FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from Not Applicable to
------------------ -----------------
Commission File Number 0-17840
NEW HORIZONS WORLDWIDE, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2941704
-------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1231 East Dyer Road, Santa Ana, California 92705
------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(714) 432-7600
----------------------------------------------------
(Registrant's telephone number, including area code)
_____________________________________________________________
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months or for such shorter period that the registrant was
required to file such reports, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of shares of common stock outstanding at June 30, 2000: 9,764,894
1
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
New Horizons Worldwide, Inc. and Subsidiaries
June 30, 2000 and December 31, 1999
(Dollars in thousands)
June 30, December
2000 31, 1999
(unaudited)
-------- --------
Assets
------
Current assets:
Cash and cash equivalents ........................... $ 1,879 $ 2,868
Accounts receivable, less allowance for doubtful
accounts of $406 in 2000 and $943 in 1999 ....... 24,422 20,991
Inventories ......................................... 1,438 1,226
Prepaid expenses .................................... 1,388 1,438
Deferred income tax assets .......................... 2,526 2,526
Other current assets ................................ 880 791
-------- --------
Total current assets ............................ 32,364 29,840
Property, plant and equipment, net ....................... 15,069 14,797
Excess of cost over net assets of acquired companies,
net of accumulated amortization of $4,511 in 2000
and $3,420 in 1999 .................................. 59,377 55,718
Cash surrender value of life insurance ................... 1,070 1,070
Other assets ............................................. 3,289 3,659
-------- --------
Total Assets ............................................. $111,169 $105,084
======== ========
See accompanying notes to condensed consolidated financial statements
2
<PAGE>
Condensed Consolidated Balance Sheets
New Horizons Worldwide, Inc. and Subsidiaries
June 30, 2000 and December 31, 1999
(Dollars in thousands)
June 30, December
2000 31, 1999
(unaudited)
-------- --------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term obligations ....... $ 149 $ 189
Accounts payable ............................... 2,678 2,155
Income taxes payable ........................... -- 918
Accounts payable to franchises ................. 4,972 3,882
Other current liabilities ...................... 17,501 16,686
--------- -------
Total current liabilities .................. 25,300 23,830
Long-term obligations, excluding current portion .... 3,258 6,730
Deferred income tax liability ....................... 835 835
Deferred rent ....................................... 856 885
Other long-term liabilities ......................... 120 127
--------- -------
Total liabilities .......................... 30,369 32,407
--------- -------
Stockholders' equity:
Preferred stock without par value, 2,000,000 shares
authorized, no shares issued ............... -- --
Common stock, $.01 par value, 15,000,000 shares
authorized; issued and outstanding 9,949,894,
shares in 2000 and 9,788,583 shares in 1999 99 97
Additional paid-in capital ..................... 39,346 37,098
Retained earnings .............................. 42,653 36,780
Treasury stock at cost - 185,000 shares in 2000
and 1999 ................................... (1,298) (1,298)
--------- -------
Total stockholders' equity ................. 80,800 72,677
--------- -------
Total Liabilities & Stockholders' Equity ............ $ 111,169 $ 05,084
========= ========
See accompanying notes to condensed consolidated financial statements
3
<PAGE>
Condensed Consolidated Statements of Earnings
New Horizons Worldwide, Inc. and Subsidiaries
Six and Three Months ended June 30, 2000 and June 30, 1999
(unaudited)
(Dollars in thousands except Earnings Per Share)
Six Months Ended Three Months Ended
------------------- --------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
-------- -------- -------- --------
Revenues
Franchising
Franchise fees ............ $ 869 $ 1,069 $ 368 $ 681
Royalties ................. 11,445 9,636 5,992 4,904
Other ..................... 2,487 1,317 1,370 737
-------- -------- -------- --------
Total franchising revenues 14,801 12,022 7,730 6,322
Company-owned training centers . 55,873 37,980 28,919 21,578
-------- -------- -------- --------
Total revenues ............ 70,674 50,002 36,649 27,900
Cost of revenues .................. 32,437 22,261 16,664 12,510
Selling, general and
administrative expenses ........ 28,426 21,409 14,720 11,468
-------- -------- -------- --------
Operating income .................. 9,811 6,332 5,265 3,922
Investment income (expense), net .. (23) 333 17 136
-------- -------- -------- --------
Income before income taxes ........ 9,788 6,665 5,282 4,058
Provision for income taxes ........ 3,915 2,572 2,113 1,584
-------- -------- -------- --------
Net income ........................ $ 5,873 $ 4,093 $ 3,169 $ 2,474
======== ======== ======== ========
Basic Earnings Per Share .......... $ 0.61 $ 0.43 $ 0.33 $ 0.26
======== ======== ======== ========
Diluted Earnings Per Share ........ $ 0.58 $ 0.41 $ 0.31 $ 0.25
======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements
4
<PAGE>
Condensed Consolidated Statements of Cash Flows
New Horizons Worldwide, Inc. and Subsidiaries
Six Months ended June 30, 2000 and June 30, 1999
(unaudited)
(Dollars in thousands)
Six Six
Months Months
Ended Ended
June 30, June 30,
2000 1999
--------- ---------
Cash flows from operating activities
Net income ............................................ $ 5,873 $ 4,093
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................... 3,749 2,644
Deferred compensation ............................ -- 148
Cash provided (used) from the change in:
Accounts receivable ............................ (3,431) (1,732)
Inventories .................................. (212) (42)
Prepaid expenses and other current assets .... 50 (246)
Other assets ................................. 543 384
Accounts payable ............................. 523 (378)
Other current liabilities .................... 1,905 900
Income taxes payable/refundable .............. (754) (303)
Deferred rent ................................ (29) (15)
--------- ---------
Net cash provided by operating activities . 8,217 5,453
--------- ---------
Cash flows from investing activities
Purchase of marketable securities ................... -- (279)
Redemption of marketable securities ................. -- 15,828
Cash surrender value of life insurance .............. -- (429)
Additions to property, plant and equipment .......... (2,930) (3,744)
Cash paid for acquired companies, net of cash acquired -- (12,875)
Cash paid for previous acquisitions (Note 3) ........ (3,488) (42)
--------- ---------
Net cash used by investing activities ....... (6,418) (1,541)
--------- ---------
Cash flows from financing activities
Proceeds from issuance of common stock .............. 731 22
Proceeds from debt obligations ...................... 1,522 (2,984)
Principal payments on debt obligations .............. (5,041) (705)
--------- ---------
Net cash used by financing activities ....... (2,788) (3,667)
--------- ---------
Net (decrease) increase in cash and cash equivalents .. (989) 245
Cash and cash equivalents at beginning of period ...... 2,868 6,873
--------- ---------
Cash and cash equivalents at end of period ............ $ 1,879 $ 7,118
======== ========
Supplemental disclosure of cash flow information
Cash was paid for:
Interest ..................................... $ 216 $ 39
======== ========
Income taxes ................................. $ 4,354 $ 2,656
======== ========
See accompanying notes to condensed consolidated financial statements
5
<PAGE>
Condensed Consolidated Statements of CASH FLOWS
New Horizons Worldwide, Inc. and Subsidiaries
Six Months ended June 30, 2000 and June 30, 1999
(unaudited)
(Dollars in thousands)
Supplemental Disclosure of Noncash Transactions --
Six Six
Months Months
Ended Ended
June 30, June 30,
2000 1999
--------- ---------
Non cash investing and financing activities:
Income tax benefit from exercise of stock
options and warrants $ 257 $ 8
========= =========
During the six months ended June 30, 2000, the Company issued 74,811 shares of
common stock with a value of $1,262 at the date of issuance as additional
consideration for previous acquisitions.
During the six months ended June 30, 1999, the Company issued 129,636 shares of
common stock with a value of $2,603 at the date of issuance for the acquisition
of the Albuquerque, New Mexico, Charlotte, North Carolina, Sacramento and
Stockton, California and San Antonio, Texas franchises.
6
<PAGE>
Notes to Condensed Consolidated Financial Statements
New Horizons Worldwide, Inc. and Subsidiaries
For the Six Months ended June 30, 2000 and June 30, 1999
(unaudited)
(Dollars in thousands except Earnings Per Share)
Note 1 In the opinion of management, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (all of
which are normal and recurring) necessary to present fairly the
financial position of the Company at June 30, 2000 and the results of
operations for the six and three month periods ended June 30, 2000 and
June 30, 1999. The statements and notes should be read in conjunction
with the financial statements and notes thereto included in the
Company's annual report for the year ended December 31, 1999.
Note 2 Certain items on the 1999 financial statements have been
reclassified to conform to the 2000 presentation.
Note 3 During the six months ended June 30, 2000, the Company granted
additional consideration for previous acquisitions of $3,488 in cash
and issued 74,811 shares of the Company's stock due to the acquired
centers meeting certain performance targets.
Note 4 Effective January 1, 1998, the Company adopted SFAS No. 130
"Reporting Comprehensive Income." The Company's comprehensive income
for the six months ended June 30, 2000 and 1999 is presented below:
Six Six
Months Months
Ended Ended
June 30, June 30,
2000 1999
--------- ---------
Net income ................................. $ 5,873 $ 4,093
Other comprehensive income, net of tax:
Unrealized holding gains/(losses) on
available for sale securities arising
during the year ..................... -- 30
--------- ---------
Comprehensive income ....................... $ 5,873 $ 4,123
========= =========
Note 5 The Company operates in two business segments -- company-owned
training centers and franchising operations. The company-owned
training centers segment operates wholly-owned computer training
centers in the United States and derives its revenues from the
operating revenues of those centers. The franchising segment
franchises computer training centers domestically and internationally
and supplies systems of instruction and sales and management concepts
concerning computer training to independent franchisees. The
franchising segment revenues are from the initial franchise fees and
royalties from the franchise operations and other revenue such as from
the Corporate Education Solutions program. The two segments are
identified on the basis of the source of revenues and the services
offered. Information on the Company's segments is as follows:
7
<PAGE>
Company
Owned Fran- Executive Consol-
Centers chising Office idated
-------- -------- --------- --------
For the six months ended June 30,
2000
--------------------------------
Revenues from external ......... $ 55,873 $ 14,801 $ -- $ 70,674
customers
Depreciation and ............... 3,317 432 -- 3,749
amortization expense
Income tax expense ............. 1,991 1,924 -- 3,915
Net income ..................... 2,895 2,978 -- 5,873
Total assets ................... 89,510 17,083 4,576 111,169
Capital expenditures ........... 2,478 452 -- 2,930
For the six months ended June 30,
1999
---------------------------------
Revenues from external ......... $37,980 $12,022 $ -- $50,002
customers
Depreciation and ............... 2,242 402 -- 2,644
amortization expense
Income tax expense ............. 1,362 1,210 -- 2,572
Net income ..................... 2,122 1,971 -- 4,093
Total assets ................... 68,901 18,006 6,434 93,341
Capital expenditures ........... 2,197 1,454 93 3,744
Note 6 The Company computes earnings per share based on SFAS No. 128,
"Earnings Per Share" (EPS). SFAS No. 128 requires the Company to
report Basic EPS, as defined therein, which assumes no dilution from
outstanding stock options, and Diluted EPS, as defined therein, which
assumes dilution from the outstanding stock options.
The computation of Basic EPS is based on the weighted average number
of shares actually outstanding during each year. The computation of
Diluted EPS is based upon the weighted average number of shares
actually outstanding, plus the shares that would be outstanding
assuming the exercise of all outstanding options and warrants,
computed using the treasury stock method.
Six Months Ended Three Months Ended
------------------------- -------------------------
June 30, June 30, June 30, June 30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
Basic EPS ... 9,680,551 9,469,742 9,714,927 9,518,799
Diluted EPS . 10,209,438 10,001,548 10,300,847 10,053,743
The difference between the shares used for calculating Basic EPS and
Diluted EPS relates to common stock equivalents consisting of stock
options and warrants outstanding during the respective periods.
8
<PAGE>
Note 7 On December 6, 1999 the Securities and Exchange Commission issued
Staff Accounting Bulletin #101, Revenue Recognition in Financial
Statements (SAB 101). SAB 101 summarizes the staff's views in applying
generally accepted accounting principles to revenue recognition in
financial statements. SAB 101 is effective for the fourth quarter of
fiscal year 2001. The Company is currently evaluating the impact SAB
101 will have on its financial statements, if any.
9
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands)
General
-------
The Company operates computer training centers in the United States and
franchises computer training centers in the United States and abroad.
Corporate revenues are defined as revenues from company-owned training centers,
initial franchise fees and royalties from franchised operations. System-wide
revenues are comprised of total revenues from all centers, both company-owned
and franchised. System-wide revenues are used to gauge the growth rate of the
entire New Horizons training network.
Revenues from company-owned training centers operated by New Horizons consist
primarily of training fees and fees derived from the sale of courseware
material. Cost of revenues consists primarily of instructor costs, courseware
costs, rent, utilities, classroom equipment, and computer hardware, software and
peripheral expenses. Included in selling, general and administrative expenses
are personnel costs associated with technical and facilities support,
scheduling, training, accounting and finance, and sales.
Revenues from franchising consist primarily of initial franchise fees paid by
franchisees for the purchase of specific franchise territories and franchise
rights, training royalty and advertising fees based on a percentage of gross
training revenues realized by the franchisees, percentage royalty fees received
on the sale of courseware, and revenue earned from Corporate Education
Solutions. Cost of revenues consists primarily of costs associated with
courseware development and franchise support personnel who provide system
guidelines and advice on daily operating issues including sales, marketing,
instructor training, and general business problems. Included in selling, general
and administrative expenses are technical support, accounting and finance
support, Corporate Education Solutions support, advertising expenses, and
franchise sales expenses.
Revenues
--------
Revenues increased $8,749 or 31.4% to $36,649 for the second quarter of 2000 and
increased $20,672 or 41.3% for the first half of 2000 compared to the same
periods in 1999. This was primarily due to improved revenues at company-owned
locations, additional revenues resulting from the acquisition of the Denver
franchise in September 1999, revenue increases at franchises open more for than
twelve months, and additional franchises added to the system. System-wide
revenues for the second quarter were $136,367, up 24.1% from $109,894 for the
same period in 1999. For the first half of 2000, system-wide revenues grew 22.2%
to $259,514 from $212,346 for the first half of 1999. System-wide revenues
include revenues from both franchised locations and company-owned training
centers. Revenues from locations open more than 12 months, both franchised and
company-owned, grew 20.2% in the second quarter of 2000 and 18.1% in the first
half of 2000 compared to the same periods in 1999.
Cost of Revenues
----------------
Cost of revenues increased $4,154 or 33.2% for the second quarter of 2000 and
increased $10,176 or 45.7% for the first half of 2000 compared to the same
periods in 1999. As a percentage of revenues, cost of revenues increased to
45.5% in the second quarter of 2000 from 44.8% and increased to 45.9% for the
first half of 2000 from 44.5% compared to the same periods in 1999. The increase
in the cost of revenues in absolute dollars was a result of the increase in the
revenues for the second quarter and the first half of 2000 as discussed above,
higher training, facilities and depreciation expenses in and associated with the
acquisition of the Denver franchise in September 1999. The increase in cost of
revenues as a percentage of revenues in the second quarter and first half of
2000 was a result of the increase in company-owned revenue as a percentage of
total revenue. The franchising segment operates at a higher gross margin than
the company-owned segment.
10
<PAGE>
Selling, General and Administrative Expenses
--------------------------------------------
Selling, general and administrative expenses increased $3,252 or 28.4% for the
second quarter of 2000 and increased $7,017 or 32.8% for the first half of 2000
compared to the same periods in 1999. As a percentage of revenues, selling,
general and administrative expenses decreased to 40.2% for the second quarter
and first half of 2000 from 41.1% and 42.8%, respectively, for the same periods
in 1999. The increase in selling, general and administrative expenses in
absolute dollars was due principally to increased spending in the areas of sales
and marketing, national advertising, and the acquisition of the Denver franchise
in September 1999. The decrease in selling, general and administrative expenses
as a percent of revenues was primarily due to the increase in revenue and
control of the addition of non-revenue producing employees.
Investment Income, Net
----------------------
Investment income decreased $27 or 16.9% for the second quarter of 2000 and
decreased $161 or 40.8% for the first half of 2000 compared to the same periods
in 1999. As a percentage of revenues, investment income decreased to 0.4% for
the second quarter of 2000 and to 0.3% for the first half of 2000 compared to
0.6% and 0.8% for the same periods in 1999, respectively. The decrease in
investment income in absolute dollars was due mainly to the use of funds to
purchase the Denver franchise acquired in September 1999 and payments made to
reduce the outstanding borrowings against the line of credit.
Interest expense increased $92 or 383% for the second quarter of 2000 and
increased $195 or 315% for the first half of 2000 compared to the same periods
in 1999. The higher interest expense was due mainly to higher outstanding
borrowings in the first six months of 2000 compared to the corresponding period
in 1999.
Income Taxes
------------
The Company's effective tax rate was 40% for the first quarter and first half of
2000.
Liquidity and Capital Resources
-------------------------------
As of June 30, 2000, the Company's working capital was $7,064 and its cash and
cash equivalents totaled $1,879. Working capital as of June 30, 2000 reflected
an increase of $1,054 or 17.5% from $6,010 as of December 31, 1999.
The Company currently maintains a $25 million credit facility with a commercial
bank, $20 million of which is for future business acquisitions and $5 million of
which is for short-term financing requirements, at an interest rate equal to the
bank's prime rate, 9.5% at June 30, 2000, less 0.5%. The Company reduced
outstanding borrowings against the line of credit in 2000 by $3,450. The
outstanding balance as of June 30, 2000 was $3,250. As of June 30, 2000, the
Company had $16,750 and $5 million available for borrowing under the acquisition
and short-term financing portions of the credit facility, respectively.
The nature of the computer education and training industry requires substantial
cash commitments for the purchase of computer equipment, software, and training
facilities. During the first six months of 2000 the Company spent approximately
$2,930 on capital items. Capital expenditures for 2000 are expected to total
approximately $6,500.
11
<PAGE>
Management believes that its current working capital position, cash flows from
operations, along with its credit facility, will be adequate to support its
current and anticipated capital and operating expenditures and its strategies to
grow its computer education and training business.
Information About Forward-Looking Statements
--------------------------------------------
The statements made in this Quarterly Report on Form 10-Q that are not
historical facts are forward-looking statements. Such statements are based on
current expectations but involve risks, uncertainties, and other factors which
may cause actual results to differ materially from those contemplated by such
forward-looking statements. All statements that address operating performance,
events or developments that management anticipates will occur in the future,
including statements relating to future revenue, profits, expenses, income and
earnings per share or statements expressing general optimism about future
results, are forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934 (the "Exchange Act"). In addition, words such as
"expects," "anticipates," "intends," "plans," "believes," "estimates,"
variations of such words, and similar expressions are intended to identify
forward-looking statements. Forward-looking statements are subject to safe
harbors created in the Exchange Act.
Important factors which may result in variations from results contemplated by
such forward-looking statements include, but are by no means limited to: (1) the
Company's ability to respond effectively to potential changes in the manner in
which computer training is delivered, including the increasing acceptance of
technology-based training which could have more favorable economics with respect
to timing and delivery costs; (2) the Company's ability to attract and retain
qualified instructors; (3) the rate at which new software applications are
introduced by manufacturers and the Company's ability to keep up with new
applications and enhancements to existing applications; (4) the level of
expenditures devoted to upgrading information systems and computer software by
customers; (5) the Company's ability to compete effectively with low cost
training providers who may not be authorized by software manufacturers; and (6)
the Company's ability to manage the growth of its business.
The Company's strategy focuses on enhancing revenues and profits at current
locations, and also includes the possible opening of new company-owned
locations, the sale of additional franchises, the selective acquisition of
existing franchises in the United States which have demonstrated the ability to
achieve above average profitability while increasing market share, and the
acquisition of companies in similar or complementary businesses. The Company's
growth strategy is premised on a number of assumptions concerning trends in the
information technology training industry. These include the continuation of
growth in the market for information technology training and the trend toward
outsourcing. To the extent that the Company's assumptions with respect to any of
these matters are inaccurate, its results of operations and financial condition
could be adversely effected.
12
<PAGE>
PART I. FINANCIAL INFORMATION
(Dollars in thousands)
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to market risk related to changes in interest rates. It
monitors the risks associated with interest rates and financial instrument
positions.
The Company's primary interest rate risk exposure results from floating rate
debt on its line of credit. At June 30, 2000, most of the Company's total
long-term debt consisted of floating rate debt. If interest rates were to
increase 100 basis points (1.0%) from June 30, 2000 rates, and assuming no
changes in long-term debt from the June 30, 2000 levels, the additional annual
expense would be approximately $33 on a pre-tax basis. The Company currently
does not hedge its exposure to floating interest rate risk.
The Company's revenue derived from international operations is paid by its
franchisees in United States dollars and, accordingly, the foreign currency
exchange rate fluctuation is not material.
13
<PAGE>
PART II. FINANCIAL INFORMATION
(Dollars in thousands)
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
c) Recent Sale of Unregistered Securities
No securities of the Company that were not registered under the Securities Act
of 1933 have been issued or sold by the Company for the period covered by this
Quarterly Report on Form 10-Q other than the following:
On January 6, 2000, the Company issued 3,855 shares of the Company's common
stock as additional consideration to a previously acquired franchise as certain
performance targets were achieved. The average price of the Company's stock
seven days before and after the date of the transaction was $11.83 per share of
common stock. Thus, the aggregate value of the 3,855 shares of common stock on
the date of the transaction was $46.
On May 16, 2000, the Company issued 29,122 shares of the Company's common stock
as additional consideration to a previously acquired franchise as certain
performance targets were achieved. The average price of the company's stock
seven days before and after the date of the transaction was $16.88 per share of
common stock. Thus, the aggregate value of the 29,122 shares of common stock on
the date of transaction was $491.
On June 14, 2000, the Company issued 41,834 shares of the Company's common stock
as additional consideration to a previously acquired franchise as certain
performance targets were achieved. The average price of the company's stock
seven days before and after the date of the transaction was $17.35 per share of
common stock. Thus, the aggregate value of the 41,834 shares of common stock on
the date of transaction was $725.
Registration under the Securities Act of 1933 was not effected with respect to
the transactions described above in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act of 1933.
14
<PAGE>
PART II: Other Information
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index
Exhibit
Number Description of Documents
------- ------------------------
10.1 Lease Agreement dated April 27, 2000 between New Horizons Worldwide,
Inc. and 1114 Trizechahn-Swig, L.L.C., guaranteed by the Registrant*
27 Financial Data Schedule*
* Filed herewith
15
<PAGE>
SIGNATURE
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 thereto duly authorized.
NEW HORIZONS WORLDWIDE, INC.
(Registrant)
Date: August 14, 2000 By: /s/
Robert S. McMillan
NEW HORIZONS WORLDWIDE, INC.
Chief Financial Officer
16
<PAGE>
=================================================
1114 TRIZECHAHN-SWIG, L.L.C.,
LANDLORD
AND
NEW HORIZONS COMPUTER LEARNING CENTERS, INC.,
TENANT
____________
L E A S E
_____________
DATED: as of April __, 2000
Premises: Portion of the Concourse Level
1114 Avenue of the Americas
New York, New York 10036
==================================================
<PAGE>
TABLE OF CONTENTS
Article Page
------- ----
i
08/09/00
649998/020
969511v1
1. Basic Lease Provisions; Demise Of Premises.................................1
2 Commencement Of Lease Term; Landlord's Contribution.........................2
3. Rent .....................................................................5
4. Use .....................................................................6
5. Alterations; Liens; Tenant's Property......................................6
6. Repairs And Maintenance...................................................10
7. Compliance With Law.......................................................11
8. Insurance.................................................................13
9. Fire Or Casualty..........................................................15
10. Assignment And Subletting................................................17
11. Non-Liability; Indemnification...........................................24
12. Condemnation.............................................................25
13. Access; Building Name....................................................26
14. Bankruptcy...............................................................27
15. Defaults, Remedies, Damages..............................................28
16. Curing Tenant's Defaults; Reimbursement..................................30
17. Quiet Enjoyment..........................................................31
18. Building Services........................................................31
19. Taxes; Operating Expenses................................................35
20. Electricity..............................................................40
21. Broker...................................................................44
22. Subordination............................................................44
23. Estoppel Certificate.....................................................46
23. Legal Proceedings........................................................46
25. Surrender................................................................47
26. Rules And Regulations....................................................47
27. Persons Bound............................................................48
28. Notices..................................................................48
29. Partnership Tenant.......................................................49
30. No Waiver; Entire Agreement..............................................50
31. Miscellaneous Provisions; Definitions....................................50
32. Inability To Perform; Severability.......................................54
33. Security.................................................................54
33. Renewal Option...........................................................55
35. Additional Premises......................................................57
EXHIBIT "A" - Floor Plans...................................................A-1
EXHIBIT "B" - Commencement Date Agreement...................................B-1
EXHIBIT "C" - Landlord's Work...............................................C-1
EXHIBIT "D" - Description of Land...........................................D-1
EXHIBIT "E" - Cleaning Specifications.......................................E-1
EXHIBIT "F" - Rules and Regulations.........................................F-1
EXHIBIT "G" - Letter of Credit..............................................G-1
EXHIBIT "H" - Approved Contractors..........................................H-1
EXHIBIT "I" - Building Unit Specifications..................................I-1
EXHIBIT "J" - Subordination, Non-Disturbance and Attornment Agreement.......J-1
EXHIBIT "K" - Concourse Level Space.........................................K-1
EXHIBIT "L" - Elevator Shaft................................................L-1
EXHIBIT "M-1" - Ground Floor Premises.......................................M-1
EXHIBIT "M-2" - Additional Concourse Premises...............................M-2
EXHIBIT "N" - Supplemental Premises.........................................N-1
i
<PAGE>
INDEX OF DEFINED TERMS
----------------------
TERM SECTION
---- -------
AAA........................................................................11.05
Additional Concourse Premises..............................................35.01
Additional Premises Commencement Date......................................35.01
Additional Premises........................................................35.01
Alterations................................................................31.19
Annual Statement...........................................................19.04
Approved Contractor List....................................................5.01
Assignment Sublet Notice...................................................10.03
Authorized Use.............................................................31.19
Base Electric Charge.......................................................20.03
Base Operating Year.........................................................1.01
Base Tax Amount.............................................................1.01
Building...................................................................31.19
Building Insurance..........................................................8.01
Building Systems...........................................................31.19
Business Days..............................................................18.02
Business Hours.............................................................18.02
Commencement Date...........................................................1.01
Concourse Level Space......................................................34.01
Continued Occupancy Period.................................................25.02
Decorations................................................................35.05
Delivery Obligation.........................................................2.02
Demised Premises............................................................1.01
Designated Broker...........................................................1.01
Determination Date.........................................................34.03
Disabilities Act ...........................................................7.01
Electric Inclusion Factor..................................................20.03
Electric Rate..............................................................20.02
Electricity Additional Rent................................................20.02
Elevator Shaft.............................................................18.01
Emergency Generator........................................................18.01
Emergency Power............................................................18.01
Emergency Power Charge.....................................................18.01
Estimate Statement.........................................................19.04
Estimated Payment..........................................................19.04
Events of Default..........................................................15.01
Excess......................................................................7.03
Exercise Date..............................................................34.01
Existing Capacity..........................................................20.01
Existing Occupant..........................................................35.01
Expedited Arbitration......................................................11.05
Expiration Date.............................................................2.01
Extra Rubbish Removal......................................................18.01
First Lease Period..........................................................1.01
Fixed Rent..................................................................1.01
Ground Floor Premises......................................................35.01
Ground Floor Signs.........................................................35.05
Hazardous Materials.........................................................7.01
Holidays...................................................................18.02
HVAC Unit..................................................................18.01
Indemnified Party..........................................................11.03
Initial Occupancy Date.....................................................20.02
Insurance Boards...........................................................31.19
Interest Rate..............................................................16.01
Interruption................................................................6.02
Issuing Bank...............................................................33.03
Labor Costs................................................................19.02
Land.......................................................................31.19
Landlord..........................................................Preface, 27.01
Landlord's Consultant......................................................20.02
Landlord's Contribution.....................................................2.05
Landlord's Delivery Work....................................................2.02
Landlord's Occupancy Work...................................................2.02
Landlord's Electricity Cost................................................20.02
i
<PAGE>
TERM SECTION
---- -------
Landlord's Work.............................................................2.02
Lease Term................................................................. 1.01
Legal Requirements........................................................ 31.19
Letter of Credit...........................................................33.03
Marketing Notice...........................................................10.03
Market Value Rent..........................................................34.02
Material Interruption.......................................................6.02
Maximum Occupancy Number....................................................7.06
Minor Alterations...........................................................5.01
Mortgage...................................................................31.19
Mortgagee..................................................................31.19
Mortgagee NDA..............................................................22.06
MVR Notice.................................................................34.03
MVR Objection Notice.......................................................34.03
NDA Outside Date...........................................................22.06
Non-Renewal Notice.........................................................33.03
Notice.....................................................................28.01
Occupancy Date..............................................................2.02
Occupancy Obligation........................................................2.02
Occupancy Payment..........................................................25.02
Occupancy Reading Date.....................................................20.02
Operating Dispute Notice...................................................19.04
Operating Expense Payment..................................................19.04
Operating Expenses.........................................................19.02
Operating Statement........................................................19.02
Operating Year.............................................................19.02
OSHA Requirements...........................................................7.01
Outside Date...............................................................35.01
Overlandlord...............................................................31.19
Overtime Periods...........................................................18.02
Partnership Tenant ........................................................29.01
Persons Within Tenant's Control............................................31.19
Profit.....................................................................10.06
Public Utility.............................................................20.02
Recapture Date.............................................................10.03
Recapture Notice...........................................................10.03
Recapture Options..........................................................10.03
Recapture Sublease.........................................................10.03
Recurring Additional Rent..................................................31.19
Related Corporation........................................................10.02
Renewal Notice.............................................................34.01
Renewal Option.............................................................34.01
Renewal Term...............................................................34.01
Rentable Square Feet .......................................................1.01
Rent Commencement Date......................................................3.01
Repairs....................................................................31.19
Second Lease Period.........................................................1.01
Security...................................................................33.01
Security Deposit Amount.....................................................1.01
Signs......................................................................31.20
Specialty Alterations.......................................................5.06
Stairway...................................................................35.03
Sublease Premises..........................................................10.03
Submeter...................................................................20.02
Substantially Complete......................................................2.02
Successor Corporation......................................................10.02
Supplemental Premises......................................................35.07
Supplemental Premises Commencement Date....................................35.07
Surrender Date.............................................................25.01
Target Completion Date......................................................2.02
Tax Payment................................................................19.03
Tax Statement..............................................................19.03
Tax Year...................................................................19.02
Taxes......................................................................19.02
Taxing Authority...........................................................19.02
ii
<PAGE>
TERM SECTION
---- -------
Tenant............................................................Preface, 31.03
Tenant Delay................................................................2.03
Tenant Electricity.........................................................20.02
Tenant's Consultant........................................................20.03
Tenant's Contractors........................................................5.01
Tenant's Initial Contractors................................................5.01
Tenant's Initial Work......................................................31.19
Tenant's Operating Share....................................................1.01
Tenant's Tax Share..........................................................1.01
Third Lease Period..........................................................1.01
Underlying Lease...........................................................31.19
iii
<PAGE>
INDENTURE OF LEASE (this "Lease") made as of this _____ day of April, 2000,
by and between 1114 TRIZECHAHN-SWIG, L.L.C., a New York corporation having an
office at c/o TrizecHahn Office Properties Inc., 1411 Broadway, New York, New
York 10018, Attention: General Manager (hereinafter referred to as "Landlord"),
and NEW HORIZONS COMPUTER LEARNING CENTERS, INC., a California corporation
having an office at 1231 East Dyer Road, Suite 110, Santa Ana, California 92705
(hereinafter referred to as "Tenant").
W I T N E S S E T H :
ARTICLE 1
BASIC LEASE PROVISIONS; DEMISE OF PREMISES
Section 1.01.
-------------
For the purposes of this Lease (including all of the schedules, riders and
exhibits, if any, annexed to this Lease), the terms set forth below shall have
the definitions which immediately follow such terms, and such definitions are
hereby incorporated into this Lease wherever used:
Base Operating Year - The "Base Operating Year" shall mean the calendar year
2000.
Base Tax Amount - The Base Tax Amount shall mean the amount of Taxes with
respect to calendar year 2000. The Base Tax Amount shall be determined by
averaging the Taxes with respect to (i) the fiscal year commencing July 1, 1999,
and ending June 30, 2000, and (ii) the fiscal year commencing July 1, 2000, and
ending June 30, 2001. By way of example only, if the Taxes for the 1999/2000
fiscal year were $100,000, and the Taxes for the 2000/2001 fiscal year were
$120,000, the Base Tax Amount would be equal to $110,000.
Commencement Date - The "Commencement Date" shall mean the date set forth in
Subsection 2.01A below.
Demised Premises - The "Demised Premises" shall mean that area of the concourse
level of the Building which is shown on the hatched portion of the plan annexed
hereto as Exhibit "A" and made a part hereof.
Designated Broker - The "Designated Broker" shall Schlesinger & Company, LLC.
Expiration Date - The "Expiration Date" shall mean the date set forth in
Subsection 2.01B below.
Fixed Rent - The "Fixed Rent" shall be:
(i) during the period beginning on the Rent Commencement Date and continuing
through and including the last day of the calendar month in which the fifth
(5th) anniversary of the Commencement Date shall occur (the "First Lease
Period"), ONE MILLION ONE HUNDRED NINETY-ONE THOUSAND NINE HUNDRED EIGHTEEN
($1,191,918.00) DOLLARS per annum, to be paid by Tenant in equal monthly
installments of $99,326.50 each;
(ii) during the period beginning on the day immediately following the expiration
of the First Lease Period and continuing through and including the last day
of the calendar month in which the tenth (10th) anniversary of the
Commencement Date shall occur (the "Second Lease Period"), ONE MILLION
THREE HUNDRED THIRTEEN THOUSAND ONE HUNDRED THIRTY ($1,313,130.00) DOLLARS
per annum, to be paid by Tenant in equal monthly installments of
$109,427.50 each; and
(iii)during the period beginning on the day immediately following the
expiration of the Second Lease Period and continuing through and including
the Expiration Date (the "Third Lease Period"), ONE MILLION THREE HUNDRED
NINETY-THREE THOUSAND NINE HUNDRED THIRTY-EIGHT ($1,393,938.00) DOLLARS per
annum, to be paid by Tenant in equal monthly installments of $116,161.50
each.
Lease Term - The "Lease Term" shall mean the period of years (and/or portions
thereof) that this Lease shall be in effect, commencing on the Commencement Date
and ending on the Expiration Date, unless sooner terminated as provided in this
Lease or by law.
Rentable Square Feet - The term "Rentable Square Feet" shall refer to the number
of rentable square feet in the Demised Premises, and shall be deemed to be
40,404 square feet, as agreed to by Landlord and Tenant following Tenant's
inspection of (or opportunity to inspect) the Demised Premises or plans thereof.
Security Deposit Amount - The "Security Deposit Amount" shall mean $650,000.00,
subject to reduction in accordance with Section 33.03 of this Lease.
Tenant's Operating Share - The term "Tenant's Operating Share" shall mean 2.95%,
for so long as Landlord shall own the entire Building. If a portion or portions
of the Building (but not the entire Building) shall be sold, transferred or
conveyed, then Tenant's Operating Share shall be changed to that percentage
which shall be equal to a fraction, the numerator of which shall be the Rentable
Square Feet, and the denominator of which shall be the aggregate rentable square
feet of office space in that portion of the Building owned by Landlord at such
time (and from time to time), as reasonably determined by Landlord's architect;
provided that such denominator shall be applied uniformly to all other Building
tenants.
1
<PAGE>
Tenant's Tax Share - The term "Tenant's Tax Share" shall mean 2.95%, for so long
as Landlord shall own the entire Building. If a portion or portions of the
Building (but not the entire Building) shall be sold, transferred or conveyed,
then Tenant's Tax Share shall be changed to that percentage which shall be equal
to a fraction, the numerator of which shall be the Rentable Square Feet, and the
denominator of which shall be the aggregate rentable square feet of office space
and retail space in that portion of the Building owned by Landlord at such time
(and from time to time), as reasonably determined by Landlord's architect;
provided that such denominator shall be applied uniformly to all other Building
tenants.
Section 1.02.
-------------
Tenant acknowledges and agrees that none of the definitions and agreements
contained in Section 1.01 above (including the definition of Rentable Square
Feet) shall be construed as or deemed to be a representation or warranty by
Landlord concerning the actual size of the Demised Premises.
Section 1.03.
-------------
Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, the
Demised Premises, together with the right to use, in common with others, such
portions of the lobbies, elevators and other public portions of the Building as
may be necessary for access to the Demised Premises, for the Lease Term, and for
the Fixed Rent and additional rent herein reserved, and subject to all of the
covenants, agreements, terms, conditions, limitations, reservations and
provisions hereinafter set forth.
ARTICLE 2
COMMENCEMENT OF LEASE TERM; LANDLORD'S CONTRIBUTION
Section 2.01.
-------------
A. The term of this Lease shall commence on the date (the "Commencement Date")
that shall be the later to occur of (i) the date first set forth above as
the execution date of this Lease, and (ii) the date that Landlord shall
deliver the Demised Premises to Tenant with the Delivery Obligation (as
such term is defined in Section 2.02 below) having been satisfied.
B. The term of this Lease shall expire at noon on April 30, 2014 (the
"Expiration Date"), or shall end on such earlier date upon which such term
may expire or be cancelled or terminated pursuant to the provisions of this
Lease or by law.
C. Promptly following the Commencement Date, Landlord and Tenant shall execute
and deliver a supplementary agreement (in the form annexed hereto as
Exhibit "B", and pertaining to the matters set forth therein) setting forth
the dates of the Commencement Date and the Expiration Date, but the failure
to so execute or deliver said supplementary agreement shall not in any way
reduce either party's obligations or rights under this Lease.
Section 2.02.
-------------
A. Tenant agrees to accept possession of the Demised Premises in "as is" and
"where is" condition as of the date hereof, subject to the completion by
Landlord, at Landlord's cost and expense, of the work to prepare the
Demised Premises for Tenant, as specified in Exhibit "C" which is annexed
hereto and made a part hereof ("Landlord's Work"). Landlord shall use
commercially reasonable efforts to Substantially Complete (as defined
below) each item of Landlord's Work specified on Exhibit "C" as "Landlord's
Delivery Work" (the "Delivery Obligation") on or before May 1, 2000 (the
"Target Completion Date"). Thereafter, Landlord shall use commercially
reasonable efforts to Substantially Complete each item of Landlord's Work
specified on Exhibit "C" as "Landlord's Occupancy Work" (the "Occupancy
Obligation") prior to the date upon which Tenant shall be ready to occupy
the Demised Premises for the conduct of Tenant's business therein (the
"Occupancy Date"); provided, however, Landlord shall complete Item #3 of
Landlord's Occupancy Work (as set forth on Exhibit C) within (30) days
after Tenant shall have delivered (i) notice to Landlord that Tenant shall
then be prepared to commence Tenant's Initial Work, and (ii) together with
such notice, evidence reasonably satisfactory to Landlord that Tenant shall
have obtained, in accordance with the provisions of Article 5 below, all
permits, authorizations and consents necessary to commence Tenant's Initial
Work. All materials, work, labor, fixtures and installations required for
completion of the Demised Premises and the operation of Tenant's business
thereat, other than Landlord's Work, shall (subject to the provisions of
Article 5 below) be promptly furnished and performed by Tenant, at Tenant's
own cost and expense.
B. The term "Substantially Complete" shall mean, with respect to any work
(including Landlord's Work), that such work shall have been completed
substantially in accordance with (i) the provisions of this Lease
applicable thereto, and (ii) the plans and specifications, if any, for such
work, except for minor details of construction, decoration and mechanical
adjustments, if any, the non-completion of which does not interfere (other
than to a de minimis extent) with Tenant's use of the Demised Premises for
the ordinary conduct of Tenant's business or, as the case may be, for the
prosecution of Tenant's Initial Work.
2
<PAGE>
C. Without limiting the generality of the foregoing, Tenant acknowledges and
agrees that it shall be Tenant's obligation, at Tenant's own cost and
expense and as part of Tenant's Initial Work, to obtain and maintain in
force and effect any amendment to the existing certificate of occupancy
necessary to permit Tenant's use and occupancy of the Demised Premises.
Tenant agrees to use the "expediter" designated by Landlord for the purpose
of obtaining any amendment to the existing said certificate of occupancy,
who shall be hired by Tenant at Tenant's own cost and expense; provided
that the fee of such expediter shall be competitive with the fees of other
expediters in the City of New York. Landlord agrees to cooperate in good
faith with Tenant in order to facilitate Tenant's efforts to obtain said
amendment to the existing certificate of occupancy (including by curing
those violations affecting the Demised Premises which would prevent Tenant
from obtaining said amendment, and by promptly executing any permits,
applications or other documents required in connection therewith).
Section 2.03.
-------------
A. If Landlord shall be unable to give possession of the Demised Premises to
Tenant with the Delivery Obligation having been satisfied on or before the
Target Completion Date by reason of the fact that the Demised Premises are
not ready for occupancy, or for any other reason, Landlord shall not be
subjected to any liability for the failure to give possession with the
Delivery Obligation having been satisfied on said date. Except as otherwise
expressly provided in this Section 2.03, no such failure to give possession
with the Delivery Obligation having been satisfied on such specific date
shall affect the validity of this Lease or the obligations of Tenant
hereunder or be deemed to extend the Lease Term, but the rent reserved and
covenanted to be paid hereunder shall not commence until possession of the
Demised Premises shall be given or shall be made available for occupancy by
Tenant, except that if such failure to give possession with the Delivery
Obligation having been satisfied has been caused by any Tenant Delay (as
defined below), there shall be no abatement of rent. Except as otherwise
expressly provided in this Section 2.03, if repairs, improvements or
decorations of the Demised Premises, if any, as may be expressly provided
in this Lease to be made by Landlord, are not completed on or before the
Target Completion Date or the Occupancy Date, as the case may be, Landlord
shall not be subject to any liability for any delay in such completion.
Notwithstanding anything to the contrary contained in this Subsection 2.03,
and subject to the provisions of Section 3.01 below, if: (i) Landlord shall
not have satisfied the Delivery Obligation on the Target Completion Date or
the Occupancy Obligation on the Occupancy Date, as the case may be, (ii)
Tenant shall be otherwise ready to perform Tenant's Initial Work on the
Target Completion Date or occupy the Demised Premises for the conduct of
Tenant's business therein on the Occupancy Date, as the case may be, and
(iii) Landlord's failure to have satisfied the Delivery Obligation shall
preclude Tenant from commencing the performance of Tenant's Initial Work,
or Landlord's failure to have satisfied the Occupancy Obligation shall
preclude Tenant from occupying the Demised Premises for the conduct of
Tenant's business therein, as the case may be, then, as Tenant's sole
remedy in connection therewith, the Rent Commencement Date shall be
postponed by one (1) day for each day after the Target Completion Date that
Landlord shall have failed to satisfy the Delivery Obligation, or by one
(1) day for each day after the Occupancy Date that Landlord shall have
failed to satisfy the Occupancy Obligation, as the case may be.
B. Intentionally omitted.
C. The term "Tenant Delay" shall mean any delay which Landlord may encounter
in the performance of Landlord's obligations under this Lease if the same
shall be the result of any act or omission of Tenant or of any Person
Within Tenant's Control.
Section 2.04.
-------------
The parties hereto agree that this Article 2 constitutes an express provision as
to the time at which Landlord shall deliver possession of the Demised Premises
to Tenant, and Tenant hereby waives any rights to rescind this Lease which
Tenant might otherwise have pursuant to Section 223-a of the Real Property Law
of the State of New York, or pursuant to any other law of like import now or
hereafter in force.
Section 2.05.
-------------
A. Subject to the terms and conditions hereinafter set forth, Landlord agrees
to provide a construction allowance ("Landlord's Contribution") to
reimburse Tenant for the cost expended by Tenant to perform Tenant's
Initial Work, in an aggregate amount not to exceed $929,292.00. Landlord
shall fund the portion of Landlord's Contribution then being requisitioned
in the manner set forth in Subsections 2.05B and 2.05C below, but only if
all of the following conditions shall have been satisfied:
(i) Tenant shall not then be in default (after notice of such default
shall have theretofore been given to Tenant) with respect to any of
the terms, covenants or conditions to be performed or observed by
Tenant under this Lease;
(ii) Tenant shall have obtained, and at all times during the construction
period shall maintain, all necessary and appropriate permits,
licenses, authorizations and approvals from all governmental
authorities having or asserting jurisdiction in connection with such
construction, and shall have delivered true copies thereof to
Landlord; and
3
<PAGE>
(iii)Tenant shall have delivered to Landlord, for approval by Landlord:
(x) a completed requisition for payment (using the AIAG702 form, or
any successor form, issued by the American Institute of Architects),
certified and sworn to by Tenant's architect stating or accompanied
by: (1) the amount being requested, (2) receipted invoices for all
labor and materials theretofore performed as part of Tenant's Initial
Work, (3) to the best of such architect's knowledge, the amount of
Landlord's Contribution theretofore paid to Tenant, (4) the value of
labor and materials theretofore performed and incorporated in the
Demised Premises and the aggregate value of the entire Tenant's
Initial Work to be performed, and (5) that the work completed to date
has been performed in good and workmanlike manner in accordance with
the plans and specifications approved by Landlord and in compliance
with all Legal Requirements; and (y) with respect to all requisitions
made by Tenant subsequent to the first requisition made by Tenant
pursuant to this subdivision 2.05A(iii), receipted invoices for all
labor and materials that were the subject of the immediately preceding
requisition, and waivers of lien from all contractors, subcontractors
and materialmen who shall have furnished materials or supplies or
performed work or services in connection with Tenant's Initial Work.
B. Within thirty (30) days after Tenant shall have complied with all of the
conditions set forth in the foregoing Subsection 2.05A, Landlord shall pay
to Tenant an amount equal to that portion of Landlord's Contribution which
shall equal, on a percentage basis, that portion of Tenant's Initial Work
then completed in accordance with the provisions hereof, as certified by
Tenant's architect, less all amounts of Landlord's Contribution previously
disbursed; provided, however, that (x) Landlord shall not be required to
make more than one (1) payment per calendar month, and (y) the
disbursements hereunder shall be subject to a retention of ten (10%)
percent until Tenant's Initial Work shall have been finally and fully
completed and approved. Notwithstanding anything to the contrary contained
in this Section 2.05, in the event that Landlord shall not so pay any
installment of Landlord's Contribution within such 30-day period, and such
failure continues for ten (10) Business Days after notice thereof from
Tenant to Landlord, then, in such event, upon five (5) days additional
notice to Landlord, Tenant shall have the right to offset any unpaid
installment of Landlord's Contribution against the next due monthly
installment(s) of Fixed Rent.
C. Provided that Tenant shall not then be in default (after notice of such
default shall have theretofore been given to Tenant) with respect to any of
the terms, covenants or conditions to be performed or observed by Tenant
under this Lease, then, within thirty (30) days following the last to occur
of: (i) Tenant's request for payment of the final installment of Landlord's
Contribution, (ii) completion of Tenant's Initial Work in accordance with
the provisions of Article 5 below, (iii) the certification of Tenant's
architect that Tenant's Initial Work has been completed in a good and
workmanlike manner, to the satisfaction of Tenant's architect, in
accordance with the plans and specifications approved by Landlord and in
compliance with all Legal Requirements, (iv) delivery by Tenant to Landlord
of waivers of lien from all contractors, subcontractors and materialmen who
shall have furnished materials or supplies or performed work or services in
connection with Tenant's Initial Work, (v) delivery by Tenant to Landlord
of true copies of final approvals of Tenant's Initial Work by all
governmental authorities having or asserting jurisdiction (including the
New York City Department of Buildings), and (vi) delivery by Tenant to
Landlord of "as built" drawings with respect to Tenant's Initial Work, the
balance of Landlord's Contribution which has not been previously disbursed
(but, in the aggregate, not in excess of the total cost of Tenant's Initial
Work), shall be disbursed to Tenant. Tenant expressly agrees that
Landlord's obligation to pay the final installment of Landlord's
Contribution shall be conditioned upon Tenant's timely compliance with the
requirements set forth in clauses (i) - (vi) of this Subsection 2.05C.
D. Landlord's obligation to pay Landlord's Contribution shall only apply to
that part of Tenant's Initial Work consisting of (i) the installation of
walls, partitions, fixtures, improvements and appurtenances permanently
attached to or built into the Demised Premises, including the following:
mechanical systems, flooring, ceilings, duct work, electrical wiring,
plumbing, millwork and supplemental air-conditioning systems (if any),
decorating, affixed carpeting and other floor coverings, and (ii)
architectural fees and engineering fees (with any such fees being referred
to herein as "soft costs"), but shall not include business and trade
fixtures, machinery, equipment or other articles of personal property;
provided, however, that in no event shall Landlord be required to pay more
than fifteen (15%) percent (i.e., $139,393.80) of Landlord's Contribution
for any such "soft costs" incurred in connection with the performance of
Tenant's Initial Work.
Section 2.06.
-------------
Landlord and Tenant acknowledge and agree that, in order to expedite the
build-out of the Demised Premises in as efficient a manner as possible, Landlord
and Tenant intend to perform portions of Landlord's Work and Tenant's Initial
Work contemporaneously. Landlord and Tenant further acknowledge and agree that,
in order to maximize such efficiency, Landlord and Tenant shall use commercially
reasonable efforts to cooperate with the other in the scheduling and performance
of each party's respective work. Notwithstanding the foregoing, in the event
that a conflict in such scheduling shall arise, and Landlord and Tenant shall be
unable to resolve such scheduling conflict in accordance with the provisions of
this Section 2.06, then the scheduling of Landlord's Work shall take priority
over the scheduling of Tenant's Initial Work.
4
<PAGE>
ARTICLE 3
RENT
Section 3.01.
-------------
Tenant covenants and agrees that, commencing on October 15, 2000 (the "Rent
Commencement Date") and continuing thereafter throughout the entire Lease Term,
Tenant shall pay to Landlord the Fixed Rent at the annual rate set forth in
Section 1.01, in equal monthly installments, in advance, on the first day of
each calendar month during the Lease Term, at the office of Landlord or such
other place as Landlord may designate, without any abatement, reduction, setoff,
counterclaim, defense or deduction whatsoever, except as expressly provided
herein. Upon the execution of this Lease, Tenant shall pay to Landlord the
installment of Fixed Rent due hereunder for the October, 2000, calendar month of
the Lease Term. In the event that Tenant's obligation to pay Fixed Rent shall
commence on a date which shall be other than the first day of a calendar month,
the same shall be prorated at the rental rate applicable during the first year
of the Lease Term, and shall be paid by Tenant to Landlord together with the
first full monthly installment of Fixed Rent as shall become due hereunder.
Section 3.02.
-------------
All costs, charges, expenses and payments (including the payments required to be
made by Tenant pursuant to Article 19 below) which Tenant assumes, agrees or
shall be obligated to pay to Landlord or others pursuant to this Lease (other
than Fixed Rent) shall be deemed additional rent, and, in the event that Tenant
shall fail to timely pay the same, Landlord shall have all of the rights and
remedies with respect thereto as are provided for herein or by applicable law in
the case of non-payment of rent.
Section 3.03.
-------------
Tenant covenants to pay the Fixed Rent and additional rent as in this Lease
provided, when due and without notice or demand, in lawful money of the United
States which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment. If any installment of Fixed Rent or any
additional rent shall not be paid within five (5) days after such installment of
Fixed Rent or additional rent shall have first become due, Tenant shall also pay
to Landlord (i) an administrative late charge in the amount of $250.00, and (ii)
interest thereon from the due date until such installment of Fixed Rent or
additional rent is fully paid at the "Interest Rate" (defined in Article 16
below); provided that Tenant shall not be required to pay said late charge or
interest the first time in any twelve (12) month period that Tenant has not paid
any such installment of Fixed Rent or additional rent, as the case may be,
within five (5) days after such installment shall first come due, unless Tenant
shall not have paid such installment of Fixed Rent or additional rent, as the
case may be, within five (5) days after having received notice that such
installment of Fixed Rent or additional rent, as the case may be, is due. Such
administrative late charge and interest charge shall be due and payable as
additional rent with the next monthly installment of Fixed Rent. Upon default in
payment by Tenant of any of the aforementioned charges, Landlord shall have all
the rights and remedies provided for upon default of the Fixed Rent. The
foregoing obligations on the part of the Tenant shall not preclude the
simultaneous or subsequent exercise by Landlord of any and all other rights or
remedies provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise. No payment by Tenant or receipt by Landlord
of a lesser amount than the Fixed Rent or additional rent herein stipulated
shall be deemed to be other than on account of the earliest stipulated Fixed
Rent or additional rent (unless Landlord, in Landlord's sole and absolute
discretion, shall otherwise and in writing so elect), nor shall any endorsement
or statement on any check or in any letter accompanying any check or payment, as
Fixed Rent or additional 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 Fixed Rent and additional rent or pursue any
other remedy provided in this Lease, at law or in equity.
Section 3.04.
-------------
If all or any part of the Fixed Rent or additional rent shall at any time become
uncollectible, reduced or required to be refunded by virtue of any Legal
Requirements (including rent control or stabilization laws), then for the period
prescribed by said Legal Requirements, Tenant shall pay to Landlord the maximum
amounts permitted pursuant to said Legal Requirements, and Tenant shall execute
and deliver such agreement(s) and take such other steps as Landlord may request
and as may be legally permissible to permit Landlord to collect the maximum rent
which, from time to time during the continuance of such legal rent restriction,
may be legally permissible (and not in excess of the amounts then reserved
therefor under this Lease). Upon the expiration or other legal termination of
the applicable period of time during which such amounts shall be uncollectible,
reduced or refunded: (a) the Fixed Rent and additional rent shall become and
shall thereafter be payable in accordance with the amounts reserved herein for
the periods following such expiration or termination, and (b) Tenant shall pay
to Landlord as additional rent, within fifteen (15) days after demand, all
uncollected, reduced or refunded amounts that would have been payable for the
aforesaid period absent such Legal Requirements. The provisions of the
immediately preceding sentence shall survive the expiration or sooner
termination of this Lease.
Section 3.05.
-------------
If Landlord shall direct Tenant to pay Fixed Rent or additional rent to a
"lockbox" or other depository whereby checks issued in payment of Fixed Rent or
additional rent (or both, as the case may be) are initially cashed or deposited
by a person or entity other than Landlord (albeit on Landlord's authority),
then, for any and all purposes under this Lease: (i) Landlord shall not be
deemed to have accepted such payment until ten (10) days after the date on which
Landlord shall have actually received such funds, and (ii) Landlord shall be
deemed to have accepted such payment if (and only if) within said ten (10) day
period, Landlord shall not have refunded (or attempted to refund) such payment
to Tenant. Nothing contained in the immediately preceding sentence shall be
construed to place Tenant in default of Tenant's obligation to pay rent if and
for so long as Tenant shall timely pay the rent required pursuant to this Lease
in the manner designated by Landlord.
5
<PAGE>
Section 3.06.
-------------
Notwithstanding anything to the contrary contained in this Article 3, provided
that Landlord shall give Tenant not less than ten (10) days notice thereof
(which notice shall identify a domestic bank and contain appropriate wire
instructions), Tenant shall pay all future monthly installments of Fixed Rent at
the office of such domestic bank, by wire transfer of immediately available
federal funds, to the account of Landlord. On not less than ten (10) days
notice, Landlord may thereafter revise or revoke such direction to pay Fixed
Rent by wire transfer. If Landlord shall direct Tenant to pay Fixed Rent by wire
transfer, then Tenant shall not be in default of Tenant's obligation to pay
Fixed Rent if and for so long as Tenant shall timely comply with Landlord's wire
instructions in connection with such payments. Accordingly, if Tenant shall have
timely complied with Landlord's instructions pertaining to a wire transfer, but
the funds shall thereafter have been misdirected or not accounted for properly
by the recipient bank designated by Landlord, then the same shall not relieve
Tenant's obligation to make the payment so wired, but shall toll the due date
for such payment until the wired funds shall have been located. However, for all
other purposes under this Lease: (i) Landlord shall not be deemed to have
accepted such payment until ten (10) days after the date on which such funds
shall have actually been deposited in Landlord's account at said bank, and (ii)
Landlord shall be deemed to have accepted such payment if (and only if) within
said ten (10) day period, Landlord shall not have refunded (or attempted to
refund) such payment to Tenant.
ARTICLE 4
USE
Section 4.01.
-------------
Subject to the provisions of Article 10 below with respect to any permitted
subtenant or assignee, Tenant shall use and occupy the Demised Premises for the
Authorized Use, and for no other purpose.
Section 4.02.
-------------
Without in any way limiting the restrictions on use contained in Section 4.01,
Tenant specifically agrees that Tenant shall not permit any part of the Demised
Premises to be used for retail banking or lending purposes of any kind (but the
foregoing restriction shall apply only if the same shall be open to the general
public on an "off the street" basis); or for a safe deposit business or the sale
of travelers checks and/or foreign exchange; or as a kitchen, restaurant or
cafeteria; or for manufacturing, storage, shipping or receiving; or for retail
securities brokerage purposes (but the foregoing restriction shall apply only if
the same shall be open to the general public on an "off the street" basis); or
for any retail sales or as a store; or for the sale of any food or beverage; or
as a news and cigar stand (or anything similar thereto); or for any sale of
merchandise with delivery at or from the Demised Premises; or for the production
of samples or workroom; or for any purpose other than the Authorized Use. In
addition, the Demised Premises may not be used by (i) an agency, department or
bureau of the United States Government, any state or municipality within the
United States, or any foreign government, or any political subdivision of any of
them, or (ii) any tax exempt entity within the meaning of Section 168(h)(2) of
the Internal Revenue Code of 1986, as amended, or any successor or substitute
statute, or rule or regulation applicable thereto (as same may be amended).
Section 4.03.
-------------
Tenant expressly acknowledges that irreparable injury will result to Landlord in
the event of a breach of any of the covenants made by Tenant in this Article 4,
and it is agreed that, in the event of such breach, Landlord shall be entitled,
in addition to any other remedies available, to an injunction to restrain the
violation thereof. Breach of any of Tenant's covenants under this Article shall
also constitute an Event of Default pursuant and subject to the provisions of
Article 15 hereof.
ARTICLE 5
ALTERATIONS; LIENS; TENANT'S PROPERTY
Section 5.01.
-------------
A. Except as otherwise expressly provided in this Section 5.01, Tenant shall
make no Alterations in or to the Demised Premises, including removal or
installation of partitions, doors, electrical installations, plumbing
installations, water coolers, heating, ventilating and air-conditioning or
cooling systems, units or parts thereof or other apparatus of like or other
nature, whether structural or non-structural, without Landlord's prior
written consent and then only by contractors or mechanics approved in
writing by Landlord. Notwithstanding anything to the contrary contained in
this Section 5.01: (i) Tenant shall have the right, on not less than ten
(10) Business Days prior written notice to Landlord, but without being
required to obtain Landlord's consent, to perform painting, installation of
wall coverings and carpet installation, and (ii) Tenant shall have the
right, on not less than ten (10) Business Days prior written notice to
Landlord, but without being required to obtain Landlord's consent, to
perform Alterations in or to the Demised Premises which do not require the
issuance of a building permit or any other governmental authorization
("Minor Alterations"), provided that (x) such Minor Alterations are made
entirely, and visible only, within the Demised Premises, (y) such Minor
Alterations do not cost in excess of $100,000, in the aggregate, over a
twelve-month period, and (z) together with such notice, Tenant shall give
Landlord a copy of the plans and specifications prepared by Tenant in
respect of such proposed Alterations, and, unless Landlord shall advise
Tenant within said ten (10) Business Day period that Landlord contends that
the performance of such Alterations requires Landlord's consent, Tenant
shall have the right to proceed to perform such Alterations, but Tenant
shall nonetheless comply with all of the other requirements governing
Alterations set forth in this Article 5.
6
<PAGE>
B. It shall be Tenant's responsibility and obligation to ensure that all
Alterations: (i) shall be made at Tenant's own cost and expense and at such
times and in such manner as Landlord may from time to time designate
(including rules governing Alterations as Landlord may from time to time
make as provided under the provisions of Article 26 below), (ii) shall
comply with all Legal Requirements (including NYC Local Laws No. 5 of 1973,
No. 16 of 1984 and No. 58 of 1988, each as amended from time to time, and
all Legal Requirements then in effect relating to asbestos and to access
for the handicapped or disabled) and all orders, rules and regulations of
Insurance Boards, (iii) shall be made promptly and in a good and
workmanlike manner using prime quality materials, and (iv) shall not affect
the appearance of the Building or be visible from the exterior of the
Building, it being Landlord's intention to keep the exterior appearance of
the Building uniform (and, in pursuance thereof, Landlord shall have the
right to approve the appearance of all such Alterations, including ceiling
heights, blinds, lighting, signs and other decorations). In order to
ensure, maintain and control the quality and standards of materials and
workmanship in and the effective security of the Building, including the
Demised Premises, Tenant acknowledges that it is reasonable to require
Tenant, and Tenant hereby covenants and agrees, to use only general
contractors, construction managers and subcontractors (collectively,
"Tenant's Contractors") first approved in writing by Landlord; provided,
however, that any Alterations to the sprinkler, Class E or other
life/safety systems of the Building, or connections to the condenser water
system of the Building, shall be performed only by such contractor(s)
designated by Landlord. Landlord expressly reserves the right to exclude
from the Building any person attempting to perform any work or act as a
Tenant's Contractor without Landlord's prior written consent.
Notwithstanding anything to the contrary contained herein, Tenant shall be
required, as part of Tenant's Initial Work (but nonetheless subject to
Landlord's approval in accordance with the provisions of this Article 5),
to cause Tenant's Contractor to re-engineer the existing sprinkler loop in
a manner consistent with Tenant's use of the Demised Premises for the
Authorized Use.
C. Intentionally omitted.
D. Except as otherwise expressly provided herein, the provisions of this
Article 5 shall apply to Tenant's Initial Work, as well as to all future
Alterations.
E. Intentionally omitted.
F. (i) A list of currently approved contractors and major trade
subcontractors is annexed hereto as Exhibit "H" and made a part
hereof. The contractors and subcontractors identified on said list
shall be deemed to be approved only for the performance of Tenant's
Initial Work, and not for future Alterations. Following completion of
Tenant's Initial Work, Landlord shall have the unfettered right to
revise said list in any manner that Landlord deems appropriate;
provided, however, that for the entire Lease Term, Landlord shall
maintain a list (the "Approved Contractor List") of not less than five
(5) approved general contractors and three (3) subcontractors for each
of the major trades, whose fees shall be reasonably competitive in the
marketplace and who shall not be affiliated with Landlord. At Tenant's
request, Landlord shall furnish to Tenant a copy of the then current
Approved Contractor List from time to time during the Lease Term.
(ii) Notwithstanding anything to the contrary contained herein, Tenant
hereby expressly acknowledges and agrees that Tenant shall be entitled
to use (a) Sweet Construction, (b) John Gallin & Sons, (c) Tri-Con
Construction, and/or (d) Tri-Star Construction (the "Tenant's Initial
Contractors") in connection with Tenant's Initial Work only if (x)
Tenant shall solicit bids for general contractor services from at
least two (2) other general contractors identified on Exhibit H, and
(y) any Tenant's Initial Contractor hired shall use only
subcontractors identified on said Exhibit H.
G. As part of Tenant's Initial Work, Tenant, in accordance with applicable
Legal Requirements, shall design and construct so-called "areas of refuge"
designed to accommodate the Maximum Occupancy Number (as defined in Section
7.06 below) of people.
Section 5.02.
-------------
A. Prior to commencing the performance of any Alterations, Tenant shall
furnish to Landlord:
(i) Plans and specifications (to be prepared by a licensed architect or
engineer engaged by Tenant, at the cost and expense of Tenant), in
sufficient detail to be accepted for filing by the New York City
Building Department (or any successor or other governmental agency
serving a similar function), of such proposed Alterations, and Tenant
shall not commence the performance thereof unless and until Landlord
shall have given written consent to said plans and specifications;
(ii) A certificate evidencing that Tenant (or Tenant's Contractors) has
(have) procured and paid for worker's compensation insurance covering
all persons employed in connection with the work who might assert
claims for death or bodily injury against Overlandlord, Landlord,
Tenant, the Land and/or the Building;
7
<PAGE>
(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 Section 8.03 below), and builder's risk, fire and
other casualty insurance (x) as Landlord may reasonably require in
connection with the work to be done for Tenant, and (y) as shall be
consistent with Landlord's requirements of other tenants in the
Building performing similar work in the Building;
(iv) If the work requires expenditures by Tenant in excess of an amount
equal to six (6) monthly installments of the then prevailing Fixed
Rent, a surety company performance bond in form and substance
satisfactory to Landlord (procured at Tenant's own cost and expense),
issued by a surety company acceptable to Landlord, or other security
satisfactory to Landlord, in an amount equal to at least 120% of the
estimated cost of such Alterations, guaranteeing to Landlord,
Overlandlord and any Mortgagee the completion thereof and payment
therefor within a reasonable time, free and clear of all liens,
encumbrances, chattel mortgages, security interests, conditional bills
of sale and other charges, and in accordance with the plans and
specifications approved by Landlord;
(v) Such permits, authorizations or consents as may be required by any
applicable Legal Requirements, all of which shall be obtained at
Tenant's cost and expense, provided, however, that no plans,
specifications or applications shall be filed by Tenant with any
governmental authority without Tenant first obtaining Landlord's
written consent thereto; and
(vi) A written letter of authorization, in form satisfactory to Landlord,
signed by all architects, engineers, surveyors, designers and
contractors who become involved in such Alterations, which shall
confirm that, at Landlord's request, any and all of their respective
drawings, plans and permits are to be removed or withdrawn from any
filing with governmental authorities.
B. In the event that Landlord shall submit the plans and specifications
referred to in clause (i) of Subsection 5.02A above to Landlord's
architects and/or engineers for review, Tenant shall reimburse Landlord as
additional rent for Landlord's expenses of such review within ten (10) days
after written notice to Tenant of the amount of such expense.
C. Tenant shall keep accurate and complete cost records of all Alterations
performed by Tenant or by Persons Within Tenant's Control, and shall
furnish to Landlord true copies thereof and/or of all contracts entered
into and work orders issued by Tenant in connection therewith within thirty
(30) days following Landlord's request therefor. Landlord's review of,
and/or any failure by Landlord to object to, any such contract or work
order shall not: (i) be construed as an approval by Landlord of such
contract or work order or the contents thereof, (ii) impose any liability
on Landlord in connection therewith, or (iii) relieve Tenant of any
obligation of Tenant with respect to such Alterations or the Demised
Premises as otherwise set forth in this Lease.
D. (i) If Landlord shall not have approved or disapproved Tenant's plans and
specifications for Alterations within (x) in the case of initially
submitted plans and specifications, fifteen (15) Business Days after
Landlord's receipt thereof, and (y) with respect to any resubmitted
plans, ten (10) Business Days after Landlord's receipt thereof,
Landlord shall (subject to the provisions of subdivision 5.02D(ii)
below) be deemed to have approved such plans and specifications. If
Landlord shall disapprove of any plans and specifications, such
disapproval must be accompanied by a written explanation of such
disapproval.
(ii) In order for Landlord to be deemed to have given approval to any plans
and specifications submitted (or resubmitted) by Tenant, the same must
be accompanied by a notice which identifies the architect or engineer
who prepared said plans and specifications, and which bears the
following legend typed in bold, capital letters at the top: "IF
LANDLORD SHALL FAIL TO APPROVE OR DISAPPROVE THE ENCLOSED PLANS AND
SPECIFICATIONS WITHIN THE TIME PERIODS SPECIFIED IN SUBSECTION
5.02D(i) OF THE LEASE, LANDLORD SHALL BE DEEMED TO HAVE APPROVED SUCH
PLANS AND SPECIFICATIONS."
Section 5.03.
-------------
A. In no event shall any material or equipment be incorporated in or to the
Demised Premises in connection with any Alteration which is subject to any
lien, encumbrance, chattel mortgage, security interest, charge of any kind
whatsoever, or is subject to any conditional sale or other similar or
dissimilar title retention agreement.
B. Tenant shall not create or permit to be created any lien, encumbrance or
charge (levied on account of any taxes or any mechanic's, laborer's or
materialman's lien, conditional sale, title retention agreement or
otherwise) which might be or become a lien, encumbrance or charge upon the
Land or Building or any part thereof or the income therefrom, and Tenant
shall not suffer any other matter or thing whereby the estate, rights and
interest of Landlord in the Land or Building or any part thereof might be
impaired. Tenant shall take all steps necessary under local laws to prevent
the imposition of such a lien, encumbrance or charge on the Land or
Building.
C. If any lien, encumbrance or charge referred to in this Section 5.03 shall
at any time be filed against the Land or Building or any part thereof, then
Tenant, within thirty (30) days after the filing thereof and at Tenant's
own cost and expense, shall cause the same to be discharged of record, and
Tenant shall indemnify Landlord against and defend and hold Landlord
harmless from all costs, expenses, liabilities, losses, fines and
penalties, including reasonable attorneys' fees and disbursements,
resulting therefrom. If Tenant shall fail to cause such lien to be
discharged within the aforesaid period, then, in addition to any other
right or remedy, Landlord may, but shall not be obligated to, discharge the
same either by paying the amount claimed to be due or by procuring the
discharge of such lien by deposit or by bonding proceedings, and in any
such event Landlord shall 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 in favor of the lienor with interest,
costs and allowances. Any amount so paid by Landlord and all costs and
expenses incurred by Landlord in connection therewith, together with
interest thereon at the Interest Rate, shall constitute additional rent
payable by Tenant under this Lease, which additional rent shall be paid by
Tenant to Landlord on demand.
8
<PAGE>
D. Nothing contained in this Lease shall be deemed or construed in any way as
constituting the consent or request of Landlord, express or implied by
inference or otherwise, to any contractor, subcontractor, laborer or
materialman for the performance of any labor or the furnishing of labor or
materials for the specific improvement, alteration to or repair of the
Demised Premises 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 that would give rise to the filing of any lien
against the Land, Building, Demised Premises or any part thereof. Notice is
hereby given that Landlord shall not be liable for any work performed or to
be performed at the Demised Premises for Tenant or any subtenant, or for
any materials furnished or to be furnished at the Demised Premises for
Tenant or any subtenant upon credit, and that no mechanic's or other lien
for such work or materials shall attach to or affect the estate or interest
of Landlord in and to the Land, Building or Demised Premises. Landlord
shall have the right to post and keep posted on the Demised Premises any
notices which Landlord may be required to post for the protection of
Landlord, the Land, Building and/or the Demised Premises from any lien.
E. Tenant shall have no power to do any act or make any contract which may
create or be the foundation for any lien, mortgage or other encumbrance
upon the reversion or other estate of Landlord or of any interest of
Landlord in the Demised Premises.
Section 5.04.
-------------
Tenant shall not at any time, either directly or indirectly, use any contractors
or labor or materials in the Demised Premises (whether in connection with the
performance of Alterations or for any other purpose at any time during the Lease
Term) if the use of such contractors or labor or materials would create any work
stoppage, picketing, labor disruption or any other difficulty with other
contractors or labor engaged by Tenant or Landlord or others in the
construction, maintenance or operation of the Building or any part thereof.
Tenant shall immediately stop any work or other activity if Landlord shall
notify Tenant that continuing such work or activity would violate the provisions
of the immediately preceding sentence.
Section 5.05.
-------------
Landlord shall not be liable for any failure or diminution of any Building
Systems or services, or for any damage to Tenant's property or the property of
any other person, caused by Alterations made by Tenant or by Persons Within
Tenant's Control, notwithstanding Landlord's consent thereto or to the plans and
specifications therefor. Landlord's consent to any such plans or specifications
shall not be deemed a representation of any kind that the same conform to the
applicable Legal Requirements. Tenant shall promptly correct any faulty or
improper Alteration made by Tenant or by Persons Within Tenant's Control, and
shall repair any and all damage caused thereby. Upon Tenant's failure to
promptly make such corrections and repairs, Landlord may make such corrections
and repairs and charge Tenant for the cost thereof. Such charge shall be deemed
additional rent, and shall be paid by Tenant to Landlord within ten (10) days
after Landlord shall render a bill therefor to Tenant.
Section 5.06.
-------------
A. All movable property, furniture, furnishings and trade fixtures furnished
by or at the expense of Tenant, other than those affixed to the Demised
Premises so that they cannot be removed without damage and other than those
replacing an item theretofore furnished and paid for by Landlord or for
which Tenant has received a credit or allowance, shall remain the property
of Tenant, and may be removed by Tenant from time to time prior to the
expiration of the Lease Term. If Landlord shall request Tenant to remove
any of said items prior to expiration of the Lease Term, Tenant shall, at
Tenant's expense, remove said items prior to the expiration of the Lease
Term. All other items of Tenant's property shall be removed by Tenant on or
before the expiration (or sooner termination) of the Lease Term.
B. All Alterations made by either party, including all paneling, decorations,
partitions, railings, mezzanine floors, galleries and the like, which are
affixed to the Demised Premises, shall become the property of Landlord and
shall be surrendered with the Demised Premises at the end of the Lease
Term. Notwithstanding the foregoing, Landlord may elect to require Tenant
to remove "Specialty Alterations" (as such term is defined below), at
Tenant's expense, by giving written notice to Tenant either prior to, or
within thirty (30) days after, the expiration of the Lease Term. Landlord
shall, at Tenant's specific request, advise Tenant at the time that
Landlord consents to the plans and specifications for an Alteration, as to
whether a proposed Alteration constitutes a Specialty Alteration, and, if
so, whether Tenant must remove such Specialty Alteration upon expiration or
sooner termination of the Lease Term. For the purposes hereof, the term
"Specialty Alterations" shall mean and include any Alteration that is not
an ordinary office installation, as reasonably determined by Landlord. By
way of example only, a kitchen, cafeteria, private lavatory, raised floor,
vault, safe, internal stairway or slab cut would each be deemed to be a
Specialty Alteration (it being understood and agreed that the foregoing is
merely a list of non-exclusive examples of a Specialty Alteration, and does
not constitute, nor shall it be construed as, Landlord's consent to the
installation thereof).
9
<PAGE>
C. In any case where Tenant removes any property or Alterations in accordance
with Subsections A and B above, or otherwise, Tenant shall immediately
repair all damage caused by said removal and shall restore the Demised
Premises to good order and condition at Tenant's expense, and if Tenant
fails to do so, Landlord may do so at Tenant's cost and Tenant shall
reimburse Landlord therefor upon demand. In addition, if Tenant shall
remove any mechanical or other equipment within the Demised Premises
containing chlorofluorocarbons, the removal of such equipment shall conform
with all Legal Requirements and industry practices, and shall be performed
by contractors and in accordance with procedures approved by Landlord.
D. Upon failure of Tenant to remove any property or Alterations in accordance
with Subsections A and B above, or upon failure of Tenant to notify
Landlord of any property it does not wish to remove from the Demised
Premises in accordance with Subsection A above, then, as to such property,
or upon termination of this Lease pursuant to Article 15 hereof, Landlord
may, at Tenant's expense: (i) remove all such property and Alterations
which Landlord may require Tenant to remove pursuant to Subsections A and B
above, (ii) cause the same to be placed in storage, and (iii) repair any
damage caused by said removal and restore the Demised Premises to good
order and condition. Tenant shall, upon demand and as additional rent,
reimburse Landlord for all of the aforesaid expenses. In addition, any
items of property or Alterations not removed by Tenant may, at the election
of Landlord, be deemed to have been abandoned by Tenant, and Landlord may
retain and dispose of some or all of said items without any liability to
Tenant and without accounting to Tenant for the proceeds thereof.
E. The provisions of this Section 5.06 shall survive the expiration or sooner
termination of the Lease Term, whereupon any and all monetary obligations
of Tenant pursuant thereto shall be deemed damages recoverable by Landlord.
Section 5.07.
-------------
If Tenant shall fail to comply with any provision of this Article 5, Landlord,
in addition to any other remedy herein provided, may require Tenant to
immediately cease all work being performed in the Building by or on behalf of
Tenant, and Landlord may deny access to the Demised Premises to any person
performing work or supplying materials in the Demised Premises.
Section 5.08.
-------------
Notwithstanding anything to the contrary contained herein, Landlord agrees that
Landlord, at Landlord's own cost and expense, shall install Disabilities
Act-compliant public bathrooms on the concourse level of the Building prior to
the date upon which Tenant shall have commenced the conduct of Tenant's business
operations in the Demised Premises.
ARTICLE 6
REPAIRS AND MAINTENANCE
Section 6.01.
-------------
Tenant shall take good care of the Demised Premises and the fixtures, glass,
appurtenances and equipment therein (including, if and to the extent installed
by Tenant or by any Person Within Tenant's Control: (i) all portions of the
Building Systems that (x) are located within the Demised Premises, or (y)
exclusively serve the Demised Premises, and (ii) any sprinkler loop and
distribution pipes and heads, and any ventilation and air-conditioning ducts and
components of a distribution system, and including any private bathrooms in or
appurtenant to the Demised Premises), and at Tenant's own cost and expense shall
make all Repairs as and when needed to preserve them in good working order and
condition, whether or not such Repairs are ordinary or extraordinary, or
foreseen or unforeseen at this time, but excluding Repairs to the rough floor,
the rough ceiling, exterior walls or load-bearing columns, unless required under
the provisions of following sentence. All damage or injury to the Demised
Premises, or to the Building or the Building Systems outside of the Demised
Premises, caused by or arising from any act or omission of Tenant, or of any
Person Within Tenant's Control, including those which are structural,
extraordinary and unforeseen, shall be promptly repaired, restored or replaced
by Tenant, at Tenant's own cost and expense. All Repairs shall be in quality and
class equal to or better than the original work or installations, and shall be
performed in good and workmanlike manner, using prime quality materials.
Section 6.02.
-------------
A. Subject to the provisions of Article 9 below, and provided that either (i)
Tenant shall have given notice to Landlord of the need therefor, or (ii)
Landlord is actually aware of the need therefor, Landlord shall make or
cause to be made all Repairs, structural and otherwise, necessary to keep
in good order and repair the Building Systems, the exterior of the Building
and the public portions of the Building, as well as the air-conditioning
and ventilation units serving the Demised Premises (as described in Article
18 below), other than those Repairs required to be made by Tenant as
provided in Section 6.01. Except as expressly set forth in Subsection 6.02B
below, there shall be no allowance to Tenant for a diminution of rental
value or interruption of business, and no liability on the part of
Landlord, by reason of inconvenience, annoyance or injury to business
arising from Landlord, Tenant or others making any Repairs or Alterations
in or to any portion of the Building or Building Systems or the Demised
Premises.
10
<PAGE>
B. (i) For the purposes of this Section 6.02, the term "Interruption"
shall mean any instance in which Tenant shall be unable to use a
substantial portion of the Demised Premises for the conduct of
Tenant's business operations therein solely by reason of (x) the
failure of Landlord to perform any of Landlord's obligations pursuant
to Subsection 6.02A above, or (y) the interruption, curtailment or
suspension of the Building services described in Article 18 below, or
the electricity described in Article 20 below, or (z) the performance
by Landlord of Repairs, Alterations or improvements in or about the
Demised Premises.
(ii) For the purposes of this Section 6.02, the term "Material
Interruption" shall mean any instance in which an Interruption shall
have occurred, and (x) Tenant shall have notified Landlord of such
Interruption and Tenant's inability to use all or a substantial
portion of the Demised Premises, and (y) such Interruption and
Tenant's inability to use all or a substantial portion of the Demised
Premises shall continue for at least ten (10) consecutive Business
Days after delivery of such notice by Tenant to Landlord, and (z) such
Interruption shall have been caused by the negligence or willful
misconduct of Landlord or of Landlord's agents.
(iii)If a Material Interruption shall occur, then, as Tenant's sole remedy
in connection with such Material Interruption, and provided that such
Material Interruption shall then be continuing, Tenant shall be
entitled to an abatement of Fixed Rent for the period which shall
begin on the eleventh (11th) Business Day following Tenant's delivery
of notice to Landlord of such Material Interruption and Tenant's
inability to use all or a substantial portion of the Demised Premises,
and which shall end on the earlier of the day on which such Material
Interruption shall cease or the day immediately prior to the day on
which the affected portion of the Demised Premises shall be useable
for the conduct of Tenant's business therein.
(iv) For the purposes hereof, a "substantial portion" of the Demised
Premises shall mean 8,500 square feet or more of useable space, and if
a substantial portion, but less than all, of the Demised Premises
shall have been rendered unusable, then Tenant shall be entitled to an
abatement of Fixed Rent on a pro rata basis, calculated by multiplying
the amount of Fixed Rent otherwise then payable pursuant to this Lease
by a fraction, the numerator of which shall be the rentable portion of
the Demised Premises which shall have been rendered unusable, and the
denominator of which shall be the number of Rentable Square Feet.
Section 6.03.
-------------
If any Insurance Boards or Legal Requirements shall require or recommend
installation of fire extinguishers or of a "sprinkler system" or any other fire
protection devices, or any changes, modifications, alterations or additions
thereto for any reason, whether or not attributable to Tenant's use of the
Demised Premises, or if any such installation or equipment becomes necessary to
prevent the imposition of a penalty or charge against the full allowance for a
sprinkler or fire extinguishing system in the fire insurance rate as fixed by
Insurance Boards, or by any fire insurance company, then Tenant, at Tenant's
expense, shall promptly install the necessary sprinkler heads and piping within
the Demised Premises and supply such changes, modifications, alterations,
additions or other equipment. In the event that Landlord shall make any such
installation (including sprinklers, stair pressurizers, water towers), or any
such change, modification, alteration or additions outside of the Demised
Premises (such as, without limitation, in the common area), Tenant shall
reimburse Landlord, as additional rent, an amount equal to Tenant's Operating
Share of the cost thereof. Such reimbursement shall be made by Tenant within ten
(10) days after written notice to Tenant of such amount.
Section 6.04.
-------------
In any case where Tenant shall be required to make Repairs or perform any work
pursuant to this Article and such Repairs or work shall affect the Building
Systems or areas outside of the Demised Premises, Landlord may, in Landlord's
discretion, elect to make such Repairs or to perform such work for and on behalf
of Tenant, but at Tenant's cost and expense. In such event, Tenant shall
reimburse Landlord as additional rent for the cost of such Repairs and/or work
within ten (10) days after Landlord shall furnish a statement to Tenant of the
amount thereof.
Section 6.05.
-------------
Tenant shall maintain the Demised Premises and the areas appurtenant thereto
(including any permitted signs or cameras) in a clean and orderly condition that
is consistent with the use and appearance of the Building. If Tenant shall fail
to so maintain the Demised Premises or appurtenant areas to the satisfaction of
Landlord, then, in addition to any other right or remedy that Landlord shall be
entitled to exercise pursuant to other provisions of this Lease, Landlord shall
have the right, on notice to Tenant and at Tenant's cost and expense, to enter
into the Demised Premises and such appurtenant areas for the express purpose of
rectifying the condition thereof and restoring the Demised Premises and such
appurtenant areas to the condition and appearance required hereunder.
ARTICLE 7
COMPLIANCE WITH LAW
Section 7.01.
-------------
A. Tenant shall not do, and shall not permit Persons Within Tenant's Control
to do, any act or thing in or upon the Demised Premises or the Building
which will invalidate or be in conflict with the certificate of occupancy
for the Demised Premises or the Building, or which will violate any Legal
Requirements. Tenant shall, at Tenant's cost and expense, comply with all
Legal Requirements (including Local Laws No. 5 of 1973 and No. 16 of 1984,
each as modified and supplemented from time to time under the
Administrative Code as applicable to the Demised Premises, and all Legal
Requirements relating to asbestos) which shall with respect to the Demised
Premises or with respect to any abatement of nuisance (including the
removal, containment, transportation and disposal of asbestos), impose any
violation, order or duty upon Landlord or Tenant arising from, or in
connection with, the Demised Premises, Tenant's occupancy, use of the
Demised Premises, or any installations therein, or required by reason of a
breach of any of Tenant's covenants or agreements under this Lease, whether
or not such Legal Requirements shall now be in effect or hereafter enacted
or issued, and whether or not any work required shall be ordinary or
extraordinary or foreseen or unforeseen at the date hereof.
11
<PAGE>
B. Except with respect to Landlord's obligation to install Disabilities
Act-compliant public bathrooms in accordance with Section 5.08 above,
Tenant shall be responsible for the cost of all present and future
compliance with The Americans with Disabilities Act of 1990, Public Law
101-336, 42 U.S.C. 12101 et seq. and Local Law 58 of 1988, each as
modified and supplemented from time to time, together with all regulations
promulgated in connection therewith (herein collectively called the
"Disabilities Act"), in respect of the Demised Premises, except that Tenant
shall not hereby be made to be under any obligation to comply with the
Disabilities Act if and to the extent that the same shall require Tenant to
make any structural alterations within the Demised Premises (i.e.,
alterations to the slab, support columns and facade) or to make any
modifications to Building Systems located within the Demised Premises,
unless the necessity for such structural alteration or modification to
Building Systems located within the Demised Premises arises from (i) the
conduct of Tenant's business, (ii) Tenant's installations, equipment or
other property therein or the operation thereof, (iii) any cause or
condition created by or at the instance of Tenant, or (iv) the breach of
any of Tenant's obligations under this Lease. In addition, Tenant shall be
responsible for the cost of all present and future compliance with the
Disabilities Act with respect to areas of the Land and Building outside the
Demised Premises, but only if and to the extent that compliance with the
requirements for such present and future compliance arises from (I) the
conduct of Tenant's business, (II) Tenant's installations, equipment or
other property therein or the operation thereof, (III) any cause or
condition created by or at the instance of Tenant, or (IV) the breach of
any of Tenant's obligations under this Lease.
C. Tenant shall be responsible for the cost of all present and future
compliance with all Legal Requirements imposed by the Occupational Safety
and Health Administration relating to indoor air quality (the "OSHA
Requirements") affecting the Demised Premises, except that Tenant shall not
hereby be made to be under any obligation to comply with the OSHA
Requirements if and to the extent that the same shall require revisions to
portions of the Building Systems located outside of the Demised Premises,
unless the necessity for such compliance arises from (i) the conduct of
Tenant's business, (ii) Tenant's installations, equipment or other property
therein or the operation thereof, (ii) any cause or condition created by or
at the instance of Tenant (as distinguished from Tenant's mere occupancy of
the Demised Premises for the Authorized Use), or (iv) the breach of any of
Tenant's obligations under this Lease.
D. Tenant shall not cause or permit any Hazardous Materials (hereinafter
defined) to be used, stored, transported, released, handled, produced or
installed in, on or from the Demised Premises or the Building. The term
"Hazardous Materials", as used herein, shall mean any flammables,
explosives, radioactive materials, hazardous wastes, hazardous and toxic
substances or related materials, asbestos or any material containing
asbestos, or any other substance or material included in the definition of
"hazardous substances", "hazardous wastes", "hazard materials", "toxic
substances", "contaminants" or any other pollutant, or otherwise regulated
by any federal, state or local environmental law, ordinance, rule or
regulation, including the Comprehensive Environmental Response Compensation
and Liability Act of 1980, as amended, the Hazardous Materials
Transportation Act, as amended, and the Resource Conservation and Recovery
Act, as amended, and in the regulations adopted and publications
promulgated pursuant to each of the foregoing Acts. In the event of a
violation of any of the foregoing provisions of this Subsection 7.01C,
Landlord may, without notice and without regard to any grace or cure period
contained elsewhere in this Lease, take all remedial action deemed
necessary by Landlord to correct such condition, and Tenant shall reimburse
Landlord for the cost thereof, upon demand, as additional rent.
E. Notwithstanding anything to the contrary contained in this Article 7,
Tenant shall not be required to remove, dispose of, encapsulate or
otherwise treat any asbestos located in the Demised Premises on the
Commencement Date so long as such asbestos shall not become friable due to
any act of Tenant or Persons Within Tenant's Control. In the event that any
such asbestos shall become friable during the Term of this Lease due to any
act of Tenant or Persons Within Tenant's Control, then Tenant shall comply
with the provisions of this Article 7 (as well as all other applicable
provisions of this Lease) with respect to such friable asbestos.
Section 7.02.
-------------
If Tenant shall receive notice of any violation of any Legal Requirements
applicable to the Demised Premises, Tenant shall give prompt notice thereof to
Landlord.
Section 7.03.
-------------
Except as otherwise expressly set forth in this Section 7.03, Tenant shall also
be obligated to comply with any Legal Requirements requiring any structural
Alteration of the Demised Premises, but only if such Alteration shall be
required by reason of a condition which has been created by, or at the instance
of, Tenant or Persons Within Tenant's Control, or shall be attributable to the
use or use to which Tenant or Persons Within Tenant's Control puts the Demised
Premises, or shall be required by reason of a breach of any of Tenant's
covenants and agreements under this Lease. Notwithstanding the foregoing, where
any structural Alteration which Tenant would otherwise be required to make to
the Demised Premises pursuant to the first sentence of this Section 7.03 shall
cost in excess (the "Excess") of Five Hundred Thousand ($500,000.00) Dollars,
then Tenant shall not be required to make any such Alteration, and Landlord
shall have the option of making such Alteration and paying the cost thereof, or
of terminating this Lease by giving to Tenant not less than thirty (30) days
prior notice of such termination. If, however, within fifteen (15) days after
the giving by Landlord of said notice of termination, Tenant shall give notice
to Landlord stating that Tenant elects to pay for the Excess cost portion of
such Alteration, and concurrently with the giving of such notice executes and
delivers to Landlord Tenant's written undertaking, with a surety bond in form,
substance and amount satisfactory to Landlord, obligating Tenant promptly to pay
for the Excess cost portion of such Alteration, and to save Landlord harmless
from any and all costs, expenses and/or liabilities (including reasonable
accountants' and attorneys' fees) in connection therewith or by reason thereof,
then such notice of termination shall be ineffective. Within ten (10) days after
being billed therefor, Tenant shall pay to Landlord the Excess cost portion of
the Alteration. In the event that a notice of termination shall be given by
Landlord under the provisions of this Section 7.03 and Tenant shall not elect to
pay for the required Alteration as hereinbefore provided, this Lease and the
Term and estate hereby granted shall expire as of the date specified therefor in
such notice with the same force and effect as if that were the date hereinbefore
set for the expiration of the Term of this Lease, and the Fixed Rent and
additional rent hereunder shall be apportioned as of such date of termination.
12
<PAGE>
Section 7.04.
-------------
If any governmental license or permit shall be required for the proper and
lawful conduct of Tenant's business and if the failure to secure such license or
permit would, in any way, affect Landlord or the Building, then Tenant, at
Tenant's expense, shall promptly procure and thereafter maintain, submit for
inspection by Landlord, and at all times comply with the terms and conditions
of, each such license or permit.
Section 7.05.
-------------
If an excavation shall be made upon the land adjacent to or under the Building,
or shall be authorized or contemplated to be made, Tenant shall afford to the
person causing or authorized to cause such excavation license to enter upon the
Demised Premises for the purpose of doing such work as said person shall deem
necessary or desirable to preserve the Building from injury or damage and to
support the same by proper foundations without any claim for damages or
indemnity against Landlord, or diminution or abatement of rent.
Section 7.06.
-------------
Notwithstanding anything to the contrary contained in this Lease or contemplated
in connection with the Authorized Use, but subject to the provisions of Article
35 below, in no event shall Tenant allow more than three hundred sixty (360)
(the "Maximum Occupancy Number") people to be present, in the aggregate, in the
Demised Premises at any one time.
ARTICLE 8
INSURANCE
Section 8.01.
-------------
Tenant shall not do or permit to be done any act or thing in or upon the Demised
Premises which will invalidate or be in conflict with the terms of the New York
State standard form of fire insurance with extended coverage, or with rental,
liability, boiler, sprinkler, water damage, war risk or other insurance policies
(or endorsements) covering the Building and the fixtures and property therein
(hereinafter referred to as the "Building Insurance"); and Tenant, at Tenant's
own expense, shall comply with all rules, orders, regulations and requirements
of all Insurance Boards, and shall not do or permit anything to be done in or
upon the Demised Premises or bring or keep anything therein or use the Demised
Premises in a manner which increases the rate of premium for any of the Building
Insurance or any property or equipment located therein over the rate in effect
at the commencement of the Lease Term.
Section 8.02.
-------------
A. If, by reason of the failure of Tenant to comply with any provision of this
Lease, the rate of premium for the Building Insurance or other insurance 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/or such other tenants or subtenants in the Building
for that part of the insurance premiums thereafter paid by Landlord or by
the other tenants or subtenants in the Building which shall have been
charged because of such failure by Tenant. Tenant shall make said
reimbursement on the first day of the month following such payment by
Landlord or such other tenants or subtenants.
B. 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 any Insurance Board establishing insurance premium rates
for the Building shall be prima facie evidence of the facts therein stated
and of the several items and charges in the insurance premium rates then
applicable to the Building.
Section 8.03.
-------------
A. Tenant shall, at Tenant's own cost and expense, obtain, maintain and keep
in force during the entire Lease Term, for the benefit of Landlord, the
managing agent for the Building, Overlandlord (if applicable) and Tenant,
the following insurance coverages: (i) commercial general liability
insurance (including premises operation, bodily injury, personal injury,
death, independent contractors' liability, owner's protective liability,
products and completed operations liability, broad form contractual
liability and broad form property damage coverages) in a combined single
limit amount of not less than $7,000,000, against all claims, demands or
actions with respect to damage, injury or death made by or on behalf of any
person or entity, arising from or relating to the conduct and operation of
Tenant's business in, on or about the Demised Premises (which shall include
Tenant's signs, if any), or arising from or related to any act or omission
of Tenant or of Persons Within Tenant's Control; (ii) during the course of
construction of any Tenant's Alterations and until completion thereof,
Builder's Risk insurance on an "all risk" basis (including collapse) on a
completed value (non-reporting) form for full replacement value covering
the interests of Landlord and Tenant (and their respective contractors and
subcontractors) in all work incorporated into the Building and all
materials and equipment located in or about the Demised Premises; (iii)
Workers' Compensation insurance, as required by law; and (iv) if Tenant
shall install or maintain one or more boilers or other pressure vessels to
serve the Demised Premises or Tenant's operations thereat, Tenant shall, at
Tenant's own cost and expense, obtain, maintain and keep in force, for the
benefit of Landlord, Overlandlord (if applicable) and Tenant, appropriate
insurance coverage thereof in an amount not less than $3,000,000 (it being
understood and agreed, however, that the foregoing shall not be deemed a
consent by Landlord to the installation and/or maintenance of any boilers
or other pressure vessels in the Demised Premises, which installation
and/or maintenance shall at all times be subject to the prior written
consent of Landlord). All such insurance shall contain only such
"deductibles" or "retentions" as Landlord shall reasonably approve. Any
insurance required to be carried by Tenant pursuant to the provisions of
this Lease may be written as either a primary or umbrella policy (or both)
and may be carried under a blanket policy or policies covering the Demised
Premises and other locations of Tenant, provided that each such policy
shall in all respects comply with the provisions of this Article 8 and
shall set forth the specific dollar amount of the coverage of such policy
that is applicable solely to the Demised Premises, and such dollar amount
shall not be less than the amount required pursuant to this Section 8.03.
In addition, prior to any entry upon the Demised Premises by Tenant or by
any Person Within Tenant's Control, Tenant shall deliver or cause to be
delivered to Landlord certificates evidencing that all insurance required
hereunder is in full force and effect. Whenever, in Landlord's reasonable
judgment, good business practice and changing conditions indicate a need
for additional or different types of insurance coverage, Tenant shall, upon
Landlord's request, promptly obtain such insurance coverage, at Tenant's
expense.
13
<PAGE>
B. Tenant shall, at Tenant's own cost and expense, obtain, maintain and keep
in force during the entire Lease Term, insurance which shall protect and
indemnify Landlord, the managing agent of the Building, Tenant and (if
applicable) Overlandlord against any and all damage to or loss of Tenant's
Alterations, equipment, furnishings, furniture, fixtures and contents in
the Demised Premises or the Building (including, if and to the extent
installed by Tenant or any Person Within Tenant's Control: (i) all portions
of the Building Systems that (x) are located within the Demised Premises,
or (y) exclusively serve the Demised Premises and (ii) any sprinkler loop
and distribution pipes and heads, and any ventilation and air-conditioning
ducts and components of a distribution system, and including any private
bathrooms in or appurtenant to the Demised Premises), and all claims and
liabilities relating thereto. Such insurance shall be written on an "all
risk" of physical loss or damage basis, for the full replacement cost value
(new, without deduction for depreciation of the covered items) and in
amounts that satisfy any co-insurance clauses of the policies of insurance,
and shall include a vandalism and malicious mischief endorsement, with
sprinkler leakage coverage.
C. Landlord, the managing agent for the Building, and (if applicable)
Overlandlord shall be named as additional insureds in said policies and
shall be protected against all liability occasioned by an occurrence
insured against. All said policies of insurance shall be: (i) written on an
"occurrence" basis, (ii) written as primary policy coverage and not
contributing with or in excess of any coverage which Landlord, the managing
agent for the Building, or Overlandlord may carry, (iii) written in form
and substance reasonably satisfactory to Landlord, and (iv) issued by
insurance companies then rated not less than A:XII in Best's insurance
reports, and which are licensed to do business in the State of New York.
Tenant shall, prior to the Commencement Date, deliver to Landlord copies of
all such policies of insurance, or (x) in the case of the insurance
required pursuant to Subsection 8.03A above, certificates thereof, or (y)
in the case of the insurance required pursuant to Subsection 8.03B above,
an ACORD Form 27 (i.e., "Evidence of Property Insurance Form") or, in
Landlord's discretion, such other form or certificate as shall be
acceptable to Landlord (but, in any case, including a copy of the waiver of
subrogation endorsement required to be carried by Tenant pursuant to this
Lease), together with evidence of payment of premiums thereon. Thereafter,
Tenant shall furnish to Landlord, at least ten (10) days prior to the
expiration of any such policies and any renewal thereof, a new policy or
certificate or form (as applicable) in lieu thereof, with evidence of the
payment of premiums thereon. Each of said policies (and certificate or
form, if applicable) shall also contain a provision whereby the insurer
agrees not to cancel, diminish or materially modify said insurance
policy(ies) without having given Landlord and Overlandlord at least thirty
(30) days prior written notice thereof, by certified mail, return receipt
requested.
D. Tenant shall pay all premiums and charges for all of said policies, and, if
Tenant shall fail to make any payment when due or carry any such policy,
Landlord may, but shall not be obligated to, make such payment or carry
such policy, and the amount paid by Landlord, with interest thereon at the
Interest Rate, shall be repaid to Landlord by Tenant within ten (10) days
following demand therefor, and all such amounts so repayable, together with
such interest, shall be deemed to constitute additional rent hereunder.
Payment by Landlord of any such premium, or the carrying by Landlord of any
such policy, shall not be deemed to waive or release the default of Tenant
with respect thereto.
E. Notwithstanding and without regard to the limits of insurance specified in
this Section 8.03, Tenant agrees to defend, protect, indemnify and hold
harmless Landlord and (if applicable) Overlandlord, and the agents,
partners, shareholders, directors, officers and employees of Landlord and
(if applicable) Overlandlord, from and against all claims, damage, loss,
liability, cost and expense (including engineer's, architects' and
attorneys' fees and disbursements) resulting from any of the risks referred
to in this Section 8.03. The foregoing obligation of Tenant shall be and
remain in full force and effect whether or not Tenant has placed and
maintained the insurance specified in this Section 8.03, and whether or not
proceeds from such insurance (such insurance having been placed and
maintained) actually are collectible from one or more of the aforesaid
insurance companies; provided, however, that Tenant shall be relieved of
its obligation of indemnity herein pro tanto of the amount actually
recovered by Landlord from one or more of said insurance companies by
reason of injury, damage or loss sustained on the Demised Premises. If any
action or proceeding shall be brought against Landlord or any of the other
indemnified parties in connection with any matter which is the subject of
the foregoing indemnity, Tenant, upon notice from Landlord, shall resist
and defend such action or proceeding at Tenant's expense by counsel
reasonably satisfactory to Landlord, without any disclaimer of liability in
connection therewith.
14
<PAGE>
Section 8.04.
-------------
A. Landlord shall cause each policy carried by Landlord insuring the Building
against loss, damage, or destruction by fire or other casualty, and Tenant
shall cause each insurance policy carried by Tenant and insuring the
Demised Premises and Tenant's Alterations, leasehold improvements,
equipment, furnishings, fixtures and contents against loss, damage, or
destruction by fire or other casualty, to be written in a manner so as to
provide that the insurance company waives all rights of recovery by way of
subrogation against Landlord or Tenant in connection with any loss or
damage covered by any such policy. Neither party shall be liable to the
other for the amount of such loss or damage which is in excess of the
applicable deductible, if any, caused by fire or any of the risks
enumerated in its policies, provided that such waiver was obtainable at the
time of such loss or damage. However, if such waiver cannot be obtained, or
shall be obtainable only by the payment of an additional premium charge
above that which is charged by companies carrying such insurance without
such waiver of subrogation, then the party undertaking to obtain such
waiver shall notify the other party of such fact, and such other party
shall have a period of ten (10) days after the giving of such notice to
agree in writing to pay such additional premium if such policy is
obtainable at additional cost (in the case of Tenant, pro rata in
proportion of Tenant's rentable area to the total rentable area covered by
such insurance); and if such other party does not so agree or the waiver
shall not be obtainable, then the provisions of this Section 8.04 shall be
null and void (with respect to both Landlord and Tenant) as to the risks
covered by such policy for so long as either such waiver cannot be obtained
or the party in whose favor a waiver of subrogation is desired shall refuse
to pay the additional premium. If the release of either Landlord or Tenant,
as set forth in the second sentence of this Section 8.04, shall contravene
any law with respect to exculpatory agreements, the liability of the party
in question shall be deemed not released, but no action or rights shall be
sought or enforced against such party unless and until all rights and
remedies against the other's insurer are exhausted and the other party
shall be unable to collect such insurance proceeds.
B. The waiver of subrogation referred to in Subsection 8.04A above shall
extend to the agents and employees of each party, but only if and to the
extent that such waiver can be obtained without additional charge (unless
such party shall pay such charge). Nothing contained in this Section 8.04
shall be deemed to relieve either party from any duty imposed elsewhere in
this Lease to repair, restore and rebuild.
Section 8.05.
-------------
In the event of any permitted sublease or occupancy (by a person other than
Tenant) of all or a portion of the Demised Premises, all of the covenants and
obligations on the part of Tenant set forth in this Article 8 shall bind and be
fully applicable to the subtenant or occupant (as if such subtenant or occupant
were Tenant hereunder) for the benefit of Landlord.
ARTICLE 9
FIRE OR CASUALTY
Section 9.01.
-------------
If the Demised Premises or any part thereof shall be damaged by fire or other
insured casualty and Tenant shall give prompt written notice thereof to
Landlord, then Landlord shall, subject to the provisions of Sections 9.02 and
9.03, proceed with reasonable diligence to repair or cause to be repaired such
damage at Landlord's expense if and to the extent that such repair is fully paid
for with the net proceeds of insurance, if any, recovered with respect to the
damage, but in no event greater than the scope of Landlord's construction of the
Demised Premises on the commencement of the Lease Term. If the Demised Premises,
or any material part thereof, shall be rendered untenantable by reason of such
damage and such damage shall not be due to the fault of Tenant or of Persons
Within Tenant's Control, then the Fixed Rent hereunder, or an amount thereof
apportioned according to the area of the Demised Premises so rendered
untenantable (if less than the entire Demised Premises shall be so rendered
untenantable), shall be abated for the period from the date of such damage to
the date when the damage shall have been repaired as aforesaid. If Landlord,
Overlandlord or any Mortgagee (as applicable) shall be unable to collect the
insurance proceeds (including rent insurance proceeds) applicable to such damage
because of some action or inaction on the part of Tenant or of Persons Within
Tenant's Control, then the cost of repairing such damage shall be paid by Tenant
and there shall be no abatement of Fixed Rent. Tenant covenants and agrees to
cooperate with Landlord, Overlandlord and any Mortgagee in their efforts to
collect insurance proceeds (including rent insurance proceeds) payable to such
parties. Subject to the provisions of Section 9.04 below, Landlord shall not be
liable for any delay which may arise by reason of adjustment of insurance on the
part of Landlord and/or Tenant, or any cause beyond the control of Landlord or
contractors employed by Landlord.
15
<PAGE>
Section 9.02.
-------------
Landlord shall not be liable for any inconvenience or annoyance to Tenant or
injury to the business of Tenant resulting in any way from damage from fire or
other casualty or the repair thereof. Tenant understands that Landlord, in
reliance upon the provisions set forth in Section 8.03 above, may elect not to
carry insurance on some or any of Tenant's furnishings, furniture, contents,
fixtures, equipment, Alterations and leasehold improvements (including, if and
to the extent installed by Tenant or by any Person Within Tenant's Control: (i)
all portions of the Building Systems that (x) are located within the Demised
Premises, or (y) exclusively serve the Demised Premises, and (ii) any sprinkler
loop and distribution pipes and heads, and any distribution ducts or equipment
for the Building Units serving the Demised Premises, and including any private
bathrooms in or appurtenant to the Demised Premises), and that, regardless of
whether Landlord does carry such insurance, Landlord shall not be obligated to
repair any damage thereto or replace the same.
Section 9.03.
-------------
Notwithstanding anything to the contrary contained in Sections 9.01 and 9.02
above, in the event that:
(i) the Building shall be damaged by fire or other casualty to the extent
that substantial alteration or reconstruction of the Building shall,
in Landlord's sole and unfettered opinion, be required (whether or not
the Demised Premises shall have been damaged by such fire or other
casualty and without regard to the structural integrity of the
Building); provided that, if the Demised Premises shall not have been
damaged, Landlord shall terminate this Lease only if Landlord shall
terminate all other leases for space on the concourse level of the
Building, or
(ii) the Demised Premises are totally or substantially damaged or are
rendered wholly or substantially untenantable, or
(iii)there is any damage to the Demised Premises within the last two (2)
years of the Lease Term, and the cost of repair exceeds an amount
equal to six (6) monthly installments of Fixed Rent,
then Landlord may, in Landlord's sole and absolute discretion, terminate this
Lease and the term and estate hereby granted, by notifying Tenant in writing of
such termination within ninety (90) days after the date of such damage. In the
event that such a notice of termination shall be given, then this Lease and the
term and estate hereby granted shall expire as of the date of termination stated
in said notice with the same effect as if that were the date hereinbefore set
for the expiration of the Lease Term, and the Fixed Rent and Recurring
Additional Rent hereunder shall be apportioned as of such date.
Section 9.04.
-------------
If Landlord shall be obligated to repair the Demised Premises pursuant to the
provisions of Section 9.01 above and if Landlord shall not substantially
complete said repair within twelve (12) months following the date of such fire
or other casualty (subject to extension for the period of any delays resulting
from causes beyond the reasonable control of Landlord), Tenant shall have the
right to terminate this Lease, but only by notice delivered to Landlord not more
than ten (10) days after the expiration of such twelve (12) month period, as the
same may be extended. In the event that such a notice of termination shall be
given by Tenant, then this Lease and the term and estate hereby granted shall
expire as of the date that said notice shall be received by Landlord with the
same effect as if that were the date hereinbefore set for the expiration of the
Lease Term, and the Fixed Rent and Recurring Additional Rent hereunder shall be
apportioned as of such date. If applicable, Landlord shall notify Tenant of any
extension of the twelve (12) month period within five (5) days following the end
of such twelve (12) month period.
Section 9.05.
-------------
Except as may be provided in Section 8.04, nothing herein contained shall
relieve Tenant from any liability to Landlord or to Landlord's insurers in
connection with any damage to the Demised Premises or the Building by fire or
other casualty if Tenant shall be legally liable in such respect.
Section 9.06.
-------------
Tenant shall throughout the Lease Term provide fire wardens and searchers as
required under NYC Local Law No. 5 of 1973, as heretofore and/or hereafter
amended.
Section 9.07.
-------------
Tenant shall give Landlord notice of the occurrence of any fire, casualty or
other accident in the Demised Premises promptly after Tenant becomes aware
thereof.
Section 9.08.
-------------
This Lease shall be considered an express agreement governing any case of damage
to or destruction of the Building or any part thereof by fire or other casualty,
and Section 227 of the Real Property Law of the State of New York (providing for
such a contingency in the absence of express agreement), and any other law of
like import now or hereafter in force, shall have no application in such case.
16
<PAGE>
ARTICLE 10
ASSIGNMENT AND SUBLETTING
Section 10.01.
--------------
A. As a material inducement to Landlord to enter into this Lease, Tenant
covenants and agrees, for Tenant and Tenant's heirs, distributees,
executors, administrators, legal representatives, successors and assigns,
that neither this Lease nor the term and estate hereby granted, nor any
part hereof or thereof, will be assigned, or advertised for assignment,
mortgaged, pledged, encumbered or otherwise transferred, by operation of
law or otherwise, and that neither the Demised Premises, nor any part
thereof, will be sublet or advertised for subletting or occupied by anyone
other than Tenant, or for any purpose other than as hereinbefore set forth,
without the prior written consent of Landlord (which consent, unless
expressly provided to the contrary in this Article 10, may be granted,
withheld or conditioned in Landlord's absolute discretion) in every case.
B. Subject to the provisions of Subsection 10.02B below, the direct or
indirect transfer of fifty (50%) percent or more (aggregating all multiple
and/or prior transfers) of: (i) the shares of a corporate tenant, or (ii)
the shares of any corporation of which Tenant is an immediate or remote
subsidiary, or (iii) the beneficial or legal interests of a tenant that is
a business entity other than a corporation, in each case including
transfers by operation of law, and including a related or unrelated series
of transactions, shall be deemed an assignment of this Lease for the
purposes of this Article 10. For the purposes hereof, "shares" of a
corporate tenant or other corporation shall be deemed to include: (x) the
issued and outstanding shares of any class of the voting stock of a
corporation, and/or (y) the issued and outstanding shares of any class of
convertible non-voting stock, debentures or securities of a corporation.
Issuance of new corporate shares of a corporation or partnership interests
by a partnership, and/or the issuance of a new class of voting stock or
convertible non-voting stock or debentures or securities of a corporation
which results in a transfer of control of that corporation, or the
execution of an agreement affecting the power to vote fifty (50%) percent
or more of the issued and outstanding shares of any class of stock or
securities of a corporation, shall each be deemed to be a "transfer" for
the purposes hereof.
Section 10.02.
--------------
A. Notwithstanding anything to the contrary contained in this Article 10,
Tenant may sublet all or a portion of the Demised Premises to a corporation
or other business entity which controls, is controlled by or is under
common control with, Tenant (herein referred to as a "Related
Corporation"), provided that (i) Tenant shall not then be in default (after
notice of such default shall have theretofore been given to Tenant) with
respect to any of Tenant's obligations under this Lease, (ii) not less than
twenty (20) days prior to such subletting, Tenant shall furnish Landlord
with the name of such Related Corporation, together with a certification of
Tenant, and such other proof as Landlord may reasonably request, that such
subtenant is a Related Corporation of Tenant, (iii) in the reasonable
judgment of Landlord, the proposed subtenant is of a character which is in
keeping with the standards of Landlord for the Building, and (iv) for the
entire term of such sublease, the subtenant thereunder shall continue to be
a Related Corporation of Tenant. In connection with the information to be
provided to Landlord pursuant to this Subsection 10.02A, Landlord shall
have the right, at any reasonable time and from time to time, to
confidentially examine such books and records of Tenant as may be necessary
to establish that such subtenant remains a Related Corporation of Tenant.
Such subletting shall not be deemed to vest in any such Related Corporation
any right or interest in this Lease or the Demised Premises, nor shall it
relieve, release, impair or discharge any of Tenant's obligations
hereunder. For the purposes of this Article 10, the term "control" shall be
deemed to mean ownership of more than fifty (50%) percent of all of the
voting stock of such corporation, or more than fifty (50%) percent of all
of the legal and equitable interest in any other business entity.
B. Notwithstanding the provisions of Subsection 10.01B above, upon not less
than ten (10) days prior written notice to Landlord, and subject to
Tenant's compliance with all of the requirements set forth in this
Subsection 10.02B, Tenant may assign or transfer Tenant's entire interest
in this Lease and the leasehold estate hereby created to a "Successor
Corporation" of Tenant (as hereinafter defined), provided that (i) Tenant
shall not then be in default (after notice of such default shall have
theretofore been given to Tenant) with respect to any of Tenant's
obligations under this Lease, (ii) the proposed occupancy shall not
increase the office cleaning requirements or impose an extra burden upon
the Building equipment or Building services, and (iii) the proposed
assignee shall not be entitled, directly or indirectly, to diplomatic or
sovereign immunity, and shall be subject to the service of process in, and
the jurisdiction of the courts of, the State of New York. The term
"Successor Corporation" shall mean any of the following: (x) a corporation
into which or with which Tenant shall be merged or consolidated, in
accordance with applicable statutory provisions for the merger or
consolidation of corporations, provided that (whether 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 (y) a corporation acquiring this Lease and the
term hereof and the estate hereby granted, the goodwill and all or
substantially all of the other property and assets of Tenant, and assuming
all or substantially all of the liabilities of Tenant; or (z) any corporate
successor to a Successor Corporation becoming such by either of the methods
described in clauses (x) and (y) above; provided that, in each case: (1)
such merger or consolidation, or such acquisition and assumption, as the
case may be, shall be made for a good business purpose other than (and not
principally for) the purpose of transferring the leasehold estate created
hereby, (2) immediately after giving effect to any such merger or
consolidation, or such acquisition and assumption, as the case may be, the
corporation surviving such merger or created by such consolidation or
acquiring such assets and assuming such liabilities, as the case may be,
shall have assets, capitalization and a net worth, as determined in
accordance with generally accepted accounting principles and certified to
Landlord by an independent certified public accountant, at least equal to
the assets, capitalization and net worth, similarly determined, of Tenant
as of the date of this Lease, or of Tenant immediately prior to such merger
or consolidation or such acquisition and assumption, whichever shall be
greater, and (3) proof reasonably satisfactory to Landlord of such business
purpose, assets, capitalization and net worth shall have been delivered to
Landlord at least ten (10) days prior to the effective date of any such
transaction. The acquisition by Tenant of all or substantially all of the
assets, together with the assumption of all or substantially all of the
obligations and liabilities, of any corporation or other business entity,
shall be deemed to be a merger for the purposes of this Article 10.
17
<PAGE>
C. The transfer of the outstanding capital stock of any corporate tenant shall
not be deemed an assignment of this Lease (and Tenant shall not be required
to furnish Landlord with the information described in the last sentence of
Subsection 10.01B above) if such transfer shall be effected by the sale of
such stock through the "over-the-counter-market" or through any recognized
stock exchange, unless such stock shall be sold, transferred or otherwise
conveyed by persons deemed "insiders" within the meaning of the Securities
Exchange Act of 1934, as amended.
Section 10.03.
--------------
A. (i) Except with respect to assignments or sublets described in Section
10.02 above, if Tenant shall desire to assign this Lease or to sublet
all or any portion of the Demised Premises, Tenant shall give Landlord
notice thereof (the "Marketing Notice"), which notice shall be
accompanied by: (a) if a sublease of the entire Demised Premises, a
statement to such effect, and if a sublease of less than the entire
Demised Premises, a description of the portion of the Demised Premises
which Tenant proposes to sublet, together with a floor plan thereof,
and (b) a statement of all of the material and economic terms and
conditions (other than the identity of the proposed assignee or
subtenant, if not yet known to Tenant) of the proposed assignment or
subletting, including the term of the proposed subletting and the
proposed effective date thereof; fixed rent, all regularly scheduled
items of additional rent, the base year for all escalations, any
rental concession, and the amount of any tenant installation allowance
in connection with the sublease; any work to be performed by Tenant to
prepare the premises for occupancy by the proposed subtenant or
assignee; any consideration to be paid for the acquisition of the
premises by reason of such assignment or subletting, leasehold
improvements, furniture, fixtures or equipment of Tenant; any takeover
obligation and any options to be granted to the proposed subtenant;
the nature and character of the business of the proposed assignee or
subtenant and its proposed use of the Demised Premises (if the
identity of the proposed assignee or subtenant is known to Tenant);
and banking, financial and other credit information with respect to
the proposed assignee or subtenant reasonably sufficient to enable
Landlord to determine the financial responsibility of the proposed
assignee or subtenant (if the identity of the proposed assignee or
subtenant is known to Tenant). Such Marketing Notice shall be deemed
an offer from Tenant to Landlord whereby Landlord shall then have the
following options (the "Recapture Options"), which may be exercised by
notice (the "Recapture Notice") given to Tenant within thirty (30)
days after Landlord's receipt of such Marketing Notice:
(x) In the event of a proposed assignment of this Lease or a sublease
of substantially all of the Demised Premises, Landlord may
require Tenant to surrender the Demised Premises to Landlord and
to accept a termination of this Lease as of a date (the
"Recapture Date") to be designated by Landlord in the Recapture
Notice, which date shall be not earlier than the thirtieth (30th)
day nor later than the ninetieth (90th) day following the date of
the Recapture Notice (unless the relevant Marketing Notice shall
have been accompanied by an Assignment/Sublet Notice, in which
case the foregoing reference to the 90th day shall be deemed to
be the later of (I) the sixtieth (60th) day and (II) the proposed
effective date of such assignment or subletting), and this Lease
and the term and estate hereby granted shall expire as of the
Recapture Date with the same effect as if that were the date
hereinbefore set for the expiration of the Lease Term, and the
Fixed Rent and the Recurring Additional Rent hereunder shall be
apportioned as of such date; or
(y) In the event of a proposed assignment of this Lease or a sublease
of substantially all of the Demised Premises, Landlord may
require Tenant to assign this Lease to Landlord (without merger
of Landlord's estates) or to Landlord's designee, effective as of
a date that shall be not earlier than the thirtieth (30th) day
nor later than the ninetieth (90th) day following the date of the
Recapture Notice (unless the relevant Marketing Notice shall have
been accompanied by an Assignment/Sublet Notice, in which case
the foregoing reference to the 90th day shall be deemed to be the
later of (I) the sixtieth (60th) day and (II) the proposed
effective date of such assignment or subletting); or
(z) In the event of a proposed sublease of less than substantially
all of the Demised Premises, Landlord may require Tenant to enter
into a sublease with Landlord or Landlord's designee of the
portion of the Demised Premises proposed to be subleased (the
"Sublease Premises") effective as of a date to be designated by
Landlord in the Recapture Notice, which shall be not earlier than
the thirtieth (30th) day nor later than the ninetieth (90th) day
following the date of the Recapture Notice (unless the relevant
Marketing Notice shall have been accompanied by an
Assignment/Sublet Notice, in which case the foregoing reference
to the 90th day shall be deemed to be the later of (I) the
sixtieth (60th) day and (II) the proposed effective date of such
assignment or subletting).
18
<PAGE>
(ii) If Landlord shall notify Tenant that Landlord elects (or if Landlord
shall be deemed to have elected) not to exercise any of the Recapture
Options, then Tenant shall have the right to assign this Lease or
sublease the Demised Premises in accordance with the provisions of
this Article 10, subject, however, to the provisions of the
immediately following subdivisions (iii) and (iv).
(iii)If Landlord shall have notified Tenant that Landlord elects (or if
Landlord shall be deemed to have elected) not to exercise any of the
Recapture Options and Tenant shall not have delivered to Landlord an
Assignment/Sublet Notice with respect to a proposed assignment of this
Lease or a subletting within ninety (90) days thereafter, then Tenant
shall be required to again deliver a Marketing Notice and otherwise
comply with the foregoing provisions before Landlord shall be required
to make an election as to the exercise of the Recapture Options.
(iv) If Landlord shall have notified Tenant that Landlord does not desire
to exercise the Recapture Options, and Tenant shall thereafter deliver
to Landlord an Assignment/Sublet Notice and such Assignment/Sublet
Notice shall disclose (x) in the case of an assignment of this Lease a
deviation of more than five (5%) percent of the consideration (if any)
to be paid to Tenant by the assignee stated in the Marketing Notice,
or (y) in the case of a subletting, a deviation in the economic terms
of more than five (5%) percent from the Marketing Notice, then
Landlord shall once again have a right to exercise the Recapture
Options with respect thereto, but only within twenty (20) days
following Landlord's receipt of Tenant's Assignment/Sublet Notice.
(v) For the purposes of the foregoing subdivision (iv), a deviation in the
economic terms shall be calculated by determination of the effective
rent, taking into account the monetary values of all of the
concessions, incentives and payments referred to in subdivision
10.03A(i) above.
(vi) If Landlord shall fail to deliver the Recapture Notice to Tenant
within the thirty (30) day period provided for in subdivision
10.03A(i) above, Landlord shall be deemed to have elected not to
exercise any of the Recapture Options (but only with respect to the
specific Marketing Notice for which said 30-day period had lapsed),
provided that, when such Marketing Notice shall have been delivered to
Landlord, it shall have borne the following legend typed in bold,
capital letters at the top: "IF LANDLORD SHALL FAIL TO NOTIFY TENANT
WHETHER LANDLORD ELECTS TO EXERCISE ITS RECAPTURE OPTIONS WITHIN
THIRTY (30) DAYS FOLLOWING RECEIPT OF THIS MARKETING NOTICE, LANDLORD
SHALL BE DEEMED TO HAVE WAIVED ITS RIGHT TO EXERCISE SUCH RECAPTURE
OPTIONS."
B. If Landlord shall elect to require Tenant to surrender the Demised Premises
and accept a termination of this Lease, then this Lease shall expire on the
Recapture Date as if that date had been originally fixed as the Expiration
Date. Regardless of which Recapture Option Landlord exercises under this
Section 10.03, Landlord shall be free to, and shall have no liability to
Tenant (or to any broker engaged by Tenant) if Landlord shall, lease the
Demised Premises to Tenant's prospective assignee or subtenant. For the
purposes of this Article 10, the phrase "substantially all of the Demised
Premises" shall mean more than eighty (80%) percent of the Demised
Premises.
C. If Landlord shall exercise the Recapture Option described in clause (z) of
Subsection 10.03A above to require Tenant to sublease to Landlord or to
Landlord's designee the Sublease Premises, such sublease to Landlord (or
Landlord's designee) as sublessee (the "Recapture Sublease"), shall be
subject to all of the following terms, provisions and conditions:
(i) the rent payable by the sublessee to Tenant under the Recapture
Sublease shall be equal to the lesser of (a) the portions of the Fixed
Rent and Recurring Additional Rent then payable under this Lease
allocable to the Sublease Premises, and (b) the rentals set forth in
the proposed sublease;
(ii) the term of the Recapture Sublease shall be for the same term as that
of the proposed subletting;
(iii)the Recapture Sublease shall be expressly subject to all of the
covenants, agreements, terms, provisions and conditions of this Lease,
except such as are irrelevant or inapplicable, and except as otherwise
expressly set forth to the contrary in this Section 10.03;
(iv) the Recapture Sublease shall be upon the same terms and conditions as
those contained in the proposed sublease, except such as are
irrelevant or inapplicable, and except as otherwise expressly set
forth to the contrary in this Section 10.03;
(v) the Recapture Sublease shall give the sublessee the unqualified and
unrestricted right, without Tenant's permission, to assign the
Recapture Sublease or any interest therein and/or to sublet the
Sublease Premises or any part or parts thereof;
(vi) the Recapture Sublease shall provide that any assignee or further
assignee or further sublessee(s) of the sublessee's interest
thereunder, may, at the election of Landlord, be permitted to make
Alterations and decorations in the Sublease Premises (provided that
Tenant shall have no obligation to remove such Alterations or
decorations from the Sublease Premises, or to restore the Sublease
Premises in connection with such Alterations and decorations at the
expiration of the Lease Term, and, further provided, that any such
Alterations shall not preclude or interfere with the use of the
remainder of the Demised Premises for the Authorized Use) or any part
thereof. Alterations and decorations in the Sublease Premises made by
any assignee or sublessee may, in the discretion of such assignee or
sublessee, be removed, in whole or in part, by such assignee or
sublessee prior to or upon the expiration or other termination of the
Recapture Sublease, provided that such assignee or sublessee shall
repair any damage to the Sublease Premises caused by such removal (or
that Tenant shall have no liability with respect to such damage); and
19
<PAGE>
(vii)the Recapture Sublease shall also provide that: (a) the parties to
the Recapture Sublease expressly negate any intention that any estate
created under the Recapture Sublease be merged with any other estate
held by either of said parties, (b) any assignment or subletting by
Landlord or Landlord's designee (as the sublessee) may be for any
purpose or purposes that Landlord, in Landlord's sole discretion,
shall deem suitable or appropriate, (c) Tenant, at Tenant's expense,
shall and will at all times provide and permit reasonably appropriate
means of ingress to and egress from the Sublease Premises (including
with respect to such core bathrooms or elevator lobbies in the
remaining portion of the Demised Premises), (d) Tenant shall be
responsible for the cost of constructing any necessary demising walls
and complying with any and all Legal Requirements pertaining thereto,
including the construction of such corridors as are necessary to
satisfy said Legal Requirements, (e) the sublessee shall have the
right to install signs and directional indicators in or about such
corridors indicating the name and location of the sublessee or other
occupant of the Sublease Premises, (f) from and after the date that
the Recapture Sublease shall become effective, Tenant shall have no
liability to Landlord with respect to the Sublease Premises for any
defaults under this Lease caused by the act or failure to act of the
sublessee under the Recapture Sublease, nor shall Tenant's obligations
to Landlord with respect to the Sublease Premises be increased by
reason of the act or failure to act of said sublessee, and (g) at the
expiration of the term of the Recapture Sublease, Tenant will accept
the Sublease Premises in its then existing condition, subject to the
obligations of the sublessee to make such repairs thereto as may be
necessary to preserve the Sublease Premises in good order and
condition.
D. Except as permitted pursuant to Section 10.02 above, in any case where
Landlord shall not (or no longer) have the right to exercise a Recapture
Option, upon Tenant's obtaining a proposed assignee or subtenant on terms
satisfactory to Tenant, Tenant shall give notice thereof to Landlord (an
"Assignment/Sublet Notice"), and (unless previously set forth in the
Marketing Notice) in such notice shall set forth in reasonable detail: (i)
the name and address of the proposed assignee or subtenant, (ii) the nature
and character of the business of the proposed assignee or subtenant and its
proposed use of the Demised Premises, (iii) current financial information
with respect to the proposed assignee or subtenant, including its most
recent financial report, (iv) the business terms and conditions of the
proposed assignment or subletting, the effective date of which shall be not
less than thirty (30) days after the giving of such notice, (v) in the
event of a desired subletting of less than all of the Demised Premises, a
description and floor plan of the proposed sublease premises, and (vi) any
other information reasonably requested by Landlord. Tenant may elect to
deliver an Assignment/Sublet Notice to Landlord simultaneously with the
delivery to Landlord of the Marketing Notice.
E. If Landlord shall exercise the Recapture Option described in clause (z) of
subdivision 10.03A(i) above, then the Rentable Square Feet, Tenant's
Operating Share and Tenant's Tax Share shall each be reduced on a pro rata
basis for the term of the Recapture Sublease.
Section 10.04.
--------------
A. If Tenant shall have complied with the provisions of Section 10.03 above
and Landlord shall not have exercised any of the Recapture Options within
the time period provided in Section 10.03 above, then Landlord shall not
unreasonably withhold or delay consent to the proposed assignment of this
Lease or a proposed subletting of all or a portion of the Demised Premises,
provided that Tenant shall not then be in default with respect to any of
Tenant's obligations under this Lease, and provided further that the
following additional conditions (which shall be in addition to, and not in
lieu of, the other terms, conditions and requirements set forth elsewhere
in this Article 10) shall be satisfied:
(i) The proposed assignee or subtenant shall not be: (a) an employment or
placement agency or governmental or quasi-governmental agency, or a
real estate brokerage office or medical office or executive
recruitment office, or (b) entitled, directly or indirectly, to
diplomatic or sovereign immunity, and the proposed assignee or
subtenant shall be subject to service of process in, and the
jurisdiction of the courts of, the State of New York;
(ii) The subletting or assignment shall be to a reputable person, whose
occupancy will be in keeping with the dignity and character of the
then use and occupancy of the Building, and whose occupancy will not
be more objectionable or more hazardous than that of Tenant herein or
impose any additional burden upon Landlord in the operation of the
Building;
(iii)The proposed assignee or subtenant shall have, in the reasonable
judgment of Landlord, sufficient financial worth to perform the
obligations of Tenant under this Lease;
20
<PAGE>
(iv) No space shall be or have been advertised or promoted to the general
public at a lower rental rate than that being asked by Landlord at the
time for similar space in the Building; provided that the foregoing
shall not be construed to prohibit Tenant from actually consummating
an assignment or sublease, as the case may be, at a lower rental rate
than that being asked by Landlord at the time for similar space in the
Building;
(v) The proposed assignee or subtenant (or any person who directly or
indirectly controls, is controlled by or is under common control with,
either (a) the proposed assignee or subtenant, or (b) any person who
controls the proposed assignee or subtenant) shall not be a tenant,
subtenant, occupant or assignee of any premises in the Building, or a
party who dealt or negotiated with Landlord or Landlord's agent
(directly or through a broker) with respect to the leasing of any
space in the Building during the six (6) months immediately preceding
Tenant's request for Landlord's consent, but the foregoing restriction
shall be applicable only if Landlord shall be able to offer, either at
the time of Tenant's request for consent or at any time during the
next succeeding twelve (12) calendar months, comparably sized space in
the Building to such proposed assignee or subtenant; and
(vi) In no event shall there be more than two occupants at any one time in
the combined Demised Premises and Additional Premises (as defined in
Article 35 below).
B. If Tenant shall sublet less than all of the Demised Premises, then each of
(i) the portion of the Demised Premises so sublet, and (ii) the portion of
the Demised Premises retained by Tenant, shall be (x) a self-contained,
tenantable unit, and (y) demised and used in compliance with all applicable
Legal Requirements.
C. If Landlord shall fail to respond to an Assignment/Sublet Notice (whether
by the grant or denial of consent, or by a request for further information)
within ten (10) Business Days after Landlord's receipt thereof (or within
thirty (30) Business Days following Landlord's receipt thereof, if the same
shall have been delivered to Landlord concurrently with a Marketing
Notice), then, provided that said Assignment/Sublet Notice shall bear the
following legend typed in bold, capital letters at the top: "IF LANDLORD
SHALL FAIL TO RESPOND TO TENANT IN CONNECTION WITH THIS ASSIGNMENT/SUBLET
NOTICE WITHIN TEN (10) BUSINESS DAYS [THIRTY (30) BUSINESS DAYS IF
DELIVERED WITH A MARKETING NOTICE], LANDLORD SHALL BE DEEMED TO HAVE
CONSENTED THERETO", Landlord shall be deemed to have consented to the
proposed assignment or subletting, as the case may be.
Section 10.05.
--------------
In the event of each and every permitted assignment of Tenant's interest under
this Lease, the following provisions shall apply:
(i) The assignee shall assume and agree, in a recordable writing delivered
to Landlord on or before the effective date of such assignment, to
perform all of the terms, conditions and agreements of this Lease on
the part of Tenant to be kept, performed and observed, and to become
jointly and severally liable with the assignor (and remote assignors,
if any) for the performance thereof.
(ii) The assignor shall assign to the assignee all of the assignor's right,
title and interest and claim to the security deposited hereunder.
(iii)The terms, covenants and conditions of this Lease may be changed,
altered or modified in any manner whatsoever by Landlord and the
assignee without the consent thereto of the Tenant named herein or of
any other remote or immediate assignor. The joint and several
liability of the Tenant named herein and of any immediate and remote
successor-in-interest of Tenant (by assignment or otherwise), and the
due performance by all such assignors and successors of each and every
one of the obligations of this Lease on Tenant's part to be performed
or observed, shall not in any way be discharged, released or impaired
by any (a) such change, alteration or modification, or other agreement
which amends any of the rights or obligations of the parties under
this Lease, (b) stipulation which extends the time within which an
obligation under this Lease is to be performed, (c) waiver of the
performance of an obligation required under this Lease, or (d) failure
to enforce any of the obligations set forth in this Lease; provided,
however, that in the case of a change, alteration or modification made
after the date of an assignment of this Lease, then, if and to the
extent that such change, alteration or modification increases the
obligations of Tenant under this Lease, the assignor shall not be
liable with respect to such increase.
Section 10.06.
--------------
A. In the event of each and every permitted subletting of all or any part
of the Demised Premises, the following provisions shall apply:
(i) No subletting shall be for a term ending later than one (1) day
prior to the Expiration Date of this Lease.
(ii) The sublease agreement shall be reasonably acceptable to Landlord
in substance and form, and shall provide that it is and shall be
subject and subordinate to this Lease and to all matters to which
this Lease is or shall be subordinate.
(iii)The sublease agreement and all of the subtenant's rights
thereunder shall be expressly made subject to all of the
obligations of Tenant under this Lease, and to the further
condition and restriction that the sublease shall not be
assigned, encumbered or otherwise transferred, or the subleased
premises further sublet by the subtenant in whole or in part, or
any part thereof suffered or permitted by the subtenant to be
used or occupied by others, without the prior written consent of
Landlord (which consent may be granted, withheld or conditioned
in Landlord's sole and absolute discretion) in each instance,
except with respect to a proposed assignment of this Lease or
subletting of the entire Demised Premises by a permitted assignee
or subtenant of the Tenant named herein (but not any remote
assignee or subtenant) which, in each case, shall be subject to
the same consent standards (as well as to Landlord's rights with
respect to the Recapture Options and Profit payments, and to
other rights and obligations of Tenant, set forth in this Article
10) applicable to an initial assignment or subletting by Tenant.
21
<PAGE>
B. If Landlord shall consent to a proposed subletting of all or any portion of
the Demised Premises, then either the sublease agreement or the written
instrument of consent, which shall also be executed and acknowledged by
Tenant and the subtenant, shall contain a provision substantially similar
to the following:
"The sublandlord [i.e., Tenant under this Lease] and the subtenant hereby
agree that, if the subtenant shall be in default of any obligation of the
subtenant under the sublease, which default also constitutes a default by
the sublandlord under the overlease [i.e., this Lease], then the
overlandlord [i.e., Landlord under this Lease] shall be permitted to avail
itself of all of the rights and remedies available to the sublandlord in
connection therewith. Without limiting the generality of the foregoing, the
overlandlord shall be permitted (by assignment of a cause of action or
otherwise) to institute an action or proceeding against the subtenant in
the name of the sublandlord in order to enforce the sublandlord's rights
under the sublease, and shall also be permitted to take all ancillary
actions (e.g., serve default notices and demands) in the name of the
sublandlord as the overlandlord shall reasonably determine to be necessary.
The sublandlord agrees to cooperate with the overlandlord, and to execute
such documents as shall be reasonably necessary, in connection with the
implementation of the foregoing rights of the overlandlord. The sublandlord
and the subtenant expressly acknowledge and agree that the exercise by the
overlandlord of any of the foregoing rights and remedies: (i) shall not
constitute an election of remedies, (ii) shall not in any way impair the
overlandlord's entitlement to pursue other rights and remedies directly
against the sublandlord, and (iii) shall not establish any privity of
relationship between the overlandlord and the subtenant, or in any way
create a landlord/tenant relationship between the overlandlord and the
subtenant."
Section 10.07.
--------------
A. If Landlord shall consent to any assignment of this Lease or to any
sublease of all or any part of the Demised Premises, Tenant shall, in
consideration therefor, pay to Landlord, as additional rent hereunder, the
following amounts (hereinafter being referred to as "Profit"):
(i) in the case of an assignment, fifty (50%) percent of the amount by
which (x) all amounts and other consideration due or payable to Tenant
and/or Tenant's designee for or by reason of such assignment
(including all amounts due or payable for the sale or rental of
Tenant's fixtures, leasehold improvements, equipment, furniture,
furnishings or other personal property), exceed (y) the amount of the
following reasonable and customary out-of-pocket expenses, but only if
and to the extent actually incurred and paid by Tenant to unrelated
third parties in connection with such assignment: (a) brokerage
commissions, (b) advertising expenses, (c) the cost of Alterations
made by Tenant to prepare the Demised Premises for occupancy by the
assignee, or the amount of a "contribution" made to the assignee by
Tenant in lieu thereof, (d) legal fees, and (e) any reimbursement paid
to Landlord by Tenant pursuant to Section 10.12 below; and
(ii) in the case of a sublease, fifty (50%) percent of the amount by which
(x) the sum of (1) all rents, additional rents and other consideration
due or payable under the sublease to Tenant by the subtenant, and (2)
all other amounts and consideration due or payable to Tenant or
Tenant's designee for or by reason of such subletting (including all
amounts due or payable for the sale or rental of Tenant's fixtures,
leasehold improvements, equipment, furniture or other personal
property), exceed (y) the sum of (1) that part of the Fixed Rent and
additional rent hereunder allocable to the subleased space and
accruing for the corresponding period during the term of the sublease,
and (2) the amount of the following reasonable and customary
out-of-pocket expenses, but only if and to the extent actually
incurred and paid by Tenant to unrelated third parties in connection
with such sublease: (a) brokerage commissions, (b) advertising
expenses, and (c) the cost of Alterations made by Tenant to prepare
the subleased premises for occupancy by the subtenant, or the amount
of a "contribution" made to the subtenant by Tenant in lieu thereof,
(d) legal fees, and (e) any reimbursement paid to Landlord by Tenant
pursuant to Section 10.12 below.
B. Any amount(s) payable by Tenant pursuant to the provisions of this Section
10.07 shall be paid by Tenant to Landlord as and when amounts on account
thereof are actually paid by or on behalf of any assignee(s) and/or any
sublessee(s) to Tenant or Tenant's designee, and Tenant agrees to promptly
advise Landlord thereof and furnish such information with regard thereto as
Landlord may reasonably request from time to time.
C. Tenant shall furnish to Landlord, in the January calendar month immediately
following each calendar year during any part of which any such sublease
shall be in effect, a reasonably detailed financial statement certified as
being correct by an executive financial officer (or, if Tenant is not a
corporation, a principal) of Tenant, setting forth all sums accruing during
the prior calendar year and/or realized by Tenant from such sublease, and a
computation of the Profit accruing and/or realized by Tenant during such
prior calendar year. Tenant shall remit to Landlord together with such
statement any Profit or portion thereof on account of such calendar year
not previously remitted to Landlord. If Tenant shall assert that, based on
such statement, Tenant shall have overpaid Landlord the amount of Profit
owed to Landlord by Tenant pursuant to this Section 10.07 for such previous
calendar year, then, after Landlord shall have had a reasonable opportunity
to review such statement and shall have confirmed the accuracy of such
assertion, Landlord shall, at Landlord's election, either (x) remit the
amount of such overpayment to Tenant within sixty (60) days after the
submission of such statement, or (y) credit the amount of such overpayment
against the next due installment of Fixed Rent.
22
<PAGE>
Section 10.08.
--------------
A. Each permitted assignee or transferee of Tenant's interest in this Lease
(but not a subtenant) shall assume and be deemed to have assumed this Lease
and all of Tenant's obligations under this Lease, and shall be and remain
liable jointly and severally with Tenant for the payment of all Fixed Rent,
additional rent, other charges and payments due under this Lease, and for
the full and timely performance of and compliance with all the terms,
covenants, conditions and agreements herein contained on Tenant's part to
be performed or complied with for the entire Lease Term. No assignment,
sublease or transfer shall be effective or binding on Landlord unless and
until such assignee, subtenant or transferee of Tenant shall deliver to
Landlord a fully executed and acknowledged duplicate original of the
instrument of assignment, sublease or transfer which contains a covenant of
assumption (if not a sublease) by an assignee or transferee of all of the
obligations aforesaid, and a confirmation (including a sublease) of the
covenant under Section 10.01 prior to and preemptive of any similar rights
of Tenant or any subtenant, and shall obtain from Landlord the aforesaid
written consent prior thereto. In the event of any purported assignment,
sublease or transfer in contravention of the provisions of this Lease,
Landlord may elect to treat such purported assignee, subtenant or
transferee as having assumed this Lease jointly and severally with Tenant,
without in any way or to any extent binding Landlord to consent to such
purported assignment, sublease or transfer.
B. In no event shall any assignee, subtenant or other occupant of the Demised
Premises use the Demised Premises for any purpose other than the Authorized
Use.
Section 10.09.
--------------
The consent by Landlord to an assignment or subletting shall not relieve Tenant,
the assignee or any subtenant from obtaining the express consent in writing of
Landlord (which consent, unless expressly provided to the contrary in this
Article 10, may be granted, withheld or conditioned in Landlord's absolute
discretion) to any other or further assignment or subletting, except with
respect to a proposed assignment of this Lease or subletting of the entire
Demised Premises by a permitted assignee or subtenant of the Tenant named herein
(but not any remote assignee or subtenant) which, in the case of each assignee
or subtenant, shall be subject to the same consent standards (as well as to
Landlord's rights with respect to the Recapture Options and Profit payments, and
to other rights and obligations of Tenant, set forth in this Article 10)
applicable to an initial assignment or subletting by Tenant.
Section 10.10.
--------------
A. If this Lease shall be assigned (whether or not in violation of the
provisions of this Article 10), Landlord may collect from the assignee, and
Tenant hereby authorizes and directs the assignee to pay to Landlord, all
rent (whether denominated as Fixed Rent or otherwise), additional rent and
other charges payable pursuant to the instrument of assignment, with the
net amount so collected by Landlord to be applied to the Fixed Rent,
additional rent and other charges herein provided, but no such assignment
or collection shall be deemed a waiver of the covenant by Tenant under
Section 10.01 above, nor shall the same be deemed the acceptance by
Landlord of the assignee as a tenant, or a release of Tenant from the
further performance of the covenants and agreements on the part of Tenant
to be performed as herein contained. Each and every instrument of
assignment shall contain the substance of the foregoing provision.
B. If all or any portion of the Demised Premises shall be sublet or occupied
by anyone other than Tenant (whether or not in violation of the provisions
of this Article 10), then, upon demand made by Landlord at any time
following the occurrence of an Event of Default, Landlord may collect from
the subtenant or occupant, and Tenant hereby authorizes and directs such
party to pay to Landlord, all rent (whether denominated as Fixed Rent or
otherwise), additional rent and other charges payable pursuant to such
instrument, with the net amount so collected by Landlord to be applied to
the Fixed Rent, additional rent and other charges herein provided, but no
such subletting, occupancy or collection shall be deemed a waiver of the
covenant by Tenant under Section 10.01 above, nor shall the same be deemed
the acceptance by Landlord of the subtenant or occupant as a tenant, or a
release of Tenant from the further performance of the covenants and
agreements on the part of Tenant to be performed as herein contained. Each
and every instrument of sublease and/or occupancy agreement shall contain
the substance of the foregoing provision.
C. If Landlord shall for any reason or cause recover or come into possession
of the Demised Premises before the date hereinbefore fixed for the
expiration of the Lease Term, or if an Event of Default shall occur, then
Landlord shall have the right (but not the obligation) to take over any and
all subleases or sublettings of the Demised Premises or any part or parts
thereof made or granted by Tenant and to succeed to all of the rights and
privileges of said subleases and sublettings or such of them as Landlord
may elect to take over and assume, and Tenant hereby expressly assigns and
transfers to Landlord such of the subleases and sublettings as Landlord may
elect to take over and assume at the time of such recovery of possession
(or occurrence of an Event of Default), and Tenant shall upon request of
Landlord execute, acknowledge and deliver to Landlord such further
assignments and transfers as may be necessary, sufficient and proper to
vest in Landlord the then existing subleases and sublettings. By its entry
into a sublease, each and every subtenant shall be deemed to have thereby
agreed that, upon said recovery of possession (or occurrence of an Event of
Default) and if Landlord shall so elect, Landlord may, in Landlord's sole
and absolute discretion, take over the right, title and interest of Tenant,
as sublandlord, under such sublease, in which case such subtenant shall:
(i) be deemed to have waived any right to surrender possession of the
subleased space or to terminate the sublease, (ii) be bound to Landlord for
the balance of the term of such sublease, and (iii) attorn to Landlord, as
its landlord, under all of the then executory terms, covenants and
conditions of this Lease, except that (x) rent shall be at the greater of
the rates provided in this Lease (apportioned based upon the area the
subleased space bears to the entire Demised Premises) or the rates of rent
and additional rent under the sublease, and (y) such subtenant shall be
deemed to have expressly agreed that Landlord shall not (1) be liable for
any previous act or omission of Tenant under such sublease, (2) be subject
to any counterclaim, offset or defense, not expressly provided in such
sublease, which theretofore accrued to such subtenant against Tenant, or
(3) be bound by any previous modification of such sublease or by any
previous prepayment of more than one (1) monthly installment of rent. The
provisions of this Subsection 10.10C shall be self-operative, and no
further instrument shall be required to give effect thereto. However,
within five (5) days after Landlord shall have notified any subtenant of
said election, such subtenant shall execute, acknowledge and deliver to
Landlord such instruments as Landlord may request to evidence and confirm
such attornment and the terms thereof. Each and every sublease shall
contain the substance of this Subsection 10.10C.
23
<PAGE>
Section 10.11.
--------------
Without limiting the generality of the covenant set forth in Section 10.01
above, Tenant covenants and agrees that Tenant shall not assign Tenant's
interest under this Lease or sublet the Demised Premises (or any portion
thereof) to any tenant or occupant in the Building. Tenant covenants and agrees
not to accept any assignment of lease or sublease from, or become a subtenant
of, any tenant or occupant in the Building.
Section 10.12.
--------------
Tenant shall reimburse Landlord on demand for all reasonable costs (including
all reasonable legal fees and disbursements, as well as the costs of making
investigations as to the acceptability of a proposed assignee or subtenant)
which may be incurred by Landlord in connection with a request by Tenant that
Landlord consent to any proposed assignment or sublease.
Section 10.13.
--------------
If Landlord shall decline to consent to any proposed assignment or sublease, or
if Landlord shall exercise any of the Recapture Options under Section 10.03
above, Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all loss, liability, damages, cost and expense (including
reasonable attorneys' fees disbursements), resulting from any claims that may be
made against Landlord by the proposed assignee or subtenant or by any brokers or
other persons claiming a commission or similar compensation in connection with
the proposed assignment or sublease.
Section 10.14.
--------------
Except as expressly provided to the contrary in this Article 10, in the event
that Tenant shall assign or attempt to assign Tenant's interest in, to or under
this Lease, or if Tenant shall sublet or attempt to sublet the Demised Premises
or any portion thereof, without having obtained Landlord's prior written consent
thereto (when such consent is required under this Article 10) or in violation of
any of the other provisions contained in this Lease, Landlord shall have the
right to terminate this Lease at any time thereafter without affording Tenant
any grace period or opportunity to cure. The acceptance by Landlord of any Fixed
Rent or additional rent paid, or of the performance of any obligation to be
performed by Tenant, by a purported assignee or subtenant shall not be deemed
(i) a consent by Landlord to the assignment or sublet to such purported assignee
or subtenant, (ii) a release by Landlord of Tenant's performance of, or
compliance with, any of the obligations to be performed, or covenants or terms
to be complied with, by Tenant pursuant to this Lease, or (iii) a waiver of
Landlord's right of termination as set forth in the immediately preceding
sentence.
Section 10.15.
--------------
The listing of any name other than that of Tenant, whether on the doors of the
Demised Premises, on any Building directory, elevators or otherwise, shall not
operate to vest any right or interest in this Lease or the Demised Premises, nor
shall it be deemed to be the consent of Landlord to any assignment or transfer
of this Lease or to any sublease of the Demised Premises or to the use or
occupancy thereof by third parties. Landlord shall not be required to permit the
listing of any name other than that of Tenant and Tenant's permitted subtenants,
and Tenant agrees that, if Landlord does consent to any such listing, the same
shall be deemed a privilege extended by Landlord that is revocable at will by
written notice to Tenant.
ARTICLE 11
NON-LIABILITY; INDEMNIFICATION
Section 11.01.
--------------
Neither Landlord nor Landlord's agents shall be liable for: (i) any damage to
property of Tenant or of others entrusted to employees of Landlord or to
Landlord's agents, nor for the loss of or damage to any property of Tenant or of
Persons Within Tenant's Control by theft or otherwise; (ii) any injury or damage
to persons or property resulting from fire, explosion, falling plaster, steam,
gas, electricity, water, rain, snow or 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 such injury or damage is caused by the negligent act
of Landlord and is not otherwise subject to the provisions of Section 8.04
above; (iii) 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; or (iv) any latent defect in the Demised Premises or in the Building.
Subject to the provisions of Section 8.04 above, nothing contained in this
Section 11.01 shall be construed to relieve Landlord of any liability that
Landlord may have to Tenant under law for any loss or damage suffered by Tenant
that is caused solely by the willful misconduct or negligence of Landlord (it
being agreed, however, that in no event shall Landlord ever have any liability
to Tenant, or to any person claiming by, through or under Tenant, for
consequential damages).
24
<PAGE>
Section 11.02.
--------------
Intentionally omitted.
Section 11.03.
--------------
Tenant agrees, irrespective of whether Tenant shall have been negligent in
connection therewith, to indemnify, protect, defend and save harmless, Landlord
and Landlord's partners, officers, directors, contractors, agents and employees
(individually and collectively, the "Indemnified Party") from and against any
and all liability (statutory or otherwise), claims, suits, demands, damages,
judgments, costs, fines, penalties, interest and expenses (including reasonable
counsel and other professional fees and disbursements incurred in any action or
proceeding, whether between Tenant and the Indemnified Party, or between the
Indemnified Party and any third party or otherwise), to which any such
Indemnified Party may be subject or suffer arising from, or in connection with:
(i) any liability or claim for any injury to, or death of, any person or
persons, or damage to property (including any loss of use thereof), occurring in
or about the Demised Premises, or (ii) the use and occupancy of the Demised
Premises, or from any work, installation or thing whatsoever done or omitted
(other than by Landlord or by Landlord's agents or employees) in or about the
Demised Premises during the Lease Term and during the period of time, if any,
prior to the Commencement Date that Tenant may have been given access to the
Demised Premises, or (iii) any default by Tenant in the performance of Tenant's
obligations under this Lease, or (iv) any act, omission, carelessness,
negligence or misconduct of Tenant or of any Person Within Tenant's Control.
Section 11.04.
--------------
Tenant shall reimburse and compensate Landlord, as additional rent within thirty
(30) days after rendition of a statement, for all expenditures, costs, fees,
expenses, judgments, penalties, damages and fines sustained or incurred by
Landlord (including reasonable counsel and other professional fees and
disbursements incurred in connection with any action or proceeding) in
connection with any matter set forth in this Article 11, or non-performance or
non-compliance with or breach or failure by Tenant to observe any term,
covenant, agreement, provision or condition of this Lease, or breach of any
warranty or representation by Tenant made in this Lease. If, in any action or
proceeding naming both Landlord and Tenant, liability arising out of the
negligence of Tenant is established, Tenant shall (i) indemnify Landlord in
accordance with the provisions of this Article 11 and (ii) waive any right of
contribution against Landlord. Reference in this Article 11 to Landlord shall
for all purposes be deemed to include (if applicable) any Overlandlord and each
Mortgagee.
Section 11.05.
--------------
A. Except as otherwise provided in Subsection 11.05B below, Tenant agrees that
Tenant's sole remedies in any instances where Tenant disputes Landlord's
reasonableness in exercising judgment or withholding consent or approval
pursuant to a specific provision of this Lease shall be those remedies in
the nature of an injunction, declaratory judgment or specific performance,
the rights to monetary damages or other remedies being hereby specifically
and irrevocably waived by Tenant. Without limiting the generality of the
foregoing, and unless expressly provided to the contrary in this Lease,
Tenant agrees that, in any situation in which Landlord's consent or
approval is required pursuant to this Lease, the same may be granted or
withheld in Landlord's absolute discretion, and/or be made subject to such
conditions as Landlord, in Landlord's absolute discretion, may deem
appropriate.
B. Tenant shall have the right to submit a dispute relating to the
reasonableness of the grant or denial of a consent under Article 10 above,
or any other provision of this Lease where Landlord's consent is expressly
required to be reasonable or not unreasonably withheld, to binding
arbitration ("Expedited Arbitration") under the Expedited Procedures
provisions (Rules 53 through 57 in the current edition) of the Commercial
Arbitration Rules of the American Arbitration Association ("AAA"). In cases
where the parties utilize such arbitration: (i) the parties will have no
right to object if the arbitrator so appointed was on the list submitted by
the AAA and was not objected to in accordance with Rule 54, (ii) the first
hearing shall be held within seven (7) Business Days after the appointment
of the arbitrator, (iii) if the arbitrator shall find that Landlord had
acted unreasonably in withholding a consent or approval, such consent or
approval shall be deemed granted, and (iv) the losing party in such
arbitration shall pay the arbitration costs charged by AAA and/or the
arbitrator.
ARTICLE 12
CONDEMNATION
Section 12.01.
--------------
If 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. If only a part of the Demised Premises shall be so condemned or taken,
then this Lease shall remain in full force and effect, but, effective as of the
date of vesting of title, the Fixed Rent and Recurring Additional Rent hereunder
shall be abated in an amount apportioned according to the area of the Demised
Premises so condemned or taken. If only a part of the Building shall be so
condemned or taken (whether or not the Demised Premises shall be affected), then
(i) Landlord may, at Landlord's 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, and (ii) if
such condemnation or taking shall deprive Tenant of access to the Demised
Premises and Landlord shall not have provided or undertaken steps to provide
other means of access thereto, Tenant may, at Tenant's option, but only by
delivery of notice in writing to Landlord within sixty (60) days following the
date on which Tenant shall have received notice of vesting of title, terminate
this Lease and the term and estate hereby granted as of the date of vesting of
title. If neither Landlord nor Tenant elects to terminate this Lease as
aforesaid, this Lease shall be and remain unaffected by such condemnation or
taking, except that the Fixed Rent and Recurring Additional Rent shall be abated
to the extent, if any, hereinbefore provided in this Article 12. If 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 shall, with reasonable diligence and at Landlord's expense, restore the
remaining portion of the Demised Premises as nearly as practicable to the same
condition as existed prior to such condemnation or taking, provided that such
restoration shall not exceed the scope of the work done in originally
constructing the Building and that the cost thereof shall not exceed the net
proceeds of the award received by Landlord for the value of the portion of the
Demised Premises so taken, and Tenant shall be entitled to receive no part of
such award.
25
<PAGE>
Section 12.02.
--------------
In the event of any condemnation or taking hereinbefore mentioned of all or a
part of the Building or the Demised Premises, 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 part thereof, and
Tenant shall be entitled to receive no part of such award. In any condemnation
proceeding, Tenant may submit a separate claim against the condemning authority
for the value of Tenant's trade fixtures and the cost of removal or relocation,
if such separate claims are allowable as such and do not reduce the award
otherwise payable to Landlord.
Section 12.03.
--------------
If all or any portion of the Demised Premises shall be taken by the exercise of
the right of eminent domain for occupancy for a limited period, this Lease shall
continue in full force and effect and Tenant shall continue to pay in full the
Fixed Rent, additional rent and other charges herein reserved, without reduction
or abatement, and Tenant shall be entitled to receive so much of any award or
payment made for such use as shall be equal to the aforementioned payments that
are actually made by Tenant to Landlord during such temporary taking, except as
hereinafter provided, and Landlord shall receive the balance thereof. If such
award or payment shall be made in a lump sum, Landlord shall receive out of such
lump sum (and Tenant shall be credited with) an amount equal to the total of the
Fixed Rent, additional rent and other charges due to Landlord or to be paid by
Tenant under the terms of this Lease for the period of such taking (less any
amounts theretofore paid by Tenant to Landlord attributable to the period of
such taking), and such amount received by Landlord shall be held by Landlord as
a fund which Landlord shall apply from time to time to the payments due to
Landlord from Tenant under the terms of this Lease. Out of the balance of such
sum, if any, Tenant shall be paid in an amount equal to the amounts, if any,
theretofore paid by Tenant to Landlord attributable to the period of such
taking, and Landlord shall be paid the remainder of such balance. If such taking
shall be for a period not extending beyond the Lease Term, and if such taking
results in changes or Alterations in the Demised Premises which would
necessitate an expenditure to restore the Demised Premises to its former
condition, then Tenant at the termination of such taking shall, at Tenant's
expense, restore the Demised Premises to its former condition, and such portion
of the award or payment payable to Landlord, if any, in excess of the Fixed
Rent, additional rent and other charges for the period of such taking as shall
be necessary to cover the expenses of such restoration shall be applied to such
restoration, and the balance necessary, if any, shall be paid by Tenant. Tenant
shall also pay all fees, costs and expenses of every character and kind of
Landlord incurred in connection with such limited taking and obtaining the award
therefor, and in connection with such restoration.
ARTICLE 13
ACCESS; BUILDING NAME
Section 13.01.
--------------
Landlord reserves the right at any time and from time to time (without thereby
creating an actual or constructive eviction or incurring any liability to Tenant
therefor) to place such structures and to make such relocations, changes,
Alterations, additions, improvements, Repairs and replacements on the Land and
in or to the Building (including the Demised Premises) and the Building Systems,
and the operation of the Building Systems, as well as in or to the street
entrances, subway entrances, lobbies, halls, plazas, washrooms, tunnels,
elevators, stairways and other parts thereof, and to erect, maintain and use
concealed or furred pipes, ducts and conduits in and through the Demised
Premises, all as Landlord may in Landlord's sole discretion deem necessary or
desirable; provided, however, that Landlord shall use commercially reasonable
efforts (but shall not be required to use overtime or premium pay labor) to
minimize Tenant's use and occupancy of the Demised Premises arising from the
making of such Repairs, Alterations and improvements. Landlord shall also have
the right to install solar control window film on, or otherwise alter for energy
savings purpose, any windows of the Demised Premises. Nothing contained in this
Article 13 shall be deemed to relieve Tenant of any duty, obligation or
liability of Tenant with respect to making any repair, replacement or
improvement or complying with any Legal Requirements as elsewhere in this Lease
provided.
26
<PAGE>
Section 13.02.
--------------
Neither this Lease nor any use by Tenant shall give Tenant any right or easement
in or to the use of any door or hallways, or any passage or any tunnel or any
arcade or plaza or to any connection of the Building with any subway, railroad
or any other building or to any public conveniences, and the use of such doors,
halls, passages, tunnels, arcades, plazas, connections and conveniences may
without notice to Tenant be regulated or discontinued at any time and from time
to time by Landlord without Landlord incurring any liability to Tenant therefor
and without affecting the obligations of Tenant under this Lease.
Section 13.03.
--------------
Landlord, and (if applicable) Overlandlord and any Mortgagee, and their
representatives, may enter the Demised Premises upon reasonable advance notice
(which may be given orally to any management level or administrative employee of
Tenant) and at reasonable hours (except in an emergency, in which case entry may
be made at any time and without notice), and without Tenant being present, for
the purpose of inspection or of making Repairs, Alterations, additions,
restorations, replacements or improvements in or to the Demised Premises or the
Building or Building Systems or of complying with Legal Requirements or the
requirements of any Insurance Board, or of performing any obligation imposed on
Landlord by this Lease, or of exercising any right reserved to Landlord by this
Lease (including the right, during the progress of any Repairs or Alterations or
while performing work or furnishing materials in connection with compliance with
all such Legal Requirements or requirements of any Insurance Board, to keep and
store within the Demised Premises all necessary materials, tools and equipment),
provided that the foregoing shall not be deemed to impose any obligation on
Landlord or Overlandlord or Mortgagee to make any Repairs or Alterations.
Section 13.04.
--------------
Landlord may, at reasonable times and without Tenant being present, show the
Demised Premises to any prospective purchaser, lessee, mortgagee, or assignee of
the Building and/or the Land, or of Landlord's interest therein, and their
representatives. During the twelve (12) month period preceding the Expiration
Date, Landlord may similarly show the Demised Premises or any part thereof to
any person contemplating the leasing of all or a portion of the same. During the
last month of the Lease Term, if Tenant shall have removed all or substantially
all of Tenant's property from the Demised Premises, Landlord may immediately or
at any time thereafter enter, alter, renovate and/or redecorate the Demised
Premises without limitation or abatement of rent, or incurring liability to
Tenant for any compensation, and such act shall have no effect on this Lease or
Tenant's obligations hereunder.
Section 13.05.
--------------
Without incurring any liability to Tenant, Landlord may permit access to the
Demised Premises and open the same, whether or not Tenant shall be present, upon
demand of any receiver, trustee, assignee for the benefit of creditors, sheriff,
marshal or court officer entitled to, or purporting to be entitled to, such
access for the purpose of taking possession of, or removing, Tenant's property
or for any other lawful purpose (but by this provision any action by Landlord
hereunder shall not be deemed a recognition by Landlord that the person or
official permitted to such access has any right to such access or interest in or
to this Lease, or in or to the Demised Premises), or upon demand of any
representative of the fire, police, building, sanitation or other department of
the city, state or federal governments.
Section 13.06.
--------------
Landlord shall have the absolute right at any time, and from time to time, to
name and change the name of the Building and to change the designated address of
the Building. The Building may be named after any person, or otherwise, whether
or not such name shall be, or shall resemble, the name of a tenant of space in
the Building.
Section 13.07.
--------------
Any reservation of a right by Landlord to enter upon the Demised Premises and to
make or perform any Repairs, Alterations or other work in, to or about the
Demised Premises which, in the first instance, is the obligation of Tenant
pursuant to this Lease, shall not be deemed to: (i) impose any obligation on
Landlord to do so, (ii) render Landlord liable (to Tenant or any third party)
for the failure to do so, or (iii) relieve Tenant from any obligation to
indemnify Landlord as otherwise provided elsewhere in this Lease.
Section 13.08.
--------------
Subject to the provisions of this Lease and to circumstances beyond the control
of Landlord, Tenant shall have access to the Demised Premises on a 24-hour per
day, 365-day per year, basis.
ARTICLE 14
BANKRUPTCY
Section 14.01.
--------------
This Lease and the term and estate hereby granted shall be subject to the
conditional limitation that, if any one or more of the following events shall
occur: (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) have made a general assignment for the benefit of
creditors, (c) 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 (d) 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 (a) 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 with respect to all or a substantial part of Tenant's
properties or assets, or (b) appointing a receiver, trustee, liquidator or other
custodian of Tenant or of all or a substantial part of Tenant's properties or
assets, and such order, judgment or decree shall have continued unstayed and in
effect for any period of ninety (90) days or more, then this Lease may be
cancelled and terminated by Landlord by the sending of a written notice to
Tenant within a reasonable time after Landlord shall be notified of the
happening of any of the aforedescribed events. 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 have been
theretofore assigned in accordance with the provisions of Article 10 above, then
the provisions of this Article 14 shall be applicable only to the party then
owning Tenant's interest in this Lease.
27
<PAGE>
Section 14.02.
--------------
Without limiting any of the foregoing provisions of this Article, if, pursuant
to the United States Bankruptcy Code, Tenant shall be permitted to assign this
Lease notwithstanding the restrictions contained in this Lease, Tenant agrees
that adequate assurance of future performance by an assignee expressly permitted
under such Code shall be deemed to mean (a) the deposit of cash security in an
amount equal to the sum of three (3) monthly installments of the Fixed Rent plus
the Recurring Additional Rent for the calendar year preceding the year in which
such assignment is intended to become effective, which deposit shall be held by
Landlord for the balance of the Lease Term, without interest, as security for
the full performance of all of the obligations under this Lease on the part of
Tenant to be performed, and (b) evidence by financial statement prepared and
certified by a certified public accountant that the assignee has a current net
worth, after including the assignment and excluding the value of the leasehold,
sufficient to meet all of the remaining rental obligations under this Lease.
ARTICLE 15
DEFAULTS, REMEDIES, DAMAGES
Section 15.01.
--------------
A. This Lease and the term and estate hereby granted shall be subject to the
conditional limitation that, if any one or more of the following events
(collectively, "Events of Default") shall occur:
(i) Tenant shall fail to pay to Landlord the full amount of any
installment of Fixed Rent or any additional rent, or any other charge
payable hereunder by Tenant to Landlord, within ten (10) days after
the date upon which the same shall first become due; or
(ii) Tenant shall do anything or permit anything to be done, whether by
action or inaction, in breach of any covenant, agreement, term,
provision or condition of this Lease, or any Exhibit annexed hereto,
on the part of Tenant to be kept, observed or performed (other than a
breach of the character referred to in clause 15.01A(i) above), and
such breach shall continue and shall not be fully remedied by Tenant
within fifteen (15) days after Landlord shall have given to Tenant a
notice specifying the same (except in connection with a breach which
cannot be remedied or cured within said fifteen (15) day period, in
which event the time of Tenant within which to cure such breach shall
be extended for such time as shall be necessary to cure the same, but
only if Tenant, within such fifteen (15) day period, shall promptly
commence and thereafter proceed diligently and continuously to cure
such breach, and provided further that such period of time shall not
be so extended as to jeopardize the interest of Landlord in the Land
and/or the Building or so as to subject Landlord to any liability,
civil or criminal); or
(iii)Any event shall occur or any contingency shall arise whereby this
Lease or the estate hereby granted or the unexpired balance of the
Lease Term would, by operation of law or otherwise, devolve upon or
pass to any person, firm, association or corporation other than
Tenant, except as may be expressly authorized herein; or
(iv) Tenant shall abandon the Demised Premises, for sixty (60) consecutive
days, or the same shall become vacant (whether or not the keys be
surrendered, and whether or not the rent be paid, and whether or not
improvements, personal property or trade fixtures remain in the
Demised Premises), or Tenant shall fail to take possession or move
into the Demised Premises within sixty (60) days after the completion
of Tenant's Initial Work; or
(v) Tenant, or any parent, affiliate or subsidiary of Tenant, (a) shall be
the tenant or occupant of any other space in the Building, and (b)
shall default in the performance of any of its obligations under the
relevant lease or other occupancy agreement (whether or not the term
thereof shall then have commenced), and such default shall continue
after the expiration of the applicable cure period (if any) provided
in such lease or other occupancy agreement; or
(vi) subject to the provisions of Subsection 35.03B below, there shall be
more than three hundred sixty (360) people present, in the aggregate,
in the Demised Premises at any one time;
28
<PAGE>
then, upon the occurrence of any of said events, Landlord may at any time
thereafter give to Tenant a notice of termination of this Lease setting
forth a termination date three (3) days from the date of the giving of such
notice, and, upon the giving of such notice, this Lease and the term and
estate hereby granted (whether or not the Lease Term shall theretofore have
commenced) shall expire and terminate upon the expiration of said three (3)
days with the same effect as if that day were the date hereinbefore set for
the expiration of the Lease Term, but Tenant shall remain liable for
damages as provided in Section 15.03 below.
B. If any Event of Default shall occur three (3) times within any period of
twelve (12) months, then, notwithstanding that each such Event of Default
shall have been cured, any further defaults of the same or a substantially
similar nature occurring within said twelve (12) month period shall be
deemed an Event of Default, whereupon Landlord shall have the right at any
time thereafter to terminate this Lease as set forth in Subsection 15.01A
above, without affording Tenant any right or opportunity to cure said
default.
Section 15.02.
--------------
A. If an Event of Default shall have occurred, Landlord and/or Landlord's
agents and employees, whether or not this Lease shall have been terminated
pursuant to Articles 14 or 15, may, without notice to Tenant, immediately
or at any time thereafter re-enter into or upon the Demised Premises or any
part thereof, either by summary dispossess proceedings or by any suitable
action or proceeding at law, or by force or otherwise, to the extent
legally permitted, without being liable to indictment, prosecution or
damages therefor, and may repossess the same, and may remove any persons or
property therefrom, to the end that Landlord may have, hold and enjoy the
Demised Premises again as and of its first estate and interest therein. The
words "re-enter", "re-entry" and "re-entered" as used in this Lease are not
restricted to their technical legal meanings. In the event of any
termination of this Lease under the provisions of Articles 14 or 15, or in
the event that Landlord shall re-enter the Demised Premises under the
provisions of this Article 15, or in the event of the termination of this
Lease (or of re-entry) by or under any summary dispossess or other
proceeding or action or any provision of law, Tenant shall thereupon pay to
Landlord the Fixed Rent, additional rent and any other charges payable
hereunder by Tenant to Landlord up to the time of such termination of this
Lease, or of such recovery of possession of the Demised Premises by
Landlord, as the case may be, plus the expenses incurred or paid by
Landlord in terminating this Lease or of re-entering the Demised Premises
and securing possession thereof, including reasonable attorneys' fees and
costs of removal and storage of Tenant's property, and Tenant shall also
pay to Landlord damages as provided in Section 15.03 below.
B. In the event of the re-entry into the Demised Premises by Landlord under
the provisions of this Section 15.02, and if this Lease shall not be
terminated, Landlord may (but shall have absolutely no obligation to do
so), not in Landlord's own name, but as agent for Tenant, relet the whole
or any part of the Demised Premises for any period equal to or greater or
less than the remainder of the original term of this Lease, for any sum
which Landlord may deem suitable, including rent concessions, and for any
use and purpose which Landlord may deem appropriate. Such reletting may
include any improvements, personalty and trade fixtures remaining in the
Demised Premises.
C. In the event of a breach or threatened breach on the part of Tenant with
respect to any of the covenants, agreements, terms, provisions or
conditions on the part of or on behalf of Tenant to be kept, observed or
performed, Landlord shall also have the right to obtain injunctive relief.
D. In the event of (i) the termination of this Lease under the provisions of
Articles 14 or 15, or (ii) the re-entry of the Demised Premises by Landlord
under the provisions of this Section 15.02, or (iii) the termination of
this Lease (or re-entry) by or under any summary dispossess or other
proceeding or action or any provision of law by reason of default hereunder
on the part of Tenant, Landlord shall be entitled to retain all monies, if
any, paid by Tenant to Landlord, whether as advance rent, security deposit
or otherwise, but such monies shall be credited by Landlord against any
Fixed Rent, additional rent or any other charge due from Tenant at the time
of such termination or re-entry or, at Landlord's option, against any
damages payable by Tenant under Section 15.03 or pursuant to law.
E. The specified remedies to which Landlord may resort under this Lease are
cumulative and concurrent, and are not intended to be exclusive of each
other or of any other remedies or means of redress to which Landlord may
lawfully be entitled at any time, and Landlord may invoke any remedy
allowed under this Lease or at law or in equity as if specific remedies
were not herein provided for, and the exercise by Landlord of any one or
more of the remedies allowed under this Lease or in law or in equity shall
not preclude the simultaneous or later exercise by the Landlord of any or
all other remedies allowed under this Lease or in law or in equity.
Section 15.03.
--------------
A. In the event of any termination of this Lease under the provisions hereof
or under any summary dispossess or other proceeding or action or any
provision of law, or in the event that Landlord shall re-enter the Demised
Premises under the provisions of this Lease, Tenant shall pay to Landlord
as damages, at the election of Landlord, either:
(i) 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 (a) 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, over (b) the
aggregate rental value of the Demised Premises for the same period
(the amounts of each of clauses (a) and (b) being first discounted to
present value at an annual rate equal to the then prevailing discount
rate announced by the Federal Reserve Bank); or
29
<PAGE>
(ii) 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 herein
before set for the expiration of the full term hereby granted;
provided, however, that if Landlord shall relet the Demised Premises
during said period, Landlord shall credit Tenant with the net rents
received by Landlord from such reletting, such net rents to be
determined by first deducting from the gross rents as and when
received by Landlord from such reletting the expenses incurred or paid
by Landlord in terminating this Lease and of re-entering the Demised
Premises and of securing possession thereof, including reasonable
attorneys' fees and costs of removal and storage of Tenant's property,
as well as the expenses of reletting, including repairing, restoring
and improving the Demised Premises for new tenants, brokers'
commissions, advertising costs, reasonable attorneys' fees and
disbursements, and all other similar or dissimilar expenses chargeable
against the Demised Premises and the rental therefrom in connection
with such reletting, it being understood that such reletting may be
for a period equal to or shorter or longer than the remaining term of
this Lease; and provided further, that (a) in no event shall Tenant be
entitled to receive any excess of such net rents over the sums payable
by Tenant to Landlord hereunder, (b) in no event shall Tenant be
entitled in any suit for the collection of damages pursuant to this
Subdivision (ii) to a credit in respect of any net rents from a
reletting except to the extent that such net rents are actually
received by Landlord prior to the commencement of such suit, and (c)
if the Demised Premises or any part thereof should be relet in
combination with other space, then proper apportionment on a square
foot area basis shall be made of the rent received from such reletting
and of the expenses of reletting, or if relet for a period longer than
the remaining term of this lease, the expenses of reletting shall be
apportioned based on the respective periods.
B. For the purposes of Subdivision A(i) of this Section 15.03, the amount of
additional rent which would have been payable by Tenant under Article 19
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
Landlord's 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 14 or 15, or under any provision of law, or had Landlord not
re-entered the Demised Premises.
Section 15.04.
--------------
Nothing contained in this Article 15 shall be construed as limiting or
precluding the recovery by Landlord against Tenant of any payments or damages to
which, in addition to the damages particularly provided above, Landlord may
lawfully be entitled by reason of any default hereunder on the part of Tenant.
The failure or refusal of Landlord to relet the Demised Premises or any part or
parts thereof, or the failure of Landlord to collect the rent thereof under such
reletting, shall not release or affect Tenant's liability for damages.
Section 15.05.
--------------
Tenant, for Tenant, and on behalf of any and all persons claiming through or
under Tenant, including creditors of all kinds, does hereby waive and surrender
all right and privilege which they or any of them might have under or by reason
of any present or future law to redeem the Demised Premises, or to have a
continuance of this Lease for the term hereby demised, after Tenant shall be
dispossessed or ejected therefrom by process of law or under the terms of this
Lease or after the expiration or termination of this Lease as herein provided or
pursuant to law. Tenant also waives the provisions of any law relating to notice
and/or delay in levy of execution in case of an eviction or dispossess of a
tenant for non-payment of rent, and of any other law of like import now or
hereafter in effect. In the event that Landlord shall commence any summary
proceeding for non-payment of rent or for holding over after the expiration or
sooner termination of this Lease, Tenant shall not, and hereby expressly waives
any right to, interpose any counterclaim of whatever nature or description in
any such proceeding.
Section 15.06.
--------------
The provisions of this Article 15 shall survive the expiration or sooner
termination of this Lease.
ARTICLE 16
CURING TENANT'S DEFAULTS; REIMBURSEMENT
Section 16.01.
--------------
If Tenant shall default (after notice and the expiration of the applicable cure
period) in the observance or performance of any term, covenant, provision or
condition on Tenant's part to be observed or performed under or by virtue of any
of the terms or provisions in this Lease, then, unless otherwise provided
elsewhere in this Lease, Landlord may immediately or at any time thereafter and
without notice perform the obligation of Tenant thereunder, and if Landlord, in
connection therewith or in connection with any default by Tenant in the covenant
to pay Fixed Rent or additional rent hereunder, shall make any expenditures or
incur any obligations for payment of money, including court costs and reasonable
attorneys' fees and disbursements, in instituting, prosecuting or defending any
action or proceeding, then such fees, disbursements, costs and expenses so paid
or obligations incurred shall be additional rent to be paid by Tenant to
Landlord, upon demand, with interest thereon at an annual rate (the "Interest
Rate") equal to the lesser of: (a) the then prevailing prime rate (which, for
the purposes hereof, includes any equivalent or successor interest rate, however
denominated) of interest for unsecured ninety-day loans by Citibank, N.A. (or
The Chase Manhattan Bank, N.A., if Citibank, N.A. shall not then have an
established prime rate; or Chemical Bank, if neither Citibank, N.A. nor The
Chase Manhattan Bank, N.A., shall then have an established prime rate; or the
prime rate of any major banking institution doing business in New York City, as
selected by Landlord, if none of the aforementioned banks shall be in existence
or have an established prime rate) plus two (2) percentage points, or (b) the
maximum rate allowed by law. Any interest payable by Tenant pursuant to this
Lease at the Interest Rate shall be calculated from the day such expenditure is
made or obligation is incurred until the date when such payment is finally and
completely paid by Tenant to Landlord.
30
<PAGE>
Section 16.02.
--------------
Bills for any property, material, labor or services provided, furnished or
rendered, or caused to be provided, furnished or rendered, by Landlord to
Tenant, may be sent by Landlord to Tenant monthly (or immediately, at Landlord's
option), and shall be due and payable by Tenant as additional rent within ten
(10) days after the same shall be sent to Tenant by Landlord. If Landlord shall
commence a summary proceeding against Tenant for non-payment of rent, Tenant
shall reimburse Landlord as additional rent for Landlord's reasonable attorneys'
fees and expenses, both if judgment is awarded for Landlord, or if Tenant makes
the payment subsequent to service of process but prior to entry of judgment. If
Tenant or any subtenant of Tenant shall request Landlord's consent to any matter
that requires Landlord's consent under this Lease and if Landlord (in Landlord's
sole discretion) shall refer the matter to Landlord's attorneys or other
professionals or consultants, then, whether or not such consent shall be
granted, Tenant shall reimburse Landlord for the reasonable fees and
disbursements incurred by Landlord in connection therewith as additional rent
within ten (10) days after a bill therefor shall have been rendered.
Section 16.03.
--------------
If the Term shall have expired or been terminated after or on the date that
Landlord shall have made any of the expenditures, or incurred any of the
obligations, set forth in this Article 16, then all such amounts and any
interest thereon, as set forth in Section 16.01 above, shall be recoverable by
Landlord as damages. The provisions of this Article 16 shall survive the
expiration or sooner termination of this Lease.
ARTICLE 17
QUIET ENJOYMENT
Section 17.01.
--------------
Landlord covenants that, if and for so long as Tenant shall pay all of the Fixed
Rent and additional rent reserved hereunder and shall observe and perform all of
the terms, agreements, covenants, provisions and conditions of this Lease on
Tenant's part to be observed and performed, and not be in default with respect
to any of Tenant's obligations under this Lease after notice and the expiration
of the applicable cure period, 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, by reason of the foreclosure of any Mortgage now or hereafter affecting
the Demised Premises or by reason of any termination of any Underlying Lease to
which this Lease is or shall become subject and subordinate, whether such
termination is effected 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. This covenant shall be construed as a covenant running
with the Land, and is not, nor shall it be construed as, a personal covenant of
Landlord, except to the extent of Landlord's interest in this Lease and only for
so long as such interest shall continue. Accordingly, this covenant shall bind
and be enforceable against Landlord or any successor to Landlord's interest,
subject to the terms hereof, only for so long as Landlord or any successor to
Landlord's interest, respectively, shall be in possession and shall be
collecting rent from Tenant, but not thereafter.
ARTICLE 18
BUILDING SERVICES
Section 18.01.
--------------
A. From and after the date that Tenant shall be ready to occupy the Demised
Premises for the conduct of Tenant's business therein, if this lease shall
be in full force and effect, Landlord shall provide the following services:
(i) passenger and freight elevator service on Business Days, during
Business Hours, and, subject to the provisions of Section 18.03 below,
have one elevator on call at all other times. Tenant agrees that
Landlord may, at Landlord's election, install elevators with or
without operators and may change the same from time to time;
31
<PAGE>
(ii) freight elevator service on Business Days, during the hours of 8 A.M.
to 4 P.M.;
(iii)water for purposes (including lavatory and pantry purposes)
consistent with the Authorized Use. Landlord shall (or, at Landlord's
direction, Tenant shall) install a meter or meters or other means to
measure Tenant's water consumption, and Tenant agrees to pay 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 for the cost of all water consumed as
measured by said meter or meters or as otherwise measured including
sewer rents, plus five (5%) percent of the resulting total, as
additional rent, on a monthly basis at the same time as Tenant shall
pay Fixed Rent in accordance with Article 3 above; and
(iv) low pressure steam in order to heat Tenant's fresh air supply.
Landlord shall (or, at Landlord's direction, Tenant shall) install a
meter or meters or other means to measure Tenant's steam consumption,
and Tenant agrees to pay 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 steam consumption by Tenant. Tenant shall reimburse Landlord for
the cost of all steam consumed as measured by said meter or meters or
as otherwise measured, plus five (5%) percent of the resulting total,
as additional rent, within ten (10) days after bills therefor are
rendered. Alternatively, at Landlord's election, upon ten (10) days
notice to Tenant, Landlord may shut such meter or meters off, and
Landlord shall charge Tenant Landlord's reasonable cost of all steam
consumed by Tenant, plus five (5%) of the resulting total, as
additional rent, within ten (10) days after bills therefor are
rendered. Tenant shall, as part of Tenant's Initial Work, be permitted
(subject to Landlord's approval in accordance with the provisions of
Article 5 above) to tap into the low pressure steam line located in
the Building's steam service room in order to access such steam.
(v) cleaning of the Demised Premises on Business Days in accordance with
the specifications set forth in Exhibit "E" annexed hereto and made a
part hereof, provided that (x) the Demised Premises are kept in
reasonable order by Tenant, and (y) Tenant shall have separated
Tenant's refuse and rubbish in the manner required by applicable Legal
Requirements. Tenant shall reimburse Landlord for the cost of removal
from the Demised Premises and the Building of so much of Tenant's
refuse and rubbish (x) as shall exceed that ordinarily accumulated
daily in the routine of business office occupancy or (y) resulting
from any use of the Demised Premises during hours other than Business
Hours (collectively, "Extra Rubbish Removal"). The reimbursement for
Extra Rubbish Removal shall be made by Tenant to Landlord, as
additional rent, within ten (10) days after bills therefor are
rendered.
B. During Business Hours on Business Days only, Landlord shall provide
air-conditioning, ventilation and heat to the Demised Premises in
accordance with the specifications set forth in Exhibit "I" annexed hereto
and made a part hereof through one or more air-conditioning units (the
"Building Units") installed by Landlord in the Building. Landlord shall
repair and (if necessary) replace the Building Units, subject to the
provisions of Section 6.02 above. Tenant shall, as part of Tenant's Initial
Work, connect to the existing Building Unit ductwork servicing the Demised
Premises. The Building Units shall at all times be the exclusive property
of Landlord, and, if located in the Demised Premises, shall be surrendered
to Landlord with the Demised Premises upon the expiration or sooner
termination of this Lease. All work, maintenance, repair and replacement
relating to the distribution system (including ducts and other conduits)
shall be the responsibility of Tenant to perform, at Tenant's own cost and
expense. Tenant shall be required to pay (in accordance with the provisions
of Article 20 below) for all electricity necessary or used in connection
with air-conditioning and ventilation in the Demised Premises. Tenant shall
at all times cooperate fully with Landlord and abide by the regulations and
requirements which Landlord may prescribe for the proper functioning and
protection of the air-conditioning and ventilation system.
C. (i) All air-conditioning, ventilation and heat required by Tenant for
Overtime Periods or to supplement the air-conditioning, ventilation
and heat supplied by Landlord through the Building Units shall be
obtained by Tenant for the Demised Premises by means of one or more
new water-cooled, package air-conditioning units (the "HVAC Unit(s)")
which shall be installed in the Demised Premises as part of Tenant's
Initial Work (provided that Tenant shall have obtained Landlord's
prior approval of plans and specifications therefor, and provided
further that Tenant shall otherwise comply with all other provisions
of Article 5 above in connection therewith), and, operated,
maintained, repaired and (if necessary) replaced by Tenant, at
Tenant's own cost and expense. Landlord shall provide Tenant with
access to (i) the Building fresh air duct servicing the Demised
Premises, and (ii) an amount of fresh air which shall be sufficient to
support a load of forty (40) tons of supplemental air-conditioning.
Upon the expiration or sooner termination of the Lease Term, the HVAC
Unit(s) shall become the property of Landlord and shall be surrendered
with the Demised Premises. In addition, all work, maintenance, repair
and replacement relating to the distribution system (including ducts
and other conduits) shall be the responsibility of Tenant to perform,
at Tenant's own cost and expense. Tenant shall be required to pay (in
accordance with the provisions of Article 20 below) for all
electricity necessary or used in connection with air-conditioning and
ventilation in the Demised Premises. Tenant shall at all times
cooperate fully with Landlord and abide by the regulations and
requirements which Landlord may prescribe for the proper functioning
and protection of the air-conditioning and ventilation system.
32
<PAGE>
(ii) Tenant has notified Landlord that Tenant may require supplemental
air-conditioning of the Demised Premises, and has requested that
Landlord reserve sufficient condenser water for up to a maximum of
forty (40) tons of supplemental air-conditioning. Landlord agrees to
reserve and shall supply said amount of condenser water, provided
that, from and after the Commencement Date and within thirty (30) days
after being billed therefor, Tenant shall pay to Landlord, as
additional rent, Landlord's then-current charges for usage of
condenser water. The current charge for condenser water is $350.00 per
ton, per annum, subject to increases in accordance with the provisions
of subdivision 18.01F(iii) below, and payable in equal monthly
installments at the same time as Tenant pays Fixed Rent in accordance
with Article 3 above. Tenant shall also, at Tenant's own cost and
expense, perform the "tap in" connection to the appropriate riser
servicing the Demised Premises. (Tenant shall not have the right to
use any existing "tap in" connection, pipes or other equipment located
in or serving the Demised Premises with respect to such condenser
water; it being agreed that Tenant shall install such equipment during
the performance of Tenant's Initial Work.) Promptly following the date
on which Tenant shall have notified Landlord as to the exact quantity
of condenser water desired by Tenant in connection therewith, Landlord
shall supply condenser water for up to a maximum of forty (40) tons of
supplemental air-conditioning in the Demised Premises. Landlord shall
not be liable to Tenant if the temperature or purity of condenser
water fails to meet minimum standards at any time or for any reason.
Tenant is on notice that condenser water systems are not foolproof,
and covenants to install self-protective measures, including a heat
exchanger and pumping system.
(iii)The charge for condenser water shall be adjusted on each January 1st
during the Lease Term to equal the product derived by multiplying the
then-current charge for condenser water by a fraction, the numerator
of which is the Index (as hereinafter defined) for January of the year
in question, and the denominator of which is the Index for January,
2000.
(iv) The term "Index" shall mean the Revised Consumer Price Index for the
Urban Wage Earners and Clerical Workers published by the Bureau of
Labor Statistics of the United States Department of Labor, for New
York-Northern New Jersey-Long Island, NY-NJ-CT, All Items (1982-84 =
100). If the Bureau of Labor Statistics of the United States
Department of Labor (the "BLS") changes the publication frequency of
the Index so that an Index is not available to make any adjustment
specified herein, the adjustment in question shall be based on the
percentage difference between the Index for the closest preceding
month for which an Index is available and the Index for the month one
year prior to such closest preceding month. If the BLS changes the
base reference period for the Index from 1982-84 = 100, the
adjustments required hereunder shall be determined with the use of
such conversion formula or table as may be published by the BLS. If
the BLS otherwise substantially revises, or ceases publication of, the
Index, then a substitute index for determining the adjustments
required hereunder, issued by the BLS or by a reliable governmental or
other nonpartisan publication, shall be reasonably designated by
Landlord.
D. Tenant expressly acknowledges that all Building windows are hermetically
sealed and will not open, and Landlord makes no representation as to the
habitability of the Demised Premises at any time that the Building Units
and/or the HVAC Unit(s) or the air-conditioning and ventilation
distribution systems are not in operation. Tenant hereby expressly waives
any claims against Landlord arising out of the cessation of operation of
the Building Units, the HVAC Unit(s) or the air-conditioning and
ventilation distribution systems, or the suitability of the Demised
Premises when the same are not in operation, whether due to normal
scheduling or the reasons set forth in Section 18.03 below.
E. If Tenant shall require freight elevator service at any time other than the
time periods set forth in Subdivision 18.01A(ii) above, Landlord shall
endeavor to accommodate Tenant, provided that Landlord shall have received
reasonable advance notice of such requirement, and provided further that
Tenant shall pay to Landlord, as additional rent and within ten (10) days
after being billed therefor, Landlord's then established hourly rate for
such usage, with a four (4) hour minimum. Landlord agrees that said hourly
rate shall not exceed the actual cost incurred by Landlord to provide such
freight elevator usage. Tenant acknowledges and agrees that use by Tenant
of the freight elevator during Business Hours in connection with the
performance of Tenant's Initial Work shall be subject to Landlord's
reasonable discretion.
F. Intentionally omitted.
G. (i) Tenant acknowledges and agrees that, in order to obtain a
sufficient quantity of fresh air and as part of Tenant's Initial Work,
Tenant shall be required, at Tenant's own cost and expense (but
subject to Landlord's prior written approval in accordance with
Article 5 above), to install a fresh air intake and exhaust system
(including a smoke purge component) that complies with all applicable
Legal Requirements, which system shall be constructed in such a manner
so that the intake and exhaust components of the system shall be
routed through the elevator shaft (the "Elevator Shaft") adjacent to
the Demised Premises, which is shown on the hatched portion of the
plan annexed hereto as Exhibit "L" and made a part hereof. Tenant
agrees to accept possession of the Elevator Shaft on the Commencement
Date in "as is" and "where is" condition, and Landlord shall not be
required to perform any work (including the removal of the elevator
car located in the Elevator Shaft as of the date hereof) with respect
to the Elevator Shaft. Tenant shall also install such dampers and
controls as shall be sufficient to isolate such fresh air intake and
exhaust system from the Building Systems. Notwithstanding the
foregoing, Landlord shall, at Tenant's reasonable cost and expense,
perform any work outside of the Demised Premises required to be
performed in connection with the installation of such fresh air intake
and exhaust system.
(ii) Tenant acknowledges and agrees that, if, due to Tenant's occupancy of
the Demised Premises, any Legal Requirement shall require that the
Demised Premises be equipped with a mechanical ventilation and exhaust
system, then Tenant shall be required, at Tenant's own cost and
expense (but subject to Landlord's prior written approval in
accordance with Article 5 above), to install a mechanical ventilation
and exhaust system that complies with all applicable Legal
Requirements.
33
<PAGE>
H. (i) Subject to the provisions of subdivision (iii) below, Tenant shall be
permitted, at Tenants cost and expense, to tap into an emergency
generator and fuel tank system installed by Landlord in the Building,
which shall be designated by Landlord in Landlords sole discretion
(the "Emergency Generator"), in order to provide the Demised Premises
with up to 40KW of emergency power capacity (the "Emergency Power"),
including adequate fuel tank capacity to ensure twenty-four (24) hours
of continuous usage between fuel deliveries. Landlord shall provide
the Emergency Power to Tenant. Landlord shall maintain the Emergency
Generator, and, in consideration therefor, Tenant shall pay to
Landlord, as additional rent, an annual fee in the amount of Eight
Thousand ($8,000) Dollars (the "Emergency Power Charge") per annum,
payable in equal monthly installments of $666.67 on the first day of
each calendar month during the Term together with the Fixed Rent,
without any set-off, reduction or deduction whatsoever. The Emergency
Power Charge shall be adjusted on each January 1st during the Lease
Term to equal the product derived by multiplying the then-current
Emergency Power Charge by a fraction, the numerator of which is the
Index for January of the year in question, and the denominator of
which is the Index for January 2000.
(ii) Landlord shall not be liable to Tenant for any loss, damage, injury,
claim or liability, including liability or claims for interruption or
loss of business or any special, indirect or consequential damages,
arising from (i) any interruption, impairment or termination of the
Emergency Generator resulting from any cause whatsoever, or (ii) the
maintenance, repair, cleaning, operation or stoppage of operation of
or defect in the Emergency Generator or the Emergency Power for any
reason whatsoever and Tenant shall not be released or excused from the
performance of any of Tenants obligations under the Lease for any such
interruption, impairment or termination.
(iii)Tenant acknowledges and agrees that, in the event that Landlord shall
not have installed or designated for Tenant's use the Emergency
Generator on or prior to the date on which Tenant shall first occupy
the Demised Premises for the conduct of Tenant's business therein,
Landlord shall install and/or designate for Tenant's use a temporary
emergency generator, which generator Tenant shall be entitled to use,
subject to and in accordance with the provisions of this Subsection
18.01H, until such time as Landlord shall have (x) installed the
Emergency Generator, and (y) notified Tenant of such installation.
Section 18.02.
--------------
The term "Business Days" shall be deemed to mean all days other than Saturdays,
Sundays and Holidays. The term "Holidays" shall be deemed to mean all federal,
state, municipal and bank holidays and Building Service Employees and Operating
Engineer's Union contract holidays now or hereafter in effect. The term
"Business Hours" shall be deemed to mean 8 A.M. to 6 P.M. on Business Days. The
term "Overtime Periods" shall mean all times other than Business Hours on
Business Days.
Section 18.03.
--------------
Landlord reserves the right to stop the furnishing of the Building services and
to stop service of the Building Systems, when necessary, by reason of accident,
or emergency, or for Repairs and Alterations in the judgment of Landlord
desirable or necessary to be made, until said Repairs and Alterations shall have
been completed; and Landlord shall have no responsibility or liability for
failure to supply heat, elevator, plumbing, electric or other services during
said period or when prevented from so doing by strikes, lockouts, difficulty of
obtaining materials, accidents or by any cause beyond Landlord's reasonable
control, or by Legal Requirements or failure of electricity, water, steam, coal,
oil or other suitable fuel or power supply, or inability by exercise of
reasonable diligence to obtain electricity, water, steam, coal, oil or other
suitable fuel or power. No diminution or abatement of rent or other compensation
shall or will be claimed by Tenant, nor shall this Lease or any of the
obligations of Tenant be affected or reduced, by reason of such interruption,
curtailment or suspension, nor shall the same constitute an actual or
constructive eviction.
Section 18.04.
--------------
Tenant shall, at Tenant's own cost and expense, abide by all requirements which
Landlord may prescribe for the proper protection and functioning of the Building
Systems and the furnishing of the Building services. Tenant also shall, at
Tenant's own cost and expense, cooperate with Landlord in any conservation
effort pursuant to a program or procedure promulgated or recommended by ASHRAE
(or any successor organization) or any Legal Requirements.
Section 18.05.
--------------
A. Tenant acknowledges receipt of advice from Landlord to the effect that
Landlord may elect to operate a messenger service center in the Building
and, as an additional Building service, to make the same available for use
by the tenants of the Building. Tenant agrees that, if Landlord shall so
elect, Landlord may require that all deliveries to the Demised Premises be
made to the Building messenger service center.
B. Without limiting the generality of the provisions of Section 18.03 above,
Landlord reserves the right, which may be exercised in Landlord's
unfettered discretion and for any reason whatsoever, to stop making the
Building messenger service center available for use by the tenants of the
Building; and Landlord shall have no responsibility or liability to Tenant
for doing so or for otherwise failing to operate the Building messenger
service center. Tenant expressly waives any claim against Landlord and
Landlord's agents arising from or in connection with the use by Tenant or
others of said messenger service center.
34
<PAGE>
ARTICLE 19
TAXES; OPERATING EXPENSES
Section 19.01.
--------------
In addition to the Fixed Rent and additional rent hereinbefore reserved, Tenant
covenants and agrees to pay Landlord, as additional rent, all amounts computed
in accordance with the provisions set forth in this Article 19.
Section 19.02.
--------------
For the purposes of this Lease:
A. The term "Taxes" shall mean (whether represented by one or more bills) the
amount which shall be equal to the product obtained by multiplying (x) the
assessed valuation of the Land and Building, and the sidewalks, plazas,
streets and alleys in front of or adjacent thereto, and any rights or
interests appurtenant thereto, by (y) the tax rate established for said Tax
Year, both as determined by the governmental authority having jurisdiction
thereover (the "Taxing Authority"). If, due to a future change in the
method of taxation or as required by the Taxing Authority, a franchise,
income, gross receipts, transit, profit or other tax or governmental
imposition, however designated (including any tax, excise or fee, measured
by or payable with respect to any rents, licenses or other charges received
by Landlord and levied against Landlord, Land and/or the Building) shall be
levied against Landlord, the Land and/or the Building in substitution (in
whole or in part) for, or as an addition to or in lieu of, any Taxes, then
such franchise, income, gross receipts, transit, profit or other tax or
governmental imposition shall be deemed to be included within the
definition of the term "Taxes" for the purposes hereof, excluding any
general income, corporate franchise, estate, inheritance, succession,
capital stock or transfer tax levied on Landlord.
B. The term "Tax Year" shall mean every twelve (12) consecutive month period,
all or any part of which shall occur during the Lease Term, commencing each
July 1 or such other date as shall be the first day of the fiscal tax year
of The City of New York or other governmental agency determined by Landlord
to be responsible for the collection of substantially all Taxes.
C. The term "Operating Year" shall mean each calendar year, all or any part of
which shall occur during the Lease Term, following the Base Operating Year.
D. The term "Operating Statement" shall mean a written statement prepared by
Landlord or Landlord's agent, setting forth Landlord's computation of the
amount payable by Tenant pursuant to Section 19.04 for a specified
Operating Year.
E. The term "Operating Expenses" shall mean (subject to the provisions of
Subsection 19.02G below) all costs and expenses paid or incurred by
Landlord or on Landlord's behalf in connection with the ownership,
management, repair, maintenance, replacement, restoration or operation of
the Building, the Land and any plazas, sidewalks, curbs and appurtenances
thereto, including the following items (which items are illustrative of
items to be included in Operating Expenses):
(i) "Labor Costs" (as such term is defined below) of persons performing
services in connection with the operation, repair and maintenance of
the Land or the Building;
(ii) the cost of (including any rental cost of) materials and supplies used
in the operation, cleaning, safety, security, renovation, replacement,
repair and maintenance of the Building and its plazas (if any),
sidewalks, curbs and appurtenances, and any plant, equipment,
facilities and systems designed to supply heat, ventilation,
air-conditioning or any other services or utilities, or comprising any
portion of the electrical, gas, steam, plumbing, sprinkler,
mechanical, communications, alarm, security or fire/life safety
systems or equipment, including any sales and other taxes thereon;
(iii)the depreciation for, or the rental cost or value (including
applicable sales taxes) of, hand tools and other movable equipment
used in the operation, cleaning, safety, security, repair or
maintenance of the Building and its plazas (if any), sidewalks, curbs
and appurtenances;
(iv) reasonable legal, accounting and other professional fees incurred in
connection with the operation or management of the Land or the
Building;
(v) amounts incurred by Landlord for services, materials and supplies
furnished in connection with the operation, repair and maintenance of
any part of the Building and its plazas (if any), sidewalks, curbs and
appurtenances, including the heating, air-conditioning, ventilating,
plumbing, electrical, elevator, safety and other systems of the
Building, and any other services furnished pursuant to Article 18
above;
(vi) the cost of all charges for window cleaning and other cleaning,
janitorial, security and other services, in and about the Building and
its plazas (if any), sidewalks, curbs and appurtenances;
35
<PAGE>
(vii)premiums paid by Landlord for rent, casualty, boiler, sprinkler,
plate-glass, liability and fidelity insurance with respect to the Land
or Building and its plazas (if any), sidewalks, curbs and
appurtenances, and any other insurance Landlord maintains or is
required to maintain with regard to the Land or the Building or the
maintenance or operation thereof;
(viii) costs (including all applicable taxes) for electricity (as measured
by the Building's electric meters, and evaluated under the same rate
classification and frequency that Landlord is charged by the public
utility furnishing electricity to the Building), steam, telephone, and
other utilities for the portions of the Land and the Building not
leased and occupied by tenants in the Building and for utilities and
electricity (so measured and evaluated) consumed in connection with
the operation of the heating, ventilating and air-conditioning
equipment servicing the Building, including (if applicable) the
tenanted portions thereof;
(ix) water charges, sewer rents, vault charges, transit taxes, any special
assessments imposed upon the Building, any other assessments,
governmental levies, county taxes or any other governmental charge,
general or special, ordinary or extraordinary, unforeseen as well as
foreseen, of any and every kind or nature whatsoever, which are or may
be levied, confirmed, charged, assessed or imposed upon the Land, the
Building and/or Landlord's interest therein, 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 (including any assessments, levies, impositions, charges or
taxes arising from the location of the Land or Building within a
Business Improvement District or other area or zone which is subject
to governmentally authorized or civic related assessments, levies,
impositions, charges or taxes not generally applicable to other
portions of the Borough of Manhattan or the City of New York), but
only if and to the extent not included within the definition of
"Taxes" set forth in Subsection 19.02A above;
(x) telephone and stationery costs;
(xi) the cost of painting and otherwise decorating any non-tenant areas of
the Building, and its plazas (if any) and sidewalks;
(xii)the cost of installing, maintaining, repairing and replacing art
works, as well as holiday decorations, for the lobby and other public
portions of the Building, and its plazas (if any) and sidewalks;
(xiii) the cost of exterior and interior landscaping of non-tenant areas of
the Land, the Building and its plazas (if any) and sidewalks;
(xiv)dues and fees paid to civic organizations and associations
representing Landlord, or of which Landlord is a member, in the City
of New York;
(xv) franchise, license and similar fees and charges paid by Landlord to
any governmental agency for the privilege of owning, leasing,
operating, maintaining or servicing the Building or any of its
equipment, property or appurtenances;
(xvi)management fees, or, if no managing agent is then employed by
Landlord, an amount in lieu thereof which is not in excess of the then
prevailing rates for management fees of first-class office buildings
in Manhattan;
(xvii) the cost or value, or the cost or value of the rental, together with
the cost of installation, of any Building security or other system
used in connection with life or property protection installed after
the Base Operating Year (including the cost, or the cost or value of
the rental, of all machinery, electronic systems and other equipment
comprising any part thereof), as well as the cost of the operation and
repair of any such system in operation during the Base Operating Year;
(xviii) whether or not capitalized under generally accepted accounting
principles, costs for Alterations to the Building made after the Base
Operating Year by reason of any Legal Requirements or the requirements
of any Insurance Boards or Landlord's insurer, provided, however, that
if and to the extent such costs are capitalized under generally
accepted accounting principles, such costs shall be amortized over a
period of ten (10) years, with an interest factor calculated using the
Interest Rate in effect at the time that any such cost is incurred;
(xix)whether or not capitalized under generally accepted accounting
principles, the cost of improvements, equipment or machinery installed
for the purpose of reducing energy consumption or reducing other
Operating Expenses, provided, however, that: (a) if and to the extent
such costs are capitalized under generally accepted accounting
principles, such costs shall be amortized over a period of ten (10)
years, with an interest factor calculated using the Interest Rate in
effect at the time that any such cost is incurred, and (b) Tenant
shall not be required to pay more on the basis of such amortized cost
than it can be reasonably anticipated that Tenant would have had to
pay with respect to the relevant component(s) of Operating Expenses
that will be reduced or eliminated by such improvements, equipment or
machinery;
36
<PAGE>
(xx) all other charges allocable to the repair, ownership, management,
maintenance, replacement, restoration or operation of the Building in
accordance with real estate accounting practices customarily used in
Manhattan.
F. The term "Labor Costs" shall mean any and all expenses incurred by Landlord
or on Landlord's behalf which shall be related to employment of personnel
at or below the grade of building manager, including amounts incurred for
wages, salaries and other compensation for services, payroll, social
security, unemployment and other similar taxes, Workers' Compensation
insurance, benefits, pensions, hospitalization, retirement plans and
insurance (including group life and disability), uniforms and working
clothes and the cleaning thereof, and expenses imposed on or on behalf of
Landlord pursuant to any collective bargaining agreement relating to such
employees. With respect to employees who are not employed on a full-time
basis with respect to the Building, a pro rata portion of expenses
allocable to the time any such employee is employed with respect to the
Building shall be included in Labor Costs.
G. The term "Operating Expenses" shall not include the following items:
(i) Labor Costs in respect of officers and executives of Landlord above
the grade of building manager, unless for work actually performed in
or about the Building ordinarily done by a third person, and then only
at compensation no higher than that which would have been paid to such
third person;
(ii) legal fees, leasing commissions, advertising expenses and promotional
expenses incurred in the leasing of space in the Building;
(iii)insurance premiums, but only if and to the extent that Landlord is
specifically entitled to be reimbursed therefor by Tenant pursuant to
this Lease (other than pursuant to this Article) or by any other
tenant or other occupant of the Building pursuant to its lease (other
than pursuant to an operating expenses escalation clause contained
therein);
(iv) the cost of any item for which Landlord is reimbursed by insurance or
otherwise compensated, including reimbursement by any tenant;
(v) the cost of any alterations, additions, changes, replacements and
improvements that are made solely in order to prepare space for
occupancy by a new tenant;
(vi) the cost of capital improvements, other than those (a) which under
generally applied real estate practice are deemed expenses or deferred
expenses, or (b) described in clauses (xviii) and (xix) of Subsection
19.02E above;
(vii)the cost of electricity furnished to the Demised Premises or any
other space in the Building leased to tenants, and for which tenants
are specifically billed in accordance with the terms of their leases;
(viii) such portion of Taxes attributable, in Landlord's judgment, to space
in the Building leased to tenants, and for which tenants are
specifically billed in accordance with the terms of their leases;
(ix) refinancing costs (including legal fees and disbursements in
connection therewith), and payments of mortgage interest and
principal;
(x) the costs of removal, encapsulation or treatment of asbestos and
asbestos containing materials in the Building;
(xi) ground rent and any other amounts (other than amounts paid for the
equivalent of Operating Expenses) payable under any Underlying Lease;
and
(xii)legal fees incurred in the enforcement of any leases in the Building
or in defending any suits brought by tenants with respect to their
leases, as well as all other legal and other professional expenses not
related to the operation, maintenance and/or security of the Building.
H. The cost of any item that was included in Operating Expenses for the Base
Operating Year and is no longer being incurred by Landlord by reason of the
installation of a labor saving device or other capital improvement shall be
deleted from Operating Expenses for the Base Operating Year in connection
with the calculation of the Operating Expense Payment for all Operating
Years from and after the Operating Year in which such installation occurs.
I. If, during all or part of any Operating Year, Landlord shall not furnish
any particular item(s) of work or service (which would otherwise constitute
an Operating Expense hereunder) to portions of the Building due to the fact
that (i) such portions are not occupied or leased, (ii) such item of work
or service is not required or desired by the tenant of such portion, (iii)
such tenant is itself obtaining and providing such item of work or service,
or (iv) for any other reason, then, for the purposes of computing Operating
Expenses, the amount for such item and for such period shall be deemed to
be increased by an amount equal to the additional costs and expenses of
furnishing such item of work or services to such portion of the Building or
to such tenant.
37
<PAGE>
J. Unless expressly excluded from Operating Expenses pursuant to Subsection
19.02G above or expressly provided otherwise elsewhere in this Lease, all
items of cost and expense identified in this Lease as being "at Landlord's
cost and expense" or phrases of similar import (regardless of whether the
words "solely" or "exclusive" are used in connection therewith, and
regardless of whether specific reference is made to Landlord's right to
recoup such cost or expense as part of Operating Expenses) shall be
included in Operating Expenses.
Section 19.03.
--------------
A. (i) If, for any reason whatsoever (whether foreseen or unforeseen), the
Taxes applicable with respect to any Tax Year shall be greater
than the Base Tax Amount, then Tenant shall pay to Landlord as
additional rent for each such Tax Year an amount equal to Tenant's Tax
Share (as defined in Section 1.01 above) of the amount by which the
Taxes applicable with respect to such Tax Year exceeds the Base Tax
Amount.
(ii) Within a reasonable time period after the issuance by the Taxing
Authority of tax bills for Taxes payable for any Tax Year, Landlord
shall submit to Tenant a statement (the "Tax Statement") which shall
indicate the amount, if any, required to be paid by Tenant as
additional rent as in this Section provided.
(iii)Tenant shall pay to Landlord, as additional rent, the amount set forth
on such Tax Statement (the "Tax Payment") in two (2) equal
installments, with the first such installment due and payable on the
June 1 immediately preceding the commencement of the Tax Year for
which the Tax Statement is being rendered, and the second such
installment due and payable on the immediately following December 1;
provided, however, that if Landlord shall not have delivered a Tax
Statement by May 20 immediately preceding the commencement of the Tax
Year for which the Tax Statement is being rendered, then the
installment of the Tax Payment otherwise due hereunder on the
immediately following June 1 shall not be due until the tenth (10th)
day after Landlord shall deliver said Tax Statement to Tenant. In the
event that the Taxing Authority shall change the time for the payment,
or number of installments, of Taxes, or if a Mortgagee shall require a
periodic escrow payment on account thereof, the time when Tenant's
installments of the Tax Payment shall be due and payable to Landlord
shall be similarly adjusted.
B. If, following the delivery of any Tax Statement, Landlord shall receive a
refund of Taxes with respect to a Tax Year for which Tenant has paid any
additional rent under the provisions of this Section 19.03, then Tenant's
Tax Share of the net proceeds of such refund, after deduction of legal
fees, appraiser's fees and other expenses incurred in obtaining reductions
and refunds and collecting the same (and after deduction of such expenses
for previous Tax Years which were not offset by tax refunds for such Tax
Years) shall be applied and allocated to the periods for which the refund
was obtained and, if Tenant shall not be in default of any of Tenant's
obligations under this Lease, Landlord shall refund or credit to Tenant an
amount equal to Tenant's Tax Share of the net proceeds of such refund. In
no event shall any refund or credit due to Tenant hereunder exceed the sum
paid by Tenant for such particular Tax Year. Only Landlord shall be
eligible to institute tax reduction or other proceedings to reduce the
assessed valuation of the Land or the Building. In no event shall Tenant
have the right to seek from the taxing authority any refund or reduction of
Taxes. If, prior to the delivery of a Tax Statement to Tenant with respect
to a particular Tax Year, Landlord shall obtain a reduction in Taxes for
that Tax Year, then Tenant shall pay to Landlord, within fifteen (15) days
following the issuance to Tenant of a bill therefor, an amount equal to
Tenant's Tax Share of all costs and expenses (including legal, appraisal
and other expert fees) incurred by Landlord in obtaining such reduction.
C. If there shall be a reduction or refund of Taxes for the Base Tax Amount,
Landlord shall furnish to Tenant a statement indicating the amount thereof,
and all prior and future additional rent payments provided for in this
Section 19.03 shall be recalculated accordingly. Any additional payment due
for any Tax Year shall be made by Tenant within fifteen (15) days after the
furnishing to Tenant of the revised statement.
D. Tenant shall pay, before delinquency, all rent and occupancy taxes and all
property taxes and assessments on the furniture, fixtures, equipment and
other property of Tenant at any time situated on or installed in the
Demised Premises, and on additions and improvements in the Demised Premises
made or installed by Tenant subsequent to the Commencement Date, if any. If
at any time during the Lease Term any of the foregoing are assessed as a
part of the real property of which the Demised Premises are a part, Tenant
shall pay to Landlord upon demand the amount of such additional taxes as
may be levied against said real property by reason thereof.
Section 19.04.
--------------
A. For each Operating Year, any part of which shall occur during the Lease
Term, Tenant shall pay an amount (the "Operating Expense Payment") equal to
Tenant's Operating Share of the amount, if any, by which Operating Expenses
for such Operating Year shall exceed the Operating Expenses for the Base
Operating Year; provided, however, that if the Commencement Date shall
occur other than on the first day of an Operating Year or if the Lease Term
shall expire or be sooner terminated on other than the last day of an
Operating Year, then the Operating Expense Payment in respect thereof shall
be prorated to correspond to that portion of such Operating Year occurring
within the Lease Term.
38
<PAGE>
B. (i) At any time before or during each Operating Year, Landlord may
furnish to Tenant a written statement (an "Estimate Statement")
setting forth Landlord's reasonable estimate of the Operating Expense
Payment for such Operating Year (the "Estimated Payment"). Tenant
shall pay to Landlord on the first day of each month during each
Operating Year an amount equal to one twelfth (1/12th) of the
Estimated Payment. If Landlord furnishes an Estimate Statement for an
Operating Year subsequent to the commencement thereof, then: (i) until
the first day of the month following the month in which the Estimate
Statement shall be furnished to Tenant, Tenant shall continue to pay
to Landlord on the first day of each month an amount equal to the
monthly sum payable by Tenant to Landlord with respect to the most
recent Operating Year; (ii) promptly after the Estimate Statement
shall be furnished to Tenant, Landlord shall give notice to Tenant
stating whether the amount previously paid by Tenant to Landlord for
the current Operating Year was greater or less than the installment of
the Estimated Payment to be paid for the current Operating Year, and
(x) if there shall be a deficiency, Tenant shall pay the amount
thereof to Landlord within ten (10) days after demand therefor, or (y)
if there shall have been an overpayment, Landlord shall credit the
amount thereof against the next monthly installment of the Fixed Rent
payable under this Lease; and (iii) on the first day of the month
following the month in which the Estimate Statement shall be furnished
to Tenant, and monthly thereafter throughout the remainder of the
Operating Year, Tenant shall pay to Landlord an amount equal to
one-twelfth (1/12th) of the Estimated Payment shown on the Estimate
Statement. Landlord may during an Operating Year, furnish to Tenant a
revised Estimate Statement, and, if a revised Estimate Statement shall
be furnished to Tenant, the Estimated Payment for such Operating Year
shall be adjusted in the same manner as provided in the preceding
sentence.
(ii) In estimating Tenant's Operating Expense Payment for any Operating
Year, the percentage increase in such Operating Expense Payment for
such Operating Year over the Operating Expense Payment for the prior
Operating Year shall not exceed ten (10%) percent of the Operating
Expense Payment for the immediately preceding Operating Year; provided
that, if the percentage increase in any component of Tenant's
Operating Expense Payment for the Operating Year in question is
reasonably expected to be higher than such ten (10%) percent increase
due to a demonstrable event which has occurred or is reasonably likely
to occur (e.g., a new union contract affecting the Building or an
increase in fuel prices), then, for purposes of such estimate,
Landlord shall have the right to increase such component of Operating
Expense Payment by such higher percentage (in which event Landlord's
statement setting forth such estimate shall be accompanied by an
explanation of such higher increase).
C. At any time after each Operating Year, Landlord shall furnish to Tenant an
annual Operating Statement (the "Annual Statement") for such Operating
Year. If the Annual Statement shows that the Estimated Payment (or other
payments) for such Operating Year exceeds the Operating Expense Payment
which should have been paid for such Operating Year, then Landlord shall
credit the amount of such excess against the next monthly installment of
Fixed Rent payable under this Lease; if the Annual Statement for such
Operating Year shows that the Estimated Payment for such Operating Year was
less than the Operating Expense Payment (or other payments) which should
have been paid for such Operating Year, Tenant shall pay the amount of such
deficiency to Landlord within thirty (30) days after receipt of the Annual
Statement.
D. (i) Each Annual Statement shall be conclusive and binding upon Tenant
unless, within ninety (90) days after receipt thereof, Tenant shall
give Landlord notice (the "Operating Dispute Notice") that Tenant
disputes the correctness of the Annual Statement, specifying the
particular respects in which the Annual Statement is claimed to be
incorrect. Tenant recognizes and agrees that Landlord's books and
records (and those of Landlord's agents) with respect to the operation
of the Land and the Building are confidential, and that Tenant shall
have no right to inspect the same except as otherwise provided in the
immediately following sentence. Within said 90-day period, Tenant may
request in writing an appointment to examine Landlord's books and
records with respect to Operating Expenses in order to verify the
accuracy of the relevant Annual Statement, in which case Landlord
shall allow Tenant's certified public accountant to conduct such
examination during Business Hours, within ten (10) Business Days after
Landlord's receipt of said request, provided that Tenant's certified
public accountant shall minimize any interference to Landlord's
business operations during the course of such examination. Tenant
shall not disclose (and shall require Tenant's certified public
accountant not to disclose) to any third party any information
obtained in the course of such examination, except if and to the
extent required by a court of competent jurisdiction.
(ii) If Tenant shall have timely delivered the Operating Dispute Notice to
Landlord, and the parties shall not be able to resolve such dispute
within sixty (60) days thereafter, then, provided that Tenant shall
have theretofore paid to Landlord the amount shown to be due to
Landlord on the disputed Annual Statement, either party may refer the
decision of the issue raised to a reputable, independent firm of
certified public accountants selected by Landlord, and the decision of
such accountants shall be conclusive and binding upon the parties. The
fees and expenses involved in such decision shall be borne by the
unsuccessful party (and if both parties are partially unsuccessful,
the accountants shall apportion the fees and expenses between the
parties based on the degree of success of each party). Tenant agrees
that, notwithstanding any such dispute (and pending resolution
thereof), Tenant shall timely pay to Landlord in full the amount shown
to be due to Landlord on the disputed annual statement. If such
dispute is resolved in Tenant's favor, Landlord shall either reimburse
Tenant for any overpayment or credit the amount of such overpayment
against the next monthly installment of Fixed Rent payable under this
Lease.
39
<PAGE>
Section 19.05.
--------------
Nothing contained in this Article 19 or any other provision of this Lease
concerning the payment of additional rents shall be construed so as to reduce
the Fixed Rent below the amount set forth in Section 1.01, plus any increases
therein pursuant to any provision of this Lease.
Section 19.06.
--------------
If there shall be a reduction of the area of the Demised Premises either due to
a partial taking thereof by eminent domain or due to subsequent agreement of the
parties or if the area of the Demised Premises shall be increased, then (i)
Tenant's Tax Share of increases of Taxes thereafter payable by Tenant under
Subsection 19.03A, and (ii) Tenant's Operating Share of increases in Operating
Expenses thereafter payable by Tenant under Subsection 19.04A, shall, except as
may otherwise be expressly agreed in writing by the parties, be increased or
decreased on the basis of the ratio between the Rentable Square Feet in the
Demised Premises before and after said increase or decrease in area.
Section 19.07.
--------------
Any payments due hereunder for any period of less than a full Tax Year or
Operating Year at the commencement or end of the Lease Term shall be equitably
prorated. In the event of any change in the fiscal period constituting a Tax
Year, Taxes levied during any transitional period shall be added to the first
subsequent Tax Year for purposes of Section 19.03. Any delay or failure by
Landlord to render any statement under the provisions of this Article 19 shall
not prejudice Landlord's right hereunder to render such statement for prior or
subsequent periods. Any delay or failure by Landlord in making any request or
demand for any amount payable by Tenant pursuant to the provisions of this
Article 19 shall not constitute a waiver of, or in any way diminish, the
continuing obligation of Tenant to make such payment. Except as otherwise
provided in Subsection 19.04D above, all statements rendered by Landlord
pursuant to the provisions of this Article 19 shall be deemed final and
conclusive as to Tenant, unless, within thirty (30) days following rendition of
any such statement, Tenant shall, in good faith and with specificity, notify
Landlord that such statement contains mathematical error. Tenant agrees that,
notwithstanding any dispute as to the correctness of a statement (and pending
resolution of such dispute), Tenant shall timely pay to Landlord in full the
amount shown to be due to Landlord on the disputed statement. If such dispute is
resolved in Tenant's favor, Landlord shall either reimburse Tenant for any
overpayment or credit the amount of such overpayment against the next monthly
installment of Fixed Rent payable under this Lease. The obligations of Tenant
with respect to any payment required pursuant to the provisions of this Article
19 shall survive the expiration or sooner termination of the Lease Term.
ARTICLE 20
ELECTRICITY
Section 20.01.
--------------
Subject to the provisions of this Article 20 and other provisions of this Lease,
Landlord shall furnish electricity for use in the Demised Premises for purposes
consistent with the Authorized Use, making available to the core electrical
closet serving the Demised Premises a capacity (the "Existing Capacity") equal
to nine (9) watts per Rentable Square Foot, exclusive of electricity used to
operate the Building Unit(s) installed by Landlord to provide air-conditioning
and ventilation to the Demises Premises. Said electricity shall be furnished to
the core electric closet located on the concourse level of the Building.
Landlord shall not be liable to Tenant for any loss or damage or expense which
Tenant may sustain or incur if either the quantity or character of electric
service shall be changed or shall no longer be available or suitable for
Tenant's requirements. Landlord may elect to furnish and install all replacement
lighting tubes, lamps, bulbs and ballasts required in the Demised Premises,
whereupon Tenant shall pay to Landlord or Landlord's designated contractor upon
demand the then established charges of Landlord or said contractor, as the case
may be, in connection therewith.
Section 20.02.
--------------
A. Subject to the provisions of Section 20.03 below, Tenant's consumption and
demand of all electricity made available to the Demised Premises (including
the Building Unit(s) servicing the Demised Premises) or to Tenant elsewhere
in the Building (collectively, "Tenant Electricity") shall be measured by
one or more submeters (collectively, the "Submeter") to be furnished and
installed by Tenant in the core electric closet located on the concourse
level of the Building. Notwithstanding the foregoing, if, in connection
with Tenant's Initial Work or any future Alterations, Tenant shall require
or wish to install additional electrical panels in said electric closet,
Tenant shall be permitted to do so at Tenant's own cost and expense,
provided that Tenant shall have obtained Landlord's prior consent thereto
and have otherwise complied with the relevant provisions of Article 5
above, and provided further that any additional submeters required in
connection therewith shall be installed, maintained, repaired and replaced
by Tenant, at Tenant's own cost and expense. All such additional submeters
shall be of the same make and design as the Submeter, and all references
hereinafter to the "Submeter" shall be deemed to include said additional
submeters.
B. Tenant agrees to purchase Tenant Electricity from Landlord or Landlord's
designated agent at terms and rates equal to "Landlord's Electricity Cost"
(as such term is defined below), plus five (5%) percent thereof, to
reimburse Landlord for administrative services in connection with
supplying, measuring and billing Tenant Electricity and for transmission
and transformer losses. If more than one submeter shall measure Tenant
Electricity, then the service rendered through each such submeter shall be
aggregated and billed in accordance with the foregoing rate, unless
Landlord shall elect separate billing on a per meter basis. Landlord may at
any time render bills for Tenant Electricity in accordance with the
foregoing provisions, and Tenant shall pay all amounts shown on said bills
to Landlord, as additional rent, within ten (10) days following the date
that such bills shall have been rendered.
40
<PAGE>
C. For purposes of this Article 20 and the other provisions of this Lease:
(i) The term "Landlord's Electricity Cost" shall mean the cost per
kilowatt hour and cost per kilowatt demand, by time of day, if
applicable, or other applicable billing method, to Landlord of
purchasing electricity for the Building, including fuel adjustment
charges (as determined for each month of the relevant period), rate
adjustment charges, sales tax, and/or any other factors used by the
public utility furnishing electric service to the Building (the
"Public Utility") in computing its charges to Landlord, applied to the
kilowatt hours of electricity and kilowatts of demand purchased by
Landlord during a given period.
(ii) The term "Electricity Additional Rent" shall mean all amounts computed
in accordance with Subsection 20.02B above, and Landlord's
determination of such amounts shall be binding and conclusive on
Tenant.
D. If the Submeter should fail to properly register or operate at any time
during the Lease Term for any reason whatsoever, then, unless Landlord
shall otherwise elect in accordance with the provisions of Section 20.03
below, Landlord may estimate the Electricity Additional Rent (based on the
average of such charges for the preceding twelve (12) month period, if
Tenant shall have occupied all of the Demised Premises for the normal
conduct of Tenant's business during the entire preceding twelve (12) month
period), and when the Submeter shall again become properly operative, an
appropriate reconciliation shall be made, by Tenant paying any deficiency
to Landlord within ten (10) days after demand therefor, or by Landlord
crediting Tenant with the amount of any overpayment, as the case may be.
E. If at any time during the Lease Term the electric rate charged by the
Public Utility (the "Electric Rate") shall be increased by the Public
Utility, or Landlord's Electricity Cost shall be increased for any other
reason, then, effective as of the date of each such increase in the
Electric Rate or Landlord's Electricity Cost (as the case may be), the
Electricity Additional Rent shall be increased in proportion to such change
in the Electric Rate or Landlord's Electricity Cost, as determined by
Landlord's electrical consultant ("Landlord's Consultant"), whose
determination shall be binding and conclusive upon the parties, subject to
the provisions of Subsection 20.03E below. In no event, however, shall the
Electric Rate deemed to be reduced below the Electric Rate in effect as of
the Commencement Date for purposes of computing the Electricity Additional
Rent. Tenant acknowledges that it is anticipated that electric rates,
charges, fees and/or other costs, as well as methods of or rules on
billing, may be changed by virtue of time-of-day rates or other methods of
billing, and that the references in this Article 20 to changes in the
Electric Rate are intended to include any and all such changes.
F. Landlord and Tenant agree that the Submeter might be installed or become
operational subsequent to the date (the "Initial Occupancy Date") that
Tenant or any Person Within Tenant's Control first enters the Demised
Premises. In such event, Landlord, in Landlord's sole discretion, may: (i)
furnish Tenant Electricity on a "rent inclusion" basis in accordance with
the provisions of Section 20.03 below for the period between the
Commencement Date and such time as the Submeter shall be installed and
operating; or (ii) estimate the Electricity Additional Rent payable by
Tenant for the period commencing on the Initial Occupancy Date and ending
on the "Occupancy Reading Date" (hereinafter defined), and Tenant shall pay
to Landlord, within ten (10) days after demand therefor, the amount set
forth on Landlord's estimate and, after rendition of a subsequent
statement, an appropriate reconciliation shall be made for any deficiency
owed by Tenant, or any overage paid by Tenant; or (iii) render a statement
to Tenant after the first reading of the Submeter shall be made (the date
upon which the Submeter shall be first read being herein called the
"Occupancy Reading Date"), which shall be on or about the date upon which
Tenant shall have commenced the conduct of Tenant's business operations in
the Demised Premises, and the amount calculated based on the Submeter
reading on the Occupancy Reading Date shall be determined on a per diem
basis and then multiplied by the number of days from the Initial Occupancy
Date through the Occupancy Reading Date to arrive at the amount due for
said period, and Tenant shall pay the Electricity Additional Rent to
Landlord on the basis of such Submeter reading within ten (10) days after
rendition of Landlord's statement setting forth such computation.
Section 20.03.
--------------
A. Notwithstanding anything to the contrary contained in the provisions of
Section 20.02 above, if at any time during the Lease Term the Submeter
shall not then be installed or operating, or if Landlord shall be compelled
by the Public Utility or any Legal Requirements (it being agreed that such
compulsion shall include Landlord's inability to legally collect from
Tenant all of the costs incurred by Landlord for Tenant Electricity) to
discontinue furnishing electricity to the Demised Premises on a submetered
basis, then (subject to the provisions of Section 20.05 below) Landlord
shall furnish electricity to the Demised Premises in quantity equal to the
Existing Capacity on a "rent inclusion" basis, and there shall be no
separate charge to Tenant for such electricity.
B. For the purposes of this Article 20, and other provisions of this Lease:
41
<PAGE>
(i) The term "Base Electric Charge" shall initially mean the amount of
$121,212.00 (except during the period which shall begin on the
Commencement Date and end on the day immediately preceding the date on
which Tenant shall first occupy the Demised Premises for the purpose
of conducting Tenant's business operations therein, during which
period the term "Base Electric Charge" shall mean the amount of $1.50
per rentable square foot).
(ii) The term "Electric Inclusion Factor" shall mean an amount, to be
included as a component of Fixed Rent, equal to the sum of the Base
Electric Charge plus all increases thereto pursuant to the provisions
of this Article 20; it being understood and agreed that at all times
the Electric Inclusion Factor shall not be less than the amount
computed by multiplying Landlord's Electricity Cost by Tenant's
kilowatt hour and kilowatt demand usage as determined by the estimate
of Landlord's Consultant, plus five (5%) percent of the resulting
total.
C. Landlord and Tenant agree that, during any period in which electricity
shall be furnished to the Demised Premises on a "rent inclusion" basis, the
annual Fixed Rent set forth in Section 1.01 above shall be increased by an
amount equal to the Base Electric Charge, as the same may be adjusted
pursuant to the provisions of this Article 20. Tenant acknowledges and
agrees that the Base Electric Charge currently represents the amount
initially included in the Electric Inclusion Factor to compensate Landlord
for the electrical wiring and other installations necessary for, and for
Landlord's obtaining and making available to Tenant, the redistribution of
electric energy to the Demised Premises as an additional service, and that
such Base Electric Charge component of the Electric Inclusion Factor is
subject to adjustment as provided herein based on Tenant's consumption
and/or demand of electricity, but shall in no event be subject to
reduction.
D. At any time, and from time to time (but in no event more frequently than
twice in a twelve month period), after Tenant shall have entered into
possession of the Demised Premises or any portion thereof, and electricity
shall be furnished to the Demised Premises on a "rent inclusion" basis,
Landlord and Landlord's agents and consultants may survey the electrical
fixtures, appliances and equipment located in or servicing the Demised
Premises and Tenant's consumption and demand of electricity therein to (i)
ascertain whether Tenant is complying with Tenant's obligations under this
Article 20, and (ii) determine whether the then Electric Inclusion Factor
included in Fixed Rent is less than the Electric Inclusion Factor computed
as a result of said survey, and to adjust the Electric Inclusion Factor
component of Fixed Rent in accordance with the following computations:
(x) In the case of the first electric survey, if the cost or value of
Tenant's electric consumption and/or demand shown by the survey shall
exceed the initial Electric Inclusion Factor, then the Electric
Inclusion Factor component of the Fixed Rent shall be increased by the
amount of such excess retroactive to the beginning of the period when
electricity shall be furnished to the Demised Premises on a "rent
inclusion" basis; and
(y) In the event of the second and subsequent surveys, if the cost or
value of Tenant's electric consumption and/or demand shown by such
survey shall exceed the then Electric Inclusion Factor, then such
Electric Inclusion Factor component of Fixed Rent shall be increased
by the amount of such excess, effective as of the earlier of (a) the
date of such survey or (b) the date on which increases in the
connected power load or changes in electric consumption occurred (as
determined by Landlord's Consultant).
E. The initial amount of each such increase shall be paid by Tenant to
Landlord within ten (10) days after Landlord furnishes Tenant with a
statement thereof, and thereafter, such increase shall be added to each of
the monthly installments of Fixed Rent. The cost of each survey made
pursuant to Subsection 20.03D above shall be borne equally by Landlord and
Tenant. The determination of Landlord's Consultant as to any increase in
the Fixed Rent based on such average monthly electric energy consumption
and/or demand shall be conclusive and binding upon the parties from and
after the delivery of a copy of such determination to Landlord and Tenant,
unless, within fifteen (15) days thereafter, Tenant shall dispute such
determination by having an independent reputable electrical consultant,
selected and paid for by Tenant ("Tenant's Consultant"), consult with
Landlord or Landlord's Consultant as to said determination. If the parties
or their respective consultants shall agree as to a resolution of said
dispute, then such agreement shall be binding upon the parties, or if the
difference between them shall be ten (10%) percent or less of the
determination made by Landlord's Consultant, then the determination made by
Landlord's Consultant shall be binding upon the parties. If Landlord's
Consultant and Tenant's Consultant shall not agree within the said ten
(10%) percent of each other, then Landlord's Consultant and Tenant's
Consultant shall jointly select a third duly qualified independent,
reputable electrical consultant who shall determine the matter and whose
decision shall be binding upon both parties with the same force and effect
as if a non-appealable judgment had been entered by a court of competent
jurisdiction. If Landlord's Consultant and Tenant's Consultant shall not
agree upon such a third electrical consultant, the matter shall be
submitted to the American Arbitration Association in New York City to be
determined in accordance with its rules and regulations, and the decision
of the arbitrators shall be binding upon the parties with the same force
and effect as if a non-appealable judgment had been entered by a court of
competent jurisdiction. Any charges of such third consultant or of the
American Arbitration Association, and all costs and expenses of either,
shall be borne equally by both parties. Notwithstanding the foregoing,
until such final determination, Tenant shall pay Fixed Rent to Landlord in
accordance with the determination made by Landlord's Consultant. After such
final determination, the parties shall promptly make adjustment for any
deficiency owed by Tenant or any overage paid by Tenant.
F. If at any time during the Lease Term the Electric Rate shall be increased
by the Public Utility, then, effective as of the date of each such increase
in the Electric Rate, the Electric Inclusion Factor included in the Fixed
Rent shall be increased in proportion to such change in the Electric Rate
(as determined by Landlord's Consultant, whose determination shall be
binding and conclusive upon the parties, subject to the provisions of
Subsection 20.03E above). In no event, however, shall the Electric Rate be
deemed to be reduced below the Electric Rate in effect as of the
Commencement Date for purposes of computing the Electric Inclusion Factor.
42
<PAGE>
G. At Landlord's request, the parties shall execute, acknowledge and deliver
to each other a supplemental agreement in such form as Landlord shall
reasonably require to reflect each change in the Fixed Rent under this
Article 20, but each and every such change shall be effective as of the
effective date described in the provision under which such change is
provided for, even if such agreement shall not be executed and delivered.
Section 20.04.
--------------
A. Tenant's use of electricity in the Demised Premises shall not at any time
exceed the Existing Capacity. In order to ensure that the Existing Capacity
is not exceeded and to avert possible adverse effect upon the Building's
distribution of electricity via the Building's electric system, if at any
time the total connected load of Tenant's fixtures, appliances and
equipment in the Demised Premises shall equal or exceed nine (9) watts per
Rentable Square Foot, then Tenant shall not, without Landlord's prior
consent in each instance, connect any additional fixtures, appliances or
equipment to the Building's electric system, or make any alterations or
additions to the then existing electric system of the Demised Premises.
B. In the event that Tenant shall request electric energy in addition to the
Existing Capacity, and if and to the extent that Landlord shall determine
that such additional electric energy is available for use by Tenant without
(x) resulting in allocation to Tenant of a disproportionate amount of
available electric energy and (y) otherwise adversely affecting the
Building or any of the other tenancies therein, then Landlord shall connect
such additional electric energy to the Demised Premises, and Tenant shall
pay to Landlord, as additional rent and within ten (10) days after the
rendition of a bill therefor, a charge equal to Landlord's then established
connection charge for each additional amp of electric energy or portion
thereof so supplied to the Demised Premises, in addition to the cost of
installing additional risers, switches and related equipment necessary in
providing such additional electric energy.
Section 20.05.
--------------
A. Landlord reserves the right to discontinue furnishing electricity to Tenant
in the Demised Premises at any time upon not less than thirty (30) days
notice to Tenant, except that, unless otherwise compelled by the Public
Utility or any Legal Requirements (it being agreed that such compulsion
shall include Landlord's inability to legally collect from Tenant all of
the costs incurred by Landlord for Tenant Electricity), if Tenant shall
immediately commence and diligently pursue to completion arrangements to
obtain electricity from the Public Utility upon receipt of Landlord's
notice that Landlord intends to discontinue furnishing electricity to the
Demised Premises, then Landlord shall postpone such discontinuance for a
sufficient amount of time so as to allow Tenant to obtain electricity
directly from the Public Utility. If Landlord exercises such right, this
Lease shall continue in full force and effect and shall be unaffected
thereby, except that, from and after the effective date of such
discontinuance, Landlord shall not be obligated to furnish electricity to
Tenant (and, if electricity shall, immediately prior to such
discontinuance, have been furnished to the Demised Premises on a "rent
inclusion" basis, the Fixed Rent payable under this Lease shall be reduced
by an amount equal to the Electric Inclusion Factor component of such Fixed
Rent).
B. If Landlord so discontinues furnishing electricity to Tenant, then Tenant
shall, at Tenant's own cost and expense, promptly arrange to obtain
electricity directly from the Public Utility. Such electricity may be
furnished to Tenant by means of the then existing Building System feeders,
risers and wiring, but only if and to the extent that Landlord determines
the same to be available, suitable and safe for such purpose. All meters
and additional panel boards, feeders, risers, wiring and other conductors
and equipment which may be required to obtain electricity directly from
such Public Utility shall be: (x) if located entirely within the Demised
Premises, installed and connected by Tenant, at Tenant's own cost and
expense, but only after having received Landlord's prior written consent
thereto, and Tenant shall thereafter maintain, repair and replace the same,
as necessary, at Tenant's own cost and expense; and (y) if located wholly
or in part outside of the Demised Premises, installed, connected and
thereafter maintained, repaired and replaced, as necessary, by Landlord, at
Tenant's cost and expense. Only rigid conduit will be allowed in connection
with any such installation.
Section 20.06.
--------------
If any tax shall be imposed on Landlord by any federal, state or municipal
authority with respect to electricity furnished to Tenant, then Tenant's pro
rata share of such taxes shall be reimbursed by Tenant to Landlord as additional
rent within ten (10) days after being billed therefor.
Section 20.07.
--------------
If the Public Utility or any Legal Requirement shall institute or require a
change in the manner in which electricity is to be furnished or paid for, and
such change reasonably necessitates an appropriate modification of this Article
20, Tenant shall execute and deliver to Landlord an instrument which sets forth
such modification; provided, however, that in no event shall the Fixed Rent be
reduced to an amount below the amount thereof stated in Section 1.01 above.
Tenant agrees to fully and timely comply with all rules and regulations of the
Public Utility applicable to Tenant or the Demised Premises.
43
<PAGE>
Section 20.08.
-------------
In the event that, pursuant to any of the provisions of this Article 20, any
initial determinations, statements or estimates are made by or on behalf of
Landlord (whether such initial determinations, statements or estimates are
subject to dispute or not pursuant to the provisions of this Article 20), Tenant
shall pay to Landlord the amount(s) set forth on such initial determinations,
statements or estimates, as the case may be, until subsequent determinations,
statements or estimates are rendered, at which time the parties shall make
adjustment for any deficiency owed by Tenant, or any overage paid by Tenant.
Section 20.09.
-------------
Notwithstanding any provisions of this Article 20 and regardless of the manner
of service of electricity to the Demised Premises (whether by rent inclusion or
submetering, but excluding a situation in which Tenant shall be obtaining
electricity directly from the Public Utility pursuant to the provisions of
Section 20.05 above), in no event shall the cost to Tenant for electricity to
the Demised Premises be less than one hundred five (105%) percent of Landlord's
Electricity Cost.
Section 20.10.
-------------
Any payments due hereunder for less than a calendar year at the commencement or
end of the Lease Term shall be equitably prorated. Any delay or failure by
Landlord to render any bills or statements under the provisions of this Article
20 shall not prejudice Landlord's right thereunder to render such bills or
statements for prior or subsequent periods. Any delay or failure by Landlord in
making any request or demand for any amount payable by Tenant pursuant to the
provisions of this Article 20 shall not constitute a waiver of, or in any way
diminish, the continuing obligation of Tenant to make such payment. The
obligations of Tenant with respect to any payment or increase pursuant to the
provisions of this Article 20 shall survive the expiration or sooner termination
of the Lease Term.
ARTICLE 21
BROKER
Section 21.01.
--------------
Tenant represents and warrants to Landlord that Tenant has not employed, dealt
or negotiated with any broker in connection with this Lease, and Tenant shall
indemnify, protect, defend and hold Landlord harmless from and against any and
all liability, damage, cost and expense (including reasonable attorneys' fees
and disbursements) arising out of any claim for a fee or commission by any
broker or other party in connection with this Lease. The provisions of this
Section 21.01 shall not apply to the Designated Broker. Landlord agrees to pay
the Designated Broker's commission in accordance with a separate agreement
between Landlord and the Designated Broker.
ARTICLE 22
SUBORDINATION
Section 22.01.
--------------
This Lease and all of Tenant's rights hereunder, including Tenant's rights under
Section 27.01, are and shall be subject and subordinate to (i) every Underlying
Lease, the rights of the Overlandlord or Overlandlords under each Underlying
Lease, all mortgages heretofore or hereafter placed on or affecting any
Underlying Lease, alone or with other property, and to all advances heretofore
or hereafter made under any such leasehold mortgage, and to all renewals,
modifications, consolidations, replacements, substitutions, spreaders, additions
and extensions of any such leasehold mortgage, and (ii) any condominium plan or
declaration now or hereafter affecting the Building, and any other instruments
or rules and regulations promulgated in connection therewith, and (iii) any
reciprocal easement agreements or any other easements now or hereafter affecting
the Building, and (iv) any Mortgage now or hereafter affecting the real property
of which the Demised Premises form a part or any part or parts of such real
property, or such real property and other property, and to each advance made or
hereafter to be made under any such Mortgage and to all renewals, modifications,
consolidations, replacements, substitutions, spreaders, additions and extensions
of any such Underlying Lease or Leases and/or Mortgages. The subordination
provisions herein contained shall be self-operative, and no further instrument
of subordination shall be required. Landlord reserves the right, by written
notice to Tenant, to determine that the foregoing provisions shall not apply to
any or all Mortgages then being and/or thereafter to be made. In confirmation of
said subordination, Tenant shall execute and deliver promptly any certificate
that Landlord or that Landlord's successors-in-interest may request. Tenant
hereby constitutes and appoints Landlord or Landlord's successors-in-interest as
Tenant's attorney-in-fact to execute and deliver any such certificate or
certificates for and on behalf of Tenant. Notwithstanding any provision in this
Lease or any separate agreement with Tenant, Tenant covenants and agrees that
Tenant shall not do any act, or refrain from doing any act, if doing such act,
or refraining from doing such act, would constitute a default or breach of any
Underlying Lease or Mortgage to which this Lease is subordinate.
Section 22.02.
--------------
This Lease may be conditionally or otherwise assigned as collateral security by
Landlord to a Mortgagee, which assignment may provide that, without Mortgagee's
prior written consent, Tenant and Landlord shall not (i) pay or accept the rent
or additional rent under the terms of this Lease for more than one month in
advance of the due date of such rent or additional rent, or (ii) enter into an
agreement to amend or modify this Lease if there shall be an unexpired term of
more than one (1) year thereunder, or (iii) voluntarily surrender the Demised
Premises, terminate this Lease or accelerate the Lease Term without cause, or
(iv) authorize the Tenant to assign this Lease or sublet the Demised Premises or
any part thereof except in the manner provided under the terms of this Lease.
Any agreement by Landlord to make, perform or furnish any capital improvements
or services not related to the possession or use of the Demised Premises by
Tenant shall not be binding on any Mortgagee in the event of foreclosure or in
the event that a Mortgagee enters upon the Demised Premises pursuant to any
security instrument in connection with the mortgage loan. Regardless of whether
and to what extent Landlord may have an obligation in connection therewith,
until a Mortgagee or such Mortgagee's successor (as the case may be) shall take
actual possession of the Building, such Mortgagee and such Mortgagee's successor
shall not be responsible for any improvements, covenants, contractual
obligations or services which Landlord has agreed to make, furnish or perform
for Tenant under the terms of this Lease, or for the control, care or management
of the Building or any waste committed on the Building by any tenant, or for any
dangerous or defective condition of the Building resulting in loss or injury or
death to any tenant, licensee or stranger. As of the date hereof, no security
deposited by Tenant has been transferred to any Mortgagee, who will assume no
liability for any security so deposited unless and until such Mortgagee demands
the transfer of said security and assumes responsibility therefor.
44
<PAGE>
Section 22.03.
--------------
Tenant agrees that, unless a Mortgagee shall elect otherwise in the case of a
foreclosure of such Mortgage, or unless the Overlandlord of an Underlying Lease
to which this Lease is subordinate shall elect otherwise in the case of a
cancellation or a termination of such Underlying Lease, neither the cancellation
nor termination of any Underlying Lease, nor any foreclosure of a Mortgage
affecting the Land, Building, an Underlying Lease or the Demised Premises, nor
the institution of any suit, action, summary or other proceeding against
Landlord herein or any successor landlord, 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 the Overlandlord of such Underlying
Lease, or the holder of such Mortgage, or the purchaser at a sale in foreclosure
of such Mortgage, or other person who shall succeed to the interests of Landlord
(which such Overlandlord, holder, purchaser or other person is hereafter in this
Section referred to as "such successor-in-interest"), Tenant covenants and
agrees to attorn to such successor-in-interest and recognize such
successor-in-interest as the landlord under this Lease. Tenant agrees to execute
an instrument in writing satisfactory to such successor-in-interest whereby
Tenant attorns to such successor-in-interest, and hereby appoints such
successor-in-interest, irrevocably, as attorney-in-fact of Tenant to execute
such instrument for and on behalf of Tenant. Tenant further waives the
provisions of any statute or rule of law now or hereafter in effect which may
give or purport to give Tenant any right of election to terminate this Lease or
to surrender possession of the Demised Premises in the event any Underlying
Lease terminates or any such mortgage is foreclosed or any such proceeding is
brought by any Overlandlord or the holder of any such mortgage.
Section 22.04.
--------------
In the event of the occurrence of any act or omission by Landlord which would
give Tenant the right to terminate this Lease or claim a partial or total
eviction, or make any claim against Landlord for the payment of money, Tenant
shall not exercise such right until Tenant shall have given written notice of
such occurrence to (i) Landlord and (ii) each Mortgagee and the Overlandlord of
any Underlying Lease, as to whom, and to the last address to which, Tenant has
been instructed to give such notice, and a reasonable period for remedying such
act or omission shall have elapsed following the giving of such notices, during
which such parties or any of them with reasonable diligence following the giving
of such notice, have not commenced and continued to remedy such act or omission
or to cause the same to be remedied. Nothing herein contained shall be deemed to
create any rights in Tenant not specifically granted in this Lease or under any
applicable provision of law, nor to obligate any such Mortgagee or Overlandlord
to remedy any such act or omission.
Section 22.05.
--------------
If a Mortgagee or prospective mortgagee shall request modifications to this
Lease, Tenant shall not unreasonably withhold, delay or defer Tenant's consent
thereto, provided that such modifications shall not materially increase the
obligations of Tenant hereunder or materially adversely affect the leasehold
interest hereby created. In no event shall a requirement that the consent of any
such Mortgagee or prospective mortgagee be given for any modification of this
Lease, or for any assignment or sublease, be deemed to materially adversely
affect the leasehold interest hereby created.
Section 22.06.
--------------
A. Subject to the provisions of this Section 22.06, Landlord shall endeavor
(without being obligated to incur any cost or expense in connection
therewith) to obtain a "non-disturbance" agreement from the holder of any
Mortgage hereafter encumbering the Land and/or the Building or from the
Overlandlord of any Underlying Lease hereafter affecting the Land and/or
the Building, in the standard form of any such Mortgagee or Overlandlord,
which shall provide in substance that, so long as Tenant is not in default
with respect to any of Tenant's obligations under this Lease after notice
and the expiration of the applicable cure period: (a) Tenant shall not be
joined as a party defendant (unless required by applicable law) (i) in any
action or proceeding which may be instituted or taken by any Overlandlord
for the purpose of terminating the Underlying Lease by reason of any
default thereunder, or (ii) in any foreclosure action or proceeding which
may be instituted by any Mortgagee, and (b) Tenant shall not be evicted
from the Demised Premises, nor shall Tenant's leasehold estate or right to
possession of the Demised Premises be terminated or disturbed, by reason of
any default under any Underlying Lease or Mortgage. Any non-disturbance
agreement may also provide that Tenant will, at the option of any Mortgagee
or the Overlandlord under any Underlying Lease, either (x) attorn to such
Mortgagee or Overlandlord and perform for such Mortgagee's or
Overlandlord's benefit all of the terms, covenants and conditions to be
performed by Tenant under this Lease, or (y) enter into a new lease with
the Overlandlord under the Underlying Lease or any Mortgagee or their
respective successors or assigns for the balance of the Lease Term on the
same terms and conditions as are contained in this Lease. If Tenant shall
not execute and deliver to a Mortgagee or Overlandlord (as the case may be)
such non-disturbance, recognition and attornment agreement, then this Lease
and all of Tenant's rights hereunder shall nonetheless be subject and
subordinate to the relevant Mortgage or Underlying Lease. Landlord shall
have no liability to Tenant if Tenant shall not receive a non-disturbance
agreement, nor shall the same relieve or release Tenant from any of the
obligations of Tenant under this Lease. Notwithstanding the foregoing,
Landlord shall use commercially reasonable efforts to obtain a
"non-disturbance" agreement, substantially in the form of Exhibit "J"
annexed hereto and made a part hereof (the "Mortgagee NDA"), by the Rent
Commencement Date. If Tenant shall not execute and deliver to such
Mortgagee the Mortgagee NDA, then this Lease and all of Tenant's rights
hereunder shall nonetheless be subject and subordinate to such Mortgage.
Except as expressly provided in Subsection 22.06B below, Landlord shall
have no liability to Tenant if, for any reason whatsoever, Tenant shall not
receive the Mortgagee NDA, nor shall the same relieve or release Tenant
from any of the obligations of Tenant under this Lease.
45
<PAGE>
B. If Landlord shall fail to deliver to Tenant, within sixty (60) days after
the Commencement Date (the "NDA Outside Date"), the Mortgagee NDA, then
Tenant may terminate this Lease, but only by giving written notice of such
termination to Landlord not later than thirty (30) days following the NDA
Outside Date (with time being of the essence as to such time period), and
only if Landlord shall not deliver the Mortgagee NDA, as the case may be,
within said thirty (30) day period. In the event that this Lease shall be
so terminated, Landlord shall return the Security to Tenant, and neither
party shall have any further obligation or liability to the other under or
with respect to this Lease.
ARTICLE 23
ESTOPPEL CERTIFICATE
Section 23.01.
--------------
At any time and from time to time before or during the Lease Term, Tenant shall,
within ten (10) days after request by Landlord, execute, acknowledge and deliver
to Landlord a statement in writing addressed to Landlord and/or to such other
party(ies) as Landlord may designate: (i) 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), (ii) stating the dates to which the Fixed Rent, additional rent
and other charges have been paid, (iii) stating whether or not, to the best
knowledge of the signer of such certificate, there exists any default by either
party in the performance of any covenant, agreement, term, provision or
condition contained in this Lease, and, if so, specifying each such default of
which the signer may have knowledge, (iv) setting forth the names and addresses
of the shareholders of Tenant (if Tenant shall be a corporate entity) and their
holdings, and (v) setting forth such other information as Landlord may request
concerning this Lease; it being intended that any such statement delivered
pursuant to this Section 23.01 may be relied upon by Landlord or by a purchaser
of Landlord's interest, and by any mortgagee, or prospective mortgagee, of any
mortgage affecting the Building or the Land, or both, and by any Overlandlord or
prospective Overlandlord under any Underlying Lease affecting the Land or
Building, or both, and by any mortgagee or prospective mortgagee of any
Underlying Lease. Failure by Tenant to comply with the provisions of this
Section 23.01 shall constitute a waiver by Tenant of any defaults on Landlord's
part under this Lease and a waiver of enforceability by Tenant of any
modification of this Lease, as against any person above described entitled to
rely upon such statement, but without limiting any rights and remedies available
to Landlord by reason of such failure.
ARTICLE 24
LEGAL PROCEEDINGS
Section 24.01.
--------------
If Tenant or Landlord shall bring any action or suit for any relief against the
other, declaratory or otherwise, arising out of this Lease or Tenant's occupancy
of the Demised Premises, the parties hereto agree to and hereby waive any right
to a trial by jury.
Section 24.02.
--------------
This Lease shall be governed in all respects by the laws of the State of New
York. Tenant hereby expressly consents to jurisdiction in the State of New York
in any action or proceeding arising out of this Lease and/or the use and
occupancy of the Demised Premises. If Tenant at any time during the Lease Term
shall not be a New York partnership or a New York corporation or a foreign
corporation qualified to do business in New York State, Tenant shall designate,
in writing, an agent located in New York County (together with such agent's
address) for service under the laws of the State of New York for the entry of a
personal judgment against Tenant. Tenant, by notice to Landlord, shall have the
right to change Tenant's designation of such agent, provided that at all times
there shall be an agent in New York County for such service. In the event of any
revocation (or attempted revocation) by Tenant of such agency, the same shall be
void and have no force or effect unless and until a new agent shall have been
designated for service and Tenant shall have notified Landlord thereof (together
with such new agent's address). If any such agency designation shall require a
filing in the office of the Clerk of the County of New York, the same shall be
promptly accomplished by Tenant, at Tenant's expense, and a certified copy
thereof shall thereupon be transmitted by Tenant to Landlord.
46
<PAGE>
ARTICLE 25
SURRENDER
Section 25.01.
--------------
Tenant shall, at the expiration or sooner termination of the Lease Term
(either, as applicable, being referred to herein as the "Surrender Date"),
quit and surrender to Landlord the Demised Premises, broom clean and in the
condition required under this Lease, reasonable wear and tear excepted, and
shall deliver all keys to and for the Demised Premises to Landlord, and
shall inform Landlord of all combinations of locks, safes and vaults, if
any, located (and permitted by Landlord to remain) in the Demised Premises.
Except as otherwise expressly provided elsewhere in this Lease, Tenant
shall, on or before the Surrender Date, remove all of Tenant's property
from the Demised Premises and shall immediately repair any damage to the
Demised Premises caused by the installation and/or removal of such
property. Any or all of such property not so removed shall, at Landlord's
option, become the exclusive property of Landlord or be disposed of by
Landlord, at Tenant's cost and expense, without further notice to or demand
upon Tenant, and without any liability to Tenant, in connection therewith.
Section 25.02.
--------------
A. If the Demised Premises shall not be surrendered as and when aforesaid,
Tenant shall pay to Landlord as use and occupancy for each month or
fraction thereof during which Tenant continues to occupy the Demised
Premises from and after the Surrender Date (the "Continued Occupancy
Period") an amount of money (the "Occupancy Payment") equal to one hundred
fifty (150%) percent of one twelfth (1/12) of the Fixed Rent due or payable
by Tenant during the twelve (12) months immediately preceding the Surrender
Date. Tenant shall make the Occupancy Payment, without notice or previous
demand therefor, on the first day of each and every month during the
Continued Occupancy Period.
B. In addition to making all required Occupancy Payments, Tenant shall, in the
event of Tenant's failure to surrender the Demised Premises on the
Surrender Date as and in the manner aforesaid, also indemnify and hold
Landlord harmless from and against any and all cost, expense, damage,
claim, loss or liability resulting from any delay or failure by Tenant in
so surrendering the Demised Premises, including any consequential damages
suffered by Landlord and any claims made by any succeeding occupant founded
on such delay or failure, and any and all reasonable attorneys' fees,
disbursements and court costs incurred by Landlord in connection with any
of the foregoing.
C. The receipt and acceptance by Landlord of all or any portion of the
Occupancy Payment shall not be deemed a waiver or acceptance by Landlord of
Tenant's breach of Tenant's covenants and agreements under this Article 25,
or a waiver by Landlord of Landlord's right to institute any summary
holdover proceedings against Tenant, or a waiver by Landlord of Landlord's
rights to enforce any of Landlord's rights, or pursue any of Landlord's
remedies against Tenant in such event as provided for in this Lease or
under law.
Section 25.03.
--------------
It is expressly understood and agreed that there can be no extension of the
Lease Term unless said extension is reduced to writing and agreed to by
Landlord. No verbal statement or unsigned writing shall be deemed to extend the
Lease Term, and Tenant hereby agrees that any improvements Tenant shall make to
the Demised Premises in reliance upon any extension of the Lease Term given
verbally or by an unsigned writing shall be at Tenant's peril.
Section 25.04.
--------------
If the last day of the Lease Term shall fall on a Saturday, Sunday or legal
holiday, the term of this Lease shall expire on the Business Day immediately
preceding such date.
Section 25.05.
--------------
Tenant expressly waives, for itself and for any person claiming by, through or
under Tenant, any rights which Tenant or any such persons may have under the
provisions of Section 2201 of the New York Civil Practice Law and Rules, and of
any successor law of like import then in force, in connection with any summary
holdover proceedings which Landlord may institute to enforce the provisions of
this Article 25.
Section 25.06.
--------------
Each and every one of Tenant's obligations set forth in this Article 25
(including the indemnity) shall survive the expiration or other termination of
the Lease Term.
ARTICLE 26
RULES AND REGULATIONS
Section 26.01.
--------------
A. Tenant and all Persons Within Tenant's Control shall faithfully observe and
comply with: (i) all of the rules and regulations set forth in Exhibit "F"
annexed hereto and made a part hereof, and (ii) such additional rules and
regulations as Landlord may, at any time or from time to time hereafter,
reasonably make and communicate in writing to Tenant, which, in the
judgment of Landlord, shall be necessary or desirable for the reputation,
safety, care or appearance of the Building and the Building Systems, or the
preservation of good order therein, or the operation or maintenance of the
Building and Building Systems, or the comfort of tenants or others in the
Building. In the case of any conflict between the provisions of this Lease
and any such rules or regulations, the provisions of this Lease shall
control. Nothing contained in this Lease shall be construed to impose upon
Landlord any duty or obligation to enforce the rules and regulations or the
terms, covenants or conditions in any other lease as against any other
tenant, except that Landlord agrees not to enforce the rules and
regulations against Tenant in a non-discriminatory manner. Landlord shall
not be liable to Tenant for violation of the same by any other tenant, or
by any other tenant's servants, employees, agents, visitors, invitees,
subtenants or licensees. In the event that Tenant shall dispute the
reasonableness of any additional rule or regulation hereafter made or
adopted by Landlord or Landlord's agents, the parties hereto agree to
submit the question of the reasonableness of such rule or regulation for
decision to the Chairman of the Board of Directors of the Management
Division of The Real Estate Board of New York, Inc., or to such impartial
person or persons as he may designate, whose determination shall be final
and conclusive upon the parties hereto. The right to dispute the
reasonableness of any additional rule or regulation upon Tenant's part
shall be deemed waived unless the same shall be asserted by service of a
notice in writing upon Landlord within ten (10) days after the giving of
notice of the making of the rule or regulation to Tenant.
47
<PAGE>
B. Notwithstanding anything to the contrary contained herein, Landlord
reserves the right to make rules and regulations that may apply only to
concourse level premises and tenants. In the event that Landlord shall make
any such rules and regulations, nothing contained in this Lease shall be
construed to impose upon Landlord any duty or obligation to enforce any
such rules and regulations as against any other concourse level tenant,
except that Landlord agrees not to enforce any such rules and regulations
against Tenant in a discriminatory manner.
ARTICLE 27
PERSONS BOUND
Section 27.01.
--------------
The covenants, agreements, terms, provisions and conditions of this Lease shall
bind and inure to the benefit of the respective heirs, distributees, executors,
administrators, successors, assigns and legal representatives of the parties
hereto with the same effect as if mentioned in each instance where a party
hereto is named or referred to, except that no violation of the provisions of
Article 10 shall operate to vest any rights in any successor, assignee or legal
representative of Tenant, and that the provisions of this Article 27 shall not
be construed as modifying the conditions of limitation contained in Articles 14
and 15. The term "Landlord" as used in this Lease shall mean the Landlord at the
particular time in question, and it is agreed that the covenants and obligations
of Landlord under this Lease shall not be binding upon Landlord herein named or
any subsequent landlord with respect to any period subsequent to the transfer of
its interest under this Lease by operation of law or otherwise. In the event of
any such transfer, the transferee shall be deemed to have assumed (subject to
this Article 27) the covenants and obligations of Landlord under this Lease, and
Tenant agrees to look solely to the transferee for the performance of the
obligations of Landlord hereunder, but only with respect to the period beginning
with such transfer and ending with a subsequent transfer of such interest. A
lease of Landlord's interest shall be deemed a transfer within the meaning of
this Article 27.
Section 27.02.
--------------
Notwithstanding anything to the contrary provided or implied elsewhere in this
Lease, Tenant agrees that there shall be no personal liability on the part of
Landlord arising out of any default by Landlord under this Lease, and that
Tenant (and any person claiming by, through or under Tenant) shall look solely
to the equity interest of Landlord in and to the Building or the leasehold
estate of Landlord for the enforcement and satisfaction of any defaults by
Landlord hereunder, and that Tenant shall not enforce any judgment or other
judicial decree requiring the payment of money by Landlord against any other
property or assets of Landlord, and at no time shall any other property or
assets of Landlord, or of Landlord's principals, partners, members,
shareholders, directors or officers, be subject to levy, execution, attachment
or other enforcement procedure for the satisfaction of Tenant's (or such
person's) remedies under or with respect to this Lease, the relationship of
Landlord and Tenant hereunder or Tenant's use or occupancy of the Demised
Premises; such exculpation of personal liability to be absolute and without any
exception.
ARTICLE 28
NOTICES
Section 28.01.
--------------
In order for the same to be effective, each and every notice, request or demand
permitted or required to be given by the terms and provisions of this Lease, or
by any Legal Requirement, either by Landlord to Tenant or by Tenant to Landlord
(any of the foregoing being referred to in this Article 28 as a "Notice"), shall
be given in writing, in the manner provided in this Section 28.01, unless
expressly provided otherwise elsewhere in this Lease. All Notices shall be
delivered by hand or by a nationally recognized overnight courier, and shall be
deemed to have been delivered on the date of receipt thereof (or the date that
such receipt is refused, if applicable). In the case of Notices given by
Landlord to Tenant, any such Notice shall be addressed to Tenant at the Demised
Premises (or before Tenant has moved its offices to the Demised Premises,
addressed to Tenant at its address as stated on the first page of this Lease).
In the case of Notices given by Tenant to Landlord, any such Notice shall be
addressed to Landlord as follows: 1114 TrizecHahn-Swig, L.L.C., c/o TrizecHahn
Office Properties Inc., 1411 Broadway, New York, New York 10018, Attention:
General Manager, with a copy to 1114 TrizecHahn-Swig, L.L.C., c/o TrizecHahn
Office Properties Inc., Sears Tower, 233 South Wacker Drive, Suite 4600,
Chicago, Illinois 60606, Attention: Portfolio Manager, and with copies thereof
delivered as aforesaid to parties designated in accordance with Section 22.04.
Either party may, by notice as aforesaid, designate a different address or
addresses for Notices.
48
<PAGE>
Section 28.02.
--------------
Notices may be given on behalf of Landlord by the managing agent for the
Building, which currently is TrizecHahn Office Properties Inc.
ARTICLE 29
PARTNERSHIP TENANT
Section 29.01.
--------------
If Tenant is a partnership (or is comprised of two (2) or more persons,
individually and as co-partners of a partnership) or if Tenant's interest in
this Lease shall be assigned to a partnership (or to two (2) or more persons,
individually and as co-partners of a partnership) pursuant to Article 10 (any
such partnership and such persons being referred to in this Article as
"Partnership Tenant"), the following provisions of this Section 29.01 shall
apply to such Partnership Tenant: (i) the liability of each of the parties
comprising Partnership Tenant shall be joint and several, (ii) each of the
parties comprising Partnership Tenant hereby consents in advance to, and agrees
to be bound by, any written instrument which may hereafter be executed changing,
modifying or discharging this Lease, in whole or in part, or surrendering all or
any part of the Demised Premises to Landlord, and by any notices, demands,
requests or other communications which may hereafter be given by Partnership
Tenant or by any of the parties comprising Partnership Tenant, (iii) any bills,
statements, notices, demands, requests or other communications given or rendered
to Partnership Tenant or to any of the parties comprising Partnership Tenant
shall be binding upon Partnership Tenant and all such parties, (iv) if
Partnership Tenant shall admit new partners, all of such new partners shall, by
their admission to Partnership Tenant, be deemed to have assumed performance of
all of the terms, covenants and conditions of this Lease on Tenant's part to be
observed and performed, (v) Partnership Tenant shall give prompt notice to
Landlord of the admission of any such new partners, and, upon demand of
Landlord, shall cause each such new partner to execute and deliver to Landlord
an agreement in form satisfactory to Landlord, wherein each such new partner
shall assume performance of all of the terms, covenants and conditions of this
Lease on Tenant's part to be observed and performed (but neither Landlord's
failure to request any such agreement nor the failure of any such new partner to
execute or deliver any such agreement to Landlord shall vitiate the provisions
of clause (iv) of this Section 29.01), and (vi) on each anniversary of the
Commencement Date, Partnership Tenant shall deliver to Landlord a list of the
names of all partners and their then current residential addresses.
Section 29.02.
--------------
If any partner in Tenant is or shall be a professional corporation, Tenant
agrees to cause such professional corporation and each individual shareholder
thereof to execute such guaranties and other instruments, agreements or
documents as Landlord may reasonably request confirming that such individual
shareholder shall have the same obligations and liability under this Lease as
such shareholder would have had if he, and not such professional corporation,
were a partner in Tenant.
Section 29.03.
--------------
Tenant and each of the partners/shareholders of Tenant hereby waive any
requirements of law that may require that Landlord first look to the assets of
Tenant for recovery of any monies due hereunder, it being the intention of the
parties hereto that Landlord may, at Landlord's election, proceed against the
assets of Tenant and/or the assets of the individual partners/shareholders of
Tenant, whether simultaneously, or in such order of priority as Landlord may
determine in Landlord's sole discretion. The provisions of this Section 29.03
are not intended to mean that Landlord shall have limited or waived its rights
to any other available remedies hereunder or under applicable law as to Tenant,
including the right to look to the assets of Tenant for recovery of any monies
due hereunder.
Section 29.04.
--------------
The partners/shareholders of Tenant hereby consent and submit to the
jurisdiction of any court of record of New York State located in New York
County, or of the United States District Court for the Southern District of New
York, and agree that service of process in any action or proceeding brought by
Landlord may be made upon any or all of the partners/shareholders of Tenant by
mailing a copy of the summons to such partner(s)/shareholder(s) either at their
respective addresses or at the Demised Premises, by registered or certified
mail, return receipt requested. Notwithstanding the foregoing, the residence of
any partner/shareholder of Tenant shall not be a basis for a choice of venue or
for a motion by a partner/shareholder of Tenant for transfer of venue or forum
non conveniens pursuant to any rule of common law and/or any applicable state of
federal provision or statute, and each partner/shareholder of Tenant and Tenant
hereby waives the right to choose venue or to move for transfer of venue or
forum non conveniens on the grounds that an individual partner/shareholder of
the Tenant resides in a particular jurisdiction.
49
<PAGE>
ARTICLE 30
NO WAIVER; ENTIRE AGREEMENT
Section 30.01.
--------------
The failure of the Landlord to enforce Landlord's rights for violation of, or to
insist upon the strict performance of any covenant, agreement, term, provision
or condition of this Lease, or any of the rules and regulations, shall not
constitute a waiver thereof, and Landlord shall have all remedies provided
herein and by applicable law with respect to any subsequent act which would have
originally constituted a violation. The receipt by Landlord of Fixed Rent and/or
additional rent with knowledge of the breach of any covenant, agreement, term,
provision or condition of this Lease shall not be deemed a waiver of such
breach. No provision of this Lease shall be deemed to have been waived by
Landlord, unless such waiver be in writing signed by Landlord. Tenant hereby
expressly waives any right that Tenant might otherwise have to raise or assert
either the aforesaid failure of Landlord to enforce rights, seek redress or
insist upon strict performance, or the aforesaid receipt by Landlord of Fixed
Rent and/or additional rent, as a basis for any defense or counterclaim in any
legal, equitable or other proceeding in which Landlord shall seek to enforce any
rights, covenants or conditions under this Lease. The remedies provided in this
Lease shall be cumulative and shall not in any way abridge, modify or preclude
any other rights or remedies to which Landlord may be entitled under this Lease,
at law or in equity. Without limiting the generality of the foregoing, Tenant
expressly agrees that, upon the occurrence of an Event of Default, Landlord
shall be entitled to exercise all of the rights set forth in Article 15 above
(including the right to terminate this Lease), notwithstanding that this Lease
provides that Landlord may cure the default or otherwise perform the obligation
of Tenant which gave rise to such Event of Default, and regardless of whether
Landlord shall have effected such cure or performed such obligation. The receipt
and retention by Landlord of Fixed Rent or additional rent from any person other
than Tenant shall not be deemed a waiver by Landlord of any breach by Tenant of
any covenant, agreement, term, provision or condition contained in this Lease,
or the acceptance of such other person as a tenant, or a release of Tenant from
the further performance of the covenants, agreements, terms, provisions and
conditions contained in this Lease.
Section 30.02.
--------------
This Lease, with the schedules, riders and exhibits, if any, annexed hereto,
contains the entire agreement between Landlord and Tenant, and any agreement
heretofore made shall be deemed merged herein. Any agreement hereafter made
between Landlord and Tenant shall be ineffective to change, modify, waive,
release, discharge, terminate or effect a surrender or abandonment of this
Lease, in whole or in part, unless such agreement is in writing and signed by
the party against whom enforcement is sought. All of the schedules, riders and
exhibits, if any, annexed hereto are incorporated herein and made a part hereof
as though fully set forth herein. If Tenant shall have any right to an extension
or renewal of the Lease Term, or any right to lease other space from Landlord,
Landlord's exercise of Landlord's right to terminate this Lease shall operate,
ipso facto, to terminate such renewal, extension or other right, whether or not
theretofore exercised by Tenant. Any option on the part of Tenant herein
contained for an extension or renewal hereof shall not be deemed to give Tenant
any option for a further extension beyond the first renewal or extended term. No
option or right granted to Tenant under this Lease to terminate, extend, or make
any other election, shall be exercisable or valid during such time as Tenant is
not duly keeping, observing and complying with all of the terms, provisions and
conditions on Tenant's part to be observed and performed under this Lease.
Section 30.03.
--------------
No act or thing done by Landlord or Landlord's agents during the Lease Term
shall be deemed to constitute an eviction by Landlord, or be deemed an
acceptance of a surrender of the Demised Premises, and no agreement to accept
such surrender shall be valid, unless in writing signed by Landlord. No employee
of Landlord or of Landlord's agents shall have any power to accept the keys of
the Demised Premises prior to the termination of this Lease. The delivery of
keys to any employee of Landlord or of Landlord's agents shall not operate as a
termination of this Lease or a surrender of the Demised Premises. In the event
that Tenant at any time shall desire to have Landlord sublet the Demised
Premises for Tenant's account, Landlord or Landlord's agents are authorized to
receive said keys for such purposes without releasing Tenant from any of
Tenant's obligations under this Lease, and Tenant hereby relieves Landlord of
any liability for loss of or damage to any of Tenant's property in connection
with such subletting.
ARTICLE 31
MISCELLANEOUS PROVISIONS; DEFINITIONS
Section 31.01.
--------------
Tenant represents that Tenant has inspected the Demised Premises, and (except as
may be otherwise expressly set forth elsewhere in this Lease) agrees to take
same in its existing condition "as is" and "where is" at the commencement of the
term of this Lease. The taking of possession of the Demised Premises by Tenant
shall be deemed conclusive evidence that Tenant accepts the same "as is" and
"where is", and that the Demised Premises and the Building are in good and
satisfactory condition. Tenant agrees that neither Landlord, nor any broker,
agent, employee or representative of Landlord nor any other party, has made, and
Tenant does not rely on, any representations, warranties or promises with
respect to the Building, the Land, the Demised Premises or this Lease, 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. Landlord makes no representation as to the design,
construction, development or use of the Land or Building, except as may be
expressly set forth in this Lease.
50
<PAGE>
Section 31.02.
--------------
The Table of Contents and Article headings of this Lease are included for
convenience only, and shall not limit or define the meaning or content hereof.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural, as the identity of the person
or persons may require. The terms "herein," "hereof" and "hereunder," and words
of similar import, shall be construed to refer to this Lease as a whole, and not
to any particular Article or Section, unless expressly so stated. The term
"and/or", when applied to two or more matters or things, shall be construed to
apply to any one or more or all thereof as the circumstances warrant at the time
in question. The term "person" shall mean any natural person or persons, a
partnership, a corporation, and any other form of business or legal association
or entity, unless expressly otherwise stated. An "affiliate" of Tenant shall
mean any person which controls or is controlled by, or is under common control
with, Tenant, with the word "control" (and, correspondingly, "controlled by" and
"under common control with"), as used with respect to any person, meaning the
possession of the power to direct or cause the direction of the management and
policies of such person. The rule of "ejusdem generis" shall not apply in or to
the construction of any term of this Lease.
Section 31.03.
--------------
If the term "Tenant", as used in this Lease, refers or shall refer to more than
one person, then, as used in this Lease, said term shall be deemed to include
all of such persons or any one of them. If any of the obligations of Tenant
under this Lease is or shall be guaranteed, the term "Tenant" as used in Article
14 shall be deemed to mean the Tenant and the guarantor, or either of them. If
this Lease shall have been assigned, then for purposes of Article 14, the term
"Tenant" shall be deemed to mean the assignee. The term "Tenant" shall mean the
Tenant herein named or any assignee or other successor-in-interest (immediate or
remote) of the Tenant herein named, which at the time in question is the owner
of the Tenant's estate and interest granted by this Lease; but the foregoing
provisions of this Section 31.03 shall not be construed to permit any assignment
of this Lease or to relieve the Tenant herein named or any assignee or other
successor-in-interest (whether immediate or remote) of the Tenant herein named
from the full and prompt payment, performance and observance of each and every
one of the covenants, obligations and conditions to be paid, performed and
observed by Tenant under this Lease.
Section 31.04.
--------------
Intentionally omitted.
Section 31.05.
--------------
Landlord and Tenant, any subtenant, and any guarantor of Tenant's obligations
under this Lease, hereby expressly consent to the jurisdiction of the Civil
Court of the City of New York and the Supreme Court of the State of New York
with respect to any action or proceeding between Landlord and Tenant or such
party with respect to this Lease or any rights or obligations of either party
pursuant to this Lease, and each of such subtenant, guarantor, Landlord and
Tenant agrees that venue shall lie in New York County. Tenant and any subtenant
further waive any and all rights to commence any such action or proceeding
against Landlord before any other court.
Section 31.06.
--------------
The submission of this Lease to Tenant shall not be construed as an offer, nor
shall Tenant have any rights with respect thereto or the Demised Premises,
unless and until Landlord and Tenant shall each have executed a counterpart of
this Lease and delivered the same to the other. Until such execution and
delivery, any action taken or expense incurred by Tenant in connection with this
Lease or the Demised Premises shall be solely at Tenant's own risk and account.
Section 31.07.
--------------
Neither this Lease nor any memorandum thereof shall be recorded.
Section 31.08.
--------------
This Lease shall be governed exclusively by (i) the provisions hereof, without
the aid of any canon, custom or rule of law requiring or suggesting construction
against the party drafting or causing the drafting of the provision in question,
and (ii) the internal laws of the State of New York as the same may from time to
time exist, without giving effect to the principles of conflicts of laws.
Section 31.09.
--------------
There shall be no merger of this Lease, or the leasehold estate created by this
Lease, with any other estate or interest in the Demised Premises, or any part
thereof, by reason of the fact that the same person may acquire or own or hold,
directly or indirectly, (i) this Lease or the leasehold estate created by this
Lease, or any interest in this Lease or in any such leasehold estate, and (ii)
any such other estate or interest in the Demised Premises or any part thereof;
and no such merger shall occur unless and until all persons having an interest
(including a security interest) in (a) this Lease or the leasehold estate
created by this Lease and (b) any such other estate or interest in the Demised
Premises, or any part thereof, shall join in a written instrument effecting such
merger and shall duly record the same.
Section 31.10.
--------------
If Tenant is a corporation, each person executing this Lease on behalf of Tenant
hereby covenants, represents and warrants that Tenant is a duly incorporated or
duly qualified (if foreign) corporation and is authorized to do business in the
State of New York (a copy of evidence thereof to be supplied to Landlord upon
request); and that each person executing this Lease on behalf of Tenant is an
officer of Tenant, and that he is duly authorized to execute, acknowledge and
deliver this Lease to Landlord (a copy of a resolution to that effect to be
supplied to Landlord upon request).
51
<PAGE>
Section 31.11.
--------------
The terms "Landlord shall have no liability to Tenant", or "the same shall be
without liability to Landlord", or "without incurring any liability to Tenant
therefor", or words of similar import, shall mean that Tenant shall not be
entitled to terminate this Lease, or to claim actual or constructive eviction
(partial or total), or to receive any abatement or diminution of rent, or to be
relieved in any manner of any of Tenant's other obligations hereunder, or to be
compensated for loss or injury suffered, or to enforce any other right or kind
of liability whatsoever against Landlord under or with respect to this Lease or
with respect to Tenant's use or occupancy of the Demised Premises.
Section 31.12.
--------------
If, under the terms of this Lease, Tenant shall be obligated to pay to Landlord
any amount of money (other than Fixed Rent), and no payment period therefor is
specified, Tenant shall pay to Landlord the amount due within ten (10) days
after being billed therefor.
Section 31.13.
--------------
Except as otherwise expressly provided herein, all bills, invoices or statements
rendered to Tenant pursuant to the terms of this Lease shall be deemed binding
and conclusive if, within thirty (30) days of receipt of the same, Tenant fails
to notify Landlord, in writing, of Tenant's intention to dispute such bill,
invoice or statement.
Section 31.14.
--------------
Time shall be of the essence with respect to the exercise of any option granted
to Tenant pursuant to this
Lease.
Section 31.15.
--------------
Notwithstanding anything to the contrary contained in this Lease, during the
continuance of any default by Tenant with respect to any of Tenant's obligations
under this Lease, Tenant shall not be entitled to exercise any rights or options
or to receive any funds or proceeds being held by Landlord under or pursuant to
this Lease.
Section 31.16.
--------------
If any sales or other tax shall be due or payable with respect to any cleaning
or other service which Tenant obtains or contracts for directly from any third
party or parties, Tenant shall file any required tax returns and shall pay any
such tax, and Tenant shall indemnify and hold Landlord harmless from and against
any loss, damage or liability suffered or incurred by Landlord by reason
thereof.
Section 31.17.
--------------
Tenant acknowledges and agrees that Tenant has no rights to any development
rights, "air rights" or comparable rights appurtenant to the Land and the
Building, and consents, without further consideration, to any utilization of
such rights by Landlord, and agrees to promptly execute and deliver any
instruments which may be requested by Landlord, including instruments merging
zoning lots, evidencing such acknowledgment and consent. The provisions of this
Section 31.17 shall be deemed to be and shall be construed as an express waiver
by Tenant of any interest Tenant may have as a "party in interest" (as such
quoted term is defined under the definition of "Zoning Lot" in Section 12-10 of
the Zoning Resolution of the City of New York) in the Land and/or the Building.
Section 31.18.
--------------
This Lease shall not be deemed or construed to create or establish any
relationship of partnership or joint venture or similar relationship or
arrangement between Landlord or Tenant.
Section 31.19.
--------------
For the purposes of this Lease (including all of the schedules, riders and
exhibits, if any, annexed to this Lease), the terms set forth below shall have
the definitions which immediately follow such terms, and such definitions are
hereby incorporated into this Lease wherever used:
Alterations - The term "Alterations" shall mean and include all
installations, changes, alterations, restorations, renovations,
decorations, replacements, additions, improvements and betterments made in
or to the Demised Premises or the Building, and shall include Tenant's
Initial Work.
Authorized Use - The "Authorized Use" shall be for the operation of an
adult educational institution offering computer training and computer
classes for corporate clientele only, and, as in incident to such use, for
executive, administrative and general office purposes, but subject to the
provisions of this Lease and the certificate of occupancy for the Building.
Building - The "Building" shall mean and include the structure and other
improvements constructed or as may in the future be constructed on the
Land, known by the address "1114 Avenue of the Americas, New York, New
York."
Building Systems - The term "Building Systems" shall mean and include such
heating, ventilating and air-conditioning systems, and such elevators,
water, sewerage, toilet, plumbing, sprinkler, life/safety, security,
electric, wiring and mechanical systems, now or hereafter installed in the
Building, and the fixtures, equipment and appurtenances thereof, and all
other mechanical devices, fixtures, equipment, appurtenances and systems
installed by Landlord in the Building.
Include and Including - The terms "include" and "including" shall each be
construed as if followed by the phrase "without being limited to".
52
<PAGE>
Insurance Boards - The term "Insurance Boards" shall mean and include the
National Board of Fire Underwriters and the Insurance Services Office, and
any other local or national body having similar jurisdiction or
establishing insurance premium rates.
Land - The "Land" shall mean the real property described in Exhibit "D"
annexed hereto.
LegalRequirements - The term "Legal Requirements" shall mean and include
all laws, orders, ordinances, directions, notices, rules and regulations of
the federal government and of any state, county, city, borough and
municipality, and of any division, agency, subdivision, bureau, office,
commission, board, authority and department thereof, and of any public
officer or official and of any quasi-governmental officials and authorities
having or asserting jurisdiction over the Land, the Building and/or the
Demised Premises.
Mortgage - The term "Mortgage" shall mean any existing or future mortgage
and/or security deed affecting the Land and/or the Building, alone or with
other property, as the same may from time to time be amended, modified,
renewed, consolidated, substituted, spread, added to, extended and/or
replaced.
Mortgagee - The term "Mortgagee" shall mean the mortgagee under, and/or the
holder of, any Mortgage.
Overlandlord - The term "Overlandlord" shall mean the landlord under any
Underlying Lease.
Persons Within Tenant's Control - The term "Persons Within Tenant's
Control" shall mean and include Tenant, all of Tenant's subtenants and
assignees, and all of their respective principals, officers, agents,
contractors, servants, employees, licensees, guests and invitees.
Recurring Additional Rent - The term "Recurring Additional Rent" shall mean
all additional rent payable by Tenant pursuant to Articles 19 and 20 of
this Lease.
Repairs - The term "Repairs" shall mean and include repairs, restorations
and replacements.
Tenant's Initial Work - The term "Tenant's Initial Work" shall mean such
work (if any) as shall be performed by Tenant or Persons Within Tenant's
Control to prepare the Demised Premises for Tenant's initial occupancy
thereof.
Underlying Lease - The term "Underlying Lease" shall mean any present or
future ground or overriding or underlying lease and/or grant affecting the
Land, the Building and/or the Demised Premises, as the same may from time
to time be amended, modified, renewed, extended and/or replaced.
Section 31.20.
--------------
Except as otherwise expressly provided in this Section 31.20, Tenant shall not
display or erect any lettering, signs, advertisement, posters, displays, or
awnings on the outside of the Demised Premises or any interior signs which are
visible from the outside (collectively, "Signs") without obtaining Landlord's
prior written approval thereto. In no event shall Tenant erect any signs on the
facade of the Building, or so-called "neon" signs in the Demised Premises. In
addition to complying with all of the terms and conditions of Article 5 of this
Lease, Tenant shall submit to Landlord a detailed sketch of any such Signs, and,
if approved, the same shall not be altered in any manner whatsoever without
first obtaining Landlord's prior written consent for such proposed change. All
such Signs shall be maintained by Tenant, at Tenant's own cost and expense, in
good order and condition, and in accordance with all of the terms and provisions
of this Lease. All Signs shall be removed by Tenant upon the expiration or
sooner termination of the Lease Term, and Tenant shall repair, at Tenant's own
cost and expense, any damage to the Demised Premises and/or other portions of
the Building (including any exterior portions) caused by the installation,
maintenance or removal of such Signs. Tenant shall indemnify and hold Landlord
harmless from and against any and all claims, costs, expense or damages suffered
by reason of the installation, maintenance or removal of such Signs. Tenant
shall not paint or decorate any part of the exterior of the Demised Premises, or
any part of the interior visible from the exterior thereof, without first
obtaining Landlord's written approval. Without limiting the foregoing, all
displays and the arrangement, style, color and general appearance thereof, in
the interior of the Demised Premises, including window displays, advertising
matter, signs, merchandise and fixtures, shall be in keeping with the character
and standards of the improvements within the Building, as determined by
Landlord. Tenant shall, immediately upon receiving notice from Landlord or
Landlord's agent, promptly discontinue, remove or change any window displays,
advertising matter, signs, merchandise and fixtures which Landlord deems
objectionable. Landlord reserves the right to require Tenant to correct and/or
Landlord itself may correct (without incurring any liability to Tenant) any
non-conforming Sign, any non-conforming displays or any other objectionable
items which are in the Demised Premises, or on the windows thereof or visible
from the exterior of the Demised Premises, at Tenant's expense, and Tenant shall
reimburse Landlord for the cost thereof, as additional rent, within ten (10)
days following Landlord's rendition of a bill therefor.
53
<PAGE>
ARTICLE 32
INABILITY TO PERFORM; SEVERABILITY
Section 32.01.
--------------
This Lease and the obligation of Tenant to pay Fixed Rent and additional rent
hereunder, and to perform and comply with all of the other covenants and
agreements hereunder on the part of Tenant to be performed or complied with,
shall in no way be affected, impaired or excused because of Landlord's delay or
failure to perform or comply with any of the covenants and agreements hereunder
on the part of Landlord to be performed or complied with, or to furnish any
service or facility, for any cause beyond the reasonable control of Landlord,
including strikes, lock-outs or labor problems, governmental preemption, or by
reason of any Legal Requirements, or by reason of the conditions of supply and
demand which have been or shall be affected by war or other emergency or general
market conditions or otherwise.
Section 32.02.
--------------
If any provision of this Lease or the application thereof to any person or
circumstance shall be determined by a court of competent jurisdiction to be
invalid or unenforceable, the remaining provisions of this Lease or the
application of such provision to persons or circumstances other than those to
which it is held invalid or unenforceable shall not be affected thereby, and
shall be valid and enforceable to the fullest extent permitted by law.
Section 32.03.
-------------
Each covenant, agreement, obligation and/or other provision of this Lease on
Tenant's part to be performed shall be deemed and construed as a separate and
independent covenant of Tenant, and not dependent on any other provision of this
Lease.
ARTICLE 33
SECURITY
Section 33.01.
--------------
Upon the execution of this Lease, but subject to the provisions of Section 33.03
below, Tenant shall deposit with Landlord the Security Deposit Amount, as
security for the faithful performance and observance by Tenant of all of the
covenants, agreements, terms, provisions and conditions of this Lease. Tenant
agrees that, if Tenant shall default with respect to any of the covenants,
agreements, terms, provisions and conditions that shall be the obligation of
Tenant to observe, perform or keep under the terms of this Lease, including the
payment of the Fixed Rent and additional rent, Landlord may use, apply or retain
the whole or any part of the security being held by Landlord (the "Security") to
the extent required for the payment of any Fixed Rent and additional rent, or
any other payments as to which Tenant shall be in default or for any monies
which Landlord may expend or may be required to expend by reason of Tenant's
default in respect of any of the covenants, agreements, terms, provisions and
conditions of this Lease, including any damages or deficiency in the reletting
of the Demised Premises, whether such damages or deficiency accrued before or
after summary proceedings or other re-entry by Landlord. Landlord shall not be
required to so use, apply or retain the whole or any part of the Security so
deposited, but if the whole or any part thereof shall be so used, applied or
retained, then Tenant shall, upon demand, immediately deposit with Landlord an
amount in cash equal to the amount so used, applied or retained, so that
Landlord shall have the entire Security on hand at all times during the Lease
Term. In the event that Tenant shall fully and faithfully comply with all of the
terms, provisions, covenants, agreements and conditions of this Lease, the
Security shall be returned to Tenant within thirty (30) days after the
Expiration Date and delivery of exclusive possession of the Demised Premises to
Landlord. In the event of any making or assignment of any Underlying Lease or
upon a conveyance of the Building: (i) Landlord shall have the right to transfer
the Security to the assignee or lessee or transferee, (ii) Landlord shall
thereupon be released by Tenant from all liability for the return of such
Security, and (iii) Tenant agrees to look solely to Landlord's successor for the
return of said Security; it being agreed that the provisions hereof shall apply
to every transfer or assignment made of the Security to a new Landlord. Tenant
further covenants that Tenant will not assign or encumber or attempt to assign
or encumber the monies deposited herein as Security, and that neither Landlord
nor Landlord's successors or assigns shall be bound by any such assignment,
encumbrance, attempted assignment or attempted encumbrance.
Section 33.02.
--------------
Landlord agrees to place the Security in an interest-bearing account, and,
unless disbursed or applied by Landlord as provided in Section 33.01 above, the
interest earned thereon (less an amount equal to one (1%) percent of the
Security, which may be retained by Landlord each year as compensation for
management and administration of said account) shall, in Landlord's discretion:
(i) be added to the Security Deposit Amount as additional security, and shall be
held and/or disbursed in accordance with the provisions of said Section 33.01,
or (ii) be disbursed annually to Tenant, either (in Landlord's discretion) when
Landlord shall generally make such distributions to tenants in the Building or
within sixty (60) days following Landlord's receipt of a written request
therefor from Tenant, but only if Tenant shall not be in default with respect to
any of Tenant's obligations under this Lease.
Section 33.03.
--------------
A. Notwithstanding anything to the contrary contained in Section 33.01 above,
in lieu of a cash security deposit, Tenant shall deliver to Landlord a
clean, irrevocable, transferable and unconditional letter of credit (the
"Letter of Credit") issued by and drawn upon a commercial bank (hereinafter
referred to as the "Issuing Bank") which shall be a member bank of the New
York Clearinghouse Association (or, in the alternative, which shall have
offices for banking purposes in the Borough of Manhattan and shall have a
net worth of not less than $100,000,000, with appropriate evidence thereof
to be submitted by Tenant), which Letter of Credit shall: (i) have a term
of not less than one year, (ii) be in the form annexed hereto as Exhibit
"H", (iii) be for the benefit of Landlord, (iv) be in the amount of
$650,000.00, (v) except as otherwise provided in this Section 33.03,
conform and be subject to Uniform Customs and Practice for Documentary
Credits, 1993 Revision, ICC Publication No. 500 (or any revision thereof or
successor thereto), (vi) be fully transferable by Landlord without any fees
or charges therefor (or, if the Letter of Credit shall provide for the
payment of any transfer fees or charges, the same shall be paid by Tenant
as and when such payment shall be requested by the Issuing Bank), (vii)
provide that Landlord shall be entitled to draw upon the Letter of Credit
upon presentation to the Issuing Bank of a sight draft accompanied by
Landlord's statement that Landlord is then entitled to draw upon the Letter
of Credit pursuant to the terms of this Lease, and (viii) provide that the
Letter of Credit shall be deemed automatically renewed, without amendment,
for consecutive periods of one year each year thereafter during the entire
Lease Term and for a period of thirty (30) days thereafter, unless the
Issuing Bank shall send notice (the "Non-Renewal Notice") to Landlord by
registered mail, return receipt requested, not less than sixty (60) days
next preceding the then expiration date of the Letter of Credit that the
Issuing Bank elects not to renew such Letter of Credit, in which case
Landlord shall have the right, by sight draft on the Issuing Bank, to
receive the monies represented by the then existing Letter of Credit, and
to hold and/or disburse such proceeds pursuant to the terms of Section
33.01 above as cash security. If Landlord shall fail, for any reason
whatsoever, to draw upon the Letter of Credit within said sixty (60) day
period, and the Letter of Credit shall expire prior to the thirtieth (30th)
day following the Expiration Date of the Lease Term, then Tenant shall,
upon demand, immediately deposit with Landlord the Security Deposit Amount
in cash or furnish Landlord with a replacement Letter of Credit (which
shall comply with all of the conditions set forth in the immediately
preceding sentence), so that Landlord shall have the entire Security on
hand at all times during the Lease Term and for a period of thirty (30)
days thereafter. Tenant acknowledges and agrees that the Letter of Credit
shall be delivered to Landlord as security for the faithful performance and
observance by Tenant of all of the covenants, agreements, terms, provisions
and conditions of this Lease, and that Landlord shall have the right to
draw upon the entire Letter of Credit in any instance in which Landlord
would have the right to use, apply or retain the whole or any part of any
cash security deposited with Landlord pursuant to Section 33.01 above.
54
<PAGE>
B. With respect to the Letter of Credit being required hereunder in lieu of
cash security: (i) all references to "Security" in Section 33.01 above
shall be deemed to refer to the Letter of Credit, or any proceeds thereof
as may be drawn upon by Landlord, and (ii) the provisions of Section 33.02
above shall apply only to such Letter of Credit proceeds (if any) as may be
drawn and held by Landlord.
C. Landlord agrees that, if no Event of Default shall have occurred at any
time during the Lease Term, and if Tenant shall not then be in default
(after notice of such default shall have theretofore been given to Tenant)
with respect to any of the obligations of Tenant under this Lease, then
Tenant shall be permitted to reduce the amount of said Letter of Credit:
(i) on the third (3rd) anniversary of the Rent Commencement Date, to
$433,333.00, and (ii) on the fifth (5th) anniversary of the Rent
Commencement Date, to $216,667.00; provided, however, that at no time
during the Lease Term shall the Letter of Credit furnished to Landlord
pursuant to this Section 33.03 be reduced to an amount less than
$216,667.00.
ARTICLE 34
RENEWAL OPTION
Section 34.01.
--------------
If (a) the initially named Tenant under this Lease, i.e., New Horizons Computer
Learning Centers, Inc. ("New Horizons") shall have theretofore leased from
Landlord all other rentable space on the concourse level of the Building in
addition to the Demised Premises (with all such additional rentable space being
hereinafter referred to as the "Concourse Level Space," and being depicted on
Exhibit "K" annexed hereto and made a part hereof), and (b) New Horizons shall
be in occupancy of the Concourse Level Space and all of the Demised Premises on
both the Exercise Date (as hereinafter defined) and the commencement of the
Renewal Term (as hereinafter defined), then New Horizons shall have an option
(the "Renewal Option") to extend the term of this Lease for a single renewal
term of five (5) years (the "Renewal Term"), which shall commence at noon on the
Expiration Date and shall expire at noon on the fifth (5th) anniversary of the
Expiration Date or such earlier date upon which this Lease may be terminated as
herein provided. The Renewal Option may be exercised only by New Horizons giving
Landlord written notice (the "Renewal Notice") of New Horizons' intention to
renew this Lease pursuant to this Article 34 not later than eighteen (18) months
prior to the Expiration Date, and not earlier than twenty (20) months prior to
the Expiration Date, and such Renewal Notice shall be deemed properly given only
if, on the date that New Horizons shall exercise the Renewal Option (the
"Exercise Date"): (i) this Lease shall not have been previously terminated or
cancelled, and (ii) there shall not then exist an Event of Default. Time shall
be strictly of the essence with respect to the giving of the Renewal Notice by
New Horizons to Landlord. Notwithstanding anything to the contrary contained in
this Section 34.01, if, subsequent to the Exercise Date but prior to the
commencement of the Renewal Term: (x) New Horizons shall not be in occupancy of
all of the Demised Premises, or (y) an Event of Default shall have occurred,
then Landlord, in Landlord's sole and absolute discretion, may elect, by written
notice to New Horizons, to void New Horizons' exercise of the Renewal Option, in
which case New Horizons' exercise of the Renewal Option shall be of no force or
effect, and the Lease Term shall end on the Expiration Date of the initial term
of this Lease, unless sooner cancelled or terminated pursuant to the provisions
of this Lease or by law.
55
<PAGE>
Section 34.02.
--------------
If Tenant shall exercise the Renewal Option in accordance with the provisions of
this Article 34, then this Lease shall be extended for the Renewal Term upon all
of the terms, covenants and conditions contained in this Lease, except that: (i)
during the Renewal Term, the Fixed Rent shall be the fair annual market rental
value (the "Market Value Rent") of the Demised Premises on the Expiration Date,
determined as provided in Section 34.03 below, but in no event less than the
Fixed Rent in effect on the Expiration Date, (ii) from and after the Exercise
Date (but subject to the provisions of the last sentence of Section 34.01
above), all references to "Expiration Date" shall be deemed to refer to the last
day of the Renewal Term, and all references to "Lease Term" shall be deemed to
include the Renewal Term, (iii) Tenant shall have no further right or option to
renew this Lease or the term hereof, and (iv) all provisions of this Lease (if
any) concerning the performance by Landlord of any work, and the grant by
Landlord of any monetary contribution, rent abatement or rent credit, in
connection with Tenant's initial occupancy of the Demised Premises shall be
deemed deleted.
Section 34.03.
--------------
A. The term "Market Value Rent" shall mean the annual fair market rental value
of the Demised Premises as of the Determination Date (as hereinafter
defined), but in no event less than the Fixed Rent payable by Tenant in the
twelve-month period immediately prior to the Expiration Date of the initial
term of this Lease. In addition, commencing on the first day of the Renewal
Term, Tenant shall pay, as additional rent, in addition to the escalation
payments provided for under this Lease, such other types of escalation
payments which Landlord shall be then charging tenants under other leases,
or shall be then requiring in other offers for leases, in the Building. For
purposes hereof, the "Determination Date" shall mean the day immediately
following the Expiration Date.
B. The initial determination of Market Value Rent shall be made in good faith
by Landlord. Provided that the Renewal Notice shall so request, Landlord
shall give notice (the "MVR Notice") to Tenant of Landlord's initial
determination of the Market Value Rent at least one year prior to the
Expiration Date. If the Renewal Notice shall not contain a request that
Landlord furnish the MVR Notice at least one year prior to the Expiration
Date, Landlord may give Tenant the MVR Notice at any time prior to the
Determination Date. Notwithstanding that the Determination Date shall not
yet have occurred, such initial determination of Market Value Rent shall be
final and binding in fixing the Market Value Rent, unless, within thirty
(30) days after Landlord shall have given the MVR Notice to Tenant,
Landlord shall receive a notice from Tenant (the "MVR Objection Notice"):
(i) advising Landlord that Tenant disagrees with the initial determination
of Market Value Rent set forth in the MVR Notice, and (ii) proposing a
specific alternative Market Value Rent, which shall have been determined in
good faith by Tenant. If Landlord and Tenant shall fail to agree upon the
Market Value Rent within thirty (30) days after Landlord shall have
received the MVR Objection Notice, then Landlord and Tenant each shall give
notice to the other setting forth the name and address of an arbitrator
designated by the party giving such notice. If either party shall fail to
give notice of such designation within ten (10) days, then the first
arbitrator chosen shall make the determination alone. If two arbitrators
shall have been designated, such two arbitrators shall, within thirty (30)
days following the designation of the second arbitrator, make their
determinations of Market Value Rent in writing and give notice thereof to
each other and to Landlord and Tenant. Such two arbitrators shall have
twenty (20) days after the receipt of notice of each other's determinations
to confer with each other and to attempt to reach agreement as to the
determination of Market Value Rent. The arbitrators shall take into account
in any such determination of Market Value Rent that Tenant is not required
to reimburse Landlord for any increases in real estate taxes or operating
expenses over a base year. If such two arbitrators shall concur as to the
determination of the Market Value Rent, such concurrence shall be final and
binding upon Landlord and Tenant. If such two arbitrators shall fail to
concur by the end of said twenty (20) day period, then such two arbitrators
shall forthwith designate a third arbitrator. If the two arbitrators shall
fail to agree upon the designation of such third arbitrator within ten (10)
days, then either party may apply to the American Arbitration Association
or any successor thereto having jurisdiction for the designation of such
arbitrator. All arbitrators shall be real estate brokers or consultants who
shall have had at least fifteen (15) years continuous experience in the
business of appraising or managing real estate or acting as real estate
agents or brokers in the Borough of Manhattan, City of New York. The third
arbitrator shall conduct such hearings and investigations as he may deem
appropriate and shall, within thirty (30) days after his designation,
choose one of the determinations of the two arbitrators originally selected
by the parties, and that choice by the third arbitrator shall be binding
upon Landlord and Tenant. Each party shall pay its own counsel fees and
expenses, if any, in connection with any arbitration under this Article 34,
including the expenses and fees of any arbitrator selected by it in
accordance with the provisions of this Article, and the parties shall share
equally all other expenses and fees of any such arbitration. The
determination rendered in accordance with the provisions of this Section
34.03 shall be final and binding in fixing the Market Value Rent. The
arbitrators shall not have the power to add to, modify or change any of the
provisions of this Lease.
C. If for any reason the Market Value Rent shall not have been determined
prior to the commencement of the Renewal Term, then, until the Market Value
Rent and, accordingly, the Fixed Rent, shall have been finally determined,
the Fixed Rent payable for and during the Renewal Term shall be equal to
the Market Value Rent proposed by Landlord. Upon final determination of the
Market Value Rent, an appropriate adjustment to the Fixed Rent shall be
made reflecting such final determination, and Landlord or Tenant, as the
case may be, shall refund or pay to the other any overpayment or
deficiency, as the case may be, in the payment of Fixed Rent from the
commencement of the Renewal Term to the date of such final determination.
56
<PAGE>
Section 34.04.
--------------
The right of renewal granted pursuant to this Article 34 shall be deemed a
personal right limited to New Horizons, and all references in this Article 34 to
"Tenant" shall be deemed to refer only to New Horizons.
Section 34.05.
--------------
Tenant expressly acknowledges and agrees that (i) by including the terms and
conditions of this Article 34 in this Lease, Landlord is not, nor shall Landlord
be deemed to be, offering to lease any portion of the Concourse Level Space to
Tenant, and (ii) nothing contained in this Article 34 or elsewhere in this Lease
shall be construed to obligate Landlord to lease, or to offer to Tenant for
leasing, any portion of the Concourse Level Space, whether or not the same shall
become available for leasing during the Lease Term.
ARTICLE 35
ADDITIONAL PREMISES
Section 35.01.
--------------
A. (i) Tenant has informed Landlord of Tenant's desire to lease from
Landlord (i) that certain portion of the ground floor of the Building
identified by hatching on Exhibit "M-1" annexed hereto and made a part
hereof (the "Ground Floor Premises"), and (ii) that certain portion of
the concourse level of the Building identified by hatching on Exhibit
"M-2" annexed hereto and made a part hereof (the "Additional Concourse
Premises", with the Ground Floor Premises and the Additional Concourse
Premises being hereinafter collectively referred to as the "Additional
Premises"). Tenant acknowledges receipt of advice from Landlord to the
effect that (a) the Additional Premises is currently occupied by a
third party (the "Existing Occupant"), and (b) Landlord has the right,
on six (6) months' prior notice, to require the Existing Occupant to
surrender the Additional Premises to Landlord, (c) Landlord is, as of
the date hereof, negotiating with the Existing Occupant for the prompt
surrender of the Additional Premises without regard to said six (6)
month period. In the event that Landlord shall deliver, in accordance
with the provisions of Subsection 35.01B below, the Additional
Premises to Tenant, then, effective upon said delivery, Tenant shall
be deemed to have leased the Additional Premises, which shall be
deemed to consist of (x) with respect to the Ground Floor Premises,
1,000 rentable square feet, and (y) with respect to the Additional
Concourse Premises, 1,793 rentable square feet.
(ii) Notwithstanding anything to the contrary contained in this Article 35,
Tenant agrees that Landlord shall have no liability to Tenant, and all
of Tenant's obligations under this Lease shall remain in full force
and effect, in the event Landlord shall not deliver the Additional
Premises to Tenant.
(iii)Notwithstanding anything to the contrary contained herein, Landlord
agrees that, in the event that the Existing Occupant shall not have
vacated the Demised Premises by November 1, 2000, Landlord shall use
reasonable efforts (including, if and to the extent that the same
would be considered commercially reasonable in the circumstances, the
commencement of summary holdover proceedings against the Existing
Occupant) to cause the Existing Occupant to vacate the Additional
Premises promptly thereafter.
B. The date of delivery of possession of the Additional Premises to Tenant in
the condition required pursuant to this Subsection 35.01B is referred to
herein as the "Additional Premises Commencement Date". Except as expressly
provided in this Subsection 35.01B, the Additional Premises shall be
delivered to Tenant in its then "as is" and "where is" condition, and
notwithstanding anything to the contrary contained in this Lease, Landlord
shall not be required to perform the work described on Exhibit "C" with
respect to the Additional Premises, except that Landlord shall be required
to (i) demolish the Additional Premises, (ii) install a "building standard"
wall to demise the Ground Floor Premises, and (iii) remove or otherwise
remediate any friable asbestos then located in the Additional Premises. On
or prior to the date that Tenant shall be prepared to perform any work in
the Additional Premises, Landlord shall deliver to Tenant an ACP-5 form
with respect to the Additional Premises.
C. The amount of Fixed Rent to be paid by Tenant to Landlord with respect to
the Ground Floor Premises shall be (x) during the First Lease Period,
NINETY THOUSAND ($90,000.00) DOLLARS per annum, to be paid by Tenant in
equal monthly installments of $7,500.00 each; (y) during the Second Lease
Period, NINETY-THREE THOUSAND ($93,000.00) DOLLARS per annum, to be paid by
Tenant in equal monthly installments of $7,750.00 each, and (z) during the
Third Lease Period, NINETY-SIX THOUSAND ($96,000.00) DOLLARS per annum,
payable in equal monthly installments of $8,000.00 each; it being agreed
that (i) in no event shall Tenant be required to pay Fixed Rent with
respect to the Ground Floor Premises prior to the Additional Premises
Commencement Date, and (ii) Tenant shall be excused from paying Fixed Rent
with respect to the Ground Floor Premises for the first six (6) full
calendar months of the Lease Term following the Additional Premises
Commencement Date. In the event that Tenant's obligation to pay Fixed Rent
with respect to the Ground Floor Premises shall commence on a date which
shall be other than the first day of a calendar month, the same shall be
prorated at the rental rate applicable during the then-current year of the
Lease Term, and shall be paid by Tenant to Landlord together with the first
full monthly installment of Fixed Rent as shall become due hereunder.
57
<PAGE>
D. The amount of Fixed Rent to be paid by Tenant to Landlord with respect to
the Additional Concourse Premises shall be (x) during the First Lease
Period, FIFTY-TWO THOUSAND EIGHT HUNDRED NINETY-THREE AND 50/100
($52,893.50) DOLLARS per annum, to be paid by Tenant in equal monthly
installments of $4,407.79 each; (y) during the Second Lease Period,
FIFTY-EIGHT THOUSAND TWO HUNDRED SEVENTY-TWO AND 50/100 ($58,272.50)
DOLLARS per annum, to be paid by Tenant in equal monthly installments of
$4,856.04 each, and (z) during the Third Lease Period, SIXTY-ONE THOUSAND
EIGHT HUNDRED FIFTY-EIGHT AND 50/100 ($61,858.50) DOLLARS per annum,
payable in equal monthly installments of $5,154.88 each; it being agreed
that (i) in no event shall Tenant be required to pay Fixed Rent with
respect to the Additional Concourse Premises prior to the Additional
Premises Commencement Date, and (ii) Tenant shall be excused from paying
Fixed Rent with respect to the Additional Concourse Premises for the first
six (6) full calendar months of the Lease Term following the Additional
Premises Commencement Date. In the event that Tenant's obligation to pay
Fixed Rent with respect to the Additional Concourse Premises shall commence
on a date which shall be other than the first day of a calendar month, the
same shall be prorated at the rental rate applicable during the
then-current year of the Lease Term, and shall be paid by Tenant to
Landlord together with the first full monthly installment of Fixed Rent as
shall become due hereunder.
Section 35.02.
--------------
From and after the Additional Premises Commencement Date, all of the provisions
of this Lease shall apply to the Ground Floor Premises, except that:
(i) The term "Demised Premises" shall be deemed to include the Ground
Floor Premises;
(ii) The term "Rentable Square Feet" shall be increased by 2,793 (to a
total of 43,197);
(iii)Fixed Rent shall be increased as described in Subsections 35.01C and
35.01D above;
(iv) Tenant's Operating Share and Tenant's Tax Share shall be increased by
0.2% (to a total of 3.15%);
(v) Tenant shall pay for electricity consumed in the Additional Premises
in the manner set forth in Article 20 above; and
(vi) The lease term with respect to the Additional Premises shall be
co-terminus with the Lease Term for the Demised Premises.
Section 35.03.
--------------
A. In the event that the Additional Premises are delivered to Tenant, Tenant
shall be entitled, at Tenant's own cost and expense (but subject to
Landlord's prior written approval in accordance with Article 5 above), to
install a fire egress, fully enclosed, two-hour fire-rated stairway (the
"Stairway") terminating at the exterior of the Building between the
Additional Concourse Premises and the Ground Floor Premises, provided that
(i) any such Stairway shall be (x) installed in compliance with all
applicable Legal Requirements, and (y) contained wholly within the
Additional Premises, and (ii) the door to the Stairway from the exterior of
the Building shall be consistent in character and appearance with other
retail premises on the ground floor of the Building.
B. In the event that Tenant shall so install the Stairway, then the Maximum
Occupancy Number shall be increased to five hundred twenty (520).
Section 35.04.
--------------
Tenant agrees that Tenant shall use the Ground Floor Premises only (i) as a
means of ingress and egress to and from the portion of the Demised Premises
located on the concourse level of the Building, (ii) for a sales office, and
(iii) a hospitality desk, and for no other purpose.
Section 35.05.
--------------
Supplementing the provisions of Section 31.20 above, Tenant shall not (i) paint
or otherwise decorate (with any such painting or other decoration being
hereinafter referred to as "Decorations"), or (ii) place or install any
lettering, signs, advertisements, posters, displays, awnings, banners or flags
(collectively, "Ground Floor Signs") in the Ground Floor Premises without
obtaining Landlord's prior written approval thereto (which approval may be
granted, withheld or conditioned in Landlord's sole and absolute discretion).
Tenant acknowledges that the Building is of a first-class nature and character
and, accordingly, Tenant agrees that Landlord may require any Decorations and/or
Ground Floor Signs which Landlord may permit Tenant to install in the Ground
Floor Premises to conform to and be in harmony with the character and appearance
of the Building, as determined by Landlord in Landlord's sole discretion.
Section 35.06.
--------------
Tenant acknowledges and agrees that Tenant shall be entitled to sublet the
Additional Premises only in connection with a subletting permitted in accordance
with the provisions of Article 10 above, and in no event shall Tenant be
entitled to sublet less than all of the Additional Premises in the event of any
such permitted subletting.
Section 35.07
-------------
Notwithstanding anything to the contrary contained herein, if the Additional
Premises Commencement Date shall not have occurred by July 1, 2001 (the "Outside
Date"), then, in lieu of delivering the Additional Premises to Tenant, Landlord
shall deliver to Tenant within ten (10) days after the Outside Date, and in the
condition required pursuant to Subsection 35.01B above (with the date of such
delivery hereinafter referred to as the "Supplemental Premises Commencement
Date"), the portion of the ground floor of the Building identified by hatching
on Exhibit "N" annexed hereto and made a part hereof (the "Supplemental
Premises") which Supplemental Premises Tenant shall be entitled to use for the
then-remaining Lease Term (x) with no obligation to pay Fixed Rent or Recurring
Additional Rent with respect thereto, and (y) solely for the purpose of
installing the Stairway, and for no other purposes. Except as otherwise
expressly provided in this Section 35.07, effective as of the Supplemental
Premises Commencement Date, the terms and conditions of this Lease, including
specifically the provisions of this Article 35, shall apply to Tenant's use and
occupancy of the Supplemental Premises (as if the Supplemental Premises were the
Additional Premises). Notwithstanding the foregoing, the provisions of
Subdivisions 35.02(i) - (v) above shall not apply to the Supplemental Premises.
58
<PAGE>
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as of
the day and year first above written.
1114 TRIZECHAHN-SWIG, L.L.C.,
Landlord
By: TrizecHahn Office Properties, Inc., Agent
By:________________________________
Name: Antonio A. Bismonte, Executive Vice President
By:________________________________
Name: Carol A. Meyer, Assistant Secretary
NEW HORIZONS COMPUTER LEARNING
CENTERS, INC.,
Tenant
By:________________________________________
Name:______________________________________
Title:_____________________________________
Tenant's Federal ID#_______________________
59
<PAGE>
COUNTY OF _______________
STATE OF ________________
On the ______ day of ____________________ in the year 2000, before me, the
undersigned, a notary public in and for said state, personally appeared
___________________________, personally known to me or proved to me on the
basis of satisfactory evidence to be the individual whose name is
subscribed to the within instrument and acknowledged to me that he/she
executed the same in his/her capacity, and that by his/her signature on the
instrument, the individual, or the person upon behalf of which the
individual acted, executed the instrument, and that such individual made
such appearance before the undersigned in the State of California.
__________________________
Notary Public
60
<PAGE>
EXHIBIT "A"
FLOOR PLANS
The location and dimensions of walls, partitions, columns, stairs and
openings are approximate and subject to revisions due to mechanical work, job
conditions and requirements of governmental departments and authorities. If the
space as actually partitioned shall differ in any respect from this sketch, the
actual area as partitioned shall in all events control. No resulting deviation
or discrepancy shall affect the rent or Tenant's obligations under this Lease.
A-1
<PAGE>
EXHIBIT "B"
COMMENCEMENT DATE AGREEMENT
AGREEMENT made this _____ day of _________, ____, between 1114 TrizecHahn-Swig,
L.L.C., hereinafter referred to as "Landlord", and New Horizons Computer
Learning Centers, Inc., hereinafter referred to as "Tenant".
WITNESSETH:
1. Landlord and Tenant have heretofore entered into a written indenture of
Lease dated as of April ____, 2000 (hereinafter referred to as the
"Lease"), for the leasing by Landlord to Tenant of certain space in the
building known as 1114 Avenue of the Americas, New York, N.Y., all as in
said Lease more particularly described.
2. Pursuant to Article 2 of the Lease, Landlord and Tenant agree that the
Commencement Date of the term of said Lease is ________________________;
the Rent Commencement Date is _______________________; and that the term
thereof shall expire, unless sooner terminated pursuant to the Lease, on
________________________.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Commencement
Date Agreement as of the day and year first above written.
TRIZECHAHN-SWIG, L.L.C.,
Landlord
By: TrizecHahn Office Properties, Inc., Agent
By:________________________________
Name: Antonio A. Bismonte, Executive Vice President
By:________________________________
Name: Carol A. Meyer, Assistant Secretary
NEW HORIZONS COMPUTER LEARNING CENTERS, INC.,
Tenant
By: _____________________
Name:
Title:
STATE OF )
) ss.:
COUNTY OF )
On the _____ day of ________ in the year 2000, before me, the undersigned,
personally appeared ____________________________, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her capacity, and that by his/her signature
on the instrument, the individual, or the person upon behalf of which the
individual acted, executed the instrument, and that such individual made such
appearance before the undersigned in the State of California.
________________________________
Notary Public
B-1
<PAGE>
EXHIBIT "C"
LANDLORD'S WORK
All work set forth in this Exhibit "C" ("Landlord's Work") shall be of material,
design, capacity, finish and color adopted by Landlord as "Building standard".
Landlord's Delivery Work
------------------------
Landlord shall:
1. demolish all existing structures in the Demised Premises.
Landlord's Occupancy Work
-------------------------
Landlord shall:
1. construct and install one men's and one women's Disabilities Act-compliant
public bathroom in the public area of the concourse level of the Building
in accordance with the design standards set forth in Schedule 1 attached
hereto.
2. create access from the Building elevators to the Demised Premises in
compliance with all applicable Legal Requirements (including specifically
the Disabilities Act).
3. construct a demising wall (with dry-wall studs on the inside of said
demising wall) in accordance with applicable Legal Requirements separating
the Demised Premises from the remainder of the concourse level of the
Building.
4. install or designate the Emergency Generator (or a temporary emergency
generator) having a capacity of
40KW.
C-1
<PAGE>
EXHIBIT "D"
LAND DESCRIPTION
All that certain lot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, City, County and State of New York, bounded and described
as follows:
BEGINNING at a point on the northerly side of West 42nd Street, distant 208
feet easterly from the northeasterly corner of 42nd Street and Avenue of
the Americas (formerly 6th Avenue);
RUNNING THENCE easterly along the northerly side of 42nd Street, 234 feet;
THENCE northerly parallel with Avenue of the Americas, 200 feet 10 inches
to the southerly side of 43rd Street;
THENCE westerly along the southerly side of 43rd Street, 442 feet to the
easterly side of Avenue of the Americas;
THENCE southerly along the easterly side of Avenue of the Americas, 100
feet 5 inches to the center line of the block;
THENCE easterly parallel with 42nd Street, 208 feet;
THENCE southerly parallel with Avenue of the Americas, 100 feet 5 inches to
the northerly side of 42nd Street, at the point or place of BEGINNING.
D-1
<PAGE>
EXHIBIT "E"
CLEANING SPECIFICATIONS
[See attached.]
E-1
<PAGE>
EXHIBIT "F"
RULES AND REGULATIONS
1. The rights of tenants with respect to 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. All deliveries
and shipments of goods and packages shall be through the freight elevators,
and not the passenger elevators. 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. Fire exits and stairways are for emergency use
only, and they shall not be used for any other purpose by the tenants,
their employees, licensees or invitees. No tenant shall encumber or
obstruct, or permit the encumbrance or obstruction of any of the lobbies,
sidewalks, plazas, entrances, corridors, escalators, elevators, fire exits,
stairways or other public portions of the Building. No door mat of any kind
whatsoever shall be placed or left in any public hall or outside any entry
door of any tenant's premises. 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. Landlord may refuse admission to the Building 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 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 the tenant
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 or 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. All removals, or the carrying in or out of any safes, freight,
furniture, packages, boxes, crates or any other object or matter of any
description must take place during such hours and in such elevators as
Landlord may determine from time to time. Landlord reserves the right to
inspect all objects and matter to be brought into the Building, and to
exclude from the Building all objects and matter which violate any of these
Rules and Regulations or the lease of which these Rules and Regulations are
a part. Landlord may require 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 of such requirement 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 or despite the provisions of this rule. On days and hours other than
those during which full elevator service is required to be provided,
Landlord may lock all outside Building doors and require use of a night
bell to summon a watchman from his other duties in order to gain access.
3. No tenant shall obtain or accept for use in its premises ice, drinking
water, food, beverage, towel, barbering, boot blacking, floor polishing,
lighting maintenance, cleaning, messenger service 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.
4. No awnings or other projections over or around the windows shall be
installed by any tenant, and only such window blinds or drapes as are
supplied or permitted by Landlord shall be used in a tenant's premises. No
curtains, blinds, shades or screens shall be attached to or hung in, or
used in connection with, any window or door of a tenant's premises, without
the prior written consent of Landlord. Such curtains, blinds, shades or
screens must be of a quality, type, design and color, and attached in the
manner, approved by Landlord. No tenant shall place objects on the
windowsills which are visible from outside of the Building. No tenant shall
darken, cover or permanently close any windows in the tenant's premises.
5. There shall not be used in any space, or in the public halls of the
Building, either by a tenant or by jobbers or others, in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber
tires, side guards and such other safeguards as Landlord shall require.
6. 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 unless the tenant, at its expense, has connected a special smoke
detector system in compliance with all Legal Requirements and approved by
Landlord. Each tenant, before closing and leaving its premises at any time,
shall ensure that all lights are turned out. All windows in each tenant's
premises shall be kept closed at all times, and all blinds and/or drapes
therein above the ground floor shall be lowered and kept drawn when and as
reasonably required (because of the position of the sun) during the
operation of the Building air-conditioning system to cool or ventilate the
tenants' premises. The sashes, sash doors, skylights, windows, and doors
that reflect or admit light and air into the halls, passageways or other
public places in the Building shall not be covered or obstructed by any
tenant, nor shall any bottles, parcels, or other articles be placed on the
window sills.
F-1
<PAGE>
7. 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. No tenant shall
throw anything out of the doors, windows or skylights or down the
passageways. 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 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.
8. Tenants shall not permit any cooking within their premises (unless
consented to in writing by Landlord), and shall not permit any food odors
emanating within their premises to seep into other portions of the
Building. In the event that Landlord shall consent to any cooking or
installation of kitchen equipment in a tenant's premises, such tenant shall
operate its dining room and kitchen equipment, if any, in a manner that
will prevent odors and smoke from escaping into areas of the Building
outside the premises, and shall, at its expense, (i) install and maintain
appropriate filters and grease traps to prevent accumulation of grease in
any duct, stack or flue used to exhaust fumes and vapors resulting from
such food preparation and to prevent stopping up of the sewerage ejecting
system of the Building if any of same are necessary or are required by any
governmental authority, (ii) keep all range hoods and ducts therefrom, if
any, clean and free of grease at all times so as to avoid fire hazard, and
(iii) clean out the vertical exhaust flue and duct, if any, at least once a
year, or more frequently as conditions require. The discharge of any fumes,
vapors and odors, which, by any Legal Requirement, must be discharged into
a separate stack or flue, will not be permitted unless such tenant, at its
expense, shall provide for such discharge in a proper manner. No tenant
shall install vending machines in its premises.
9. No acids, vapors or other materials shall be discharged or permitted to be
discharged into the waste lines, vents or flues of the Building which may
damage them. The water and wash closets and other plumbing fixtures in or
serving any 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.
10. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by a tenant on any part of the outside or
inside of its premises or the Building without the prior written consent of
Landlord. In the event of the violation of the foregoing by a 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 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, such tenant shall refrain from or
discontinue such advertising.
11. No additional locks or bolts of any kind (including locks that are opened
by magnetic cards) 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, unless, in each such case, Landlord shall have been
furnished with a key thereto (or the same shall be operable by Landlord's
master key for the Building). Duplicate keys for a tenant's premises and
toilet rooms shall be procured only from the 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 the
Landlord, and, in the event of the loss of any keys furnished by Landlord,
such tenant shall pay to Landlord the cost thereof.
12. No tenant shall mark, paint, drill into, or in any way deface any part of
the Building or the premises demised to such tenant. Nor boring, cutting or
stringing of wires shall be permitted, except with the prior written
consent of Landlord, and as Landlord may direct. No tenant shall install
any resilient tile or similar floor covering in the premises demised to
such tenant, except in a manner approved by Landlord. Unless and until
Landlord may otherwise direct, no tenant shall lay linoleum, or other
similar floor covering, so that the same shall come in direct contact with
the floor of its premises, and, if linoleum or other similar floor covering
is desired to be used, an interlining of builder's deadening felt shall be
first affixed to the floor, by a paste or other material, soluble in water,
the use of cement or other similar adhesive material being expressly
prohibited.
13. 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 or for any mail order business. 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, nor advertise for laborers giving
an address at the Building. No premises shall be used, or permitted to be
used, at any time, as a store for the sale or display of goods, wares or
merchandise of any kind, or as a restaurant, shop, booth, bootblack or
other stand, or for the conduct of any business or occupation which
predominantly involves direct patronage of the general public in the
premises demised to such tenant, or for manufacturing or for other similar
purposes.
F-2
<PAGE>
14. 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 of their regular duties, unless under special
instructions from the office of the Landlord.
15. Unless Landlord shall be furnishing electricity to the tenant's premises,
each tenant shall, at its expense, provide artificial light and electricity
in the premises 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.
16. Tenants' employees shall not loiter around the hallways, stairways,
elevators, front, roof or any other part of the Building used in common by
the occupants thereof. No tenant shall allow its premises to be used for
lodging or sleeping, or for any immoral or illegal purposes. No bicycles,
vehicles, animals, fish or birds of any kind shall be brought into or kept
in or about any tenant's premises, except that the foregoing shall not be
deemed to prohibit handicapped employees or visitors of tenants from being
accompanied in the Building by a seeing-eye or hearing-aid dog. Canvassing,
soliciting and peddling in the Building are prohibited, and each tenant
shall cooperate to prevent the same.
17. If the premises demised to any tenant become infested with vermin, such
tenant, at its own cost and expense, shall cause its premises to be
exterminated, from time to time, to the satisfaction of Landlord, and shall
employ such exterminators therefor as shall be approved by Landlord.
Landlord reserves the right to require that the exterminators generally
employed in the Building be employed, so long as their charges are
reasonable.
18. Any cuspidors or similar containers or receptacles used in any tenant's
premises shall be cared for and cleaned by and at the expense of the
tenant. No showcases or other articles shall be put in front of or affixed
to any part of the exterior of the Building, nor placed in the halls,
corridors or vestibules. If a tenant's premises shall be an entire floor,
the elevator lobby in the premises shall be kept neat, orderly and fresh in
appearance to Landlord's satisfaction.
19. No tenant shall place a load upon any floor of its premises which exceeds
the load per square foot which such floor was designed to carry and which
is allowed by law. Landlord reserves the right to prescribe the weight and
position of all safes, files, paper and book storage facilities, business
machines and heavy equipment and installations.
20. Business machines and mechanical equipment of any tenant which cause noise,
vibration or any other nuisance that may be transmitted to the structure or
other portions of the Building or to premises, to such a degree as to be
objectionable to Landlord or which interfere with the use or enjoyment by
other tenants of their premises or the public portions of the Building,
shall be placed and maintained by such tenant at such tenant's own cost and
expense, in settings of cork, rubber or spring type vibration eliminators
sufficient to eliminate noise or vibration to the satisfaction of Landlord.
21. If the Building shall contain a Building directory, then Landlord will, at
the request of a tenant, maintain listings on the Building directory of the
name of such tenant and, in the sole discretion of Landlord, of any other
person, firm, association or corporation lawfully in possession of the
premises or any part thereof. The listing of any name other than that of a
tenant, whether on the doors of the premises, on the Building directory, or
otherwise, shall not operate to vest any right or interest in such tenant's
lease or in the premises or be deemed to be the written consent of Landlord
required pursuant to such tenant's lease, it being expressly understood
that any such listing is a privilege extended by Landlord revocable at will
by written notice to such tenant.
22. No tenant shall move any safe, heavy equipment or bulky matter in or out of
the Building without Landlord's written consent. If the movement of such
items requires special handling, the tenant shall employ only persons
holding a Master Rigger's License to do said work, and all such work shall
be done in full compliance with the Administrative Code of the City of New
York and other municipal requirements. All such movements shall be made
during hours which will least interfere with the normal operations of the
Building, and all damage caused by such movement shall be promptly repaired
by such tenant at such tenant's expense.
23. All moving, shipping and receiving of a tenant's property shall be through
the freight elevator only, and at such times and in such a manner as
Landlord shall designate for the proper operation of the Building. If a
tenant's use of such elevator is after regular business hours, or in such a
manner that requires the supervision of Landlord's employees (of which fact
Landlord shall be the sole judge), such tenant shall pay to Landlord the
cost of furnishing such after-hour service and/or supervision. All bulk
deliveries shall be made during non-business hours, at the tenant's cost.
24. Any entrance door or doors leading from a tenant's premises into the public
corridor shall be repaired and/or maintained by such tenant, at such
tenant's own cost and expense, including, without limitation, repair and
maintenance of the enframement and mechanisms of said door(s), whether such
repair or maintenance is caused by any damage by such tenant, its
employees, workmen or contractors, by ordinary wear and tear or otherwise.
25. Landlord reserves the right to rescind, alter or waive any rule or
regulation at any time prescribed for the Building when Landlord deems it
necessary or desirable for the reputation, safety, care of appearance of
the Building, or the preservation of good order therein, or the operation
or maintenance of the Building or the equipment thereof, or the comfort of
tenants or others in the Building. No rescission, alteration or waiver of
any rule or regulation in favor of one tenant shall operate as a
rescission, alteration or waiver in favor of any other tenant.
F-3
<PAGE>
EXHIBIT "G"
LETTER OF CREDIT FORM
NO.___________ Date ____________ Irrevocable Letter of Credit #_____________
BENEFICIARY
1114 TrizecHahn-Swig, L.L.C.
c/o TrizecHahn Office Properties Inc.
1411 Broadway
New York, New York 10018
Attention: General Manager
Dear Sir(s),
We hereby authorize you to value on ___________________________ New York, N.Y.
For the account of ____________________ up to the aggregate amount of $_______.
The funds represented by this letter of credit are available by your drafts at
sight drawn on ________________________________.
This Letter of Credit may be transferred to any transferee of the interest of
the landlord under the lease dated as of ___________________, between 1114
TrizecHahn-Swig, L.L.C., as landlord, and New Horizons Computer Learning
Centers, Inc., as tenant.
It is a condition of this Letter of Credit that it shall be deemed to be
automatically extended for a period of one year from the present or any future
expiration date, unless we shall notify you by written notice given by
registered mail at least 60 days prior to such expiration date that we elect not
to renew it for such additional period, in which case you shall have the right
to draw on us the full amount of this Letter of Credit by your sight draft,
accompanied by your signed written statement that you are drawing under Letter
of Credit #_______________ because you have received notice of non-renewal from
us, and the accountee is still obligated to you under the above-referenced
lease.
Partial draws are permitted under this Letter of Credit.
All drafts drawn under this Letter of Credit must bear on their face the clause
"Drawn under Letter of Credit/# _________________".
Except so far as otherwise expressly stated, this Letter of Credit is subject to
the Uniform Customs and Practice for Documentary
Credits (1993 Revision) International Chamber of Commerce, Publication No 500.
G-1
<PAGE>
EXHIBIT "H"
APPROVED CONTRACTORS
[See attached.]
H-1
<PAGE>
EXHIBIT "I"
BUILDING UNIT SPECIFICATIONS
[See attached.]
I-1
<PAGE>
EXHIBIT "J'
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
[See attached.]
J-1
<PAGE>
EXHIBIT "K"
CONCOURSE LEVEL SPACE
[See attached.]
K-1
<PAGE>
EXHIBIT "L"
ELEVATOR SHAFT
[See attached.]
L-1
<PAGE>
EXHIBIT "M-1"
GROUND FLOOR PREMISES
[See attached.]
M-1
<PAGE>
EXHIBIT "M-2"
ADDITIONAL CONCOURSE PREMISES
[See attached.]
M-2
<PAGE>
EXHIBIT "N"
SUPPLEMENTAL PREMISES
[See attached.]
N-1
