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be levied against Landlord, and/or the Land and/or the Building, in substitution
in whole or in part for said Real Estate Taxes, or in lieu of additional real
estate taxes, then such franchise, income, transit, profit or other tax or
governmental imposition shall be deemed to be included within the definition of
"Real Estate Taxes" for the purposes hereof. In the event that the Real Estate
Taxes for the Base Tax Year shall include any charge with respect to any so
called "Business Improvement District" or similar charge (a "Bid Charge"), and
if any such Bid Charge is subsequently discontinued or eliminated, then, as of
the date of such discontinuance or elimination, the Real Estate Taxes for the
Base Tax Year shall be recalculated as if the Bid Charge had not originally been
included therein.
(d) The term "Tax Year" shall mean every twelve- month
consecutive period commencing each July 1st during the Term of this Lease.
(e) The term "Wage Rate" shall mean the minimum regular hourly
wage rate plus all other sums, including, but not limited to, sums paid for
pensions, welfare funds, vacations, bonuses, social security unemployment,
disability benefits, health, life, accident and other type of insurance required
to be paid to or for the benefit of employees engaged in the general maintenance
and operation of office buildings of the type in the vicinity of the Building
pursuant to a collective bargaining agreement (designated as "Others" in said
agreement) between Realty Advisory Board on Labor Relations, Inc. (or any
successor thereto) and Local 32B/32J of the Building Service Employees
International Union AFL-CIO (or any successor thereto). The Wage Rate is
intended to be an index in the nature of a cost of living index, and is not
intended to reflect the actual costs of wages or expenses for the Building. If
any such agreement is not entered into, or such parties or their successors
shall cease to bargain collectively, then the Wage Rate shall be the minimum
regular hourly wage rate and other sums as aforesaid payable to or for the
benefit of employees engaged in the maintenance and operation of first class
office buildings of the same general type as the Building in the Manhattan area.
(f) The term "Base Wage Rate" shall mean the Wage Rate in
effect on January 1, 1996.
(g) The term "Wage Rate Factor" shall mean 4,219.
A. Operating Expense Adjustment
It is agreed that if at any time the Wage Rate shall be greater than
the Base Wage Rate, Tenant shall be required to pay to Landlord as additional
rent an "Operating Expense Adjustment" in an annual sum equal to the product
obtained by multiplying (i) the number of cents (including any fraction of a
cent) by which the Wage Rate exceeds the Base Wage Rate by (ii) the Wage Rate
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Factor by (iii) 75%. Such Operating Expense Adjustment shall be payable to
Landlord together with Fixed Rent in equal monthly installments on the first day
of each calendar month commencing with the first month during the Term of this
Lease in which the Wage Rate shall be greater than the Base Wage Rate and, as
billed by Landlord, continuing thereafter until a new adjustment in the
additional rent shall be established and become effective in accordance with the
provisions of this paragraph. Notwithstanding any change in Wage Rate downwards,
the Fixed Rent shall not be reduced. In the event any change in the Wage Rate
shall be made retroactive, Tenant shall pay Landlord the amount of any resulting
retroactive adjustment in such additional rent within fifteen (15) days after
being billed therefor.
B. Real Estate Tax Adjustment
In the event that the Real Estate Taxes payable for any Tax Year shall
exceed the amount of such Real Estate Taxes, as finally determined, payable with
respect to the Base Tax Year, Tenant shall pay to Landlord, as additional rent
("Tenant's Tax Payment") for such Tax Year, an amount equal to the Percentage of
the excess. By or after the start of the Tax Year following the Base Tax Year,
and by or after the start of each Tax Year thereafter, Landlord shall furnish to
Tenant a statement of the Real Estate Taxes payable with respect to such Tax
Year, and a statement of the Real Estate Taxes payable during the Base Tax Year.
Within thirty (30) days after the issuance by the governmental
authority having jurisdiction thereover of tax bills for Real Estate Taxes
assessed, levied and/or imposed upon the Land and Building for any Tax Year,
Landlord shall submit to Tenant a photostatic copy of such bill and/or bills and
thereafter on or about each respective anniversary date shall submit a copy of
the tax bill and/or bills for the Real Estate Taxes assessed, levied or imposed
upon the Land and Building for such Tax Year, together with a statement which
shall indicate the amount, if any, of Tenant's Tax Payment. Landlord's failure
to submit copies of bills as aforesaid shall not be considered a default by
Landlord or a defense by Tenant to such tax payment.
Within thirty (30) days after the issuance of the statement, Tenant
shall pay Tenant's Tax Payment in the amount set forth on such statement. Such
statement shall be conclusively deemed binding upon Tenant unless Tenant shall
have objected thereto in writing within thirty (30) days of receipt thereof.
In the event Landlord shall receive a final reduction or refund of Real
Estate Taxes for any Tax Year for which Tenant is obligated to pay any
additional rent under the provisions of this subsection B of Section 3.04, the
amount or the proceeds of such reduction or refund, less legal fees and other
expenses
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incurred in collecting the same or achieving such reduction, shall be applied
and allocated to the periods for which such final reduction or refund was
obtained, and proper adjustment shall be made between Landlord and Tenant and if
such refund or reduction shall be received following the Expiration Date,
Landlord shall pay to Tenant the amount of such adjustment, as determined above,
promptly following Landlord's receipt of such refund or reduction. Tenant has
been advised that proceedings to protest the Real Estate Tax Assessment for the
Base Tax Year may have been filed and may result in a reduction of Real Estate
Taxes for the Base Tax Year.
Any payments or refunds due hereunder for any period of less than a
full Tax Year at the commencement or end of the Term of this Lease shall be
equitably prorated to reflect such event.
In addition to Tenant's obligation to pay Tenant's Tax Payment as
aforesaid, Tenant shall pay to Landlord as additional rent payable upon demand,
any occupancy tax or rent tax now in effect or hereafter enacted, if payable by
Landlord in the first instance or hereafter required to be paid by Landlord.
Section 3.05. Upon the date of the expiration or any sooner termination
of this Lease, whether the same be the date hereinabove set forth as the
expiration of the Term of this Lease or any prior or subsequent date, a
proportionate share of the Fixed Rent, adjustments and additional rents for the
year (calendar or fiscal) in which such expiration or termination occurs, shall
immediately become due and payable by Tenant to Landlord as hereinafter
provided, if not theretofore already billed and paid. Such proportionate share
shall be based upon the length of time that this Lease shall have been in
existence during such year. Promptly after any such expiration or termination,
Landlord shall compute the amounts due from Tenant, as aforesaid, which
computations shall either be based on that year's actual figures or be an
estimate based on the most recent statements theretofore prepared by Landlord
and furnished to Tenant pursuant to this Lease. If an estimate is used, then
Landlord shall promptly cause statements to be prepared on the basis of the
comparative year's actual figures as soon as they are available, and within ten
(10) days after such statement or statements are prepared by Landlord and
furnished to Tenant, Landlord and Tenant shall make appropriate adjustments of
any estimated payments theretofore made.
Tenant's obligation to pay any and all rents, adjustments and
additional rents under this Lease shall continue and shall cover all periods up
to the Expiration Date. Landlord's and Tenant's obligations to make the
adjustments hereinabove referred to shall survive any expiration or termination
of this Lease. Any delay or failure of Landlord in billing any Fixed Rent or
additional rent herein provided for shall not constitute a waiver of or in any
way impair the
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continuing obligation of Tenant to pay such rent adjustments hereunder.
ARTICLE 4
ELECTRICITY
Section 4.01. The Fixed Rent reserved in this Lease includes the agreed
sum of $12,235.10 per annum in consideration of which Landlord, as an additional
service, will supply Tenant with electricity for normal use in the Demised
Premises between the hours 9:00 A.M. and 5:30 P.M. on Business Days. If
Landlord's electric rates (i.e., the public utility rate schedule at the time in
question, including all surcharges, taxes, fuel adjustments, taxes regularly
passed on to consumers by the public utility, and other sums payable in respect
thereof for the supply of electric energy to Landlord for the Building) are
increased, the Fixed Rent reserved in this Lease shall be adjusted by applying
to the sum specified above, the same percentage as such rate increase, and such
adjusted Fixed Rent shall be billed by Landlord to Tenant, with effect as of the
date of the increase of Landlord's electric rate. Landlord shall not be liable
in any way to Tenant for any failure or defect in the supply or character of
electric energy furnished to the Demised Premises by reason of any requirement,
act or omission of the public utility serving the Building with electricity or
for any other reason not attributable to the Landlord. At Landlord's option,
Tenant shall purchase from the Landlord or Landlord's agent all lighting tubes,
lamps, bulbs and ballasts used in the Demised Premises and Tenant shall pay
Landlord's reasonable charges for providing and installing same on demand, as
additional rent.
Section 4.02. Tenant's use of electric energy in the Demised Premises
shall not at any time exceed the capacity of any of the electrical conductors,
machinery 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 electric service, Tenant shall not, without Landlord's
prior written consent in each instance, connect any additional fixtures,
machinery, appliances or equipment to the Building electric distribution system
or make any alteration or addition to Tenant's machinery, appliances or
equipment, or the electric system of the Demised Premises existing on the
Commencement 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 upon Landlord's demand. As a condition to
granting such consent, Landlord may require Tenant to agree to an increase in
the Fixed Rent by an amount which will reflect the value to Tenant of the
additional service to be furnished by Landlord, that is, the potential
additional electrical energy to be made available to Tenant based upon the
estimated additional capacity of such additional risers or other equipment. If
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Landlord and Tenant cannot agree on the amount of such increase, Tenant shall
nevertheless pay the same as billed until such amount shall be determined by an
independent utility consultant to be selected by Landlord and paid equally by
Landlord and Tenant. The determination of the consultant shall be binding upon
the parties. When the amount of such increase is so determined, the parties
shall execute an agreement supplementary hereto to reflect such increase in the
amount of the Fixed Rent stated in this Lease and in the amount set forth in
Section 4.01, effective from the date such additional service is made available
to Tenant, but such increase shall be effective from such date even if such
supplementary agreement is not executed.
Section 4.03. If there shall be an increase in the space
constituting the Demised Premises, or if Tenant's failure to maintain its
machinery and equipment in good order and repair causes greater consumption of
electrical current, or if Tenant uses electricity on days or hours other than
those specified in Section 4.01, or if Tenant adds any machinery, appliances or
equipment requiring additional electrical current, the Fixed Rent herein
reserved shall be increased accordingly. The amount of such increase shall be
billed by Landlord to Tenant, effective as of the date of the increased usage.
Such sum shall be due, and shall be paid by Tenant, as additional rent hereunder
at the time billed. If Tenant disputes the amount of such increase, Tenant shall
nevertheless pay the same as billed, and the amount shall be determined by an
independent utility consultant to be selected by Landlord and paid equally by
Landlord and Tenant. The determination of the consultant shall be binding upon
the parties.
Section 4.04. Landlord reserves the right to discontinue furnishing
electric energy to Tenant in the Demised Premises at any time upon not less than
thirty (30) days' notice to Tenant. If Landlord exercises such right of
termination, this Lease shall continue in full force and effect and shall be
unaffected thereby, except only that, from and after the effective date of such
termination, Landlord shall not be obligated to furnish electric energy to
Tenant and the Fixed Rent under this Lease shall be reduced by the amount set
forth in Section 4.01, plus or minus the amount of any change pursuant to
Sections 4.01, 4.02, 4.03 and 4.05. If Landlord so discontinues furnishing
electric energy to Tenant, Tenant shall arrange to obtain electric energy
directly from the public utility company furnishing electric service to the
Building. Such electric energy may be furnished to Tenant by means of the then
existing building system feeders, risers and wiring to the extent that the same
are available, suitable and safe for such purposes. All meters and additional
panel boards, feeders, risers, wiring and other conductors and equipment which
may be required to obtain electric energy directly from such public utility
company shall be installed and maintained by Tenant at its expense.
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Section 4.05. Tenant covenants and agrees that at no time will the
connected electrical load serving the Demised Premises exceed 5 watts per square
foot. Should Landlord consent to an increase in the connected electrical load,
as a condition to granting such consent, Landlord may require Tenant to agree to
an increase in the Fixed Rent by an amount which will reflect the value to
Tenant of the additional connected electrical load. If Tenant disputes the
amount, Tenant shall nevertheless pay the same as billed, and the amount shall
be determined by an independent utility consultant to be selected by Landlord
and paid equally by Landlord and Tenant. The determination of the consultant
shall be binding upon the parties.
Section 4.06. If any tax is imposed upon Landlord with respect to
electrical energy furnished as a service to Tenant by any Federal, State or
Municipal Authority, Tenant covenants and agrees that where permitted by law or
applicable regulations, Tenant's pro rata share of such taxes shall be
reimbursed by Tenant to Landlord.
Section 4.07. (a) Landlord, at its sole cost and expense, shall have
the right to procure periodic surveys made by an independent utility consultant
selected by Landlord. If such utility consultant determines that there has been
(i) an increase in Tenant's use of electrical current or (ii) the amount set
forth in Section 4.01 is insufficient, then, the amount set forth in Section
4.01 shall be adjusted and in addition to the other requirements and obligations
imposed on Tenant in this Article, and notwithstanding the provisions of the
first sentence of this Section 4.07(a), Landlord and Tenant shall equally pay
the fees of the utility consultant making such survey. The findings of such
utility consultant shall be binding and conclusive upon the parties.
(b) If Tenant wishes to dispute any determination of the additional
rental value of electricity service to the Demised Premises on the basis of any
survey made pursuant to Section 4.07(a) or as otherwise determined pursuant to
Sections 4.02 and 4.03 hereof, it shall notify Landlord to such effect within
thirty (30) days after receipt of written notice of such determination. Unless
and until such dispute is determined in Tenant's favor, Tenant shall pay the
Fixed Rent as computed in accordance with such determination. The dispute shall
be determined in the following manner: Tenant shall retain an independent
electrical engineer or consultant ("Tenant's Consultant") to review Landlord's
survey or other basis of Landlord for such determination, as the case may be,
and, if deemed advisable, to make an independent survey. Not later than thirty
(30) days after Tenant shall have given Landlord the notice of dispute, Tenant
shall deliver to Landlord (i) Tenant's Consultant's comments on Landlord's
survey or on Landlord's other basis for such determination, and/or (ii) Tenant's
Consultant's survey. Landlord shall refer such comments and/or survey to the
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consultant who prepared the original survey or to its electrical consultant
("Landlord's Consultant") who shall meet with Tenant's Consultant for the
purpose of reaching agreement upon the additional rental value of the
electricity service to the Demised Premises. If they are unable to reach such
agreement within thirty (30) days after the delivery of such comments or report,
Landlord's Consultant and Tenant's Consultant shall appoint a disinterested
third electrical consultant, who shall, within twenty (20) days thereafter,
resolve whatever differences may remain between Landlord's Consultant and
Tenant's Consultant and on the basis of such resolution determine the additional
rental value of the electricity service to the Demised Premises. If Landlord's
Consultant and Tenant's Consultant are unable to agree upon a disinterested
third electrical consultant within the thirty (30) day period above specified
for agreement between Landlord's Consultant and Tenant's Consultant, and if the
parties are unable to agree upon such a third electrical consultant within ten
(10) days thereafter, either party, upon written notice to the other, may apply
for the appointment of such a third electrical consultant to the President of
the Real Estate Board of New York, Inc. or any organization successor thereto,
or in his absence or refusal or failure to act, to the Supreme Court of the
State of New York in the County of New York. The fees and expenses of Landlord's
Consultant shall be borne entirely by Landlord. The fees and expenses of
Tenant's Consultant shall be borne entirely by Tenant. The fees and expenses of
the disinterested third electrical consultant shall be shared equally by
Landlord and Tenant. If and to the extent that the additional rental value of
the electricity service to the Demised Premises shall be so determined to be
less than the value originally determined by Landlord's Consultant, the amount
of the resulting overpayment of the Fixed Rent shall be refunded by Landlord to
Tenant on Tenant's demand therefor.
Section 4.08. Notwithstanding the aforesaid provisions of this Article,
if, pursuant to an action of the Public Service Commission of the State of New
York, or otherwise, submetering of electricity is permitted at the Building,
then Landlord shall have the option, at Landlord's sole cost and expense, of
installing submeters to measure Tenant's electricity consumption. Upon
installation of the submeters, Tenant's electricity consumption and demand shall
be measured by said submeters, and Tenant agrees to purchase such electricity
from Landlord or Landlord's designated agent at Landlord's electric rates, plus
ten (10%) percent thereof to reimburse Landlord for administrative services in
connection with supplying and billing such electricity and for line loss. All
such sums shall be paid by Tenant to Landlord as additional rent hereunder. If
more than one meter measures the electricity consumption and demand of Tenant in
the Building, the service rendered through each meter shall be aggregated and
billed in accordance with the above rate classification, unless Landlord shall
elect separate billing on a per-meter basis. Landlord may at any time render
bills for
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Tenant's consumption and demand and Tenant shall pay the same within thirty (30)
days following the date the same are rendered. If Landlord exercises such right
of submetering, this Lease shall continue in full force and effect and shall be
unaffected thereby, except only that, from and after the effective date of such
submetering, the Fixed Rent under this Lease shall be reduced by the amount set
forth in Section 4.01, plus or minus the amount of any change pursuant to
Sections 4.01, 4.02, 4.03 and 4.05, and Tenant shall purchase electric energy
pursuant to this Section 4.08.
ARTICLE 5
USE
Section 5.01. Tenant shall use and occupy the Demised Premises for
administrative, executive and general business office purposes only and for no
other purposes.
Section 5.02. Tenant shall not suffer or permit the Demised Premises or
any part thereof to be used in any manner, or suffer or permit anything to be
done therein, or suffer or permit anything to be brought into or kept in the
Demised Premises which would in any way (i) violate any law or requirement of
public authorities, (ii) cause structural injury to the Building or any part
thereof, (iii) interfere with the normal operation of the heating,
air-conditioning, ventilating, plumbing or other mechanical or electrical
systems of the Building or the elevators installed therein, (iv) constitute a
public or private nuisance, or (v) alter the appearance of the exterior of the
Building or of any portion of the interior thereof other than the Demised
Premises.
Section 5.03. Tenant shall not, without the prior written consent of
Landlord (which shall not be unreasonably withheld or delayed), allow a
"Servicing Company" (defined below) to install any telephone, data, information
or other communications equipment in the Demised Premises to service premises
occupied by persons other than Tenant (and its subtenants, if any) and/or its
affiliates. For example, the Demised Premises may not be used as a so-called
"switching" or "relay" station serving third parties (that is, parties other
than Tenant, its subtenants, if any, and its affiliates) without such consent by
Landlord. In granting such consent, Landlord may require that the Servicing
Company enter into a license agreement with Landlord confirming that the
Servicing Company shall have no independent rights in the Demised Premises and
that upon termination of this Lease, for whatever reason, the Servicing Company
will have no right to leave its equipment in the Demised Premises. Landlord may
make a reasonable charge to the Servicing Company for allowing it to install its
equipment in the Demised Premises. A "Servicing Company" shall mean a person,
firm, corporation or other entity other than Tenant whose equipment
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services not only the Demised Premises, but other premises or parties as well.
ARTICLE 6
REPAIRS, ALTERATIONS AND LIENS
Section 6.01. Tenant shall take good care of the Demised Premises and
the fixtures and appurtenances and equipment therein and, at its sole cost and
expense, make all repairs thereto as and when needed to preserve the aforesaid
in good working order and condition (other than structural repairs and repairs
to the plumbing, wiring and other Building equipment for the general supply of
water, heat, air-conditioning, gas and electricity which are not caused by the
carelessness, omission, neglect, improper conduct or other cause of Tenant, its
servants, employees, agents, visitors or licensees). All damage or injury to the
Demised Premises and to its fixtures, appurtenances and equipment or to the
Building of which the same form a part, or to its fixtures, appurtenances and
equipment caused by Tenant moving property, or resulting from any
air-conditioning unit or system, any short circuit, flow or leakage of water,
steam, illuminating gas, sewer gas, sewerage or odors, or by frost or by
bursting or leaking of pipes or plumbing works or gas, or from any other cause
of any other kind or nature whatsoever due to carelessness, omission, neglect,
improper conduct or other cause of Tenant, its servants, employees, agents,
visitors or licensees, shall be repaired, restored or replaced promptly by
Tenant, at its sole cost and expense, to the satisfaction of Landlord exercised
in good faith. If Tenant fails to make such repairs, restorations or
replacements, same may be made by Landlord at the expense of Tenant and any
costs therefor shall be collectible as additional rent or otherwise, and shall
be paid by Tenant within fifteen (15) days after rendition of a bill or
statement therefor.
Section 6.02. Landlord shall, at its expense, make all repairs and
replacements, structural and otherwise, necessary in order to maintain and keep
in good order and repair the exterior of the Building and the public portions of
the Building, the need for which Landlord shall have knowledge (including the
public halls and stairways, fire safety system, plumbing, wiring and other
Building equipment for the general supply of water, heat, air-conditioning, gas
and electricity) except repairs hereinabove provided to be made by Tenant and
repairs, the need for which Tenant has not reported to Landlord. Landlord hereby
covenants to maintain the Building and the public portions thereof in a manner
consistent with other first-class buildings in Midtown Manhattan.
Section 6.03. All repairs, restorations or replacements by either party
shall be of first-class quality and done in good and workmanlike manner. Tenant
shall, and shall include in all contracts, subcontracts and purchase orders, a
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requirement that such contractors, subcontractors or materialmen, as the case
may be, shall, cause all workers at the Demised Premises to work harmoniously
with each other and with Building personnel and in a manner which will not
disrupt access to or use of the common areas of the Building, cause
inconvenience to the other tenants in the Building or interfere with the conduct
of other tenants' business. Tenant agrees that should Tenant, its agents and/or
contractors, enter upon the Demised Premises for the purpose of performing any
work, the labor employed by Tenant or anyone performing such work, for or on
behalf of Tenant, shall always be harmonious and compatible with the labor
employed by Landlord or any contractors or subcontractors of Landlord. Should
such labor be unharmonious or incompatible, Landlord may require Tenant to
withdraw such labor from the Demised Premises. In the event Tenant or Tenant's
contractor shall enter upon the Demised Premises or any other part of the
Building, Tenant agrees to indemnify and save Landlord free and harmless, from
and against any and all claims whatsoever arising out of said entry or such
work. Tenant's agents and contractors and their employees shall comply with the
special rules, regulations and requirements of Building management with respect
to the performance and coordination of said agents, contractors and their
employees so as to avoid intrusion into the operation of the Building and to
avoid disturbing the quiet enjoyment of other tenants.
Section 6.04. Tenant shall not store or place any materials or other
obstructions in the lobby or other public portions of the Building, or on the
sidewalk adjacent to the Building.
Section 6.05. Tenant shall do no work and shall make no alterations,
decorations, installations, additions or improvements in or to the Demised
Premises, including, but not limited to, installation of a water cooler, an
air-conditioning or cooling system unit or part thereof, or other apparatus of
like or other nature without Landlord's prior written consent which consent
shall not be unreasonably withheld or delayed in the case of alterations,
decorations, installations, additions or improvements in the Demised Premises
which are non-structural in nature and do not affect the structure, exterior or
common areas at the Building or adversely affect the functioning of the heating,
ventilating or air-conditioning, electrical, mechanical, plumbing or elevator
systems of the Building or other tenants' use thereof, and then only by
contractors or mechanics approved by Landlord. Such approval must be obtained
prior to any bidding for said work. All such work, alterations, decorations,
installations, additions or improvements shall be done at Tenant's sole expense
and at such times and in such manner as Landlord may from time to time designate
and in full compliance with all governmental bodies having jurisdiction
thereover. Tenant's work, alterations, decorations, installations, additions or
improvements shall be completed free of all liens and
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encumbrances and, as a condition precedent to Landlord's consent to the making
by Tenant of alterations, decorations, installations, additions or improvements
to the Demised Premises, Tenant agrees to obtain, and deliver to Landlord,
written and unconditional waivers of mechanics' liens upon the real property in
which the Demised Premises are located, for all work, labor and services to be
performed and materials to be furnished by them in connection with such work,
signed by all contractors, subcontractors, materialmen and laborers to become
involved in such work. As a condition to Landlord's permission to Tenant to make
any of Tenant's installations in the Demised Premises prior to the Commencement
Date, Landlord may require that Tenant agree with Landlord to fixing the
Commencement Date of this Lease.
Landlord shall not be liable for any failure of the air-conditioning
and ventilating equipment in the Demised Premises installed by Landlord caused
by any work, alterations, decorations, installations, additions or improvements
by Tenant, and Tenant shall correct any such condition causing such failure
promptly upon notice from Landlord of the need therefor. If Tenant shall fail to
correct same, Landlord may make such correction and charge Tenant for the cost
thereof. Such sum due Landlord shall be deemed additional rent and shall be paid
by Tenant promptly upon being billed therefor.
Section 6.06. Prior to commencing any work pursuant to the provisions
of Section 6.05, Tenant shall furnish to Landlord:
(i) Copies of all governmental permits and authorizations which may be
required in connection with such work.
(ii) A certificate evidencing that Tenant (or Tenant's contractors) has
(have) procured workers' compensation insurance covering all persons employed in
connection with the work who might assert claims for death or bodily injury
against Landlord, "Overlandlord" (as hereinafter defined), Tenant or the
Building.
(iii) Such additional personal injury and property damage insurance
(over and above the insurance required to be carried by Tenant pursuant to the
provisions of Article 9) as Landlord may reasonably require because of the
nature of the work to be performed by Tenant.
Section 6.07. All work, alterations, decorations, installations,
additions or improvements upon the Demised Premises made by either party,
including all paneling, decorations, partitions, railings, mezzanine floors,
galleries and the like, affixed to the realty or for which Tenant shall have
received a credit or contribution shall, unless Landlord elects otherwise (which
election shall be made by giving a notice pursuant to the provisions of Article
30 not less than thirty
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(30) days prior to the expiration or other termination of this Lease or any
renewal or extension thereof) become the property of Landlord and shall remain
upon, and be surrendered with the Demised Premises as a part thereof at the end
of the Term or renewal or extension term, as the case may be. In the event that
Landlord shall elect otherwise, then such alterations, decorations,
installations, additions or improvements made by Tenant upon the Demised
Premises which are atypical of an ordinary office installation (atypical shall
be deemed to include, but not be limited to, a raised floor, louvered windows,
any kitchen facility, any vault and any audio or video installation), as
Landlord shall select shall be removed by Tenant, and Tenant shall restore the
Demised Premises to its original condition, at its own cost and expense, at or
prior to the expiration of the Term.
Where furnished by or at the expense of Tenant (except where same is a
replacement of an item theretofore furnished and paid for by Landlord or against
which Tenant has received a credit or contribution from Landlord), all movable
property, furniture, furnishings and trade fixtures other than those affixed to
the realty so that they cannot be removed without material damage shall remain
the property of Tenant and shall be removed from the Demised Premises on or
before the Expiration Date. In the event of damage to the Demised Premises or
the Building by reason of such removal, Tenant shall restore the same to good
order and condition (normal wear and tear excepted). If Tenant should desire to
leave any part of such property in the Demised Premises upon the expiration of
the Term, it shall so notify Landlord in writing not less than thirty (30) days
prior to the expiration of the Term, specifying the items of property which it
desires to so leave. If within fifteen (15) days after the service of such
notice Landlord shall request Tenant to remove any of the said property, Tenant
shall, at its expense, at or before the expiration of the Term, remove said
property and, in case of damage to the Demised Premises or the Building by
reason of such removal, restore the Demised Premises to good order and condition
(normal wear and tear excepted).
Section 6.08. Landlord shall not be responsible for supervision and/or
coordination in respect to Tenant's activities pursuant to this Lease.
Landlord's managing agent shall perform such supervision and coordination and,
with respect to any work, alteration, decoration, addition or improvement
costing more than $15,000, Tenant agrees to pay such managing agent, promptly
upon being billed therefor, a sum equal to ten (10%) percent of the cost of such
work for indirect costs, field supervision and coordination in connection
therewith. Tenant agrees to keep records of Tenant's work, alterations,
decorations, additions and improvements costing in excess of $15,000 and of the
cost thereof. Tenant agrees to furnish to Landlord's managing agent copies of
such records certified as correct by Tenant within
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forty-five (45) days after Landlord's managing agent's request therefor.
Section 6.09. Tenant will not do any act or suffer any act to be done
which will in any way encumber the title of Landlord or Tenant in and to the
Demised Premises or the Building or the Land, nor will the interest or estate of
Landlord or Tenant in the Demised Premises or the Building or the Land be in any
way subject to any claim by way of lien or encumbrance, whether by operation of
law or by virtue of any express or implied contract by Tenant.
Section 6.10. Tenant will not suffer or permit any liens to stand
against the Demised Premises, the Building or the Land or any part thereof, by
reason of any work, labor, services or materials done for, or supplied to, or
claimed to have been done for, or supplied to, Tenant, or anyone holding the
Demised Premises or any part thereof through or under Tenant. If any such lien
is at any time filed against the Demised Premises or the Building or the Land,
Tenant will cause the same to be discharged of record within thirty (30) days
after the date of filing of the same, by either payment, deposit or bonding (and
the failure of Tenant to do so shall be a material default hereunder entitling
Landlord to give a notice to Tenant pursuant to the provisions of Section
17.01(1) hereof). In addition to any other right or remedy of Landlord, Landlord
may, but will not be obligated to, procure the discharge of such lien either by
paying the amount claimed to be due by deposit in court or bonding, and/or
Landlord will be entitled, if Landlord so elects, to compel the prosecution of
an action for the foreclosure of such lien by the lienor and to pay the amount
of the judgment, if any, in favor of the lienor with interest computed at the
Interest Rate, costs and allowances. Any amount paid or deposited by Landlord
for any of the aforesaid purposes, and all legal and other expenses of Landlord,
including, without limitation, attorneys' fees incurred in defending such action
or in procuring the discharge of such lien, with all necessary disbursements in
connection therewith, will become due and payable on the date of payment or
deposit, as additional rent.
Section 6.11. Nothing in this Lease will be deemed to be, or construed
in any way as constituting, the consent or request of Landlord, express or
implied by inference or otherwise, to any person, firm or corporation for the
performance of any labor or the furnishing of any materials for any
construction, rebuilding, alteration or repair of or to the Demised Premises,
the Building or the Land or any part thereof, nor as giving Tenant any right,
power or authority to contract for or permit the rendering of any services or
the furnishing of any materials which might in any way give rise to the right to
file any lien against Landlord's interest in the Demised Premises, the Building
or the Land.
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ARTICLE 7
FLOOR LOAD, NOISE, WINDOW CLEANING
Section 7.01. Tenant shall not place a load upon any floor of the
Demised Premises which exceeds the load per square foot which such floor was
designed to carry and which is allowed by law.
Section 7.02. Business machines and mechanical equipment belonging to
Tenant which cause noise or vibration that may be transmitted to the structure
of the Building or the Demised Premises to such a degree as to be objectionable
to Landlord shall be placed and maintained by the party owning the machines or
equipment, at such party's expense, in settings of cork, rubber or spring type
vibration eliminators sufficient to eliminate noise or vibration.
Section 7.03. Tenant will not clean, nor require, permit, suffer or
allow any window in the Demised Premises to be cleaned from the outside in
violation of Section 202 of the Labor Law or of the rules of the Board of
Standards and Appeals or of any other board or body having or asserting
jurisdiction.
ARTICLE 8
LAWS, ORDINANCES, REQUIREMENTS OF PUBLIC AUTHORITIES
Section 8.01. Tenant shall, at its expense, comply with all laws,
orders, ordinances and regulations or any direction made pursuant to any law,
ordinance, rule, regulation or order of any public office or officer which or
who shall, with respect to the occupancy, use or manner of use of the Demised
Premises or to any abatement of nuisance, impose any violation, order or duty
upon Landlord or Tenant arising from Tenant's occupancy, use or manner of use of
the Demised Premises, or as a result of any installations made therein (whether
or not in compliance with the work article hereof) by Tenant or at Tenant's
request, or required by reason of a breach of any of Tenant's covenants or
agreements hereunder.
Section 8.02. If Tenant should desire to contest the validity of any
such law, ordinance, rule, regulation or order with which Tenant is obligated to
comply, it may, at its expense, carry on such contest and non-compliance by it
during such contest (so long as Tenant proceeds with due diligence) shall not
constitute a breach of this Lease provided that it shall, to the satisfaction of
Landlord, indemnify and hold Landlord harmless from and against all liability
for any loss, damages and expenses (including, without limitation, attorneys'
fees) which might result from or be incurred in connection with such contest or
non-compliance. Notwithstanding the foregoing, non-compliance as aforesaid shall
not commence or continue if it might subject Landlord to any fine or penalty or
to prosecution for a crime,
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or if it would constitute a default by Landlord under any mortgage or lease
affecting the Building and/or the Land.
Section 8.03. If Tenant receives written notice of any violation of
law, ordinance, rule, regulation or order applicable to the Demised Premises, it
shall give prompt notice thereof to Landlord.
Section 8.04. Except as aforesaid, Landlord shall, at its expense,
comply with or cause to be complied with, all laws, ordinances, rules,
regulations and orders of federal, state, county and municipal authorities and
any direction made pursuant to law of any public officer or officers which
shall, with respect to the public portions of the Building, impose any
violation, order or duty upon Landlord or Tenant and with respect to which
Tenant is not obligated by Section 8.01 to comply. Except as aforesaid, Landlord
shall further, at its expense, comply with or cause to be complied with, all
laws, ordinances, rules, regulations and orders of federal, state, county and
municipal authorities and any direction made pursuant to law of any public
officer or officers which affect Tenant's use or enjoyment of, or access to, the
Demised Premises and with respect to which Tenant is not obligated by Section
8.01 to comply. Landlord may, at its expense, contest the validity of any such
law, ordinance, rule, order or regulation.
ARTICLE 9
INSURANCE, PROPERTY LOSS, REIMBURSEMENT
Section 9.01. Tenant shall not do or permit to be done any act or thing
upon the Demised Premises which will invalidate or be in conflict with the
Certificate of Occupancy or the terms of the New York State standard form of
fire, boiler, sprinkler, water damage or other insurance policies covering the
Building and the fixtures and property therein and Tenant shall, at its own
expense, comply with all rules, orders, regulations or requirements of the New
York Board of Fire Underwriters or any other similar body having jurisdiction
and shall not knowingly do or permit anything to be done in or upon the Demised
Premises in a manner which increases the rate of fire insurance upon the
Building or on any property or equipment located therein over the rate in effect
at the commencement of the Term of this Lease.
Section 9.02. If, by reason of any failure of Tenant to comply with the
provisions of this Lease, the rate of fire, boiler, sprinkler, water damage or
other insurance (with extended coverage) on the Building or on the property and
equipment of Landlord or any other tenant or subtenant in the Building shall be
higher than it otherwise would be, Tenant shall reimburse Landlord and the other
tenants in the Building for that part of the fire, boiler, sprinkler, water
damage or other insurance premiums thereafter paid by Landlord or by the other
tenants in
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the Building which shall have been charged because of such failure by Tenant,
and Tenant shall make the reimbursement on the first day of the month following
such payment by Landlord or such other tenants. In any action or proceeding
wherein Landlord and Tenant are parties, a schedule or "make up" of any
insurance rate for the Building or Demised Premises issued by the New York Fire
Insurance Exchange, or other body establishing fire insurance rates for the
Building, shall be conclusive evidence of the facts therein stated and of the
several items and charges in the insurance rates then applicable to the Building
or Demised Premises.
Section 9.03. Tenant, at Tenant's own cost and expense, shall maintain
insurance protecting and indemnifying Landlord and Tenant (and at Landlord's
request, the landlord under any ground or underlying lease [herein
"Overlandlord"], as well as the holder of any mortgage affecting the Land, the
Building or both) against any and all claims for injury or damage to persons or
property for the loss of life or of property occurring upon, in or about the
Demised Premises and the public portions of the Building used by Tenant, its
employees, agents, contractors, customers and invitees arising out of the
negligent act or omission of any of the foregoing, such insurance to afford
minimum protection during the Term of this Lease of not less than a single
combined limit of $2,000,000 in respect of property damage and bodily injury or
death to any one person or in respect of any one occurrence or accident.
Landlord may from time to time require that the amount of liability insurance to
be maintained by Tenant under this Article be increased so that Landlord shall
be adequately protected giving due consideration to all relevant circumstances
and conditions. Any such increase shall be consistent with increases required by
landlords of similar buildings in the Midtown Manhattan area.
All such insurance shall be effected under valid and enforceable
policies (which may cover the Demised Premises and other locations), shall be
issued by insurers of recognized responsibility and shall contain a provision
whereby the insurer agrees not to cancel the insurance without ten (10) days'
prior written notice to Landlord.
On or before the Commencement Date of this Lease, Tenant shall furnish
Landlord with a certificate evidencing the aforesaid insurance coverage and
renewal certificates shall be furnished to Landlord at least thirty (30) days
prior to the expiration date of each policy for which a certificate was
theretofore required to be furnished.
Section 9.04. Tenant shall give Landlord immediate notice in case of a
fire or accident in the Demised Premises or the Building, or of defects therein
or in any fixtures or equipment promptly after Tenant becomes aware of the same.
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Section 9.05. Tenant shall indemnify and hold Landlord harmless from
and against all liabilities, suits, claims, demands and actions, and costs and
expenses of any kind or nature, due to or arising out of any injury to person or
property, including death resulting at any time therefrom, occurring in or about
the Demised Premises. To the extent of any valid and collectible insurance
furnished by Tenant for the protection of Landlord, Tenant's obligation to
indemnify and hold Landlord harmless against liability which is covered by such
insurance shall be deemed, to the extent thereof, to be satisfied.
Section 9.06. Landlord and Tenant shall each endeavor to secure an
appropriate clause in, or an endorsement upon, each fire or extended coverage or
rent insurance policy obtained by it and covering the Building, the Demised
Premises or the personal property, fixtures and equipment located therein or
thereon, pursuant to which the respective insurance companies waive subrogation
or permit the insured, prior to any loss, to agree with a third party to waive
any claim it might have against said third party. The parties hereto shall give
prompt notice to the other in the event such clause is or becomes unavailable.
The waiver of subrogation or permission for waiver of any claim shall extend to
the agents of each party and the employees of each party and its respective
agents and, in the case of Tenant, shall also extend to all other persons and
entities occupying or using the Demised Premises. If and to the extent that such
waiver or permission can be obtained only upon payment of an additional charge,
then the party benefiting from the waiver or permission shall pay such charge
upon written demand, or shall be deemed to have agreed that the party obtaining
the insurance coverage in question shall be free of any further obligations
under the provisions hereof relating to such waiver or permission.
Subject to the foregoing provisions of this Section 9.06, each party
hereby releases the other with respect to any claim (including a claim for
negligence) which it might otherwise have against the other party for loss,
damages or destruction with respect to its property by fire or other casualty
(including rental value or business interest, as the case may be) occurring
during the Term of this Lease.
Section 9.07. Tenant agrees to look solely to Landlord's estate and
interest in the Land and Building, or the lease of the Building, or of the Land
and Building, and the Demised Premises, for the satisfaction of any right or
remedy of Tenant for the collection of a judgment (or other judicial process)
requiring the payment of money by Landlord, in the event of any liability by
Landlord, and no other property or assets of Landlord shall be subject to levy,
execution, attachment, or other enforcement procedure for the satisfaction of
Tenant's remedies under or with respect to this Lease, the relationship of
Landlord and Tenant hereunder, or Tenant's use and occupancy of the Demised
Premises, or any other liability of Landlord to Tenant.
<PAGE>
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ARTICLE 10
DAMAGE OR DESTRUCTION BY FIRE OR OTHER CAUSE
Section 10.01. If the Building or the Demised Premises shall be
partially or totally damaged or destroyed by fire or other cause, then whether
or not the damage or destruction shall have resulted from the fault or neglect
of Tenant, or its employees, agents or visitors (and if this Lease shall not
have been terminated as in this Article 10 hereinafter provided), Landlord shall
to the extent permitted by available insurance proceeds, repair the damage and
restore and rebuild the Building and/or the Demised Premises (without limiting
the rights of any insurance company, subrogated to Landlord's rights hereunder
pursuant to the terms of any insurance policy as to which Landlord shall have
been unable to obtain a waiver of subrogation in accordance with Section 9.06
hereof to seek recovery from Tenant, and any rights of Landlord under any other
provisions of this Lease or at law or in equity), with reasonable dispatch after
notice to it of the damage or destruction; provided, however, that Landlord
shall not be required to repair or replace any of Tenant's property.
Notwithstanding anything contained herein to the contrary, in no event shall
Tenant be relieved of liability or responsibility for damage or destruction
resulting from the fault or neglect of Tenant if the insurance policies carried
by Landlord on the Building do not contain a waiver of the right of subrogation.
Section 10.02. If the Building or the Demised Premises shall be
partially destroyed by fire or other cause, the rents payable hereunder shall be
abated to the extent that the Demised Premises shall have been rendered
untenantable and for the period from the date of such damage or destruction to
the date the damage shall be repaired or restored. If the Demised Premises or a
major part thereof shall be totally (which shall be deemed to include
substantially completely) untenantable on account of fire or other cause, the
rent shall abate as of the date of the damage or destruction and until Landlord
shall repair, restore and rebuild the Building and the Demised Premises,
provided, however, that should Tenant occupy or reoccupy a portion of the
Demised Premises during the period the Demised Premises are made completely
untenantable, rents allocable to such portion shall be payable by Tenant from
the date of such occupancy.
Section 10.03. If the Building or Demised Premises shall be totally
damaged or destroyed by fire or other cause, or if the Building shall be so
damaged or destroyed by fire or other cause that Landlord shall decide not to
restore or rebuild it, 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 casualty. In case of any damage or destruction mentioned in this
Article 10, Tenant may terminate this Lease by notice to Landlord, if Landlord
has not completed the making of the required repairs and restored and rebuilt
the Building and
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the Demised Premises within nine (9) months from the date of such damage or
destruction, or within such period after such date (not exceeding six (6)
months) as shall equal the aggregate period Landlord may have been delayed in
doing so by adjustment of insurance, labor trouble, governmental controls, act
of God, or any other cause beyond Landlord's reasonable control, and such
termination shall be effective upon the expiration of thirty (30) days after the
date of such notice.
Section 10.04. 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 10. Landlord shall endeavor to effect such repair or
restoration promptly and in such manner as not unreasonably to interfere with
Tenant's business, provided no additional costs, for labor at overtime or
premium rates, or otherwise, are incurred thereby.
Section 10.05. Notwithstanding any of the foregoing provisions of this
Article 10, if Landlord or Overlandlord or the holder of any superior mortgage
shall be unable to collect all of the insurance proceeds (including rent
insurance proceeds) applicable to damage or destruction of the Demised Premises
or the Building by fire or other cause by reason of some action or inaction on
the part of Tenant or any of its employees, agents or contractors, then, without
prejudice to any other remedies which may be available against Tenant, there
shall be no abatement of Tenant's rent until the total amount of such rent not
abated which would otherwise have been abated equals the amount of uncollected
insurance proceeds.
Section 10.06. Landlord will not carry separate insurance of any kind
on Tenant's property and Landlord shall not be obligated to repair any damage
thereto or replace the same.
Section 10.07. In the event of the termination of this Lease pursuant
to any of the provisions of this Article 10, this Lease and the Term and estate
hereby granted shall expire as of the date of such termination with the same
effect as if that were the Expiration Date, and the Fixed Rent and additional
rent payable hereunder shall be apportioned as of such date.
Section 10.08. The provisions of this Article 10 shall be considered an
express agreement governing any case of damage or destruction of the Demised
Premises by fire or other casualty, and Section 227 of the Real Property Law of
the State of New York providing for a contingency in the absence of an express
agreement, and any other law of like import, now or hereafter in force, shall
have no application to the Demised Premises and this Lease.
<PAGE>
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Section 10.09. In the event the Building or Demised Premises shall be
partially or totally damaged or destroyed by fire or other cause and, as a
result thereof, Tenant's occupancy of the Demised Premises shall be temporarily
interrupted, in accordance with the terms of this Article 10, then the
Expiration Date of this Lease shall be deemed automatically extended for the
same number of days of such temporary interruption. In the event Expiration Date
shall be extended as aforesaid, the parties hereto agree to execute and deliver
an agreement setting forth the extended Expiration Date, provided the failure of
the parties to enter into such an agreement shall not affect their respective
rights and obligations hereunder.
ARTICLE 11
ASSIGNMENT, SUBLETTING, MORTGAGING
Section 11.01. (a) Tenant will not by operation of law or otherwise,
assign, mortgage or otherwise encumber this Lease, nor the estate and Term
hereby granted, nor sublet or permit the Demised Premises or any part thereof to
be used by others, without Landlord's prior written consent in each instance.
The consent by Landlord to any assignment or subletting shall not in any manner
be construed to relieve Tenant from obtaining Landlord's express written consent
to any other or further assignment or subletting.
If Tenant desires to assign or sublet all or any portion of the Demised
Premises, Tenant agrees to use as its exclusive rental agent for such purpose
for a period of thirty (30) days (and thereafter on a non-exclusive basis), the
then designated leasing agent of the Building and to notify such leasing agent
of its desire to assign this Lease or sublet the Demised Premises. Upon
obtaining a proposed assignee or sublessee, upon terms satisfactory to Tenant,
Tenant shall submit to Landlord in writing (1) the name of the proposed assignee
or subtenant; (2) the terms and conditions of the proposed assignment or
subletting; (3) the nature and character of the business of the proposed
assignee or subtenant and any other information reasonably requested by
Landlord.
Upon receipt of the foregoing submission from Tenant Landlord shall
have the following options to be exercised within thirty (30) days from the date
of such receipt:
1. If an assignment shall be proposed or if a proposed
subletting shall be for all or substantially all of the Demised Premises,
Landlord shall have the option to terminate this Lease effective as of the date
proposed by Tenant for such assignment or subletting.
2. If a proposed sublease shall be for less than all or
substantially all of the Demised Premises or if it shall be
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for less than the balance of the Term of this Lease, Landlord shall have the
option to terminate this Lease as to the portion of the Demised Premises
proposed to be sublet for such portion of the Term as is included in such
proposed sublease, effective as of the effective date of such proposed sublease.
In the event of the exercise of such option under this subparagraph 2, the rent
and all other charges payable hereunder shall be equitably apportioned, and
Tenant shall be responsible for the cost of constructing any necessary demising
walls.
3. Landlord shall have the option to require Tenant to execute
an assignment or sublease to Landlord, or to any party designated by Landlord,
upon the same terms and conditions as contemplated with the proposed assignee or
subtenant, except that (A) Landlord (or Landlord's designee) as assignee or
sublessee shall have an express unlimited right to further assign or sublease to
others and to make any alterations required in connection therewith, and (B) the
rent or consideration payable under such assignment or sublease to Landlord (or
Landlord's designee) shall be the lower of (i) the rental payable by Tenant to
Landlord under this Lease, or (ii) the rental payable by the proposed assignee
or subtenant pursuant to the assignment or sublease originally proposed by
Tenant.
(b) If Landlord shall not exercise any of its foregoing options within
the time set forth above, provided Tenant shall not then be in default
hereunder, Landlord's consent to any such proposed assignment or subletting
shall not be "unreasonably" withheld, as described in paragraph (c) of this
Section 11.01.
If Landlord shall not exercise any of the options described in
paragraph (a) above and Tenant shall thereupon assign this Lease or sublet all
or any portion of the Demised Premises, then and in that event Tenant shall pay
to Landlord as additional rent the difference, if any, between the Fixed Rent
plus additional rent allocable to that part of the Demised Premises affected by
such assignment or sublease pursuant to the provisions of this Lease, and the
Fixed Rent and additional rent payable by the assignee or sublessee to Tenant.
Such additional rent payments shall be made monthly within five (5) days after
receipt of the same by Tenant. Any other cash or other consideration payable to
Tenant in connection with such assignment or sublease or the sale of Tenant's
property in connection therewith shall be similarly paid over to Landlord when
and as received by Tenant.
If Tenant fails to consummate any proposed assignment or subletting to
which Landlord shall have consented within sixty (60) days after granting such
consent, paragraph (a) shall again apply to said proposed assignment or
subletting.
No option exercised by Landlord pursuant to the above provisions of
paragraph (a), and no assignment or sublease made to Landlord under the above
provisions of paragraph (a), shall be
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binding upon any purchaser of any ground or underlying lease who acquires such
ground or underlying lease by reason of the foreclosure of any mortgage to which
this Lease is subordinate, nor upon any assignee of any ground or underlying
lease who takes such assignment in lieu of such foreclosure, it being
understood, however, that such purchaser or assignee may, at its option, elect
to enforce such option, assignment or sublease.
(c) In determining reasonableness with respect to its consent to a
proposed assignment or sublease by Tenant, Landlord may take into consideration
all relevant factors surrounding the proposed assignment or sublease, including,
without limitation, the following:
(i) the financial stability and business reputation of the
proposed assignee or subtenant;
(ii) the nature of the business and the proposed use of the
Demised Premises by the proposed assignee or subtenant in relation to the
majority of other tenants in the Building;
(iii) that the proposed assignee or subtenant shall not be a
tenant of other space in the Building or a party which has dealt with Landlord
or Landlord's agent (directly or through a broker) with respect to space in the
Building during the six (6) months immediately preceding Tenant's request for
Landlord's consent, provided Landlord has space in the Building for such
proposed assignee or subtenant;
(iv) restrictions contained in leases of other tenants of the
Building;
(v) the 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 Landlord's investment therein;
(vi) that not more than one entity shall occupy the Demised
Premises at any time.
Section 11.02. If this Lease shall be assigned, or if the Demised
Premises or any part thereof be sublet or occupied by any person or persons
other than Tenant, Landlord may after default by Tenant, collect rent from the
assignee, subtenant or occupant and apply the net amount collected to the rent
herein reserved, but no such assignment, subletting, occupancy or collection of
rent shall be deemed a waiver of the covenants in this Article, nor shall it be
deemed acceptance of the assignee, subtenant or occupant as a tenant, or a
release of Tenant from the full performance by Tenant of all the terms,
conditions and covenants of this Lease.
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Section 11.03. Each assignee or transferee shall assume and be deemed
to have assumed this Lease and shall be and remain liable jointly and severally
with Tenant for the payment of the rent, additional rent and adjustments of
rent, and for the due performance of all the terms, covenants, conditions and
agreements herein contained on Tenant's part to be performed for the Term of
this Lease. No assignment shall be binding on Landlord unless such assignee or
Tenant shall deliver to Landlord a duplicate original of the instrument of
assignment which contains a covenant of assumption by the assignee of all of the
obligations aforesaid and shall obtain from Landlord the aforesaid written
consent prior thereto.
Section 11.04. For the purposes of this Lease, any sale, transfer or
assignment of more than fifty (50%) percent of the stock of a corporate Tenant
or any transfer in the control of Tenant by operation of law or otherwise shall
be deemed an assignment. For the purposes hereof, "control" shall be deemed to
mean ownership of not less than a majority of all of the voting stock of such
corporation or not less than a majority of all of the legal and equitable
interest in any other business entities.
Section 11.05. The listing of any name other than that of Tenant,
whether on the doors of the Demised Premises, on the Building directory or
otherwise, shall not operate to vest any right or interest in this Lease or the
Demised Premises. It is expressly understood that any such listing is a
privilege extended by Landlord that is revocable at will by written notice to
Tenant.
Section 11.06. Tenant shall reimburse Landlord for any out-of-pocket
costs incurred by Landlord to review the requested consent provided in Article
11, including reasonable attorneys' fees.
Section 11.07. If Landlord shall recover or come into possession of the
Demised Premises before the Expiration Date, Landlord shall have the right to
take over any sublease made by Tenant and to succeed to all rights of Tenant
thereunder, Tenant hereby assigning (effective as of the date of Landlord's
succession of Tenant's estate in the Demised Premises) such subleases as
Landlord may elect to take over. Every subletting hereunder shall be subject to
the condition that, from and after the termination of this Lease or re-entry by
Landlord hereunder or other succession by Landlord to Tenant's estate in the
Demised Premises, the subtenant under such sublease shall waive any right to
surrender possession or to terminate the sublease and, at Landlord's election,
shall be bound to Landlord for the balance of the term thereof and shall attorn
to and recognize Landlord, as its landlord, under all of the then executory
terms of such sublease, except that Landlord shall not be (a) liable for any
previous act, omission or negligence of Tenant under such
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sublease, (b) subject to any counterclaim, defense or offset theretofore
accruing to such subtenant against Tenant, (c) bound by any previous
modification or amendment of such sublease made without Landlord's consent or by
any previous prepayment of more than one month's rent and additional rent unless
paid as provided in the sublease, or (d) obligated to perform any repairs or
other work in the subleased space or the Building beyond Landlord's obligations
under this Lease, and each subtenant shall execute and deliver such instruments
as Landlord may reasonably request to evidence and confirm such attornment.
Section 11.08. Notwithstanding anything to the contrary elsewhere
contained herein (including Section 11.01(a) hereof), provided that Tenant shall
not be in default in any of the terms of this Lease beyond notice and the
expiration of any applicable grace period, Tenant may, without Landlord's
consent but upon not less than ten (10) days' prior written notice to Landlord,
sublet to any corporations or other business entities which control, are
controlled by, or are under common control with Tenant (herein referred to as a
"Related Entity") all or part of the Demised Premises or permit any Related
Entity to occupy the same for any of the purposes permitted to Tenant, subject
however to compliance with Tenant's obligations under this Lease. Such
subletting or occupancy shall not be deemed to vest in any such Related Entity
any right or interest in this Lease nor shall such subletting or occupancy
relieve, release, impair or discharge any of Tenant's obligations hereunder.
Tenant shall deliver to Landlord a copy of any such sublease or occupancy
agreement for all or any portion of the Demised Premises.
Section ll.09. Notwithstanding anything to the contrary elsewhere
contained herein (including Section 11.01(a) which shall not be applicable to an
assignment or transfer pursuant to this Section 11.09), Tenant may, upon prior
written notice to Landlord, assign or transfer its entire interest in this Lease
and the leasehold estate hereby created to a "Successor Corporation" (as such
term is hereinafter defined) of Tenant, provided that Tenant shall not be in
default in any of the terms of this Lease beyond notice and the expiration of
any applicable grace period. A "Successor Corporation", as used in this Section,
shall mean (a) a corporation into which or with which Tenant, its corporate
successors or permitted assigns, is merged or consolidated, in accordance with
applicable statutory provisions for the merger or consolidation of a
corporation, provided that by operation of law or by effective provisions
contained in the instruments of merger or consolidation, the liabilities of the
corporations participating in such merger or consolidation are assumed by the
corporation surviving such merger or consolidation, or (b) a corporation,
partnership or other business entity acquiring this Lease and the Term and the
estate hereby granted, the goodwill and all or substantially all of the other
property and assets (other than capital stock of such acquired corporation) of
Tenant, its corporate successors or
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permitted assigns, and assuming all or substantially all of the liabilities of
Tenant, its corporate successors or permitted assigns, or (c) any corporate
successor to a Successor Corporation becoming such by either of the methods
described in subdivisions (a) and (b) above, provided that, (x) immediately
after giving effect to any such merger or consolidation, or such acquisition and
assumption, as the case may be, the corporation, partnership or other business
entity surviving such merger or created by such consolidation or acquiring such
assets and assuming such liabilities, as the case may be, shall have a net
worth, as determined in accordance with generally accepted accounting
principles, at least equal to the greater of (i) the net worth, similarly
determined, of Tenant, immediately prior to such merger or consolidation or such
acquisition and assumption, as the case may be, or (ii) the net worth, similarly
determined, of Tenant as of the date of this Lease and (y) proof of such net
worth, as evidenced by a statement from a certified public accounting firm
reasonably satisfactory to Landlord shall have been delivered to Landlord at
least ten (10) days prior to the effective date of any such merger or
consolidation, or acquisition and assumption, as the case may be. Upon the
compliance with the foregoing provisions of this Section 11.09, and the delivery
to Landlord of the agreement of the Successor Corporation, in form and substance
satisfactory to Landlord, to assume all the terms of this Lease to be performed
by Tenant, and to be bound thereby, the corporation, partnership or other
business entity so assigning or transferring this Lease shall thereafter be
released and discharged from any obligations thereafter arising under this
Lease.
Section 11.10 Anything herein to the contrary notwithstanding, the
provisions of Section (a) of Article 11.01 shall not apply to, and Tenant shall
be permitted to sublet or allow the occupancy of, "desk space" in the Demised
Premises, from time to time, without Landlord's consent to entities affiliated
with Tenant or to clients or customers of Tenant provided (a) there is no
separate demising of the area to be subleased or occupied and no additional
reception area for the same, (b) such sublet or occupied space shall not, in the
aggregate, exceed five hundred (500) rentable square feet of space in the
Demised Premises, (c) Landlord receives a copy of the sublease or occupancy
agreement prior to the effective date thereof which agreement shall be subject
to the terms of this Lease, including, but not limited to, this Article 11, and
(d) prior to the effective date of any such sublease or occupancy Landlord
receives proof, reasonably satisfactory to Landlord, that such subtenant or
occupant is affiliated with Tenant or is a client or customer of Tenant.
Permission to such persons to use the Demised Premises shall not create a
tenancy or any other interest in the Demised Premises other than a license which
shall cease and expire in any event automatically without notice upon expiration
or termination of the letting under this Lease. Tenant shall be responsible for
all acts, omissions and
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operations of such persons associated with their use of the Demised Premises.
Use of the Demised Premises pursuant hereto shall not be deemed to entitle said
persons to rights or privileges which Landlord has accorded, or may hereafter
accord, to lessees of space in the Building. If Landlord determines that any
such occupant is not reputable or causes a nuisance or disruption to other
tenants in the Building or conducts itself or its business in a manner
inconsistent with the terms of this Lease, Landlord may revoke such license and
require Tenant to terminate such occupancy, and Landlord may exclude same from
the Building.
ARTICLE 12
NO LIABILITY ON LANDLORD
Section 12.01. Landlord or its agents shall not be liable for any
damage to property of Tenant or of others entrusted to employees of the
Building, nor for the loss of or damage to any property of Tenant by theft or
otherwise. Landlord or its agents shall not be liable for any injury or damage
to persons or property resulting from fire, explosion, falling plaster, steam,
gas, electricity, water, rain or snow, leaks from any part of the Building or
from the pipes, appliances or plumbing works or from the roof, street or
sub-surface or from any other place or by dampness or by any other cause of
whatsoever nature, unless caused by or due to the negligence of Landlord, its
agents, servants or employees; nor shall Landlord or its agents be liable for
any such damage caused by other tenants or persons in the Building or caused by
operations in construction of any private, public or quasi-public work; nor
shall Landlord be liable for any latent defect in the Demised Premises or in the
Building of which they form a part. If at any time any windows of the Demised
Premises are temporarily or permanently closed, darkened or bricked up for any
reason whatsoever including but not limited to Landlord's own acts, Landlord
shall not be liable for any damage Tenant may sustain thereby, and Tenant shall
not be entitled to any compensation therefor nor abatement of rent, nor shall
the same release Tenant from its obligations hereunder nor constitute an
eviction.
ARTICLE 13
MOVING OF HEAVY EQUIPMENT
Section 13.01. Tenant shall not move any safe, heavy equipment or bulky
matter in or out of the Building without Landlord's written consent, which
consent Landlord agrees not to unreasonably withhold or delay. If the movement
of such items requires special handling, Tenant agrees to employ only persons
holding a Master Rigger's License to do said work and all such work shall be
done in full compliance with the Administrative Code of the City of New York and
other municipal requirements.
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All such movements shall be made during hours which will least interfere with
the normal operations of the Building, and all damage caused by such movement
shall be promptly repaired by Tenant at Tenant's expense.
ARTICLE 14
CONDEMNATION
Section 14.01. In the event that the whole of the Demised Premises
shall be lawfully condemned or taken in any manner for any public or
quasi-public use, this Lease and the Term and estate hereby granted shall
forthwith cease and terminate as of the date of vesting of title. In the event
that only a part of the Demised Premises shall be so condemned or taken, then,
effective as of the date of vesting of title, the rent hereunder for such part
shall be abated. In the event that only a part of the Building shall be so
condemned or taken, then (a) if substantial structural alteration or
reconstruction of the Building shall in the reasonable opinion of Landlord be
necessary or appropriate as a result of such condemnation or taking (whether or
not the Demised Premises be affected), Landlord may, at its option, terminate
this Lease and the Term and estate hereby granted as of the date of such vesting
of title by notifying Tenant in writing of such termination within sixty (60)
days following the date on which Landlord shall have received notice of vesting
of title, or (b) if Landlord does not elect to terminate this Lease, as
aforesaid, this Lease shall be and remain unaffected by such condemnation or
taking, except that the Fixed Rent and additional rent shall be abated to the
extent, if any, hereinbefore provided in this Article 14. In the event that only
a part of the Demised Premises shall be so condemned or taken and this Lease and
the Term and estate hereby granted are not terminated as hereinbefore provided,
Landlord will, at its expense, restore with reasonable diligence the remaining
structural portions of the Demised Premises as nearly as practicable to the same
condition as it was prior to such condemnation or taking.
In the event of termination in any of the cases hereinabove provided in
this Article 14, this Lease and the Term and estate hereby granted shall expire
as of the date of such termination with the same effect as if that were the date
hereinbefore set for the expiration of the Term of this Lease, and the rent
hereunder shall be apportioned as of such date.
In the event of any condemnation or taking hereinabove mentioned of all
or a part of the Building, Landlord shall be entitled to receive the entire
award in the condemnation proceeding, including any award made for the value of
the estate vested by this Lease in Tenant, and Tenant hereby expressly assigns
to Landlord any and all right, title and interest of Tenant now or hereafter
arising in or to any such award or any
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part thereof, and Tenant shall be entitled to receive no part of such award.
Tenant shall, at its own cost and expense, be entitled to pursue an independent
claim for moving expenses, Tenant's property (which does not become part of the
Building or property of Landlord) and injury to Tenant's business, provided,
however, that such claim shall not thereby lessen, reduce or otherwise affect
Landlord's award.
ARTICLE 15
ENTRY, RIGHT TO CHANGE PUBLIC PORTIONS OF THE BUILDING
Section 15.01. Tenant shall permit Landlord to erect, use and maintain
pipes and conduits in and through the Demised Premises. All such pipes and
conduits shall either be concealed above the suspended ceiling area, or within
the demising walls or installed in the service columns, or shall be installed
along the walls of the Demised Premises and appropriately enclosed, where
feasible. In the event the construction deprives the Tenant of the use of a
material or substantial portion of the usable area of the Demised Premises
(other than on a temporary basis), the Tenant shall be entitled to an pro rata
abatement of rent for the space so permanently taken. Landlord agrees that in
the event more than fifty percent (50%) of the Demised Premises is permanently
taken pursuant to this Article 15 and such taking materially interferes with
Tenant's ability to conduct its business in the balance of the Demised Premises,
Tenant shall, within thirty (30) days after such permanent taking, have the
right to cancel and terminate this Lease upon written notice to Landlord.
Landlord or its agents or designees shall have the right, but only upon
reasonable notice (except in emergencies, in which event no notice shall be
required) given to Tenant or any authorized employee of Tenant at the Demised
Premises, to enter the Demised Premises at reasonable times during business
hours, for the purpose of making such repairs or alterations as shall be
required or as Landlord shall have the right to make by the provisions of this
Lease. Landlord shall be allowed to take all material into and upon the Demised
Premises that may be required for the repairs and alterations above mentioned
without the same constituting an eviction of Tenant in whole or in part, and the
rent reserved hereunder shall in no wise abate, except as otherwise provided in
this Lease, while said repairs or alterations are being made, by reason of loss
or interruption of the business of Tenant because of the prosecution of any such
work, or otherwise. Landlord agrees to do any work pursuant to this Article in
such a manner so as not to unreasonably interfere with Tenant's business,
provided no additional costs, for labor at overtime or premium rates, or
otherwise, are incurred thereby.
Section 15.02. During the six (6) months prior to the expiration of the
Term of this Lease, Landlord may exhibit the Demised Premises to prospective
tenants. Landlord shall also
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have the right to enter the Demised Premises for the purpose of inspecting the
same or exhibiting the same to prospective purchasers or lessees of the entire
Building or to prospective mortgagees of the property of which the Demised
Premises forms a part. The holders of any mortgage of Landlord's interest in the
property, or such holders' agents or designees, shall also have such right of
inspection for itself and for any prospective assignees of any such mortgagees.
Landlord agrees, to the extent practicable, to give Tenant reasonable prior
notice of any exhibition or inspection pursuant to this Section 15.02 and to
perform any such exhibition or inspection at times convenient to Tenant and in a
manner so as to minimize interference with Tenant's business.
Section 15.03. Landlord shall have the right at any time without
thereby creating an actual or constructive eviction or incurring liability to
Tenant therefor, to change the arrangement or location of such of the following
as are not contained within the Demised Premises or any part thereof: entrances,
passageways, elevators, doors and doorways, corridors, stairs, toilets and other
like public service portions of the Building.
ARTICLE 16
BANKRUPTCY
Section 16.01. (a) Anything elsewhere in this Lease to the contrary
notwithstanding, this Lease may be cancelled by Landlord by the sending of a
written notice to Tenant within a reasonable time after the happening of any one
or more of the following events: (i) Tenant shall (A) have applied for or
consented to the appointment of a receiver, trustee, liquidator, or other
custodian of Tenant or any of its properties or assets, (B) be unable to pay its
debts generally as they become due or shall have taken any other action which
could result in it becoming the subject of an insolvency or bankruptcy
proceeding, (C) have made a general assignment for the benefit of creditors, (D)
have commenced a voluntary case for relief as a debtor under the United States
Bankruptcy Code or filed a petition to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debts, dissolution or liquidation
law or statute or an answer admitting the material allegations of a petition
filed against it in any proceeding under any such law, or (E) be adjudicated a
bankrupt or insolvent; or (ii) Without the acquiescence or consent of Tenant an
order, judgment or decree shall have been entered by any court of competent
jurisdiction approving as properly filed a petition seeking relief under the
United States Bankruptcy Code or any bankruptcy, reorganization, insolvency,
readjustment of debts, dissolution or liquidation law or statute with respect to
Tenant or appointing a receiver, trustee, liquidator or other custodian of all
or a substantial part of its properties or assets, and such order, judgment or
decree shall have continued unstayed and in effect for any period
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of not less than sixty (60) days. Neither Tenant, nor any person claiming
through or under Tenant or by reason of any statute or order of court, shall
thereafter be entitled to possession of the Demised Premises, but shall
forthwith quit and surrender the Demised Premises. If this Lease shall be
assigned in accordance with its terms, the provisions of this Article shall be
applicable only to the party then owning Tenant's interest in this Lease.
(b) It is stipulated and agreed that in the event of the termination of
this Lease pursuant to paragraph (a) hereof, Landlord shall forthwith,
notwithstanding any other provisions of this Lease to the contrary, be entitled
to recover from Tenant as and for liquidated damages an amount equal to the
difference between the rent reserved hereunder for the unexpired portion of the
Term demised and the then fair and reasonable rental value of the Demised
Premises for the same period. In the computation of such damages the difference
between any installment of rent becoming due hereunder after the date of
termination and the fair and reasonable rental value of the Demised Premises for
the period for which such installment was payable shall be discounted to the
date of termination at the rate of six percent (6%) per annum. If the Demised
Premises or any part thereof be re-let by Landlord for the unexpired Term of
this Lease, or any part thereof, before the presentation of proof of such
liquidated damages to any court, commission or tribunal, the amount of rent
reserved upon such re-letting shall be prima facie evidence as to the fair and
reasonable rental value for the part or the whole of the Demised Premises so
re-let during the term of the re-letting. Nothing herein contained shall limit
or prejudice the right of Landlord to prove for and obtain as liquidated damages
by reason of such termination, an amount equal to the maximum allowed by any
statute or rule in effect at the time when, and governing the proceedings in
which, such damages are to be approved, whether or not such amount be greater,
equal to, or less than the amount of the difference referred to above.
ARTICLE 17
DEFAULTS AND REMEDIES AND WAIVER OF REDEMPTION
Section 17.01.(1)If (A) Tenant defaults in fulfilling any of the
covenants of this Lease, (i) with respect to the covenant for the payment of
Fixed Rent or additional rent, if such default shall continue for seven (7)
days, and (ii) with respect to any other covenant, if such default shall
continue for thirty (30) days, in either event, after Landlord shall have given
to Tenant a written notice specifying such default, or (B), the Demised Premises
become abandoned, or if the Demised Premises are damaged by reason of negligence
or carelessness of Tenant, its agents, employees or invitees, or (C) in the case
of the happening of a default or omission (other than in the payment of Fixed
Rent, additional rent or other charges hereunder and other
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than the failure to cause a lien against the Demised Premises, the Building or
the Land to be discharged of record within the time period provided elsewhere in
this Lease), such default or omission cannot with due diligence be completely
cured or remedied within such thirty (30) day period, if Tenant shall not have
diligently commenced curing such default within such thirty (30) day period, and
shall not thereafter with reasonable diligence and in good faith be proceeding
to remedy or cure such default, then, in any such case, Landlord may give to
Tenant a notice of intention to terminate this Lease upon the expiration of
three (3) days from the service of such notice of intention, and upon the
expiration of said three (3) days, this Lease and the Term hereof shall
terminate, and Tenant shall then quit and surrender the Demised Premises to
Landlord, but Tenant shall remain liable as hereinafter provided.
(2) If (A) the notice provided for in (1) hereof shall have been given,
and the Term shall expire as aforesaid; or (B) if Tenant shall make any default
in the payment of Fixed Rent or additional rent herein reserved, or any part of
either, or in making any other payment herein provided; or (C) if any execution
or attachment shall be issued against Tenant or any of Tenant's property
whereupon the Demised Premises shall be taken or occupied or attempted to be
taken or occupied by someone other than Tenant; or (D) if Tenant shall make
default with respect to any other lease between Landlord and Tenant; or (E) if
Tenant shall fail to move into or take possession of the Demised Premises within
ninety (90) days after commencement of the Term of this Lease, of which facts
Landlord shall be the sole judge exercised in good faith; then in any of such
events Landlord may, without notice, re-enter the Demised Premises by any lawful
process, and dispossess Tenant and the legal representatives of Tenant or any
other occupants of the Demised Premises by summary proceedings or otherwise and
remove their effects and hold the Demised Premises as if this Lease had not been
made. Tenant hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to the aforesaid end. If Tenant shall make default
hereunder prior to the date fixed as the commencement of any renewal or
extension of this Lease, Landlord may cancel and terminate such renewal or
extension agreement by written notice, but Tenant shall remain liable as
hereinafter provided.
Section 17.02. In case of any such default, re-entry, expiration and/or
dispossess by summary proceedings or otherwise, (i) the rent shall become due
thereupon and be paid up to the time of such re-entry, dispossess and/or
expiration together with such costs as Landlord may incur for legal expenses,
reasonable attorneys' fees, brokerage and/or putting the Demised Premises in
good order, or for preparing the same for re-rental; (ii) Landlord may re-let
the Demised Premises or any part or parts thereof, either in the name of
Landlord or otherwise, for a term or terms, which may at Landlord's option be
less than or exceed
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the period which would otherwise have constituted the balance of the Term of
this Lease and may grant concessions or free rent; and/or (iii) Tenant or the
legal representatives of Tenant shall also pay Landlord as liquidated damages
for the failure of Tenant to observe and perform Tenant's covenants herein
contained, at the election of Landlord, either:
(a) a sum which at the time of such termination of this Lease
or at the time of any such re-entry by Landlord, as the case may be, represents
the then value of the excess, if any, of (1) the aggregate of the installments
of Fixed Rent and the additional rent (if any) which would have been payable
hereunder by Tenant, had this Lease not so terminated, 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 date hereinbefore set for the expiration of
the full term hereby granted pursuant to Articles 1 and 2 hereof, over (2) the
aggregate rental value of the Demised Premises for the same period, said lump
sum to be discounted to the Expiration Date of this Lease at the then prevailing
prime rate of interest; or
(b) sums equal to the aggregate of the installments of Fixed
Rent and additional rent (if any) 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 date hereinbefore set for the
expiration of the full Term hereby granted; provided, however, that if Landlord
shall re-let the Demised Premises during said period, Landlord shall credit
Tenant with the net rents received by Landlord for such re-letting, such net
rents to be determined by first deducting from the gross rents as and when
received by Landlord from such re-letting the expenses incurred or paid by
Landlord terminating this Lease or of re-entering the Demised Premises and of
securing possession thereof, including, without limitation, reasonable
attorneys' fees and costs of removal and storage of Tenant's property, as well
as the expenses of re-letting, including repairing, restoring, altering,
decorating and preparing the Demised Premises for new tenants, brokers'
commissions, advertising costs, reasonable attorneys' fees, and all other
similar or dissimilar expenses chargeable against the Demised Premises and the
rental therefrom in connection with such re-letting, it being understood that
any such re-letting may be for a period equal to or shorter or longer than the
remaining Term of this Lease; provided, further, that (1) in no event shall
Tenant be entitled to receive any excess of such net rents over the sums payable
by Tenant to Landlord hereunder, (2) in no event shall Tenant be entitled in any
suit for the collection of damages pursuant to this paragraph (b) to a credit in
respect of any net rents from a re-letting except to the extent that such net
rents are actually received by Landlord prior to the commencement of such suit,
and (3) if the Demised Premises or any part thereof should be re-let in
combination with other space,
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then proper apportionment on a square foot area basis shall be made of the rent
received from such re-letting and of the expenses of re-letting.
For the purpose of paragraph (a) of this Section 17.02, the amount of
additional rent which would have been payable by Tenant under Article 3 hereof
for each year, as therein provided, ending after such termination of this Lease
or such re-entry, shall be deemed to be an amount equal to the amount of such
additional rent payable by Tenant for the calendar year and Tax Year ending
immediately preceding such termination of this Lease or such re-entry. Suit or
suits for the recovery of such damages, or any installments thereof, may be
brought by Landlord 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 of this Lease would have expired if it had not been terminated under
the provisions of Articles 16 or 17 hereof, or under any provision of law, or
had Landlord not re-entered the Demised Premises.
Landlord, at Landlord's option, may make such alterations, repairs,
replacements and/or decorations in the Demised Premises as Landlord in
Landlord's sole judgment considers advisable and necessary for the purpose of
re-letting the Demised Premises; and the making of such alterations and/or
decorations shall not operate or be construed to release Tenant from any
liability hereunder as aforesaid. Landlord shall in no event be liable in any
way whatsoever for failure to re-let the Demised Premises, or in the event that
the Demised Premises are re-let, for failure to collect the rent thereof under
such re-letting. In the event of a breach or threatened breach by Tenant of any
of the covenants or provisions hereof, Landlord shall have the right of
injunction and the right to invoke any remedy allowed at law or in equity as if
re-entry, summary proceedings and other remedies were not herein provided for.
Mention in this Lease of any particular remedy shall not preclude Landlord from
any other remedy, in law or in equity. Tenant hereby expressly waives any and
all rights of redemption granted by or under any present or future laws in the
event of Tenant being evicted or dispossessed for any cause, or in the event of
Landlord obtaining possession of the Demised Premises, by reason of the
violation by Tenant of any of the covenants and conditions of this Lease, or
otherwise.
ARTICLE 18
LANDLORD'S RIGHT TO PERFORM TENANT'S OBLIGATIONS
Section 18.01. If Tenant shall default in the observance or performance
of any term or covenant on its part to be observed or performed under or by
virtue of any of the terms or provisions in any Article of this Lease, Landlord,
without being under any obligation to do so and without thereby waiving such
default, may remedy such default for the account and at the expense of Tenant.
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If Landlord makes any expenditures or incurs any obligations for the payment of
money in connection therewith, including, but not limited to, attorneys' fees in
instituting, prosecuting or defending any action or proceedings, such sums paid
or obligations incurred with interest computed at the Interest Rate and costs
shall be deemed to be additional rent hereunder and shall be paid to it by
Tenant on demand.
ARTICLE 19
COVENANT OF QUIET ENJOYMENT
Section 19.01. Landlord covenants that upon Tenant paying the Fixed
Rent and additional rents and observing and performing all the terms, covenants
and provisions of this Lease on Tenant's part to be observed and performed,
Tenant may peaceably and quietly enjoy the Demised Premises, subject
nevertheless to the terms and conditions of this Lease and provided, however,
that no eviction of Tenant by reason of paramount title, the foreclosure of any
mortgage now or hereafter affecting the Demised Premises or by reason of any
termination of any ground or underlying lease to which this Lease is subject and
subordinate, whether such termination is by operation of law, by agreement or
otherwise, shall be construed as a breach of this covenant nor shall any action
by reason thereof be brought against Landlord, and provided further that this
covenant shall bind and be enforceable against Landlord, subject to the terms
hereof, only so long as Landlord is in possession and is collecting rent from
Tenant but not thereafter.
ARTICLE 20
EXCAVATION
Section 20.01. In the event that an excavation should be made for
building or other purposes upon land adjacent to the Building, or should be
authorized to be made, Tenant shall, if necessary, afford to the person or
persons causing or authorized to cause such excavation, license to enter upon
the Demised Premises for the purpose of doing such work as shall reasonably be
necessary to protect or preserve the wall or walls of the Building, or the
Building, from injury or damage and to support them by proper foundations,
pinning and/or underpinning.
ARTICLE 21
SERVICES AND EQUIPMENT
Section 21.01. So long as this Lease is in full force and effect,
Landlord shall, at its cost and expense:
(a) Provide necessary elevator facilities on Business Days
from 8:00 A.M. to 6:00 P.M. and shall have sufficient
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elevators available at all other times. At Landlord's option, the elevators
shall be operated by automatic control or by manual control, or by a combination
of both of such methods.
(b) (i) Maintain and keep in good order and repair the
air-conditioning, heating and ventilating system installed by Landlord, which
system is further described hereinbelow. The "interior" portion of said system
will be operated by Landlord as seasonably required on Business Days from 8:00
A.M. to 6:00 P.M. and the "perimeter" portion of said system shall be under
Tenant's control. Landlord shall have no responsibility or liability for the
ventilating conditions and/or temperature of the Demised Premises during the
hours or days Landlord is not required to furnish heat, ventilation or
air-conditioning pursuant to this paragraph. Landlord has informed Tenant that
the windows of the Demised Premises and the Building may be sealed and that
accordingly, the Demised Premises may become uninhabitable and the air therein
unbreathable during the hours or days when Landlord is not required pursuant to
this paragraph to furnish heat, ventilation or air-conditioning. Such condition
of the Demised Premises shall not constitute nor be deemed to constitute a
breach or a violation of this Lease or of any provision thereof, nor shall such
condition of the Demised Premises constitute or be deemed to constitute an
eviction and Tenant shall not claim nor be entitled to claim any abatement of
rent or make any claim for any damages or compensation by reason of such
condition of the Demised Premises. Any use or occupancy of the Demised Premises
during the hours or days Landlord is not required to furnish heat, ventilation
or air-conditioning to the Demised Premises pursuant to this paragraph shall be
at the sole risk, responsibility and hazard of Tenant. Tenant shall in any event
cause all of the windows in the Demised Premises to be kept closed at all times
and shall cause all of the vents, intakes, outlets and grilles in the Demised
Premises to be kept entirely unobstructed at all times. Additionally, Tenant
shall comply with and observe any and all rules, regulations and requirements
hereafter prescribed by Landlord for the proper functioning of the heating,
ventilating and air-conditioning system.
(ii) The heating, ventilating and air-conditioning
system servicing the Demised Premises consists, as of the date hereof, of an
interior duct air distribution system and perimeter units. The perimeter units
serve that portion of the Demised Premises which is within 15 feet from the
glass line of the Building and operate automatically, commencing operation at
8:00 A.M. and ceasing operation at 6:00 P.M. The perimeter units may be
activated by Tenant at any other time and upon activation will operate for a
pre-programmed period of time and may be reactivated by Tenant thereafter on a
continuing basis. All electricity used in connection with the operation of the
perimeter units shall be supplied by Landlord upon and subject to all of the
terms and conditions contained in Article 4 hereof.
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(iii) In the event that Tenant shall require operation
of the "interior" portion of the air-conditioning, heating or ventilation system
at times other than as described above, Tenant shall give Landlord at least
twenty-four (24) hours advance notice of such requirement and, if reasonably
practicable, Landlord will arrange for such operation and Tenant shall pay
Landlord's established charges therefor as additional rent, including with
respect to minimum number of hours and/or minimum floor area for such operation.
(c) Provide cleaning and janitorial services on Business Days
as described in Schedule D annexed hereto.
(d) Furnish hot and cold water for lavatory and drinking and
office cleaning purposes. If Tenant requires, uses or consumes water for any
other purposes, Tenant agrees to Landlord installing a meter or meters or other
means to measure Tenant's water consumption, and Tenant further agrees to
reimburse Landlord for the cost of the meter or meters and the installation
thereof, and to pay for the maintenance of said meter equipment and/or to pay
Landlord's cost of other means of measuring such water consumption by Tenant.
Tenant shall reimburse Landlord the cost of all water consumed, as measured by
said meter or meters or as otherwise measured, including sewer rents.
(e) Provide Tenant with its proportional share of directory
listings on the Building lobby directory, free of charge to Tenant. Landlord may
make a reasonable charge for any changes to the directory listings.
Section 21.02. Landlord reserves the right to interrupt, curtail or
suspend the services required to be furnished by Landlord under this Article 21
when the necessity therefor arises by reason of accident, emergency, mechanical
breakdown, or when required by any law, order or regulation of any federal,
state, county or municipal authority, or for any other cause beyond the
reasonable control of Landlord. Landlord shall do any work pursuant to this
Article in such a manner so as to minimize interference with Tenant's business,
provided no additional costs, for labor at overtime or premium rates, or
otherwise, are incurred thereby. No diminution or abatement of rent or other
compensation shall or will be claimed by Tenant as a result of any interruption,
curtailment or suspension of services, nor shall this Lease or any of the
obligations of Tenant be affected or reduced by reason of such interruption,
curtailment or suspension.
Section 21.03. Tenant shall reimburse Landlord for the cost to Landlord
of removal from the Demised Premises and the Building of so much of any refuse
and rubbish of Tenant as shall exceed that ordinarily accumulated daily in the
routine of business
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office occupancy or by any use of the Demised Premises after customary business
hours.
Section 21.04. It is expressly agreed that only Landlord or any one or
more persons, firms or corporations authorized in writing by Landlord will be
permitted to furnish laundry, linen, towels, drinking water, ice and other
similar supplies and services to tenants and licensees in the Building. Landlord
may fix, in its sole and absolute discretion, at any time and from time to time,
the hours during which and the regulations under which such supplies and
services are to be furnished. Landlord expressly reserves the right to act as or
to designate, at any time and from time to time, an exclusive supplier of all or
any one or more of the said supplies and services, provided that the quality
thereof and the charges therefor are reasonably comparable to that of other
suppliers and Landlord furthermore expressly reserves the right to exclude from
the Building any person, firm or corporation attempting to furnish any of said
supplies or services but not so designated by Landlord.
Section 21.05. It is expressly agreed that only Landlord or any one or
more persons, firms or corporations authorized in writing by Landlord will be
permitted to sell, deliver or furnish any food or beverages, either personally
or through the use of vending machines, for consumption within the Demised
Premises or elsewhere in the Building. Landlord expressly reserves the right to
act as or to designate at any time, or from time to time, an exclusive supplier
or suppliers of such food and beverages sold in the Building and Landlord
further expressly reserves the right to exclude from the Building any person,
firm or corporation attempting to purvey any such food or beverages but not so
designated by Landlord. It is understood, however, that Tenant or regular office
employees of Tenant who are not employed by any supplier of such food or
beverages or by any person, firm or corporation engaged in the business of
purveying such food or beverages, may personally bring or have delivered into
the Building food or beverages for consumption within the Demised Premises by
employees of Tenant, but not for resale to or for consumption by any other
tenant. Landlord may fix in its absolute discretion, at any time and from time
to time, the hours during which and the regulations under which foods and
beverages may be brought or delivered into the Building by or for regular
employees of Tenant. Notwithstanding the foregoing, it is understood that Tenant
or regular office employees of Tenant who are not employed by any supplier of
such food or beverages or by any person, firm or corporation engaged in the
business of purveying such food or beverages, may personally bring food or
beverages into the Building for consumption within the Demised Premises by
employees of Tenant, but not for resale to or for consumption by any other
tenant. It is further understood that Tenant may order food and beverages for
delivery to Tenant in the Demised Premises for consumption by Tenant's employees
and invitees from contractors, restaurants and caterers selected by
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Tenant, without obtaining Landlord's prior consent, provided however that if
Landlord determines that the delivery by any such contractor, restaurant or
caterer poses a security risk to the Building personnel or to other tenants in
the Building or otherwise causes a nuisance or disruption in the Building,
Landlord may exclude same from the Building.
Section 21.06. Tenant agrees to employ such office maintenance
contractor as Landlord may from time to time designate, for all waxing,
polishing, lamp replacement, cleaning (other than those cleaning services
Landlord is obligated to furnish) and the maintenance work in the Demised
Premises, provided that the quality thereof and the charges therefor are
reasonably comparable to that of other contractors. Tenant shall not employ any
other contractor without Landlord's prior written consent, which shall not be
unreasonably withheld (except that Tenant's own employees, not including any
affiliate or Related Entity, may provide such services to Tenant only).
Section 21.07. Landlord will not be required to furnish any other
services, except as otherwise provided in this Lease.
Section 21.08. (a) Tenant, at its sole cost and expense, shall cause
the Demised Premises to be exterminated on a monthly basis to the satisfaction
of Landlord and shall for such purposes employ exterminators designated by
Landlord.
(b) If Tenant shall have facilities on the Demised Premises
for cooking, drinking, eating, washing and/or storage of food, or similar items,
Tenant shall, on a weekly basis, cause the portion of the Demised Premises on
which such facilities are located to be exterminated to the satisfaction of
Landlord by exterminators designated by Landlord. The foregoing shall not,
however, constitute any approval or consent to the use of the Demised Premises
for such purposes.
(c) If Tenant fails to comply with the provisions of this
Section 21.08, Landlord, in addition to any other remedies available to it under
this Lease or pursuant to law, may perform such service, and the cost therefor
shall be paid by Tenant on demand as additional rent hereunder.
ARTICLE 22
DEFINITION OF LANDLORD
Section 22.01. The term "Landlord" wherever used in this Lease shall be
limited to mean and include only the owner or owners at the time in question of
the Land and the Building or the Building or the tenant under a ground or
underlying lease affecting the Land and the Building or the Building, or both,
to whom this Lease may be assigned, or a mortgagee in possession, so
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that in the event of any sale, assignment or transfer of the Land and the
Building or the Building, or of such ground or underlying lease, such owner,
tenant under a ground lease or mortgagee in possession shall thereupon be
released and discharged from all covenants, conditions and agreements of
Landlord thereafter accruing hereunder; but such covenants, conditions and
agreements shall be binding upon each new owner, tenant under a ground or
underlying lease, or mortgagee in possession for the time being of the Land and
the Building, until sold, assigned or transferred.
ARTICLE 23
INVALIDITY OF ANY PROVISION
Section 23.01. If any term, covenant, condition or provision of this
Lease or the application thereof to any circumstance or to any person, firm or
corporation shall be invalid or unenforceable to any extent, the remaining
terms, covenants, conditions and provisions of this Lease, or the application
thereof to any circumstances or to any person, firm or corporation other than
those as to which any term, covenant, condition or provision is held invalid or
unenforceable, shall not be affected thereby and each remaining term, covenant,
condition and provision of this Lease shall be valid and shall be enforceable to
the fullest extent permitted by law.
ARTICLE 24
BROKER
Section 24.01. The parties hereto agree that Norman Bobrow & Company,
Inc. and SageGroupAssociates Inc. (collectively, the "Brokers") were the only
brokers which negotiated and brought about this transaction, and Landlord agrees
to pay the Brokers a commission therefor as per separate agreements. Tenant
represents and warrants that it has not dealt with any broker other than the
Brokers, and Tenant agrees to indemnify and save Landlord harmless from any
claims made by other brokers claiming to have dealt with Tenant. Landlord
represents that it has not dealt with any broker other than the Brokers, and
Landlord agrees to indemnify and save Tenant harmless from any claims made by
other brokers claiming to have dealt with Landlord.
ARTICLE 25
SUBORDINATION
Section 25.01. This Lease is subject and subordinate to all ground or
underlying leases and to all mortgages which may now or hereafter affect such
leases or the Building of which the Demised Premises forms a part, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
This clause
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shall be self-operative, and no further instrument of subordination shall be
required by any mortgagee. In confirmation of such subordination, Tenant shall
execute promptly any certificate that Landlord may request. Tenant hereby
constitutes and appoints Landlord the Tenant's attorney-in-fact to execute any
such certificate or certificates for and on behalf of Tenant.
Section 25.02. At the option of Landlord or any successor landlord or
the holder of any mortgage affecting the Demised Premises, Tenant agrees that
neither the cancellation nor termination of any ground or underlying lease to
which this Lease is now or may hereafter become subject or subordinate, nor any
foreclosure of a mortgage affecting said premises, nor the institution of any
suit, action, summary or other proceeding against Landlord herein or any
successor landlord, or any foreclosure proceeding brought by the holder of any
such mortgage to recover possession of such property, shall by operation of law
or otherwise result in cancellation or termination of this Lease or the
obligations of Tenant hereunder, and upon the request of any such landlord,
successor landlord, or the holder of such mortgage, Tenant covenants and agrees
to attorn to Landlord or to any successor to Landlord's interest in the Demised
Premises, or to such holder of such mortgage or to the purchaser of the
mortgaged premises in foreclosure.
Section 25.03. In the event of any act or omission by Landlord which
would give Tenant the right to terminate this Lease or to claim a partial or
total eviction, pursuant to the terms of this Lease, if any, Tenant will not
exercise any such right until:
(i) it has given written notice of such act or omission to the
following (whose names and addresses shall previously have been furnished to
Tenant) by delivering such notice of such act or omission addressed to such
holders at the last address so furnished:
(a) the holder of any first mortgage, and
(b) the landlord under any ground or underlying lease to which
this Lease is subject and subordinate; and
(ii) a reasonable period for remedying such act or omission shall have
elapsed following such giving of notice during which such parties, or any of the
parties, with reasonable diligence, following the giving of such notice, has not
commenced and continued to remedy such act or omission or to cause the same to
be remedied.
Section 25.04. If, in connection with obtaining financing, a banking,
insurance or other recognized institutional lender shall request reasonable
modifications in this Lease as a condition to
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such financing, Tenant will not unreasonably withhold, delay or defer its
consent thereto, provided that such modifications do not, in Tenant's reasonable
opinion, increase the obligations of Tenant hereunder or materially adversely
affect the leasehold interest hereby created or Tenant's use and enjoyment of
the Demised Premises.
ARTICLE 26
ESTOPPEL CERTIFICATE
Section 26.01. Tenant agrees, at any time, and from time to time, upon
not less than ten (10) days prior notice from Landlord, to execute, acknowledge
and deliver to Landlord a statement in writing addressed to Landlord 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), stating the dates to which the Fixed Rent,
additional rental and other charges have been paid, and stating whether or not
to the best knowledge of the signer of such certificate, there exists any
default in the performance of any covenant, agreement, term, provision or
condition contained in this Lease, and any claim or offset in favor of Tenant,
and, if any, specifying each such default, claim or offset in favor of Tenant,
and, if any, specifying each such default, claim or offset of which signer may
have knowledge, it being intended that any such statement delivered pursuant
hereto may be relied upon by Landlord and by any purchaser or prospective
purchaser of the Building and/or the Land and by any mortgagee or prospective
mortgagee of any mortgage affecting the Building and/or the Land, and by any
landlord under a ground or underlying lease affecting the Land or the Building.
ARTICLE 27
LEGAL PROCEEDINGS, WAIVER OF JURY TRIAL
Section 27.01. Landlord and Tenant hereby waive, to the extent such
waiver is not prohibited by law, the right to a jury trial in any action,
summary proceeding or legal proceeding between or among the parties hereto or
their successors arising out of this Lease or Tenant's occupancy of the Demised
Premises or Tenant's right to occupy the Demised Premises.
Section 27.02. Tenant hereby waives the right to interpose a
counterclaim (other than a mandatory counterclaim) in any summary proceeding
instituted by Landlord against Tenant or in any action instituted by Landlord
for unpaid rent or additional rent under this Lease.
Section 27.03. Tenant hereby agrees that the existence of any legal
proceeding arising under this Lease, or any judgment
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resulting therefrom, shall remain confidential and to that end shall not discuss
with, or make public disclosure of, the same to the press, other tenants of the
Building, or otherwise except if, and to the extent that, such disclosure is
required by a court of competent jurisdiction and Tenant may make such
disclosure to its attorneys and accountants. The parties hereto understand and
agree that the papers filed in the course of any such legal proceeding may be
available to the public but this Section 27.03 is understood by Tenant as a
prohibition against any public discussion or disclosure of the same, including
any response to any query from the press, other tenants of the Building or
otherwise.
Section 27.04. A. In the event Tenant claims or asserts that Landlord
has violated or failed to perform a covenant of Landlord not to unreasonably
withhold or delay Landlord's consent or approval, or in any case where
Landlord's reasonableness in exercising its judgment is in issue, Tenant's sole
remedy shall be an action for specific performance, declaratory judgment or
injunction, and in no event shall Tenant be entitled to any money damages for a
breach of such covenant, and in no event shall Tenant claim or assert any claims
in any money damages in any action or by way of set-off, defense or
counterclaim, and Tenant hereby specifically waives the right to any money
damages or other remedies.
B. In the event that Tenant shall request Landlord's consent
to an assignment of this Lease or a proposed subletting or occupancy of all or
any portion of the Demised Premises and Tenant believes that Landlord has
unreasonably withheld or delayed the same, such dispute, but no other matter
whatsoever (except for any other matter under this Lease for which arbitration
is provided as the method of dispute resolution, in which event such matter
shall be resolved in a separate arbitration proceeding), shall be resolved by
arbitration in Manhattan by an arbitrator selected from the panel of retired
judges maintained by Comprehensive Alternative Dispute Resolution Enterprises,
Inc. ("CADRE"). If CADRE shall no longer exist or shall be unwilling or unable
to act, such dispute shall be resolved by another reputable commercial
arbitration company which has expedited arbitration procedures which meet the
time frame set forth herein, as Landlord shall select (the "Company"), provided,
however, that Tenant may dispute Landlord's choice of the Company, in which
event the parties shall mutually agree upon the Company, and if the parties
shall be unable to agree upon the Company, the Company shall be appointed by any
judge of a court of competent jurisdiction in the City of New York. Upon
selection of the Company the parties agree that the balance of this Section
27.04B shall continue to apply with the substitution of the Company in lieu of
CADRE. If Tenant so desires to submit such dispute to CADRE, Tenant shall notify
Landlord of such desire, and within ten (10) Business Days thereafter, Tenant
shall make such submission and deliver all applicable
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applications and documents to CADRE with a copy of the entire submission being
delivered simultaneously to Landlord. The arbitration shall be conducted
pursuant to the then existing rules, regulations, practices and procedures of
CADRE and provided such rules so permit, within five (5) Business Days after
Tenant's submission or application, the arbitration shall commence two (2)
Business Days thereafter and shall be conducted for at least seven (7) hours on
each Business Day thereafter until completion, each party having no more than a
total of fifteen (15) hours to present its case and to cross-examine or
interrogate persons supplying information or documentation on behalf of the
other party. If such rules do not permit such expedited procedure, then such
rules of CADRE shall govern, it being the intent of the parties to conduct the
arbitration in the most expeditious manner permitted by the rules. The
arbitrator shall make a determination within five (5) Business Days after
conclusion of the arbitration; such determination to be strictly limited to
whether or not Landlord's failure to consent to any proposed assignment of this
Lease or proposed sublease or occupancy of all or any portion of the Demised
Premises was reasonable, and, if such failure shall be found to be unreasonable,
whether the same was in bad faith. No monetary award shall be awarded as a
result of any proceeding pursuant to this Section, Landlord's sole
responsibility in the event of a negative determination being the requirement of
granting its consent to Tenant's proposed assignment, sublease or occupancy as
the case may be, except that (i) the prevailing party shall have the right to be
reimbursed for its reasonable fees and expenses within twenty (20) days after
submission of a bill therefor to the losing party, and (ii) in the event that
pursuant to this arbitration procedure Landlord shall be found to have acted in
bad faith in withholding its consent to Tenant's proposed assignment, sublease
or occupancy, but, due solely to the delay caused by such procedure, Tenant's
proposed assignee or sublessee or occupant shall not be obligated to assume this
Lease or sublease or occupy the proposed portion of the Demised Premises,
Landlord shall, at Tenant's option be required to step into the position of such
assignee or sublessee or occupant upon the terms and conditions contained in the
submission required to be made to Landlord (including, if the same would have
been the obligation of the subtenant or occupant, constructing, at Landlord's
own cost and expense any required demising walls). Any determination pursuant to
this Section shall be final and binding upon the parties and each party shall
pay its respective costs of any proceedings pursuant to this Section (except
that the prevailing party shall have the right to be reimbursed for its
reasonable fees and expenses within twenty (20) days after submission of a bill
therefor to the losing party). Any determination pursuant to this Section shall
be confidential and neither Landlord, Tenant, nor any entity acting on behalf of
either shall in any manner whatsoever make any public disclosure of any such
determination to representatives of the press, to other tenants of the Building,
or otherwise unless required by law or
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regulation or order or directive of a court of competent jurisdiction.
ARTICLE 28
SURRENDER OF PREMISES/HOLDOVER
Section 28.01. Upon the expiration or other termination of the Term of
this Lease, Tenant shall quit and surrender the Demised Premises in good order
and condition, ordinary wear and tear and damage by fire or other casualty, the
elements and any cause beyond Tenant's reasonable control excepted, and shall
remove all its property therefrom, except as otherwise provided in this Lease.
Tenant's obligation to observe or perform this covenant shall survive the
expiration or other termination of the Term of this Lease.
Section 28.02. If at any time during the last month of the Term of this
Lease, Tenant shall cease to occupy the Demised Premises and shall have removed
all or substantially all of Tenant's property from the Demised Premises,
Landlord may, and Tenant irrevocably grants to Landlord a license to,
immediately enter and alter, renovate and redecorate the Demised Premises,
without diminution or abatement of rent, or incurring liability to Tenant for
any compensation, and such acts shall have no effect on this Lease and Tenant
shall have no liability for any acts or omissions occurring in the Demised
Premises after Tenant shall have ceased occupancy thereof.
Section 28.03. Tenant agrees it shall indemnify and save Landlord
harmless against all costs, claims, loss or liability resulting from delay by
Tenant in surrendering the Demised Premises upon expiration or sooner
termination of the term of this Lease, including, without limitation, any claims
made by any succeeding tenant founded on such delay. The parties recognize and
agree that the damage to Landlord resulting from any failure by Tenant timely to
surrender the Demised Premises will be substantial, will exceed the amount of
monthly rent theretofore payable hereunder, and will be impossible of accurate
measurement. Tenant therefore agrees that if possession of the Demised Premises
is not surrendered to Landlord within fifteen (15) days after the date of the
expiration or sooner termination of the Term of this Lease, then Tenant will pay
Landlord as liquidated damages for each month and for each portion of any month
during which Tenant holds over in the Demised Premises after expiration or
sooner termination of the Term of this Lease, a sum equal to two and one-half (2
1/2) times the average rent and additional rent which was payable per month
under this Lease during the six (6) month period preceding such expiration or
termination of the Term of this Lease. The aforesaid obligations shall survive
the expiration of sooner termination of the Term of this Lease.
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ARTICLE 29
RULES AND REGULATIONS
Section 29.01. Tenant, its servants, employees, agents, visitors, and
licensees shall observe faithfully and comply strictly with the rules and
regulations set forth in Schedule C attached hereto and made a part hereof.
Landlord shall have the right from time to time during the Term of this Lease to
make reasonable changes in and additions to the rules thus set forth.
Section 29.02. Any failure by Landlord to enforce any rules and
regulations now or hereafter in effect, either against Tenant or any other
tenant in the Building, shall not constitute a waiver of any such rules and
regulations.
ARTICLE 30
NOTICES
Section 30.01. Any notice, request or demand permitted or required to
be given by the terms and provisions of this Lease, or by any law or
governmental regulation, either by Landlord to Tenant or by Tenant to Landlord,
shall be in writing. Unless otherwise required by such law or regulation, such
notice, request or demand shall be given, and shall be deemed to have been
served and given by Landlord and received by Tenant, when Landlord (1) shall
have deposited such notice, request or demand by registered or certified mail
enclosed in a securely closed postpaid wrapper, in a United States Government
general or branch post office, addressed to Tenant at the Demised Premises, and
(2) until Tenant has moved its offices to the Demised Premises, shall have
deposited such notice, request or demand by registered or certified mail
enclosed in a securely closed postpaid wrapper in such a post office addressed
to Tenant at its address as stated on the first page of this Lease.
Additionally, a copy of all notices to Tenant shall be sent to Joel Fruchter
Esq., Finkelstein, Bruckman, Wohl, Most & Rothman, 575 Lexington Avenue, 19th
Floor, New York, New York 10022. Such notice, request or demand shall be given,
and shall be deemed to have been served and given by Tenant and received by
Landlord, when Tenant shall have deposited such notice, request or demand by
registered or certified mail enclosed in a securely closed postpaid wrapper in
such a post office addressed to Landlord at 777 Third Avenue, New York, New York
10017. Either party may, by notice as aforesaid, designate a different address
or addresses for notices, requests or demands to it.
ARTICLE 31
NO WAIVER: ENTIRE AGREEMENT
Section 31.01. The failure of Landlord to seek redress for violation
of, or to insist upon the strict performance of, any
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covenant or condition of this Lease, or any of the Rules and Regulations set
forth or hereafter adopted by Landlord shall not prevent a subsequent act which
would have originally constituted a violation from having all the force and
effect of an original violation. The receipt by Landlord of rent with knowledge
of the breach of any covenant of this Lease shall not be deemed a waiver of such
breach. The failure of Landlord to enforce any of the Rules and Regulations set
forth, or hereafter adopted, against Tenant and/or any other tenant in the
Building shall not be deemed a waiver of any such Rules and Regulations. No
provision of this Lease shall be deemed to have been waived by Landlord, unless
such waiver be in writing signed by Landlord. No payment by Tenant or receipt by
Landlord of a lesser amount than the monthly rent herein stipulated shall be
deemed to be other than on account of the earliest stipulated rent, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment as rent be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord's right to recover the
balance of such rent or pursue any other remedy in this Lease provided.
Section 31.02. This Lease with the Schedules annexed hereto, if any,
contains the entire agreement between Landlord and Tenant, and any executory
agreement hereafter made between Landlord and Tenant shall be ineffective to
change, modify, waive, release, discharge, terminate, or effect an abandonment
of this Lease, in whole or in part, unless such executory agreement is in
writing and signed by the party against which enforcement of the change,
modification, waiver, release, discharge, termination or the effecting of the
abandonment is sought.
ARTICLE 32
CAPTIONS
Section 32.01. The captions of Articles in this Lease are inserted only
as a matter of convenience and for reference, and they in no way define, limit
or describe the scope of this Lease or the intent of any provision thereof.
ARTICLE 33
INABILITY TO PERFORM
Section 33.01. This Lease and the obligation of Tenant to pay rent
hereunder and perform all of the other covenants and agreements hereunder on the
part of Tenant to be performed shall in no way be affected, impaired or excused
because Landlord is unable to fulfill any of its obligations under this Lease or
to supply or is delayed in supplying any service expressly or impliedly to be
supplied or is unable to make, or is delayed in making any repair, additions,
alterations or decorations or is unable to supply or is delayed in supplying any
equipment or
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fixtures if Landlord is prevented or delayed from so doing by reason of strike
or labor troubles or any outside cause whatsoever including but not limited to,
governmental preemption in connection with a National Emergency or by reason of
any rule, order or regulation of any department or subdivision thereof of any
government agency or by reason of the conditions of supply and demand which have
been or are affected by war or other emergency.
ARTICLE 34
NO REPRESENTATION BY LANDLORD
Section 34.01. Landlord or Landlord's agents have made no
representations or promises with respect to the Building, the Land or the
Demised Premises except as herein expressly set forth, and no rights, easements
or licenses are acquired by Tenant by implication or otherwise except as
expressly set forth in the provisions of this Lease. The taking of possession of
the Demised Premises by Tenant shall be conclusive evidence, as against Tenant,
that Tenant accepts said premises and that the Demised Premises and the Building
of which the same form a part were in good and satisfactory condition at the
time such possession was so taken.
ARTICLE 35
NAME OF BUILDING
Section 35.01. The Building may be known as or by such name as
Landlord, in its sole discretion, may elect, and Landlord shall have the right
from time to time to change such designation or name without Tenant's consent.
ARTICLE 36
SUCCESSORS AND ASSIGNS
Section 36.01. The covenants, conditions and agreements contained in
this Lease shall bind and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors and, except as otherwise
provided herein, their assigns.
ARTICLE 37
DEFERRED COLLECTIONS
Section 37.01. If all or any part of the Fixed Rent or additional
rents, as above defined, shall at any time become uncollectible, reduced or
required to be refunded by virtue of any rules, regulations, orders, laws and
ordinances (including, without limitation, rent control or stabilization laws),
or
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governmental or quasi-governmental authorities having jurisdiction ("Laws and
Ordinances"), then for the period prescribed by said Laws and Ordinances, Tenant
shall pay to Landlord the maximum amounts permitted pursuant to said Laws and
Ordinances. Upon the expiration of the applicable period of time during which
such amounts shall be uncollectible, reduced or refunded, Tenant shall pay to
Landlord as additional rent, within fifteen (15) days after demand, all such
uncollected, reduced or refunded amounts that would have been payable for the
period absent such Laws and Ordinances; provided, however, that the retroactive
collection thereof shall then be lawful.
ARTICLE 38
FEES/INTEREST/LATE CHARGES
Section 38.01. Whenever any default by Tenant causes Landlord to incur
attorneys' fees and/or any other costs or expenses, Tenant agrees that it shall
pay and/or reimburse Landlord for such reasonable attorneys' fees and such costs
or expenses promptly upon being billed therefor.
Section 38.02. If any monies owing by Tenant under this Lease are paid
more than ten (10) days after the date such monies are payable pursuant to the
provisions of this Lease, Tenant shall pay Landlord interest thereon, at the
Interest Rate, for the period from the date such monies were originally payable
to the date such monies are paid. In the event that twice in any calendar year
Tenant shall have defaulted beyond any applicable notice and cure period in the
payment of Fixed Rent or additional rent, or any part of either, then any
further default by Tenant within such twelve (12) month period shall permit
Landlord to collect from Tenant, upon demand, in addition to any interest
payable pursuant to this Article 38, or elsewhere in this Lease, a late charge
equal to five percent (5%) of the amount of Fixed Rent and additional rent so
due as compensation to Landlord for the costs incurred by it as a result of such
defaults, Landlord and Tenant acknowledging that the actual amount of such costs
would be impossible to ascertain.
ARTICLE 39
ABATEMENT OF RENT
Section 39.01. Anything herein to the contrary notwithstanding,
provided this Lease shall be in full force and effect and Tenant shall not be in
default hereunder beyond any applicable notice and grace periods, the Fixed Rent
shall abate as follows (i) at the rate of $2,724.77 per month for the first
(1st) through the twelfth (12th) months of the Term, and, (ii) at the rate of
$1,816.51 per month for the thirteenth (13th) through the thirty-sixth (36th)
months of the Term.
<PAGE>
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ARTICLE 40
TENANT'S EXPANSION OPTION
Section 40.01. In the event that Tenant has notified Landlord in
writing that it desires to lease additional space on the 24th floor of the
Building (the "Expansion Space") and provided same becomes available for direct
leasing on or before the date which is not later than the fifth (5th)
anniversary of the Commencement Date (i.e., a lease of such space expires or is
terminated and such space is not leased again by the same tenant or occupant, or
the successors or assigns or subtenants of such tenant or occupant, by renewal
or a new lease or modification of a previous lease and such space is not subject
to any other lease or an option contained in another lease or the space is not
subject to a lease as of the date hereof or the space is not one with respect to
which Landlord has commenced negotiations with any other proposed tenant), then,
Landlord shall send Tenant a notice setting forth the date on which Landlord has
obtained, or anticipates obtaining, vacant possession of the Expansion Space.
Upon Landlord giving such a notice, provided this Lease shall be in full force
and effect and provided that Tenant shall not be in default hereunder beyond any
applicable notice and grace period either as of the date of Tenant's exercise of
the expansion option herein described or as of the day which would otherwise be
the first day of Tenant's leasing of the Expansion Space (which conditions
regarding default may be waived by Landlord in its sole discretion), and further
provided that there shall be not less than five (5) years remaining in the Term
as of the Expansion Space Commencement Date (as hereinafter defined), then
Tenant shall have the option, exercisable by notice to Landlord given within
five (5) days after Landlord's notice to Tenant, time being of the essence with
respect to Tenant's notice, to lease the Expansion Space from Landlord upon the
terms and conditions hereinafter set forth. In the event Tenant fails to
exercise its option to accept the Expansion Space within five (5) days from the
date of the applicable notice from Landlord, Landlord shall have the right to
lease the Expansion Space to any other proposed tenant for any term whatsoever
and Tenant shall be deemed to have waived its rights to the Expansion Space.
Section 40.02. If Tenant exercises its option to lease the Expansion
Space in a timely manner, then on the date (the "Expansion Space Commencement
Date"), Landlord delivers possession of the Expansion Space to Tenant, the
Expansion Space shall be added to the Demised Premises. Tenant acknowledges that
it will take the Expansion Space "as-is", and Landlord shall not be obligated to
perform any work, furnish any materials, or give Tenant any rent credit or work
allowance or any sum of money with respect thereto, and the Expansion Space
shall become part of the Demised Premises upon and subject to all of the terms
and conditions of this Lease, except that the Fixed Rent payable by Tenant for
the Expansion Space shall be equal to the greater of (i) the Fixed Rent then in
effect from time to time for the
<PAGE>
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Demised Premises (on a per square foot basis) including all escalations and
additional rent payable as herein provided or (ii) the fair market rental value
of the Expansion Space (the "Expansion FMRV"). The Expansion FMRV shall be
determined in accordance with the following procedure:
(i) Immediately after the exercise by Tenant of its option
contained herein, Landlord and Tenant shall use their best efforts to
agree upon the Expansion FMRV. In the event Landlord and Tenant cannot
reach agreement within fifteen (15) Business Days after the date of
Tenant's notice of exercise of its option contained herein, Landlord
and Tenant shall each select a reputable, licensed real estate broker
having an office in New York County and familiar with the rentals then
being charged in the Building and in comparable buildings
(respectively, "Landlord's Broker" and "Tenant's Broker") who shall
confer promptly after their selection by Landlord and Tenant and shall
use their best efforts to agree upon the Expansion FMRV, taking into
consideration all relevant factors, including, as a primary factor, the
rental which Landlord is then commanding or requiring for leases of
comparable space in the Building (or, if there is then no comparable
space in the Building, taking into consideration the quality of
non-comparable space in the Building relative to the Expansion Space)
and also considering all other terms and conditions of this Lease which
are applicable to the Expansion Space. If Landlord's Broker and
Tenant's Broker cannot reach agreement within forty-five (45) days
after the date of Tenant's notice of exercise of its option contained
herein, then within ten (10) days thereafter, they shall designate a
third reputable, licensed real estate broker having an office in New
York County (the "Independent Broker"). Upon the failure of Landlord's
Broker and Tenant's Broker to agree upon the designation of the
Independent Broker, then the Independent Broker shall be appointed by a
Justice of the Supreme Court of the State of New York upon ten (10)
days notice, or by any other court in New York County having
jurisdiction and exercising functions similar to those exercised by the
Supreme Court of the State of New York. Concurrently with such
appointment, Landlord's Broker and Tenant's Broker shall each submit a
letter to the Independent Broker, with a copy to Landlord and Tenant,
setting forth such broker's estimate of the Expansion FMRV, taking into
consideration the factors described above and all other terms and
conditions of this Lease which are applicable to the Expansion Space
(respectively, "Landlord's Broker's Letter" and "Tenant's Broker's
Letter").
<PAGE>
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(ii) In the event the Expansion FMRV set forth in Landlord's
Broker's Letter and Tenant's Broker's Letter shall differ by less than
$2.50 per square foot for any year during the remainder of the Term,
then the Expansion FMRV shall not be determined by the Independent
Broker, and the Expansion FMRV shall be the average of the Expansion
FMRV set forth in Landlord's Broker's Letter and Tenant's Broker's
Letter. In the event the Expansion FMRV set forth in Landlord's
Broker's Letter and Tenant's Broker's Letter shall differ by more than
$2.49 per square foot per annum for any year during the remainder of
the Term, the Independent Broker shall conduct such investigations and
hearings as he may deem appropriate and shall, within sixty (60) days
after the date of his designation, choose either the rental set forth
in Landlord's Broker's Letter or Tenant's Broker's Letter to be the
Expansion FMRV during the Term and such choice shall be binding upon
Landlord and Tenant. Landlord and Tenant shall each pay the fees and
expenses of its respective broker. The fees and expenses of the
Independent Broker shall be shared equally by Landlord and Tenant.
Section 40.03. In the event the Fixed Rent for the Expansion Space
shall not have been determined prior to the Expansion Space Commencement Date,
then the Fixed Rent for the Expansion Space to be paid by Tenant to Landlord
until such determination has been made shall be the Fixed Rent for the Demised
Premises (on a per square foot basis) immediately preceding the Expansion Space
Commencement Date, including all escalations or additional rent payable pursuant
to Article 3 hereof or as otherwise provided herein. After such determination of
the Fixed Rent for the Expansion Space has been made, any excess rental for the
Expansion Space theretofore paid by Tenant to Landlord shall be credited by
Landlord against the next ensuing monthly installments of Fixed Rent payable by
Tenant to Landlord and any deficiency in Fixed Rent due from Tenant to Landlord
attributable to the Expansion Space shall be immediately paid.
Section 40.04. Promptly after Tenant exercises its option to lease the
Expansion Space and the Fixed Rent for the Expansion Space shall have been
determined, Landlord and Tenant shall execute and deliver an agreement (i)
incorporating the Expansion Space into the definition of the Demised Premises,
(ii) setting forth the Fixed Rent for the Expansion Space, (iii) amending
Section 3.04 to reflect the increase in the Percentage attributable to the
Expansion Space and the increase in the Wage Rate Factor attributable to the
Expansion Space (iv) amending Section 4.01 to reflect the increase in the dollar
amount as set forth therein attributable to the Expansion Space; provided the
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failure of the parties to enter into such an agreement shall not affect their
respective rights and obligations hereunder.
Section 40.05. Under no circumstances shall Landlord have any liability
for the failure of any occupant of all or a portion of the Expansion Space to
vacate same at the end of the term of such occupant's lease. Landlord agrees to
take such actions as are reasonable, in its sole judgment, to obtain vacant
possession of any such space at the end of such term provided Landlord's failure
to deliver such possession to Tenant shall in no event affect the enforceability
of this Lease.
ARTICLE 41
TENANT'S TERMINATION OPTION
Section 41.01. Tenant shall have the option to cancel and terminate
this Lease, effective as of the fifth (5th) anniversary of the Commencement Date
(such date is herein referred to as the "Early Termination Date") by written
notice ("Tenant's Termination Notice") delivered to Landlord no later than nine
(9) months prior to such Early Termination Date. Tenant's Termination Notice
shall be accompanied by Tenant's check in the amount of $209,111.22, which sum
represents the unamortized costs of (i) the cost of Landlord's Work, (ii) the
brokerage commission paid in connection with this Lease, (iii) the abatement of
rent contained in Article 39 hereof, and (iv) the difference between the average
Fixed Rent which would have been paid over the entire Term and the Fixed Rent
actually paid by Tenant up to and including the Early Termination Date, together
with interest thereon at the Interest Rate, time being of the essence with
respect to the delivery of Tenant's Termination Notice and check. Upon timely
delivery of Tenant's Termination Notice and the aforementioned check (subject to
collection), this Lease will expire on the Early Termination Date as if such
date were the Expiration Date set forth herein and Tenant shall vacate the
Demised Premises on or before the Early Termination Date leaving the same in the
condition otherwise required upon the expiration or sooner termination of this
Lease.
Section 41.02 The effectiveness of the foregoing option is expressly
conditioned upon there not being any uncured default by Tenant hereunder, beyond
notice and the expiration of any applicable cure period, at the time of the
exercise of said option and at the time of termination (unless Landlord, in its
sole discretion, elects to waive such condition). The Termination Payment shall
be paid by Tenant and received by Landlord as consideration for the privilege of
termination when, as, and if Tenant exercises the said option to terminate this
Lease, as aforesaid.
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IN WITNESS WHEREOF, Landlord and Tenant have respectively executed this
Lease as of the day and year first above written.
SAGE REALTY CORPORATION, AGENT
By: /s/ Robert Kaufman
---------------------------
Landlord
CORPORATE TV GROUP, INC.
By: /s/ Richard Frisch
---------------------------
Tenant
<PAGE>
ACKNOWLEDGEMENTS
State of New York )
) ss.:
County of New York )
On the 5th day of August 1996, before me personally came Robert Kaufman
to me known, who being by me duly sworn, did depose and say that he resides at
18 Martin Ct., Great Neck, NY that he is the Executive President of SAGE REALTY
CORPORATION, the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by authority of the Board of
Directors of said corporation.
/s/ Brendan M. English
-------------------------
Notary Public
No. OIEN5040806
CORPORATE TENANT
State of New York )
) ss.:
County of New York )
On the 1st day of August, 1996, before me personally came
Richard Frisch to me known, who, being by me duly sworn did depose and
say that (s)he resides at 20 Griffen Avenue, Scarsdale, NY 10583;
that (s)he is the President of Corporate TV Group, Inc., the corporation
described in and which executed the above instrument; and that (s)he signed
(her) his name by order of the Board of Directors of such corporation.
/s/ Joel Fruchter
-------------------------
Notary Public
No. 24-4705724
<PAGE>
SCHEDULE "A"
FLOOR PLAN
SEE ATTACHED
<PAGE>
SCHEDULE "B"
LANDLORD'S WORK
I. PLANS AND WORK
Within thirty (30) days after the date of this Lease, but in no event
later than August 31, 1996, Tenant shall submit to Landlord for review and
approval complete and detailed final architectural, mechanical and engineering
plans and specifications prepared by Montroy Andersen Design Group, Inc. (which
plans and specifications shall include, without limitation, Tenant's selection
of paint color, carpet color, finish types and millwork) showing the alterations
required by Tenant to the Demised Premises in order to prepare the Demised
Premises for Tenant's occupancy. Tenant's plans and specifications shall be
prepared in accordance with, and Landlord's responsibility shall be limited to,
the specifications set forth in Section IV of this Schedule B, provided,
however, in addition to the specifications set forth in Section IV hereof,
Landlord shall also furnish and install (i) a pantry at a location to be
designated in the Final Plans and approved by Landlord and (ii) in lieu of the
lighting fixtures referred to in paragraph 8 of Section IV hereof, forty-three
2' x 4' parabolic lighting fixtures and five 2' x 2' parabolic lighting fixtures
and three incandescent down lighting fixtures at locations to be designated in
the Final Plans and approved by Landlord. The plans and specifications, as
approved by Landlord, are hereinafter referred to as the "Final Plans" and all
work required by the Final Plans to be performed by Landlord is hereinafter
referred to as "Landlord's Work." The Final Plans shall be prepared by Tenant at
Tenant's own cost and expense provided that Landlord shall reimburse Tenant or
pay Tenant's architect directly up to a maximum of $10,843.00 for the costs
incurred by Tenant in preparation of the Final Plans. In addition to submission
of the aforesaid plans and specifications, Tenant shall also furnish any and all
documents and information which Landlord may reasonably require for submission
to its insurance company(s), mortgagee(s), contractors and other interested
parties.
Tenant shall be responsible for showing that the Final Plans comply
with all applicable laws, rules, ordinances, requirements and regulations of all
governmental and quasi-governmental authorities having jurisdiction over
Landlord's Work and Tenant shall be liable for and shall indemnify Landlord
against any and all claims and expenses arising from or relating to the failure
of the Final Plans to meet such requirements including, without limitation, any
and all costs incurred for revising the Final Plans and correcting faulty work
resulting from errors or omissions in the Final Plans. Landlord's approval of
the Final Plans, Landlord's description of the kind and extent of work to be set
forth in the Final Plans and Landlord's performance of the work in conformity
with the Final Plans shall not make Landlord liable for any expense or claim
which may arise from or relate to the failure of Landlord's Work to meet
applicable laws, rules,
<PAGE>
B-2
ordinances, requirements and or regulations of any governmental or
quasi-governmental authority having jurisdiction thereover, nor shall Landlord's
approval of the Final Plans, performance of Landlord's Work or any statement
made herein or in the body of the Lease constitute an express or implied
representation of Landlord that any or all work performed and installation
supplied pursuant to the Final Plans is suitable for the particular requirements
of Tenant or any specific or general use and purpose of Tenant.
Landlord shall cause the Final Plans and/or appropriate building
notices and forms relating thereto to be filed with and approved by any
governmental and quasi-governmental authorities having jurisdiction over
Landlord's Work. All costs, fees and expenses incurred in connection with
obtaining the approvals of and filings with such governmental and
quasi-governmental authorities as well as all engineering and architectural
costs associated therewith, if any, shall be paid for by Tenant and if initially
paid for by Landlord, shall be reimbursed to Landlord upon demand. Any
additional approvals or filings necessitated by changes made by Tenant to the
Final Plans shall be at the sole cost and expense of Tenant.
The submission of the Final Plans to Landlord shall be deemed
authorization by Tenant for Landlord to proceed with the work shown on the Final
Plans, subject to the provisions hereof. Any approvals required to be given by
either party shall be deemed given, unless within five (5) days after any
submission the party receiving the same notifies the submitting party of an
objection thereto. Any architect or designer now or hereafter acting for or on
behalf of Tenant shall be deemed an agent of Tenant and authorized to bind
Tenant in all respects.
The air conditioning system to serve the Demised Premises will be
designed at Landlord's expense. For engineering services required for any other
purposes, Tenant shall reimburse Landlord for the cost of the same. Any changes
to the Final Plans and any changes to the original air-conditioning design
necessitated by any changes made by Tenant to the Final Plans shall be at
Tenant's expense.
Prior to the Commencement Date, entry by Tenant, its agents,
contractors or subcontractors, in or on the Demised Premises for performance of
work in the Demised Premises not included within Landlord's Work, or for any
other purpose whatsoever, shall be at Tenant's sole risk and responsibility.
Upon the request of Landlord, Tenant shall deliver to Landlord policies and
certificates of insurance reasonably satisfactory to Landlord. In the event
Tenant or Tenant's contractor shall enter upon or perform work in the Demised
Premises or any other part of the Building, Tenant agrees to indemnify and save
Landlord free and harmless, from and against any and all claims whatsoever
arising out of said entry or such work.
<PAGE>
B-3
Tenant agrees that should Tenant, its agents, contractors or
subcontractors, enter upon the Demised Premises for the purpose of performing
any work not included within Landlord's Work, or for any other purpose
whatsoever, the labor employed by Tenant or anyone performing such work, for or
on behalf of Tenant, shall always be harmonious and compatible with the labor
employed by Landlord or any agents, contractors or subcontractors of Landlord.
Should such labor be unharmonious or incompatible, Landlord may require Tenant,
its agents and/or contractors to withdraw from the Demised Premises. Tenant's
agents, contractors and subcontractors and their respective employees shall
comply with the special rules, regulations and requirements of Building
management for the performance and coordination of said agents, contractors,
subcontractors and their employees so as to avoid the intrusion into the
operation of the Building and to avoid disturbing the quiet enjoyment of other
tenants.
Landlord's Work shall be deemed to be substantially completed
("Substantial Completion" or "Substantially Completed") on the date (the
"Substantial Completion Date") when Landlord's Work shall have been completed in
accordance with the Final Plans with the exception of punchlist items (i.e.,
insubstantial details of construction, mechanical adjustment or decoration which
remain to be performed in connection with Landlord's Work which shall be
completed with reasonable promptness after the Commencement Date).
As a condition to Landlord's permission to Tenant to make any of
Tenant's installations in the Demised Premises, Landlord may require that Tenant
agree with Landlord the fixing of the Commencement Date of this Lease.
II. LIABILITY FOR ABOVE BUILDING STANDARD WORK
All items set forth in Section IV below shall be of manufacture,
material, design, capacity and finish selected by Landlord as the standards of
the Building (the "Building Standard"). Tenant shall be liable to Landlord or
Landlord's designated agent for costs incurred by Landlord in the completion of
Landlord's Work to the extent that (i) such costs are incurred as a result of a
change by Tenant in the work as shown on the Final Plans, or (ii) if the Final
Plans require the performance of work or the installation of items not described
in Section IV below. Landlord or Landlord's agent shall inform Tenant by notice
of the cost of such extra work which shall be payable by Tenant together with a
handling and supervision fee of twenty-one percent (21%) (such costs together
with such fee being collectively, "Tenant's Contribution") as additional rent
within ten (10) days of delivery to Tenant of an invoice for same. Landlord
shall perform such extra work only if Tenant approves the cost thereof in
writing within three (3) days from Landlord's notice thereof.
<PAGE>
B-4
III. DELAYS
The term "Tenant Delay" shall mean any delay that Landlord may
encounter in the completion of Landlord's Work by reason of any act, neglect,
failure or omission of Tenant, its agents, servants, contractors, architect or
employees, in the performance of Tenant's obligations under this Schedule B,
including:
1. Any delay in submission of Tenant's complete and detailed final
architectural, mechanical and engineering plans and specifications as and when
described in the first paragraph of this Schedule B;
2. Any delay due to changes made by or on behalf of Tenant in the Final
Plans;
3. Any delay due to Tenant's request for items to be installed within
the Demised Premises not set forth, or in greater quantities than those set
forth, in Section IV, or that have a delivery date which does not provide
sufficient time for installation prior to the otherwise anticipated date of
Substantial Completion (so-called "long lead items"). Landlord agrees to notify
Tenant of any such delay caused by the inclusion in the Final Plans of any long
lead items within five (5) Business Days of becoming aware thereof;
4. Any delay caused by work by or on behalf of Tenant, other than
Landlord's Work as described in the Final Plans; and
5. Non-payment of any installment of Tenant's Contribution, or any
other payment required of Tenant under this Schedule B or elsewhere in the
Lease, when due.
If the Substantial Completion Date shall be delayed by reason of a
Tenant Delay, the Demised Premises shall be deemed to be Substantially Completed
for purposes of the Commencement Date (as defined in the Lease) as of the date
that the Demised Premises would have been Substantially Completed but for any
such Tenant Delay, as determined by Landlord in its reasonable discretion,
whether or not any such Tenant Delay could have been avoided by the commitment
by Landlord of additional personnel to the performance of Landlord's Work. In
addition, Tenant shall, promptly upon demand, reimburse Landlord for all damages
resulting from such Tenant Delay.
IV. SPECIFICATIONS
Except as may be otherwise specifically provided, the following work
and materials shall be provided by Landlord at its sole cost and expense, in
accordance with the Building Standard:
<PAGE>
B-5
Certain elements of the following work will or may adjoin, abut or
connect to, previously existing installations. Reasonable effort will be made to
make these conjunctions in a good and workmanlike manner, but Tenant recognizes
and agrees that not all elements will necessarily be newly installed.
1. Partitioning
Gypsum board (5/8") - one side 2-1/2" steel stud and other side two (2)
layers of 5/8" gypsum board, of which one layer shall extend to underside of
floor above; sound transmission class 38; amount as required. Sound baffles will
be installed in peripheral enclosures where partitions abut said enclosure.
2. Doors and Bucks
Integral pressed steel 16 gauge, floor to ceiling bucks; flush
fireproof "3/4 hr." doors, hollow metal, full height; as required. Buck design
affords option of butt or reveal joint. Reveal will be installed unless
otherwise specified. Doors will be undercut to accept carpet.
3. Closets
Each closet shall be 5'0" (nominal in length) ceiling high, with flush
bi-fold doors (as manufactured by Paniflex or equal) and shall have two (2) wood
hat shelves (paint grade) and one (1) metal chrome coat rod; one (1) per tenant
or per 1,500 square feet. Doors will be installed trimless.
4. Hardware
Building standard latch sets (as manufactured by Russwin Mohad, or
equal), 1-1/2" pair Olive Knuckle Hinges; wall door stops for each door. One
lockset on main entrance door with dead bolt (Russwin or equal) master keyed to
Building system; surface mounted model L.C.N. narrow line closer (Stanley or
equal).
5. Painting
Painting is to be based upon a two coat application for all new
surfaces which shall consist of one coat prime and one coat finish. All existing
surfaces are to be painted one of nine Building Standard colors from Building
Standard color card. It shall be the responsibility of the painting contractor
to guarantee adequate paint coverage, proper surface preparation and knowledge
of all existing conditions. Strict adherence to all Building Standard paint
specifications on file in the Building office is required.
<PAGE>
B-6
6. Flooring
Vinyl composition tile floor covering (12" X 12" 1/8"), as manufactured
by Kentile or equal throughout, or Building Standard carpeting, as per Building
Standard selection board, with underlayment; 4" straight black rubber base on
all walls. Flash patching throughout as required. All floors (except where
Tenant chooses to have carpet installed) will be cleaned and/or waxed prior to
occupancy. No "glued down" carpet will be permitted except as set forth below.
Only the following methods of carpet installation shall be permitted:
Carpet Tile: carpet tile may be installed only with releasable
adhesive approved by Landlord allowing for easy removal of such carpet tiles
from sub-floor without damage to said sub-floor.
Broadloom: broadloom may be installed either with releasable adhesive
approved by Landlord allowing for easy removal of such broadloom from sub-floor
without damage to said sub-floor, or with "tack strips" along perimeter of the
carpeted room with commercial grade padding installed underneath broadloom.
7. Hung Ceilings
Manufactured by United States Gypsum ("Glacier" or equal). No
"dutchmans" allowed.
8. Lighting
Four (4) tube fluorescent light fixtures, Building Standard (without
lamps), 2' x 4' (as manufactured by National Lighting or equal); one (1) fixture
per 125 square feet of net rentable area, but in no event in excess of
governmental regulations in effect as of the date of installation. Fixtures may
be new or refurbished from Building stock. All lenses to be new. Tenant to
supply new Building Standard lamps and bulbs which Landlord will install at no
cost.
9. Venetian Blinds
White colored venetian blinds in blind pockets on all windows; no
substitutions will be permitted. Blinds may be new or refurbished from Building
stock.
10. Heating, Ventilating and Air Conditioning
Year-round air conditioning system, combining the use of periphery
units and interior duct air distribution system. The periphery air conditioning
system shall service that portion of
<PAGE>
B-7
the Demised Premises being approximately 15' distant from the glass line of the
Building. The air conditioning system shall be designed to maintain interior
conditions of 80(degree) dry bulb and 50% relative humidity when outside
conditions are 95 degrees dry bulb and 75 degrees wet bulb, 70(degree) when
0(degree) outside; and will provide fresh air in a quantity not less than 0.3
cubic feet per minute per square foot of floor area, provided that in any given
room or area of the Demised Premises the occupancy does not exceed one (1)
person for each 100 square feet and the total connected electric load does not
exceed four (4) watts per square foot total, and further provided such
conditions are in conformance with the New York State Energy Conservation Code
effective January 1, 1979.
Interior duct distribution, including Building Standard ducts, grilles,
etc., to accommodate Tenant's layout. Said duct distribution to be designed by
Landlord's engineer only.
For each periphery room Landlord will furnish one or more automatic
thermostatically controlled incremental self contained peripheral units (as
manufactured by Singer/Remington) sized by Landlord's engineer to be of
sufficient capacity to provide heating, ventilating and air conditioning in
accordance with the standards set forth in Section (A) above. The automatic
system will operate from 8:00 a.m. to 6:00 p.m. each Business Day. Heating or
cooling at occupant's selection shall be available at any time in periphery
only. In order to reactivate the system after its automatic shut-off, Tenant
need only press a button within the Demised Premises. Once reactivated, the
system will thereafter automatically shut off at intermittent intervals. It can
again be reactivated upon the pressing of the aforesaid button.
Integrated with the air conditioning unit enclosure will be installed a
system of storage cabinets to provide a complete module of comfort and
convenience. The storage cabinets will be of the open bookcase type with an
adjustable metal shelf and fixed bottom shelf. The cabinets will be 12" deep and
located on both sides of the air conditioning enclosure to provide one
continuous assembly.
11. Electrical Outlets
Duplex receptacles in Building Standard partitions, in base and/or
peripheral enclosures, at prefabricated knockouts, and/or underfloor duct
system, one (1) per 150 square feet of area.
12. Switches
Ceiling fixtures will be serviced by switches as required by the New
York City Building Code, not less than one (1) switch per room.
<PAGE>
B-8
13. Telephone
Landlord will supply up to one point of telephone distribution for each
200 square feet of area, through partition (in base) or peripheral knockouts
only and/or conduit up to 3/4" to top of partitions. All wiring shall be done by
Tenant's contractor and Landlord shall have no responsibility for said work.
Work must meet Building Standard criteria, and damage incurred to ceiling or
walls by Tenant's contractor shall be the sole responsibility of Tenant to
repair. Any additional conduit shall be installed by Landlord's contractors and
charged to Tenant.
<PAGE>
SCHEDULE "C"
RULES AND REGULATIONS
1. The rights of tenants in the entrances, corridors, elevators and
escalators of the Building are limited to ingress to and egress from the
tenants' premises for the tenants and their employees, licensees and invitees,
and no tenant shall use, or permit the use of, the entrances, corridors,
escalators or elevators for any other purpose. No bicycles, dogs or other
animals may be brought into the Building by Tenant, or its employees, licensees
or invitees. No tenant shall invite to the tenant's premises, or permit the
visit of, persons in such numbers or under such conditions as to interfere with
the use and enjoyment of any of the plazas, entrances, corridors, escalators,
elevators and other facilities of the Building by other tenants. Tenant shall
not use or permit its employees to use the elevators before 10:00 A.M. in a
"Down" direction for purposes of taking a coffee break or similar activities.
Fire exits and stairways are for emergency use only, and they shall not be used
for any other purposes by the tenants, their employees, licensees or invitees.
No tenant shall encumber or obstruct, or permit the encumbrance or obstruction
of, any of the sidewalks, plazas, entrances, corridors, escalators, elevators,
fire exits or stairways of the Building. Landlord reserves the right to control
and operate the public portions of the Building and the public facilities, as
well as facilities furnished for the common use of the tenants, in such manner
as it deems best for the benefit of the tenants generally.
2. The cost of repairing any damage to the public portions of the
Building or the public facilities or to any facilities used in common with other
tenants, caused by a tenant or the employees, licensees or invitees of the
tenant, shall be paid by such tenant.
3. Landlord may refuse admission to the Building outside of ordinary
business hours to any person not known to the watchman in charge or not having a
pass issued by Landlord or not properly identified, and may require all persons
admitted to or leaving the Building outside of ordinary business hours to
register. Tenant's employees, agents and visitors shall be permitted to enter
and leave the Building whenever appropriate arrangements have been previously
made between Landlord and Tenant with respect thereto. Each tenant shall be
responsible for all persons for whom he requests such permission and shall be
liable to Landlord for all acts of such persons. Any person whose presence in
the Building at any time shall, in the judgment of Landlord, be prejudicial to
the safety, character, reputation and interests of the Building or its tenants
may be denied access to the Building or may be ejected therefrom. In case of
invasion, riot, public excitement or other commotion, Landlord may prevent all
access to the Building during the continuance of the same, by closing the doors
or otherwise, for the safety of the tenants and protection of property in the
Building. Landlord may require
<PAGE>
C-2
any person leaving the Building with any package or other object to exhibit a
pass from the tenant from whose premises the package or object is being removed,
but the establishment and enforcement, or failure to enforce, of such
requirements shall not impose any responsibility on Landlord for the protection
of any tenant against the removal of property from the premises of the tenant.
Landlord shall, in no way, be liable to any tenant for damages or loss arising
from the admission, exclusion or ejection of any person to or from the tenant's
premises or the Building under the provisions of this rule.
4. No tenant shall obtain or accept or use in its premises ice,
drinking water, food, beverage, towel, barbering, boot blacking, floor
polishing, lighting maintenance, cleaning or other similar services from any
persons not authorized by Landlord in writing to furnish such services, provided
always that the charges for such services by persons authorized by Landlord are
not excessive. Such services shall be furnished only at such hours, in such
places within the tenant's premises and under such regulations as may be fixed
by Landlord.
5. No awnings or other projections over or around the windows shall be
installed by any tenant and only such window blinds as are supplied, or
permitted by Landlord shall be used in a tenant's premises.
6. There shall not be used in any space, or in the public halls of the
Building, either by Tenant or by jobbers or others, in the delivery or receipt
of merchandise or mail, any hand trucks, except those equipped with rubber tires
and side guards.
7. All entrance doors in each tenant's premises shall be left locked
when the tenant's premises are not in use. Entrance doors shall not be left open
at any time. All windows in each tenant's premises shall be kept closed at all
times, and all blinds or drapes therein above the ground floor shall be lowered
or closed when and as reasonably required because of the position of the sun,
during the operation of the Building air conditioning system to cool or
ventilate the tenant's premises.
8. No noise, including the playing of any musical instruments, radio or
television, which, in the judgment of Landlord, might disturb other tenants in
the Building shall be made or permitted by any tenant and no cooking shall be
done in Tenant's premises except as expressly approved by Landlord. Nothing
shall be done or permitted in any tenant's premises and nothing shall be brought
into or kept in any tenant's premises which would impair or interfere with any
of the Building services or the proper and economic heating, cleaning or other
servicing of the Building or the premises, or the use or enjoyment by any other
tenant of any other premises, nor shall there be installed by any tenant any
ventilating, air conditioning, electrical or
<PAGE>
C-3
other equipment of any kind which, in the judgment of Landlord, might cause any
such impairment or interference. No dangerous, inflammable, combustible or
explosive object or material shall be brought into the Building by any tenant or
with the permission of any tenant.
9. Tenant shall not permit any cooking or food odors emanating from the
Demised Premises to seep into other portions of the Building.
10. No acids, vapors or other materials shall be discharged or
permitted to be discharged into the waste lines, vents or flues of the Building
which may damage them. The water and wash closets and other plumbing fixtures in
or serving any tenant's premises shall not be used for any purpose other than
the purpose for which they were designed or constructed, and no sweepings,
rubbish, rags, acids or other foreign substances shall be deposited therein. All
damages resulting from any misuse of the fixtures shall be borne by the tenant
who, or whose servants, employees, agents, visitors or licensees, shall have
caused the same.
11. No signs, advertisement, notice or other lettering shall be
exhibited, inscribed, painted or affixed by any tenant on any part of the
outside or inside the premises or the Building without the prior written consent
of Landlord. In the event of the violation of the foregoing by any tenant,
Landlord may remove the same without any liability, and may charge the expense
incurred by such removal to the tenant or tenants violating this rule. Interior
signs and lettering on doors and elevators shall be inscribed, painted, or
affixed for each tenant by Landlord at the expense of such tenant, and shall be
of a size, color and style acceptable to Landlord.
Landlord shall have the right to prohibit any advertising by any tenant
which impairs the reputation of the Building or its desirability as a building
for offices, and upon written notice from Landlord, Tenant shall refrain from or
discontinue such advertising.
12. No additional locks or bolts of any kind shall be placed upon any
of the doors or windows in any tenant's premises, and no lock on any door
therein shall be changed or altered in any respect. Duplicate keys for a
tenant's premises and toilet rooms shall be procured only from Landlord, which
may make a reasonable charge therefor. Upon the termination of a tenant's lease,
all keys to the tenant's premises and toilet rooms shall be delivered to
Landlord.
13. No tenant shall mark, paint, drill into, or in any way deface any
part of the Building or the premises demised to such tenant. Not boring, cutting
or stringing of wires shall be permitted, except with the prior written consent
of Landlord,
<PAGE>
C-4
and as Landlord may direct. Not tenant shall install any resilient tile or
similar floor covering in the premises demised to such tenant except in a manner
approved by Landlord.
14. No tenant shall use or occupy, or permit any portion of the
premises demised to such tenant to be used or occupied, as an office for a
public stenographer or typist, or as a barber or manicure shop, or as an
employment bureau. No tenant or occupant shall engage or pay any employees in
the Building, except those actually working for such tenant or occupant in the
Building or advertise for laborers giving an address at the Building.
15. No premises shall be used, or permitted to be used, at any time, as
a store for the sale or display of goods or merchandise or any king, or as a
restaurant, shop, booth, bootblack or other stand, or for the conduct of any
business or occupation which involves direct patronage of the general public on
the premises demised to such tenant, or for manufacturing or for other similar
purposes.
16. The requirements of tenants will be attended to only upon
application at the office of the Building. Employees of Landlord shall not
perform any work or do anything outside for the regular duties, unless under
special instructions from the office of the Landlord.
17. Each tenant shall, at its expense, provide artificial light in the
premised demised to such tenant for Landlord's agents, contractors and employees
while performing janitorial or other cleaning services and making repairs or
alterations in said premises.
18. Employees of Tenant shall not loiter around the hallways,
stairways, elevators, front, roof or any other part of the Building used in
common by the occupants thereof.
19. Any cuspidors or similar containers or receptacles used in the
Demised Premises shall be cared for and cleaned by and at the expense of Tenant.
20. Any and all wet and/or food garbage, including coffee grinds, is to
be deposited in a plastic liner bag in a waste basket or other receptacle.
21. Tenant shall separate all refuse and rubbish of Tenant in
accordance with the methods and procedures set forth, from time to time, by
Landlord.
<PAGE>
SCHEDULE "D"
I. GENERAL CLEANING AND JANITORIAL SPECIFICATIONS
A. DAILY SERVICES
1. Empty and clean interiors and exteriors of receptacles
and places for disposal.
2. Empty and clean all ash trays and receptacles.
3. Clean cigarette urns and replace sand and/or water as
necessary.
4. Hand dust all office furniture, fixtures and window
sills. If textolite or similar desk tops are used,
they are to be wiped with a damp cloth.
5. Dust all moldings, door louvers, ventilating louvers within
reach, ledges, radiators, chair rails, baseboards and trim,
damp dusting where necessary.
6. Dust under all desk equipment and damp dust all telephone
equipment, excluding all electronic desk machines (e.g.,
Computer terminals and screens, copiers and faxes).
7. Wash clean all water coolers and fountains.
8. Wipe clean all chrome, aluminum and other metal work
and enamel and mail chutes.
9. Unwaxed flooring, excluding wood, marble, terazzo or carpet,
used as corridors adjacent to the core shall be cleaned and
mopped. This excludes full floor tenants who must maintain
their corridor.
10. Damp wash blackboards unless marked "save".
11. Keep supply closets and slop sinks clean and orderly.
12. Store cleaning equipment in designated areas.
13. Sweep all floors.
14. All tenant kitchen areas are excluded from all cleaning
services.
<PAGE>
D-2
B. WEEKLY SERVICES
Wipe clean all brass and other bright work. Refinishing and
polishing special metal surfaces are the responsibility of the
tenant.
C. QUARTERLY SERVICES "HIGH DUSTING"
1. Dust, while in place, all pictures, frames, charts,
graphs and similar wall hangings not reached in nightly
cleaning, as necessary.
2. Dust and clean all vertical surfaces, such as walls,
partitions, doors, door bucks, venetian blinds and other
surfaces not reached in nightly cleaning, as necessary. This
excludes interior glass partitions located in tenant areas.
3. Dust all books while in place in libraries, as
necessary.
4. Dust all door louvers and other ventilating louvers,
grills, etc., as necessary.
5. Clean all pipes and other horizontal surfaces not
reached in nightly cleaning, as necessary. This
excludes interior glass partitions located in tenant
areas.
6. Dust all lighting fixtures, globes, files and open
shelves.
7. Dust all closet shelving and damp mop closet tile
floors.
D. ANNUAL SERVICES
1. Clean all stairwell walls.
2. Dust ceiling surfaces, other than acoustical ceiling
materials, and vacuum clean only acoustical material and other
similar surfaces. Wash ceiling areas around air-diffuser, if
requested.
II. RESTROOMS
With respect to the Building core restrooms only, which
excludes private or executive bathrooms, Contractors shall:
<PAGE>
D-3
A. NIGHTLY SERVICES
1. Mop, rinse and dry floors; polish mirrors and glass
shelves, clean enameled surfaces.
2. Wash basins, urinals and bowls using non-abrasive cleaner of
the bacterial disinfectant type in cold water, remove stains
and making certain to clean under sides of rim of urinals and
bowls.
3. Wash both sides of all toilet seats with bacterial
disinfectant type cleaner in cold water.
4. Damp wipe walls and wash the tile wall near urinals
with a disinfectant.
5. Polish flushometers, piping, toilet seat hinges and
other metal if not clean and bright.
6. Fill and maintain mechanical operation of all toilet
tissue, soap and sanitary napkin dispensers. The
Landlord shall be responsible for the cost of
mechanical repairs. The cost of hand towels and soap
are the responsibility of the tenant. The Landlord
pays for toilet paper.
7. All waste paper cans and sanitary disposal receptacles
are to be emptied and thoroughly cleaned and washed, as
necessary.
8. Scrub floors as necessary.
9. Private and executive restrooms are excluded from all
nightly service.
10. All supplies are excluded from private and executive
restrooms.
B. MONTHLY SERVICES
Wash down wall in washrooms and stalls as needed from trim to
floor. This excludes private and executive restrooms.
III. FLOORS
With respect to the Building, Contractor shall:
<PAGE>
D-4
A. NIGHTLY CLEANING
1. Sweep all floors.
2. Sweep, wet mop with a detergent and rise all VCT
floors.
3. Landlord will maintain surfaces in all public corridors
of split tenant floors. Full floors are the
responsibility of the tenant.
4. Vacuum carpets in passenger elevators. Clean and
vacuum all elevator saddles and tracks in all floors.
5. Remove gum and foreign matter from all floors as
necessary.
B. WEEKLY CLEANING
1. Sweep stairs in fire stairways and dust handrails.
2. Dust all brass and other bright work. Refinishing or
polishing metal or chrome are excluded.
3. Vacuuming of carpet floors:
(a) Vacuum clean all carpets once weekly in tenant
areas.
(b) Use a heavy-duty machine with an adjustable
height "beater bar" or "beater brush".
(c) Carpet sweep as necessary.
(d) Brush or dust by hand carpet edges inaccessible
to high pressure vacuum attachments as required.
(e) Clean under furniture that can be moved.
(f) DRAPERIES REQUIRE A HAND-TYPE VACUUM ATTACHMENT
TO REMOVE ACCUMULATED DUST.
IV. GLASS
1. The cleaning of interior glass partitions is the
responsibility of the tenant.
2. Window cleaning, other than interior glass partitions, shall
be in accordance with the existing or future schedule
established at the building. The Landlord is responsible for
the cost of this service.
<PAGE>
EXHIBIT 28.4
<PAGE>
REGISTRATION RIGHTS AGREEMENT
AGREEMENT, made as of the 16th day of June, 1997 by and
between MEDIALINK WORLDWIDE INCORPORATED, a Delaware corporation ("Medialink"),
with an office at 708 Third Avenue, 9th Floor, New York, New York 10017 and
RICHARD FRISCH, an individual with an address c/o Corporate TV Group, Inc., 747
Third Avenue, New York, New York 10017 ("RF" or the "Holder").
RECITALS
WHEREAS, Medialink and Corporate TV Group, Inc., a New York
corporation ("CTV"), have entered into an asset purchase agreement (the "Asset
Purchase Agreement") simultaneously herewith, whereby Medialink is acquiring
substantially all of the assets of CTV.
WHEREAS, RF is the sole shareholder of CTV.
WHEREAS, pursuant to the terms of the Asset Purchase
Agreement, RF shall receive shares of the common stock, par value $.01 per
share (the "Common Stock"), of Medialink as follows: (i) on the Closing Date,
RF shall receive shares of Common Stock having a Value equal to Three Hundred
Thirty-Three Thousand Three Hundred and Thirty-Three ($333,333) Dollars, as of
the close on the last trading day two business days prior to the Closing Date,
and (ii) following the Closing Date, RF shall receive additional shares of
Common Stock as a portion of the Contingent Consideration (collectively, the
"Registerable Shares").
WHEREAS, capitalized terms utilized herein and not defined
herein shall have the respective meanings ascribed to them in the Asset
Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, receipt
of which is hereby acknowledged by CTV, it is agreed by and between the parties
hereto as follows:
1. Effectiveness. Subject to the provisions of that certain
Registration and Preemptive Rights Agreement dated as of October 31, 1989 by
and among Video Broadcasting Corporation (now known as Medialink Worldwide
Incorporated) and the other parties thereto ("Registration Agreement"),
Medialink hereby grants the registration rights described herein (the
"Registration Rights") to the Holder only with respect to the Registerable
Shares.
2. Incidental Registration.
(a) If Medialink at any time within seven and one
half (7 1/2) years from the date hereof proposes for any reason to register any
of its securities under the Securities Act (other than pursuant to a
registration statement on Forms S-
<PAGE>
4, S-8 or similar or successor or another form which is not available for
registering Registerable Shares for sale to the public), it shall, each such
time promptly give written notice to the Holder of Registerable Shares of its
intention so to do, and, upon the written request, given within thirty (30)
days after receipt of any such notice, of the Holder of the Registerable Shares
to register his Registerable Shares (which request shall specify the number of
Registerable Shares intended to be sold or disposed of by such Holder),
Medialink shall use its best efforts to cause the requested number of
Registerable Shares to be registered under the Securities Act to permit the
sale or other disposition by the prospective selling Holder. Notwithstanding
the foregoing, Medialink shall have the sole and absolute right to withdraw
such registration statement at any time.
(b) In the event that the proposed registration by
Medialink is, in whole or in part, an underwritten public offering of
securities of Medialink, such Registerable Shares are to be included in the
underwriting (i) on the same terms and conditions as the shares of Common
Stock, if any, otherwise being sold through underwriters under such
registration or (ii) on terms and conditions comparable to those normally
applicable to offerings of common stock in reasonably similar circumstances in
the event that no shares of Common Stock other than by selling shareholders are
being sold through underwriters under such registration; provided, however,
that if the managing underwriter determines that the inclusion of all
Registerable Shares proposed to be included in the underwritten public offering
and other issued and outstanding shares of Common Stock proposed to be included
therein by persons other than the Holder of Registerable Shares (the "Other
Shares") would interfere with the successful marketing of such securities, then
the number of Registerable Shares and Other Shares to be included in their
underwritten public offering shall, subject to the Registration Agreement, be
reduced, pro rata, among the holders of Other Shares and the Holder of
Registerable Shares.
3. Preparation and Filing. If and whenever Medialink is under
an obligation pursuant to the provisions of Section 2(a) of this Agreement to
use its best efforts to effect the registration of Registerable Shares,
Medialink shall:
(a) Prepare and file with the Securities and
Exchange Commission a registration statement with respect to such Registerable
Shares and use its best efforts to cause such registration statement to become
and remain effective;
(b) Prepare and file with the Securities and
Exchange Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective for at least one hundred fifty
(150) days and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all shares covered by such registration
statement;
(c) Furnish to each seller such number of copies of
a summary prospectus or other prospectus, including each preliminary prospectus
and final
2
<PAGE>
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as such seller may reasonably request in order to facilitate
the public sale or other disposition of the Registerable Shares;
(d) Use its best efforts to register or qualify the
Registerable Shares covered by such registration statement under the securities
or blue sky laws of such jurisdictions as the selling Holders shall reasonably
request (provided, however, that Medialink shall not be required to consent to
general service of process for all purposes in any jurisdiction where it is not
then qualified) and do any and all other acts or things which may be necessary
or advisable to enable the selling Holders to consummate the public sale or
other disposition in such jurisdictions of the Registerable Shares; and
(e) In the event the offering is not underwritten,
to file such number of copies of the final prospectus with the National
Association of Securities Dealers, Inc. to comply with the prospectus delivery
requirements and permit the sale of the Registerable Shares covered by the
registration statement to be sold on NASDAQ.
4. Expenses. All Registration Expenses (as hereinafter
defined) incurred in providing the Registration Rights shall be paid by
Medialink. For purposes of this Section 4, the term "Registration Expenses"
shall mean all expenses incurred by Medialink in providing the Registration
Rights, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses, fees and disbursements of counsel for
Medialink, state blue sky fees and expenses, and the expense of any special
audits incident to or required by any such registration, but excluding
underwriting discounts, selling commissions and the fees and expenses of such
selling Holder's own counsel.
5. Indemnification.
(a) Medialink hereby agrees that it will indemnify
and hold the selling Holder of Registerable Shares, each underwriter and each
officer, shareholder, employee, agent and representative of them and each
person controlling, controlled by or under common control with them within the
meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations thereunder, harmless from and against any and all loss, claim,
damage, liability, cost or expense whatsoever (including, but not limited to,
any and all reasonable legal fees and other expenses and disbursements incurred
in connection with investigating, preparing to defend or defending any action,
suit or proceeding, including any inquiry or investigation, commenced or
threatened, or any claim whatsoever, or in appearing or preparing for
appearance as a witness in any action, suit or proceeding including any
inquiry, investigation or pretrial proceeding such as a deposition), to which
such person may become subject under the Securities Act, the Exchange Act or
other statute, law or regulation, at common law or otherwise, of the United
States or any State arising out of, or based upon any untrue statement or
alleged untrue statement of a material fact
3
<PAGE>
contained in the registration statement, any amendment thereto or any
preliminary or final prospectus, or arise out of or be based upon the omission
or alleged omission to state therein a material act required to be stated
therein or necessary in order to make the statements therein not misleading, or
any violation by Medialink of any rule or regulation promulgated under the
Securities Act or the Exchange Act applicable to Medialink and relating to
action or inaction required of Medialink in connection with such registration
statement; provided, however, that the indemnity agreement contained in this
paragraph (a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of Medialink nor shall Medialink be liable in such case for any such
loss, claim, damage, liability or action to it to the extent it arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such registration statement,
amendment, preliminary prospectus or final prospectus in reliance upon and in
conformity with information furnished to Medialink in connection therewith by
any selling Holder or any such controlling person expressly for use therein.
(b) The selling Holder will indemnify and hold
harmless Medialink, each of its directors, each of its officers who have signed
the registration statement and each person who controls Medialink within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
to the same extent as the foregoing indemnification from Medialink to the
selling Holder, but only with respect to statements or omissions of a fact, or
alleged statement or omissions of a fact, if any, contained in the registration
statement, any amendment thereto or in any preliminary or final prospectus in
reliance upon and in conformity with information furnished to Medialink by such
selling Holder expressly for inclusion therein, provided, however, that the
indemnity agreement contained in this paragraph (b) shall not apply in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such selling Holders (which
consent shall not be unreasonably withheld or delayed).
(c) Promptly after receipt by a person described in
paragraph (a) or (b) above having a right to indemnification (an "Indemnified
Person") of notice of any claim, or the commencement of any action, suit or
proceeding, such Indemnified Person will, if a claim in respect thereof is to
be made against the person or persons described in paragraph (a) or (b) as
providing indemnification (an "Indemnifying Person"), notify the Indemnifying
Person in writing thereof. In case any such action is brought against any
Indemnified Person, and such Indemnified Person notifies the Indemnifying
Person of the commencement thereof, the Indemnifying Person will be entitled to
participate therein and, to the extent that it may elect by written notice
delivered to the Indemnified Person promptly after receiving the aforesaid
notice from such Indemnified Person, to assume the defense thereof with counsel
reasonably satisfactory to such Indemnified Person; provided, however, that if
the defendants in any such action include both Indemnified Persons and
Indemnifying Persons and counsel for an Indemnified Person shall have
reasonably concluded that there may be legal defenses available to the
Indemnified Person which are different from or additional to those available to
such other defendant(s), the Indemnified
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Person shall have the right to select separate counsel, the reasonable fees and
disbursements of which shall be reimbursed by the Indemnifying Person.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in this
Section 5 is due in accordance with its terms but is, for any reason, held by a
court to be unavailable, Medialink and the selling Holder shall contribute to
the aggregate losses, claims, damages and liabilities (including reasonable
legal or other expenses incurred in connection with investigation or defending
of same) to which Medialink and the selling Holder may be subject based on
their comparative fault, provided that no person who has committed an
intentional misrepresentation shall be entitled to contribution from any person
who has not committed an intentional misrepresentation. For the purposes of
this paragraph (d), any person controlling, controlled by or under common
control with the selling Holder, or any partner, director, officer, employee,
representative or agent of any thereof, shall have the same rights to
contribution as the selling Holder, and each person who controls Medialink
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, each officer of Medialink and each director of Medialink shall
have the same rights to contribution as Medialink. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against the other party under this paragraph (d),
notify such party from whom contribution may be sought, but the omission to so
notify such party shall not relieve the party from which contribution may be
sought from any obligation it or they may have hereunder or otherwise.
(e) In connection with any registration statement
with respect to which a Holder is participating, each such Holder shall furnish
to Medialink in writing such information as shall be reasonably requested by
Medialink for use in any such registration statement or prospectus.
6. Miscellaneous.
(a) Notices. Any notice required or permitted
hereunder shall be given in writing and shall be deemed given upon delivery to
a party, or on the first attempted date of delivery after the same is mailed to
a party by certified mail, return receipt requested, or overnight mail,
addressed to a party at its address set forth in the beginning of this
Agreement. Any party may change its address for purposes of notice by giving
notice of such changed address in accordance herewith.
(b) Entire Agreement; Amendment. This instrument
constitutes the entire agreement of the parties concerning the subject matter
hereof. No modification of this Agreement shall be enforced against any party
unless the modification shall be in writing and shall be consented by such
party.
(c) Governing Law. This Agreement was entered into
and shall be governed by, construed and enforced in accordance with the laws of
the State of New York without giving effect to the principles of conflicts of
law thereof.
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(d) Headings. The headings of Articles and Sections
herein are inserted for convenience of reference only and shall be ignored in
the construction or interpretation hereof.
(e) Successors and Assigns. This Agreement shall
inure to the benefit of and shall be binding on, the parties hereto and their
respective successors and permitted assigns; provided, however, that the Holder
may not assign its rights hereunder to any person other than an immediate
family member of the Holder without the prior written consent of Medialink.
IN WITNESS WHEREOF, this Agreement has been executed as of
the date first above written.
MEDIALINK WORLDWIDE INCORPORATED
By: /s/ Laurence Moskowitz
-------------------------------
Name: Laurence Moskowitz
Title: President
/s/Richard Frisch
-----------------------------------
RICHARD FRISCH, Holder
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