<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ______________________
Commission File Number 0-20946
Health Management Systems, Inc.
(Exact name of registrant as specified in its charter)
New York 13-2770433
- -------------------------------- ----------------------------------
(I.R.S. Employer
State of Incorporation Identification Number)
401 Park Avenue South, New York, New York 10016
- --------------------------------------------------------------------------------
(Address of principal executive offices, zip code)
(212) 685-4545
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report.)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at February 28,
Class 1998
--------------------------------- --------------------------------
Common Stock, $.01 Par Value 17,264,007 Shares
<PAGE> 2
HEALTH MANAGEMENT SYSTEMS, INC.
INDEX TO FORM 10-Q
QUARTER ENDED JANUARY 31, 1998
PART I FINANCIAL INFORMATION Page No.
Item 1 Financial Statements
Consolidated Balance Sheets as of January 31,
1998 (unaudited) and October 31, 1997 1
Consolidated Statements of Operations
(unaudited) for the three month periods ended
January 31, 1998 and January 31, 1997 2
Consolidated Statement of Shareholders' Equity
(unaudited) for the three month period ended
January 31, 1998 3
Consolidated Statement of Cash Flows
(unaudited) for the three month periods ended
January 31, 1998 and January 31, 1997 4
Notes to Interim Consolidated Financial
Statements (unaudited) 5
Item 2 Management's Discussion and Analysis of Results of
Operations and Financial Condition 7
PART II OTHER INFORMATION 10
SIGNATURES 11
EXHIBIT INDEX 12
<PAGE> 3
HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
($ In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
January 31, October 31,
1998 1997
--------- ---------
(Unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 15,790 20,694
Short-term investments 19,347 18,386
Accounts receivable, net 42,223 39,519
Other current assets 3,265 3,384
--------- ---------
Total current assets 80,625 81,983
Property and equipment, net 7,573 7,988
Goodwill, net 12,160 12,316
Capitalized software costs, net 3,167 3,060
Deferred income taxes 2,698 2,721
Other assets 1,249 1,626
--------- ---------
Total assets $ 107,472 109,694
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 14,422 16,153
Deferred revenue 5,031 5,122
Deferred income taxes 7,056 6,909
--------- ---------
Total current liabilities 26,509 28,184
Other liabilities 1,622 1,704
--------- ---------
Total liabilities 28,131 29,888
--------- ---------
Shareholders' equity:
Preferred stock - $.01 par value; 5,000,000 shares authorized;
none issued and outstanding 0 0
Common stock - $.01 par value; 45,000,000 shares authorized;
17,790,741 shares issued and 17,236,741 shares outstanding at January 31, 1998;
17,773,653 shares issued and 17,459,153 shares outstanding at October 31, 1997 178 178
Capital in excess of par value 67,383 67,304
Retained earnings 14,385 13,506
Unrealized appreciation on short-term investments 758 681
--------- ---------
82,704 81,669
Less treasury stock, at cost
554,000 shares at January 31, 1998 and 314,500 shares at October 31, 1997 (3,363) (1,863)
--------- ---------
Total shareholders' equity 79,341 79,806
--------- ---------
Total liabilities and shareholders' equity $ 107,472 109,694
========= =========
</TABLE>
See accompanying notes to interim consolidated financial statements.
1
<PAGE> 4
HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three months ended
January 31,
------------------
1998 1997
-------- --------
<S> <C> <C>
Revenue
Trade $ 25,037 21,309
Affilliates 0 964
-------- --------
25,037 22,273
Cost of services:
Compensation 14,412 11,659
Data processing 2,506 1,793
Occupancy 2,254 2,143
Other 4,332 3,350
-------- --------
23,504 18,945
-------- --------
Operating margin before amortization of intangibles 1,533 3,328
Amortization of intangibles 523 46
-------- --------
Operating income 1,010 3,282
Other income (expense):
Net interest and net other income 460 441
Merger related costs 0 (500)
Equity in loss of affiliate 0 (16)
-------- --------
460 (75)
Income before income taxes 1,470 3,207
Income tax expense (591) (1,403)
-------- --------
Net income $ 879 1,804
======== ========
Earnings per share data:
Basic:
Basic earnings per share $ 0.05 0.10
======== ========
Weighted average common shares outstanding 17,347 17,631
======== ========
Diluted:
Diluted earnings per share $ 0.05 0.10
======== ========
Weighted average common shares and common share equivalents 17,519 18,236
======== ========
</TABLE>
See accompanying notes to interim consolidated financial statements.
2
<PAGE> 5
HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
($ In Thousands)
<TABLE>
<CAPTION>
Common Stock Unrealized
------------------ Capital In Retained Appreciation Total
Par Excess Of Earnings on Short-term Treasury Shareholders'
Shares Value Par Value (Deficit) Investments Stock Equity
------ ----- --------- --------- ----------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at October 31, 1997 17,459,153 $ 178 67,304 13,506 681 (1,863) 79,806
Net income 0 0 0 879 0 0 879
Stock option activity 562 0 3 0 0 0 3
Employee stock purchase plan activity 16,526 0 76 0 0 0 76
Treasury stock acquisition (239,500) 0 0 0 0 (1,500) (1,500)
Appreciation on short-term investments 0 0 0 0 77 0 77
-----------------------------------------------------------------------------------
Balance at January 31, 1998 17,236,741 $ 178 67,383 14,385 758 (3,363) 79,341
===================================================================================
</TABLE>
See accompanying notes to interim consolidated financial statements.
3
<PAGE> 6
HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
Three months ended
January 31,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Operating activities:
Net income $ 879 1,803
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 835 729
Software capitalization (593) (305)
Amortization of intangibles 523 46
Provision for doubtful accounts 0 (17)
Deferred tax expense 170 561
Equity in loss of affiliate 0 16
Changes in assets and liabilities:
Increase in accounts receivable (2,704) (2,236)
Decrease in other current assets 119 716
Decrease in accounts payable and accrued expenses (1,731) (5,309)
Decrease in amounts payable to affiliates 0 (162)
Decrease in deferred revenue (91) (670)
Increase in other assets and liabilities, net 231 352
-------- --------
Net cash used in operating activities (2,362) (4,476)
-------- --------
Investing activities:
Capital asset expenditures (238) (363)
Proceeds from sale of short-term investments (883) (80)
-------- --------
Net cash used in investing activities (1,121) (443)
-------- --------
Financing activities:
Proceeds from issuance of common stock 3 431
Proceeds from exercise of stock options 76 156
Common stock repurchase (1,500) 0
-------- --------
Net cash (used in) provided by financing activities (1,421) 587
-------- --------
Net decrease in cash and cash equivalents (4,904) (4,332)
Cash and cash equivalents at beginning of period 20,694 22,340
-------- --------
Cash and cash equivalents at end of period $ 15,790 18,008
======== ========
</TABLE>
See accompanying notes to interim consolidated financial statements.
4
<PAGE> 7
HEALTH MANAGEMENT SYSTEMS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Unaudited Interim Financial Information
The management of Health Management Systems, Inc. ("HMS" or the "Company")
is responsible for the accompanying unaudited interim consolidated
financial statements and the related information included in these notes
to the unaudited interim consolidated financial statements. In the opinion
of management, the unaudited interim consolidated financial statements
reflect all adjustments, consisting of normal recurring adjustments,
necessary for the fair presentation of the Company's financial position
and results of operations and cash flows for the periods presented.
Results of operations of interim periods are not necessarily indicative of
the results to be expected for the entire year.
These unaudited interim consolidated financial statements should be read
in conjunction with the audited consolidated financial statements of the
Company as of and for the year ended October 31, 1997 included in the
Company's Annual Report on Form 10-K for such year as filed with the
Securities and Exchange Commission (the "Commission").
2. Supplemental Cash Flow Disclosures
Cash paid for income taxes during the quarters ended January 31, 1998 and
1997 was $774,000 and $129,000, respectively.
The Company recorded $0 and $2,574,000 for the three months ended January
31, 1998 and 1997, respectively, as disqualified dispositions related to
certain compensatory stock option exercises, which has the effect of
reducing the Company's tax liability with an offsetting increase to
shareholders' equity. Additionally, the Company recorded non-cash
transactions during the quarter ended January 31, 1997, which included the
issuance of 87,850 shares of the Company's common stock to settle
$1,182,000 of Quality Standards in Medicine, Inc. ("QSM") notes payable
plus accrued interest for the comparable prior year period. The Company
acquired QSM in November 1996 using the pooling of interest method of
accounting.
3. Earnings Per Share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share"
(SFAS 128). The Company adopted SFAS 128 during the quarter ended January
31, 1998, and earnings per share amounts for all periods presented in the
accompanying unaudited interim consolidated statement of operations are
calculated and presented in accordance with SFAS 128. The statement
specifies new standards for the computation and presentation of earnings
per share, requiring the presentation of both "basic" and "diluted"
earnings per share. Basic earnings per share is calculated as net earnings
divided by the weighted average common shares outstanding. Diluted
earnings per share is calculated calculated as net earnings divided by the
weighted average common shares outstanding including the dilutive effects
of potential common shares, which include the Company's stock options.
A reconciliation of the numerator and denominator of the calculations for
the three month periods ended January 31, 1998 and 1997 is presented
below.
5
<PAGE> 8
3. Earnings Per Share, cont'd
<TABLE>
<CAPTION>
Three months ended
January 31,
1998 1997
------- ------
($ in thousands, except per share data)
<S> <C> <C>
Numerator:
Net Income $ 879 1,804
======= ======
Denominator:
Weighted average common shares 17,347 17,631
Potential common shares:
Stock options 172 605
------- ------
Weighted average common shares and common share equivalents 17,519 18,236
======= ======
Basic earnings per share $ 0.05 0.10
======= ======
Diluted earnings per share $ 0.05 0.10
======= ======
</TABLE>
6
<PAGE> 9
Item 2--Management's Discussion and Analysis of Results of Operations and
Financial Condition--Three Month Periods Ended January 31, 1998 and 1997
Operating Results
Three Months Ended January 31, 1998
Revenue for the first quarter of fiscal year 1998 was $25,037,000, an increase
of $2,764,000 or 12% from the comparable period in 1997. The Company's Transfer
Payment Services ("TPS") division, which includes both Provider and Payor
services, accounted for $12,870,000 or 51% of the Company's consolidated revenue
for the first quarter of 1998, a decrease from 73% from the comparable period in
1997. Revenue from Provider services, comprised of Retroactive Claims
Reprocessing ("RCR"), Comprehensive Account Management Services ("CAMS"), and
Outsourcing, totaled $8,558,000, a decrease of $2,768,000 from the comparable
period in 1997. Outsourcing included $665,000 in revenue attributable to the
assets of Global Health Systems, Inc. and GHS Management Services, Inc.,
subsidiaries of GHS, Inc. (collectively, "Global"), acquired in July 1997, for
which there was no revenue in the comparable prior year period. Revenue from
Payor services, comprised of Third Party Liability Recovery ("TPLR") services
and the Company's CDR Associates, Inc. subsidiary, totaled $4,312,000, a
decrease of $719,000.
Revenue from the Software Systems and Services ("Software") division, comprised
of Decision Support Software ("DSS") and Managed Care Information Systems
("MCIS"), totaled $12,167,000 or 49% of the Company's consolidated revenue for
the first quarter of 1998, an increase of $6,251,000, and an increase from 37%
from the comparable period in 1997. Revenue from DSS was $6,903,000, an increase
of $987,000 or 17% from the comparable period in 1997. Revenue from MCIS was
$5,264,000, for which there was no comparable revenue during the first quarter
of 1997.
Cost of services for the first quarter of 1998 was $23,504,000, an increase of
$4,559,000 or 24% from the comparable period in 1997. The increase in cost of
services was due primarily to the addition of HSA Managed Care Systems, Inc.
("HSA"), comprising the Company's MCIS offering, and the addition of Global to
the Company's Outsourcing offering and acquired as a purchase in July 1997. The
Company purchased the remaining 57% of the equity of HSA, not previously owned
by it, in March 1997.
Compensation expense for the first quarter of 1998, the Company's largest
expense component, totaled $14,412,000, an increase of $2,753,000 or 24% over
the comparable period in 1997. The HSA acquisition added $2,946,000 in
compensation expense to the Software division, which was offset by a net
decrease in headcount of 113 in the TPS division.
Data processing expense for the first quarter of 1998 was $2,506,000, an
increase of $713,000 or 40% over the comparable period in 1997. This increase
was primarily attributable to the acquisition of HSA, which added $532,000 in
data processing expense.
Occupancy expense for the first quarter of 1998 was $2,254,000, an increase of
$111,000 or 5% over the comparable period in 1997. The increase was due to the
acquisition of HSA, which added $312,000 to occupancy expense, offset by the
sublease of two floors at the Company's New York City offices.
Other operating expense for the first quarter of 1998 was $4,332,000, an
increase of $982,000 or 29% over the comparable period in 1997. The acquisition
of HSA accounted for $563,000 of the increase, while higher professional fees
and employee related costs accounted for the balance of the increase.
Operating margin for the first quarter of 1998 before amortization of intangible
assets was $1,533,000, a decrease of $1,795,000 or 54% from the comparable
period in 1997.
7
<PAGE> 10
Amortization of intangible assets for the first quarter of 1998 was $523,000, an
increase of $477,000 over the comparable period in 1997. The increase was due
primarily to the goodwill associated with the HSA acquisition.
Net interest income in the first quarter of 1998 was $460,000, an increase of
$19,000 or 58% over the comparable period in 1997. The Company did not incur any
merger-related costs in the first quarter of 1998, while the comparable period
in 1997 included $500,000 in one-time costs relating to the QSM merger.
Income tax expense for the first quarter of 1998 was $591,000, a decrease of
$812,000 or 58% from the comparable period in 1997. The decrease in income tax
expense was due both to the Company's lower pre-tax profit and an effective tax
rate for the first quarter of 1998 of 40.3%, as compared with 43.8% for the
first quarter of 1997.
Net income for the first quarter of 1998 was $879,000, a decrease of $925,000 or
51% from the comparable period in 1997. Basic earnings per share for the first
quarter of 1998 was $0.05, a decrease of $0.05 from the comparable period in
1997. Excluding the QSM merger related costs from the comparable period in 1997,
basic earnings per share decreased $0.08.
8
<PAGE> 11
Liquidity and Capital Resources
At January 31, 1998, the Company had $54,116,000 in net working capital, an
increase of $317,000 over the level at October 31, 1997. The Company's principal
sources of liquidity at January 31, 1998 consisted of cash, cash equivalents,
and short-term investments aggregating $35,137,000, net accounts receivable of
$42,223,000, and an available balance of $28,400,000 under a line of credit.
Accounts receivable at January 31, 1998 reflected an increase of $2,704,000 or
6.8% from the October 31, 1997 balance. There has been no significant change in
the nature, age, or composition of the Company's accounts receivable portfolio.
On May 28, 1997, the Board of Directors authorized the Company to repurchase
such number of shares of its Common Stock that have an aggregate purchase price
not in excess of $10,000,000. The Company would repurchase these shares from
time to time on the open market or in negotiated transactions at prices deemed
appropriate by the Company. Repurchased shares will be deposited in the
Company's treasury and used for general corporate purposes. In the first quarter
of fiscal year 1998, the Company repurchased in the open market 239,500 shares
having an aggregate purchase price of $1,500,000; since the inception of the
repurchase program in June 1997, the Company has repurchased in the open market
554,000 shares having an aggregate purchase price of $3,363,000.
* * * * *
Certain statements in this document constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance, or achievements of HMS, or industry results, to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. The important factors that could
cause actual results to differ materially from those indicated by such
forward-looking statements include, but are not limited to (i) the information
being of a preliminary nature and therefore subject to further adjustment; (ii)
the ability of HMS to contain costs in view of its revised revenue outlook, to
grow internally or by acquisition and to integrate acquired businesses into the
HMS group of companies; (iii) the uncertainties of litigation; (iv) HMS's
dependence on significant customers; (v) changing conditions in the healthcare
industry which could simplify the reimbursement process and adversely affect
HMS's business; (vi) government regulatory and political pressures which could
reduce the rate of growth of health care expenditures; (vii) competitive actions
by other companies, including the development by competitors of new or superior
services or products or the entry into the market of new competitors; (viii) the
ability of HMS to deal with the Year 2000 Problem on a timely basis; (ix) all
the risks inherent in the development, introduction, and implementation of new
products and services; and other factors both referenced and not referenced in
this document. When used in this document, the words "estimate," "project,"
"anticipate," "expect," "intend," "believe," and similar expressions are
intended to identify forward-looking statements, and the above described risks
inherent therein.
9
<PAGE> 12
HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
PART II--OTHER INFORMATION
Item 1 Legal Proceedings--In April and May 1997, five purported class
action lawsuits were commenced in the United States District Court
for the Southern District of New York against the Company and
certain of its present and former officers and directors alleging
violations of the Securities Exchange Act of 1934 in connection with
certain allegedly false and misleading statements. These lawsuits,
which seek damages in an unspecified amount, have been consolidated
into a single proceeding captioned In re Health Management Systems,
Inc., Securities Litigation (97 CIV-1965 (HB) and a Consolidated
Amended Complaint has been filed. Defendants have made a motion to
dismiss the Consolidated Amended Complaint. The motion was submitted
to the Court on December 18, 1997 following oral argument and is sub
judice. Discovery has been stayed pending a determination of the
Company's motion to dismiss. The Company believes it has meritorious
defenses to the claims asserted against it and intends to vigorously
defend this litigation should the pending motion to dismiss not be
granted. It is too early to form any opinion as to the eventual
outcome of this matter.
Item 2 Changes in Securities --None
Item 3 Defaults Upon Senior Securities --Not applicable
Item 4 Submission of Matters to a Vote of Security Holders --None
Item 5 Other Information --None
Item 6 Exhibits and Reports on Form 8-K --None
10
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: March 6, 1998 HEALTH MANAGEMENT SYSTEMS, INC.
-------------------------------
(Registrant)
/s/ Paul J. Kerz
-------------------------------------
Paul J. Kerz
President and Chief Executive Officer
11
<PAGE> 14
HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
EXHIBIT INDEX
Exhibit Number Description of Exhibit
-------------- ----------------------
10.1 Sublease Agreement, dated December 23, 1997, between
Health Management Systems, Inc. and Shandwick USA, Inc.
10.2 Consent to Sublease, dated December 23, 1997, by 387
P.A.S. Enterprises to the subletting by Health
Management Systems, Inc to Shandwick USA, Inc.
11 Computations of Earnings Per Share
27 Financial Data Schedule (Submitted for informational
purposes only and not deemed to be filed)
12
<PAGE> 1
SUBLEASE AGREEMENT
This Sublease Agreement is made as of the day of December, 1997,
between Health Management Systems, Inc., a New York corporation, having its
offices at 401 Park Avenue South, New York, New York 10016 ("Sublandlord"), and
Shandwick USA, Inc., a Delaware corporation, having its offices at 405 Lexington
Avenue, 16th Floor, New York, New York 10174 ("Subtenant").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Lease dated as of the 15th day of
March, 1996 (hereinafter referred to as the "Master Lease") by and between 387
P.A.S. Enterprises, as Landlord (hereinafter referred to as "Master Landlord"),
and Sublandlord as Tenant, Master Landlord leased to Sublandlord approximately
34,000 square feet of space, in the aggregate, consisting of the entire third
and fourth floors (the "Sublet Premises") of the building located at 387 Park
Avenue South, in the Borough of Manhattan, City, County and State of New York
(the "Building") at a rent and subject to the terms and conditions set forth in
the Master Lease; and
WHEREAS, Subtenant desires to sublet the entire Sublet Premises from
the Sublandlord upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, for themselves, their successors
and assigns, mutually covenant and agree as follows:
I. Use and Occupancy. The Subtenant represents that it is a general business
corporation and shall use and occupy the Sublet Premises for general and
executive offices or any other purposes permitted in the Master Lease.
I. Demise. Sublandlord does hereby sublease to Subtenant, and Subtenant does
hereby sublease from Sublandlord, for the term and upon the conditions
hereinafter provided, the entire Sublet Premises, together with the right to use
the common facilities included in the
<PAGE> 2
Building, building service fixtures and equipment serving the Sublet Premises.
The Sublet Premises, consisting of the entire demised premises described in the
Master Lease, are outlined on the floor plan attached hereto and made a part
hereof as Exhibit A.
I. Condition of Sublet Premises. Subject to the provisions of this Sublease,
Subtenant shall accept and Sublandlord shall deliver to Subtenant vacant
possession of the Sublet Premises on the Commencement Date (hereinafter defined)
in its "as is" condition existing on the date of this Sublease, without
requiring any alterations, improvements, repairs or decorations to be made by
Sublandlord, or at Sublandlord's expense, either at the time possession is given
to Subtenant or during the entire term of this Sublease, and without
representation, warranty or guaranty of any kind by Master Landlord or
Sublandlord. In connection therewith, Subtenant represents that it has
thoroughly examined the Building and the Sublet Premises.
I. Term and Termination. The term of this Sublease (the "Sublease Term") shall
commence on the date (the "Commencement Date") which is the later to occur of
(i) January 1, 1998, or (ii) the Effective Date (hereinafter defined). The
Sublease Term shall end on March 30, 2006 or on such earlier date upon which
said term may expire or be terminated pursuant to any of the conditions,
limitations or other provisions of this Sublease, the Master Lease or pursuant
to law. The term "Effective Date" shall be the date on which Sublandlord shall
have delivered to Subtenant a copy of the requisite written consent of Master
Landlord ("Master Landlord's Consent") to this Sublease. On the Effective Date,
by its delivery of possession of the Sublet Premises to Subtenant, Sublandlord
shall be deemed to have represented that its representations set forth in
paragraph 9 hereof are true and correct as of such Effective Date. If for any
reason whatsoever the Effective Date shall not have occurred on or prior to
March 1, 1998, either party, at any time prior to the Effective Date, may
terminate this Lease by delivery of a written notice to the other party.
I. The Rental.
a. The Subtenant shall pay from and after the "Rent Commencement
Date" (as hereinafter defined) to the
<PAGE> 3
Sublandlord Base Rent, at the annual rate of: (i) $819,399.96 per annum during
the period from the Commencement Date through December 31, 2001, payable in
equal monthly installments of $68,283.33 each (plus annual operating cost
increases as provided for in subparagraph 6(i) of this Sublease) based upon an
annual rate of $24.10 per square foot on the area of the Sublet Premises; and
(ii) $853,400.00 per annum during the balance of the Sublease Term, commencing
January 1, 2002, in equal monthly installments of $71,117.00 each (plus annual
operating cost increases as provided for in subparagraph 6(i) of this Sublease)
based upon an annual rate of $25.10 per square foot on the area of the Sublet
Premises. If the Commencement Date is a day other than the first day of a
calendar month, then the Subtenant shall pay upon the Commencement Date a
portion of the Base Rent pro rated on a per diem basis from the Commencement
Date to the end of the month in which the Commencement Date occurs. Provided
that the Subtenant is not in default beyond any applicable period of grace after
notice, the Rent Commencement Date shall be defined as the first day following
the third month anniversary of the Commencement Date.
b. All other sums due and owing to Sublandlord as Additional Rent
pursuant to this Sublease, including the provisions of the Master Lease that are
herein incorporated by reference pursuant to paragraph 10 (the "Master Lease
Provisions") shall be payable to Sublandlord as Additional Rent hereunder.
c. All payments for the Rental shall be made in the manner and
amount provided for in this Sublease and the Master Lease directly to the
Sublandlord.
d. All sums which Sublandlord is required to pay to Master Landlord
or others as a consequence of any breach or default by Subtenant under the
covenants, provisions, terms and conditions of the Master Lease Provisions on
the part of the Subtenant to be performed or observed pursuant to the
requirements of this Sublease.
<PAGE> 4
I. Annual Operating Cost Increases and Tax Escalation. Subtenant shall be liable
to pay the following sums due on account of increases in the real estate taxes
and operating costs attributable to the Building as contemplated by Sections
1.04 and 5.01 of the Master Lease: (i) included in the Base Rent shall be 1.04%
of the previous year's Base Rent for operating expenses commencing with the
first anniversary of the Commencement Date; and (ii) Subtenants's proportionate
share of the increase in real estate taxes for the entire Building over the Base
Year (Subtenant's annual proportionate share of such increase shall be 16.67% of
the increase in real estate taxes for the entire Building over the Base Year
commencing with the real estate tax bill due and payable January 1, 1999 and
continuing semi-annually throughout the Term). The Base Year shall be the
calendar year beginning January 1, 1998 and ending December 31, 1998.
Sublandlord shall send a copy of Sublandlord's Statement of Real Estate Tax or
other increases for which Subtenant is responsible to Subtenant after receipt
thereof from the Master Landlord.
I. Electricity. Subtenant shall be responsible for (i) the payment directly to
the appropriate public utility of all Subtenant's electricity charges during the
Sublease Term (which will be separately metered and directly billed to
Subtenant); and (ii) the establishment (with the reasonable cooperation of
Sublandlord) of Subtenants's own account with Consolidated Edison or any other
applicable utility company.
I. Audiovisual Equipment and Furniture Rental. Subtenant hereby leases from
Sublandlord the equipment and furniture listed on Exhibit B attached hereto and
made a part hereof (the "Rental Equipment") throughout the Sublease Term at a
fixed monthly rental of $8,418.37 (allocable $6,122.45 for furniture and
$2,295.92 for the audio-visual equipment) payable on the first day of each
calendar month beginning with the Commencement Date and continuing for the
balance of the Sublease Term. Subtenant shall be responsible for the maintenance
and repair of the Rental Equipment at its sole cost and expense. Subtenant has
inspected the Rental Equipment and agrees to rent same in the condition existing
at the time of such inspection (subject to normal use, wear and tear).
<PAGE> 5
I. Representations and Covenants of Sublandlord. The Sublandlord represents to
the Subtenant that:
a. The Sublet Premises are the same premises referred to in a the
Master Lease dated March 15, 1996 between Sublandlord and Master Landlord; a
copy of the Master Lease and has been previously furnished to the Subtenant, and
is attached hereto and made a part hereof as Exhibit C.
b. There are no amendments to the Master Lease.
c. The Master Lease is now in full force and effect and has the
Fixed Expiration Date of March 31, 2006, subject to the renewal provisions of
Article 37 of the Master Lease.
d. Sublandlord is not now in default in performance of any of
Sublandlord's obligations under the Master Lease; nor has Sublandlord received
any notice of default or claimed default from Master Landlord.
e. The Sublandlord is the owner of the entire interest of Tenant
under the Master Lease and has not in any way encumbered such interest or
granted any other party the right to possess the Sublet Premises.
f. The Sublandlord owns good and marketable title to the Rental
Equipment.
g. To the best of Sublandlord's knowledge, all construction work
performed by Sublandlord to the Sublet Premises complies with all applicable
federal, state and local laws.
h. To the best of Sublandlord's knowledge, there are no hazardous or
asbestos containing materials in the Sublet Premises.
i. Sublandlord covenants and agrees with Subtenant that:
<PAGE> 6
a) Sublandlord will not consent to any modification, amendment or termination of
the Master Lease;
a) Provided that Subtenant hereunder performs its obligations hereunder,
Sublandlord will perform its obligations under the Master Lease;
a) If Sublandlord shall receive any notice or writing from Master Landlord with
respect to the Master Lease or the Sublet Premises, Sublandlord will furnish a
copy of such notice or writing to Subtenant within three (3) business day of
Sublandlord's receipt thereof in the manner provided in paragraph 25 hereunder.
a) Sublandlord will provide Subtenant with its pro rata share of listing in the
directory located in the Building's lobby.
a) Subtenant shall have the right to place its corporate identity/signage within
the 3rd and 4th floor elevator lobbies and on entrance doors, subject to the
reasonable approval of Master Landlord.
a) If at any time Subtenant is advised that Sublandlord is in default of any of
its obligations under the Master Lease, Subtenant, on notice to Sublandlord,
shall have the right (but not the obligation) to remedy such default by
Sublandlord and deduct the cost thereof (plus related costs and expenses) from
Rental payments hereunder.
I. Master Lease.
A. Except as otherwise provided hereunder, as between the parties hereto, all of
the terms, provisions, covenants and conditions of the Master Lease Provisions
are incorporated herein by reference and hereby made a part of this Sublease.
However, for purposes of such incorporation by reference, all references to
Landlord and Tenant shall be deemed references to Sublandlord and Subtenant,
respectively, all references to Health Management Systems, Inc. shall be deemed
references to Shandwick USA, Inc., all references to Premises shall be deemed
references to the Sublet Premises, all references to the term of the
<PAGE> 7
Master Lease shall be deemed references to the Sublease Term and all references
to Commencement Date shall be deemed to refer to the Commencement Date
hereunder. Provided however, references in Section 34.01 to Tenant shall be
deemed references to Sublandlord and Subtenant and references to Landlord shall
be deemed references to Master Landlord. As between Sublandlord and Subtenant,
the limitations of liability contained in Section 34.01 of the Master Lease
shall not be applicable.
A. Subtenant shall be entitled to the same notice and cure periods as
Sublandlord is afforded pursuant to the relevant Sections of the Master Lease,
less (a) one (1) business day where the notice and cure period in the Master
Lease is five (5) days or less, or (b) three (3) business days when the notice
and cure period in the Master Lease is more than five (5) days.
A. Subtenant shall have all of the rights of the Tenant under the Master Lease
as against Sublandlord and, as between the parties hereto, Sublandlord agrees to
observe and perform all of the terms, covenants and conditions on Sublandlord's
part to be observed and performed under the Master Lease Provisions, to the
extent that they are not inconsistent with the provisions of this Sublease, as
if Subtenant were the Tenant and Sublandlord were the Landlord.
A. Sublandlord shall have all the rights of the Master Landlord under the Master
Lease as against Subtenant and, as between the parties hereto, Subtenant agrees
to be bound by and to perform and comply with all the covenants, provisions,
terms and conditions of the Master Lease Provisions, to the extent that they are
not inconsistent with the provisions of this Sublease, as if Sublandlord were
the Landlord and Subtenant were the Tenant under the Master Lease, excluding
Sublandlord's covenants to pay rent, Additional Rent and other charges to the
Landlord thereunder, subject to the following:
(i) The aggregate number of square feet of rentable space
referred to in Section 1.02 of the Master Lease, for purposes of this Sublease,
is "34,000".
<PAGE> 8
(ii) The "Term" referred to in the Master lease, for purposes
of this Sublease, is replaced with the Sublease Term set forth in paragraph 4
hereunder.
(iii) The "Base Rent" payment amount and schedule referred to
in Section 1.04(a) of the Master Lease is replaced with the dates and amounts
set forth in paragraph 5 of this Sublease and the schedule annexed hereto and
made a part hereto as Exhibit D.
(iv) The "Additional Rent" referred to in Section 1.04(b) of
the Master Lease shall be paid to Sublandlord in accordance with the amounts set
forth in paragraph 6 of this Sublease.
(v) The "Initial Period" referred to in Section 1.05 of the
Master Lease, for purposes of this Sublease is the first three months from the
Commencement Date hereunder.
(vi) The per diem sum referred to in Section 1.07 of the
Master Lease, for purposes of this Sublease, shall be computed based on the
monthly Rental amounts set forth in paragraphs 5, 6 and 8 hereunder.
(vii) All references to or in connection with the term
"Landlord's Work" referred to Article 3 and throughout the Master Lease, for
purposes of this Sublease, are deleted and of no force and effect.
(viii) All references to or in connection with the term
"Fourth Floor Delivery Date" referred to in Article 4 and throughout the Master
Lease, for purposes of this Sublease, are deleted and of no force and effect.
(ix) Sections 3.01 and 3.03; Article 4; Sections 12.05(a),
12.05(b), 12.05(c), 12.05(d) and 12.05(e); and Articles 37 and 38 are deleted in
their entirety and Subtenant shall have no rights or obligations thereunder,
except as otherwise set forth in any portion of this Sublease.
<PAGE> 9
(x) Exhibit B to the Master Lease is deleted in its entirety
and replaced with Exhibit B to this Sublease.
(xi) The tax years referred to in Section 5.01(c) of the
Master Lease, for purposes of determining the Base Taxes in this Sublease, shall
mean the calendar year commencing January 1, 1998 and ending December 31, 1998.
I. Representations of Subtenant re: Master Lease. Subtenant represents to
Sublandlord that Subtenant has read the Master Lease and is fully familiar with
all of the terms and conditions therein; specifically, notwithstanding anything
to the contrary contained in this Sublease, Subtenant acknowledges and agrees
that:
a. The effectiveness of this Sublease is subject to the consent of
the Master Landlord and shall not be binding upon the parties until the
Sublandlord receives written consent from the Master Landlord.
b. Neither Sublandlord nor Master Landlord shall be held liable by
the Subtenant for the failure of the Master Landlord to give its consent to the
Sublease; provided that Sublandlord shall use it best efforts to obtain the
Master Landlord's Consent.
I. Heating, Ventilation and Air Conditioning ("HVAC") Mechanical Systems.
Sublandlord shall deliver the existing HVAC systems in "good working order".
Maintenance of and repair of such systems shall be the responsibility of the
Subtenant.
I. Insurance. Subtenant shall obtain and maintain all insurance types and
coverage as specified in the Master Lease to be obtained and maintained by
Sublandlord, as tenant, in amounts not less than those specified in the Master
Lease. All such policies of insurance shall name Master Landlord, Master
Landlord's Managing Agent and Sublandlord as additional insureds thereunder.
I. Services, Repairs and Supplies.
<PAGE> 10
a. Subtenant shall be entitled to receive from the Master Landlord
all of the services, repairs and supplies which Sublandlord is entitled to
receive under the Master Lease.
b. Notwithstanding anything to the contrary contained in paragraph
10 of this Sublease, Subtenant agrees to look solely to the Master Landlord for
such services, repairs and supplies and to promptly pay Master Landlord or
Sublandlord, as may be the case, for any such services, repairs or supplies
which Master Landlord is not required to furnish under the Master Lease without
a separate charge.
I. Place for Payments. All payments required to be made by the Subtenant herein
shall be made to Sublandlord, at Sublandlord's office specified in paragraph 26
of this Sublease, Attention: Vincent C. Hartley, or at such other place as
Sublandlord shall hereafter from time to time direct in writing.
II. Waiver of Rent. Sublandlord hereby waives payment of the first three months
of the rent, subject to the execution and delivery of this Sublease and consent
thereto by the Master Landlord. The waiver of rent includes Base Rent only and
does not include amounts due for: (i) Additional Rent, (ii) Rental Equipment,
(iii) electricity, or (iv) any other charges. The waiver of rent is reflected in
the payment schedule set forth in Exhibit D.
I. Brokers. Sublandlord and Subtenant each hereby represent and warrant that it
has not dealt with any broker other than Jones Lang Wootton, USA in connection
with this Sublease, and that Sublandlord shall pay any brokerage fees which
shall be due in connection therewith pursuant to a separate agreement. Each
party shall indemnify the other against any cost or liability resulting from the
indemnifying party's breach of the foregoing representation and warranty.
I. Expansion Option. It is understood and agreed that any option to expand the
Sublet Premises must be negotiated directly with the Master Landlord and
Sublandlord makes no warranties or representations in connection therewith.
<PAGE> 11
I. Avoidance of Default of Master Lease. Subtenant represents and agrees that it
will neither do, suffer, nor permit anything to be done which would or
reasonably could result in a default under the Master Lease Provisions.
I. Subtenant's Right to Participate in Enforcement Proceedings against Master
Landlord. If the Master Landlord shall default in any of its obligations to
Sublandlord with respect to the Sublet Premises, Subtenant shall be entitled to
participate with Sublandlord in the enforcement of Sublandlord's rights against
the Master Landlord with respect to the Sublet Premises but, except as
hereinafter expressly provided, Sublandlord shall have no obligation to bring
any action or proceeding or to take any steps to enforce Sublandlord's rights
against Master Landlord. If, after written request from Subtenant, Sublandlord
shall fail or refuse to take appropriate action within five (5) business days
for the enforcement of Sublandlord's rights against Master Landlord with respect
to the Sublease Premises and Subtenant shall be barred from taking action
directly against Master Landlord by reason of lack of privity of contract,
Subtenant shall have the right to take such action in the name of Sublandlord,
but at Subtenant's expense, and for that purpose, and only to such extent,
Subtenant is hereby granted an irrevocable power of attorney to exercise all of
the rights of Sublandlord under the Master Lease with respect to the Sublet
Premises and such rights are hereby conferred upon Subtenant, on a case by case
basis and upon written notice to Sublandlord in each case. If Sublandlord shall,
with Subtenant's consent, take, participate or shall be requested by Subtenant
to participate or assist in any action in the enforcement of Sublandlord's
rights against the Master Landlord, Subtenant agrees to reimburse Sublandlord
for all reasonable expenses incurred by Sublandlord in connection therewith
including, without limitation, attorney's fees and disbursements. Subtenant
hereby agrees to indemnify Sublandlord and hold it harmless from and against any
and all damages, claims and liabilities to others resulting from any action or
proceeding taken or instituted by Subtenant (or by Sublandlord at Subtenant's
request) pursuant to this paragraph, whether or not Sublandlord joins in the
same.
<PAGE> 12
I. Subtenant's Work. In order to accommodate Subtenant's initial space needs,
Subtenant may make the necessary changes, additions, alterations, repairs,
replacements or improvement to the Sublet Premises (the "Subtenant's Work").
Subtenant's Work shall be performed in accordance with Section of the Master
Lease and paragraph 20 of this Sublease.
I. Tenant Improvement Allowance. Provided that Subtenant is not in default of
any terms of this Sublease beyond any applicable period of grace after notice,
Subtenant shall be entitled to a credit of $140,000, to be applied against the
Base Rent only, as a Tenant Improvement Allowance ("TI") for Subtenant's Work
(whether or not Subtenant has expended same) credited against the first
$140,000.00 due and payable by Subtenant to Sublandlord for Base Rent. The TI is
reflected in the payment schedule set forth on Exhibit D.
I. Indemnities.
a. Sublandlord does hereby agree to indemnify and save Subtenant
harmless to the fullest extent permitted by applicable law from and against any
and all costs, liabilities, expenses, defaults and/or claims (including legal
costs and disbursements) that may arise or be in any way attributable to or
occur as a consequence of:
(i) any acts or omissions of Sublandlord in connection with
its use and occupancy of the Sublet Premises or the performance of its
obligations under the Master Lease that shall have occurred on or prior to the
Commencement Date; and/or
(ii) any default by Sublandlord in the performance of its
obligations or in the accuracy of its representations, warranties and/or
agreements contained in this Sublease Agreement and/or in the provisions of the
Master Lease.
b. Subtenant does hereby agree to indemnify and save Sublandlord
harmless to the fullest extent permitted by applicable law from and against any
and all costs, liabilities, expenses, defaults and/or claims
<PAGE> 13
(including legal costs and disbursements) that may arise or be in any way
attributable to or occur as a consequence of:
(i) any acts or omissions of Subtenant in connection with its
use and occupancy of the Sublet Premises or the performance of its obligations
under the Master Lease Provisions that shall have occurred during the Sublease
Term; and/or
(ii) any default by Subtenant in the performance or observance
of any of its representations, warranties and/or agreements herein set forth
and/or otherwise entered into with Sublandlord.
I. Assigning and Subletting. Notwithstanding anything to the contrary in Article
8 of the Master Lease, as incorporated herein by reference, and this paragraph
24, Subtenant covenants and agrees that (a) neither this Sublease nor the terms
hereof and leasehold hereby granted, nor any interest herein or therein, will be
assigned, mortgaged, pledged, encumbered or otherwise transferred, voluntarily,
by operation of law or otherwise, except as permitted by Article 8 of the Master
Lease; (b) neither the Sublet Premises nor any part thereof will be encumbered
in any manner by reason of any act or omission on the part of Subtenant, or used
or occupied, or permitted to be used or occupied, or utilized for desk space or
for mailing privileges, by anyone other than Subtenant or an affiliate of
Subtenant (provided that Subtenant guarantees the performance of such
affiliate's obligations under this Sublease), or for any use or purpose other
than as permitted hereunder, or be sublet or offered or advertised for
subletting without the prior written consent of Sublandlord, in each instance,
which consent shall not be unreasonably withheld, except as permitted by Article
8 of the Master Lease; and (c) in the event that any assignee or subtenant other
than an approved affiliate of Subtenant pays to Subtenant any amounts in excess
of the annual Base Rent set forth in this Sublease and Additional Rent then
payable hereunder, or pro rata portion thereof on a square footage basis for any
portion of the Sublet Premises, Subtenant shall promptly pay 100% of said excess
to Sublandlord as and when received by Subtenant.
<PAGE> 14
I. Notices. All notices required or permitted hereunder shall be in writing and
addressed as follows:
If to the
Master Landlord: 387 P.A.S. Enterprises
387 Park Avenue South
New York, New York 10022
Attention: John Fletcher, III
Phone: (212) 838-0211
Fax: (212) 755-7386
with a copy to: Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Richard L. Chadakoff, Esq.
Phone: (212) 906-1200
Fax: (212) 751-4864
If to Sublandlord: Health Management Systems, Inc.
401 Park Avenue South
New York, New York 10016
Attention: Vincent C. Hartley
Phone: (212) 685-4545
Fax: (212) 889-8776
with a copy to: Coleman & Rhine LLP
1120 Avenue of the Americas
New York, New York 10036
Attention: Bruce S. Coleman, Esq.
Phone: (212) 840-3330
Fax: (212) 840-3744
If to Subtenant: Shandwick USA, Inc.
405 Lexington Avenue, 16th Floor
New York, New York 10174
Attention: Larry Kaplan
Phone: (212) 309-0609
Fax: (212) 983-6426
with a copy to: Lane & Mittendorf LLP
320 Park Avenue
New York, New York 10022
Attention: Harvey Feldschreiber, Esq.
Phone: (212) 508-3286
<PAGE> 15
Fax: (212) 421-2996
or to such other address and attention as any of the above shall notify the
others in writing. Any notice shall have been deemed duly given if mailed to
such address postage prepaid, registered or certified mail, return receipt
requested, when deposited with the U.S. Postal Service, if delivered to such
address by hand, when so delivered, or if faxed upon receipt of a confirmatory
report.
I. Successors and Assigns. This Sublease and everything herein contained shall
extend to and bind and enure to the benefit of the Sublandlord and its
successors and assigns and the Subtenant and its permitted successors and
assigns. No rights shall enure to the benefit of any assignee, subtenant or
occupant unless the provisions of Article 8 of the Master Lease and paragraph 25
of this Sublease are complied with.
I. Miscellaneous. Neither Sublandlord nor any agent or representative of
Sublandlord has made or is making, and Subtenant in executing and delivering
this Sublease is not relying upon, any warranties, representations, covenants,
promises or statements whatsoever, except to the extent expressly set forth in
this Sublease, or (with respect to covenants and promises only) in the Master
Lease Provisions. All understandings and agreements, if any, heretofore had
between the parties are merged into this Sublease, which alone fully and
completely expresses the agreement of the parties. No surrender of possession of
the Sublet Premises or of any part thereof or of any remainder of the term of
this Sublease shall release Subtenant from any of its obligations hereunder;
unless accepted by Sublandlord in writing. The receipt and retention by
Sublandlord of monthly Base Rent or other Rental payments from anyone other than
Subtenant or permitted assignee shall not in itself be deemed a waiver of the
breach by Subtenant of any covenant, agreement, term or provision of this
Sublease, or as the acceptance of such other person as a tenant, or as a release
of Subtenant from the covenants, agreements, terms, provisions and conditions
herein contained. The receipt and retention by Sublandlord of monthly Base Rent
or Additional Rent with knowledge of the breach of any covenant, agreement,
term, provision or
<PAGE> 16
condition herein contained shall not in itself be deemed a waiver of such
breach.
I. Quiet Enjoyment. So long as Subtenant is not in default (beyond any
applicable notice and cure period) under this Sublease, its quiet enjoyment of
the Sublet Premises shall not be disturbed or interfered with by Sublandlord or
anyone claiming by, through or under Sublandlord.
I. Sublandlord's Consent. Whenever Sublandlord's consent is required under this
Sublease, (a) Sublandlord's rejection of a request made by Subtenant shall not
be deemed unreasonable, in any case, if such rejection is based on Master
Landlord's rejection of such request, and (b) except as otherwise set forth
herein, Sublandlord's consent shall not be unreasonably withheld or delayed.
Where privity of contract is an issue, Sublandlord agrees to make any such
request on Subtenant's behalf and provide Subtenant with the reasonable consent
necessary to enforce Subtenant's rights and perform Subtenant's obligations
under this Lease.
I. Security Deposit. Contemporaneously with the execution of this Sublease,
Subtenant shall provide to Sublandlord a security deposit in the amount of
Sixty-nine Thousand Seven Hundred Dollars ($69,700.00) (the "Security Deposit").
The Security Deposit shall be held by the Sublandlord in segregated interest
bearing account in a financial institution located in New York City. Providing
Subtenant is not in default beyond any applicable grace period, accrued interest
on such Security Deposit shall be paid annually in arrears to Subtenant during
the first calendar year commencing January 1, 1999. The Security Deposit shall
secure Subtenant's performance of its obligations under this Sublease. In the
event Subtenant is in default the interest will accrue for the benefit of the
ultimate recipient. The Security Deposit is not an advance payment of rent or a
measure or limit of Sublandlord's damages upon a default or an event of default.
I. End of Term. In addition to the terms and conditions set forth in Article 23
of the Master Lease, upon the expiration of this Sublease:
<PAGE> 17
a. Subtenant shall surrender to Sublandlord those items set forth in
Exhibit B in good working order, subject only to reasonable, use, wear and tear.
b. Subtenant shall remove all of its furniture, furnishings, trade
fixtures and other movable property from the Sublet Premises, if required by the
Master Lease; provided that Subtenant shall have no obligation to remove and/or
restore the connecting door constructed by Sublandlord incident to the Tenant's
Work described in the Master Lease.
c. Unless otherwise consented to in writing by the Sublandlord,
Subtenant shall, at its sole cost and expense, remove all structural alterations
made incident to Subtenant's Work, if such removal shall be required pursuant to
the Master Lease.
I. Capitalized Terms. Any capitalized terms not otherwise defined in this
Sublease shall have the meanings described in the Master Lease.
I. Interpretation. In the event of any conflict or ambiguity between the terms
and conditions of this Sublease and the Master Lease, the terms and condition of
this Sublease shall control.
I. Counterparts. This Sublease may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
I. Facsimile. This Sublease may be executed via facsimile copy with the original
to be delivered to the other party within seven (7) days thereafter.
I. Severability. It is the intention of the parties that this Sublease shall be
enforceable to the fullest extent permissible under applicable law, but that the
unenforceability (or modification to conform to such law) of any provision or
provisions hereunder shall not render unenforceable, or impair, the remainder
thereof. In the event any one or more of the provisions of this Sublease shall
be deemed invalid or unenforceable, either in whole or
<PAGE> 18
in part, this Sublease shall be deemed amended to delete or modify, as
necessary, the offending provision or provisions and to alter the bounds thereof
in order to render it valid and enforceable to the fullest extent permitted by
law.
I. Conflicting Provisions. In the event of any conflict, inconsistency or
ambiguity between the provisions of this Sublease and the Master Lease
Provisions, as between the Sublandlord and the Subtenant provisions of this
Sublease shall control.
<PAGE> 19
IN WITNESS WHEREOF, this Sublease has been duly executed by the
parties hereto as of the date and year first set forth above.
SUBLANDLORD:
HEALTH MANAGEMENT SYSTEMS, INC.
By: ____________________________
Vincent C. Hartley
Director of Administration
SUBTENANT:
SHANDWICK USA, INC.
By: ____________________________
Larry Kaplan
Chief Executive Officer
<PAGE> 20
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the day of December, 1996, before me personally came Larry
Kaplan, to me known, who, being by me duly sworn, did depose and say that he
resides at ; that he is the Chief Executive Officer of Shandwick USA, Inc., a
Delaware corporation, the corporation described in and which executed the
foregoing instrument; and that he signed his name thereto by order of the board
of directors of said corporation.
------------------------------
Notary Public
<PAGE> 21
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the day of December, 1996, before me personally came
Vincent C. Hartley, to me known, who, being by me duly sworn, did depose and say
that he resides at ; that he is the Director of Administration of Health
Management Systems, Inc., a New York, the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the board of directors of said corporation.
------------------------------
Notary Public
<PAGE> 1
CONSENT TO SUBLEASE
387 P.A.S. ENTERPRISES, a New York partnership having an office at
387 Park Avenue South, New York, New York 10016 ("Landlord"), hereby consents to
the subletting by HEALTH MANAGEMENT SYSTEMS, INC., a New York corporation having
an office at 387 Park Avenue South, New York, New York 10016 ("Tenant") to
SHANDWICK USA INC, a New York corporation having an office at 405 Lexington
Avenue, New York, New York ("Subtenant"), pursuant to an Agreement of Sublease,
dated as of December 23, 1997 (the "Sublease"), a copy of which is annexed
hereto as Exhibit "A", of certain space (the "Sublease Space"), as more
particularly described in the Sublease, which Sublease Space is the entire
premises (the "Premises") presently leased and demised by Landlord to Tenant
pursuant to an Agreement of Lease, dated as of March 15, 1996 (the "Lease").
Such consent is subject to, and in reliance upon, the representations,
warranties, covenants, terms and conditions contained herein. All capitalized
terms contained herein shall have the meaning ascribed to them in the Lease
unless otherwise indicated herein.
1. Sublease Subordinate to Lease. The Sublease shall be subject and
subordinate at all times to the Lease and to all of the provisions, covenants,
agreements, terms and conditions of the Lease, this Consent and any matters to
which the Lease is or shall be subordinate, and Subtenant shall not do or permit
anything to be done in connection with Subtenant's use and occupancy of the
Sublease Space which would violate any of said provisions, covenants,
agreements, terms and conditions. Any breach or violation of any provision of
the Lease which is incorporated by reference or otherwise into the Sublease or
of this Consent by Subtenant shall be deemed to be and shall constitute a
default by Tenant in fulfilling such provision. During the term of the Sublease,
Subtenant shall duly observe and comply with all of the terms, covenants,
agreements, provisions, obligations and conditions on the part of the Subtenant
to be performed or observed under the Sublease.
2. Representations and Warranties. Tenant and Subtenant represent
and warrant that no rent or other consideration is being paid or is payable to
Tenant by Subtenant for the right to use or occupy the Sublease Space or for
the use, sale or rental of Tenant's fixtures, leasehold improvements, equipment,
furniture or other personal property that is not provided for in the Sublease
and Subtenant further represents and warrants that the aggregate amount of any
such rent payable pursuant to the Sublease is not in excess of the pro-rata
portion of the fixed rent and any additional rent payable pursuant to the Lease
(col-
<PAGE> 2
lectively, the "Rent") for the Sublease Space now being paid by Tenant to
Landlord pursuant to the terms of the Lease, and if such rent or other
consideration exceeds such pro-rata portion of the Rent, Tenant shall comply
with Section 8.10(b) of the Lease and Tenant shall pay to Landlord fifty percent
(50%) of such excess in accordance with, and subject to, the provisions of the
Lease. Tenant and Subtenant further represent and warrant that the Sublease is
the complete, true and correct Agreement between Tenant and Subtenant.
3. Amendment of Sublease, Waiver. Tenant and Subtenant agree that
they shall not change, modify, amend, cancel or terminate the Sublease or enter
into any additional agreements relating to or affecting the use or occupancy of
the Sublease Space, or the use, sale or rental of Tenant's fixtures, leasehold
improvements, equipment, furniture or other personal property, without first
obtaining Landlord's prior written consent thereto. Neither this Consent, the
Sublease, the Lease, nor any acceptance of rent or other consideration from the
Subtenant by Landlord or Landlord's agent shall operate to waive, modify,
impair, release or in any manner affect Tenant's liability under the Lease or
Subtenant's liability under the Sublease, nor shall the foregoing operate to
waive any breach or violation of any provision of the Lease or any rights of
Landlord against any person, firm, association, corporation or other entity
liable or responsible for the performance of any of the provisions, covenants,
agreements, terms or conditions contained in the Lease, nor shall the foregoing
enlarge or increase Landlord's obligations or Tenant's rights or diminish
Tenant's obligations under the Lease or otherwise; and all provisions,
covenants, agreements, terms and conditions of the Lease are hereby declared by
Tenant to be in full force and effect. No assignment of the Lease or Sublease or
further sublease of all or any part of the Sublease Space shall be made by
Tenant or Subtenant, without the prior written approval of Landlord pursuant to,
and in accordance with, the provisions of the Lease and Sublease.
4. Ratification of Sublease. Tenant and Subtenant acknowledge that
Landlord is consenting to the Sublease as an accommodation to Tenant and
Subtenant, and that Landlord's consent is strictly limited to the Sublease. By
executing and delivering this Consent, Landlord shall not be deemed to have
modified or waived any of Tenant's obligations under the Lease provided,
however, that in the event Tenant shall default in the payment of any rent under
the Lease, Landlord agrees to and shall (i) provide Subtenant with a copy of any
default notice it may give to Tenant and (ii) allow Subtenant, at Subtenant's
election, to make up any such defaulted payment in satisfaction of Tenant's
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<PAGE> 3
obligation to Landlord for same within the time period provided in such default
notice for cure.
5. Remedies for Default. In the event of any default by Tenant or
Subtenant in the full performance and observance of any of their respective
obligations hereunder or in the event any representation or warranty of Tenant
or Subtenant made herein shall prove to be false or misleading in any material
respect, such event may, at Landlord's option, be deemed a default under the
Lease, and Landlord shall have the right to and may pursue all of the rights,
powers and remedies provided for in the Lease or at law or in equity or by
statute or otherwise with respect to defaults.
6. Use. Subject to all of the provisions, covenants, agreements,
terms and conditions of the Lease, the Sublease Space and each part thereof
shall be used by Subtenant in accordance with the provisions of Article 2 of the
Lease, and for no other purpose.
7. Termination; Attornment. A. If at any time prior to the
expiration date of the Lease, the term of the Lease with respect to the Sublease
Space shall terminate or be terminated for any reason whatsoever, the Sublease
and the term thereof shall terminate on or prior to the day of such termination
and Subtenant, at Subtenant's sole cost and expense, shall (i) quit and
surrender the Sublease Space to Landlord, broom clean, in good order and
condition, ordinary wear and tear and damage for which Subtenant is not
responsible for under the terms of the Sublease excepted, (ii) remove from the
Sublease Space and the Building all of Subtenant's personal property and all
other property and effects of Subtenant and all persons claiming through or
under Subtenant, and (iii) repair all damage to the Sublease Space and the
Building occasioned by such removal and otherwise to the Building standard
original condition. Except as otherwise provided in the Lease, Landlord shall
have the right to retain any property and personal effects which shall remain in
the Sublease Space or the Building, on the date of termination of the Sublease,
without any obligation or liability to Tenant or Subtenant, and to retain any
net proceeds realized from the sale thereof, without waiving Landlord's rights
with respect to any default by Subtenant under the foregoing provisions of this
paragraph and the provisions of the Lease and Sublease. If Subtenant shall fail
to vacate and surrender the Sublease Space in accordance with the provisions of
this paragraph, Landlord shall be entitled to all of the rights and remedies
which are available to a landlord against a tenant holding over after the
expiration of a term, and any such holding over shall be and be deemed to be a
default under the Lease.
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Subtenant expressly waives for itself and for any person claiming through or
under Subtenant, any rights which Subtenant or any such person 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
holdover summary proceedings which Landlord may institute to enforce the
foregoing. If the date of the termination of the Sublease shall fall on a Sunday
or holiday, then Subtenant's obligations under the first sentence of this
paragraph shall be performed on or prior to the Saturday or business day
immediately preceding such Sunday or holiday. Subtenant's obligations under this
paragraph shall survive the expiration or earlier termination of the terms of
the Lease and Sublease.
B. Anything to the contrary contained in Section 7A hereof
notwithstanding, in the event of a termination, reentry, or dispossession of
Tenant by Landlord under the Lease, Landlord may, at its option, take over all
of the right, title and interest of Tenant as sublandlord under the Sublease,
and Subtenant shall, at Landlord's option, attorn to Landlord pursuant to the
then executory provisions of the Lease, except that Landlord shall not: (i) be
liable for any previous act or omission of Tenant under the Sublease; (ii) be
subject to any offset, not expressly provided in the Sublease, that theretofore
accrued to Subtenant against Tenant; or (iii) be bound by any previous
modification of the Sublease which was not consented to in writing by Landlord
or by any previous prepayment of more than one month's Rent then due. The
foregoing provisions of this paragraph 7B shall apply notwithstanding that, as a
matter of law, the Sublease may terminate upon the expiration, termination or
surrender of the Lease and shall be self-operative upon any such election by
Landlord to require attornment; provided, however, that the Subtenant, upon
demand of Landlord, agrees to execute and deliver such instrument or instruments
as Landlord may reasonably request to evidence and confirm the foregoing
provisions of this paragraph 7B. If Landlord elects to exercise its option under
this paragraph 7B, then the foregoing provision of paragraph 7A shall be of no
force or effect.
8. Landlord's Representations; Non-Disturbance; Estoppel. A.
Landlord hereby represents to Tenant and to Subtenant that (a) the Lease
attached hereto as Exhibit "B" is a true and complete copy of the Lease and all
amendments thereto, (b) the Lease is currently in full force and effect, (c) the
Fixed Expiration Date of the Lease is March 31, 2006, subject to the renewal
provisions of Article 37 of the Lease, (d) Landlord has not sent any notice of
default or claimed default to Tenant which remains unremedied nor, to Landlord's
knowledge without further investigation, is
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<PAGE> 5
Tenant now in default in the performance of any of Tenant's obligations under
the Lease and (e) there are currently no interests superior to the interest of
Landlord in the Lease or the Premises.
B. Landlord agrees that it will use reasonable efforts to obtain
from any Superior Mortgagee and/or Superior Lessor, a non-disturbance agreement
or a recognition agreement, as the case may be (each, a Non-Disturbance
Agreement"), for the benefit of Subtenant, to the effect that as long as
Subtenant is not in default in the payment of Rental or of any of the other
covenants and conditions of the Sublease beyond any applicable grace period, and
provided Subtenant shall agree to attorn to and recognize any such Superior
Mortgagee and/or Superior Lessor, as a successor sublandlord under the Sublease
and shall promptly execute and deliver any instrument that such successor
sublandlord may reasonably request to evidence such attornment, that its rights
as subtenant under the Sublease shall not be terminated and the possession of
Tenant shall not be disturbed by any such Superior Mortgagee or Superior Lessor,
and that any sale at foreclosure will be subject to the Sublease. The inability
of Landlord to obtain such Non-Disturbance Agreement, despite reasonable efforts
on its part, shall not be deemed a default on Landlord's part of its obligations
hereunder, or impose any claim in favor of Subtenant against Landlord by reason
thereof or affect the validity of the Sublease in any manner whatsoever.
Landlord's agreement to use reasonable efforts shall not impose any obligation
upon Landlord to incur any cost or expense or to institute any legal or other
proceeding in connection with obtaining such Non-Disturbance Agreement.
C. Landlord agrees from time to time during the term of the Sublease
as requested by Subtenant, upon not less than ten (10) days' prior notice, to
execute and deliver to Subtenant an estoppel certificate subject to and in
accordance with the provisions of Article 31.01 of the Lease.
9. Notices. Any notices required or desired to be given under this
Consent shall be given to the respective party at the address hereinabove set
forth in accordance with the provisions set forth in the Lease for the giving of
notices.
10. Entire Agreement. This Consent contains the entire agreement of
the parties with respect to the matters contained herein and may not be
modified, amended or otherwise changed except by written instrument signed by
the parties sought to be bound. Furthermore, Tenant and Sub-
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<PAGE> 6
tenant each acknowledge and represent that, other than this Consent, the Lease
and the Sublease, there are no other agreements, oral or otherwise, or
representations or warranties of any kind or nature referring or relating to, or
in connection with, the Lease and the Sublease or the use and occupancy of the
Premises, the Sublease Space or any other portion of the Building which create
any obligation on Subtenant to pay any additional rent or other consideration
whatsoever to Tenant or which create any obligation that could be asserted
against Landlord, its agents, employees or any of the Parties (hereinafter
defined).
11. Governing Law. This Consent shall for all purposes be construed
in accordance with, and governed by, the laws of the State of New York.
12. Broker. Tenant and Subtenant each represent and warrant to
Landlord that it has not dealt with any broker in connection with the Sublease
or this Consent other than Jones Lang Wooton USA (the "Broker") and that no
broker negotiated the Sublease or is entitled to any commission in connection
therewith other than the Broker and the execution and delivery of this Consent
by Landlord shall be conclusive evidence that Landlord has relied upon the
foregoing representation and warranty of Tenant. Tenant and Subtenant shall each
indemnify Landlord to the extent the foregoing representation and warranty is
untrue. The provisions of this paragraph 12 shall survive the cancellation or
expiration of the Sublease and this Consent.
13. Miscellaneous. A. Each right and remedy of Landlord provided for
in this Consent or in the Lease shall be cumulative and in addition to every
other right and remedy provided for herein and therein or now or hereafter
existing at law or in equity or by statute or otherwise.
B. Neither the partners, directors or officers of Landlord
(collectively, the "Parties") shall be liable for the performance of Landlord's
obligations under this Consent, nor shall the Parties be liable for the
performance of Landlord's obligations under the Sublease pursuant to any
attornment by Subtenant to Landlord. Tenant and Subtenant, as the case may be,
shall look solely to Landlord to enforce Landlord's obligations hereunder and
thereunder and shall not seek any damages against any of the Parties. The
liability of Landlord for Landlord's obligations under this Consent and the
Sublease shall be limited to Landlord's interest in the Building and Tenant and
Subtenant shall not look to any other property or assets of Landlord or the
property or assets of any of the Parties in seeking either to enforce Landlord's
obligations under the Sublease pursuant to such attornment or to satisfy a
judgment for Land-
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lord's failure to perform such obligations. If, subsequent to an attornment by
Subtenant to Landlord, Landlord shall sell, convey, assign or transfer (or any
subsequent landlord shall sell, convey, assign or transfer) its interest in the
Building or the Premises, as the case may be, Landlord shall be and hereby is
entirely freed and relieved of all covenants and obligations of Landlord
hereunder, and under the Sublease, from and after the date of such sale,
conveyance, assignment or transfer.
C. The terms and provisions of this Consent shall bind and inure to
the benefit of the parties hereto and their respective successors and assigns
except that no violation of the provisions of Paragraph 3 hereof shall operate
to vest any rights in any successor or assignee of Tenant or Subtenant.
D. If any one or more of the provisions contained in this Consent
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
E. This Consent may be executed in several counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement.
F. It is expressly understood and agreed that this Consent shall not
create or constitute, nor shall it be deemed to create or constitute, any
landlord-tenant relationship, or occupancy or license agreement between Landlord
and Subtenant.
G. Pursuant to Section 8.05(h) of the Lease, Tenant shall pay to
Landlord on demand any reasonable costs, including attorneys' fees and
disbursements incurred by Landlord in connection with the Sublease and this
Consent.
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IN WITNESS WHEREOF, Landlord, Tenant and Subtenant have respectively
executed this Consent as of the 23rd day of December, 1997.
387 P.A.S. ENTERPRISES, Landlord
By: Twenty-Seven Park Avenue, Inc., its
general partner
By: /s/ John Fletcher
--------------------------------
Name: John Fletcher
Title: Vice President
HEALTH MANAGEMENT SYSTEMS, INC.,
By: /s/ Vincent C. Hartley
--------------------------------
Name: Vincent C. Hartley
Title: Director of Administration
SHANDWICK USA, INC., Subtenant
By: /s/ Larry Kaplan
--------------------------------
Name: Larry Kaplan
Title: Chief Executive Officer
Shandwick Americas
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Exhibit A
The Sublease
<PAGE> 10
SUBLEASE AGREEMENT
This Sublease Agreement is made as of the 23rd day of December,
1997, between Health Management Systems, Inc., a New York corporation, having
its offices at 401 Park Avenue South, New York, New York 10016 ("Sublandlord"),
and Shandwick USA, Inc., a Delaware corporation, having its offices at 405
Lexington Avenue, 16th Floor, New York, New York 10174 ("Subtenant").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Lease dated as of the 15th day of
March, 1996 (hereinafter referred to as the "Master Lease") by and between 387
P.A.S. Enterprises, as Landlord (hereinafter referred to as "Master Landlord"),
and Sublandlord as Tenant, Master Landlord leased to Sublandlord approximately
34,000 square feet of space, in the aggregate, consisting of the entire third
and fourth floors (the "Sublet Premises") of the building located at 387 Park
Avenue South, in the Borough of Manhattan, City, County and State of New York
(the "Building") at a rent and subject to the terms and conditions set forth in
the Master Lease; and
WHEREAS, Subtenant desires to sublet the entire Sublet Premises from
the Sublandlord upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, for themselves, their successors
and assigns, mutually covenant and agree as follows:
1. Use and Occupancy. The Subtenant represents that it is a general
business corporation and shall use and occupy the Sublet Premises for general
and executive offices or any other purposes permitted in the Master Lease.
2. Demise. Sublandlord does hereby sublease to Subtenant, and
Subtenant does hereby sublease from Sublandlord, for the term and upon the
conditions hereinafter provided, the entire Sublet Premises, together with the
right to use the common facilities included in the Building, building service
fixtures and equipment serving the Sublet Premises. The Sublet Premises,
consisting of the entire demised premises described in the Master Lease, are
outlined on the floor plan attached hereto and made a part hereof as Exhibit A.
3. Condition of Sublet Premises. Subject to the provisions of this
Sublease, Subtenant shall accept and Sublandlord shall deliver to Subtenant
vacant possession of the Sublet Premises on the Commencement Date (hereinafter
defined) in its "as is" condition existing on the date of this Sublease,
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without requiring any alterations, improvements, repairs or decorations to be
made by Sublandlord, or at Sublandlord's expense, either at the time possession
is given to Subtenant or during the entire term of this Sublease, and without
representation, warranty or guaranty of any kind by Master Landlord or
Sublandlord. In connection therewith, Subtenant represents that it has
thoroughly examined the Building and the Sublet Premises.
4. Term and Termination. The teem of this Sublease (the "Sublease
Term") shall commence on the date (the "Commencement Date") which is the later
to occur of (i) January 1, 1998, or (ii) the Effective Date (hereinafter
defined). The Sublease Term shall end on March 30, 2006 or on such earlier date
upon which said term may expire or be terminated pursuant to any of the
conditions, limitations or other provisions of this Sublease, the Master Lease
or pursuant to law. The term "Effective Date" shall be the date on which
Sublandlord shall have delivered to Subtenant a copy of the requisite written
consent of Master Landlord ("Master Landlord's Consent") to this Sublease. On
the Effective Date, by its delivery of possession of the Sublet Premises to
Subtenant, Sublandlord shall be deemed to have represented that its
representations set forth in paragraph 9 hereof are true and correct as of such
Effective Date. If for any reason whatsoever the Effective Date shall not have
occurred on or prior to March 1, 1998, either party, at any time prior to the
Effective Date, may terminate this Lease by delivery of a written notice to the
other party.
5. The Rental.
a. The Subtenant shall pay from and after the "Rent
Commencement Date" (as hereinafter defined) to the Sublandlord Base Rent, at the
annual rate of: (i) $819,399.96 per annum during the period from the
Commencement Date through December 31, 2001, payable in equal monthly
installments of $68,283.33 each (plus annual operating cost increases as
provided for in subparagraph 6(i) of this Sublease) based upon an annual rate of
$24.10 per square foot on the area of the Sublet Premises; and (ii) $853,400.00
per annum during the balance of the Sublease Term, commencing January 1, 2002,
in equal monthly installments of $71,117.00 each (plus annual operating cost
increases as provided for in subparagraph 6(i) of this Sublease) based upon an
annual rate of $25.10 per square foot on the area of the Sublet Premises. If the
Commencement Date is a day other than the first day of a calendar month, then
the Subtenant shall pay upon the Commencement Date a portion of the Base Rent
pro rated on a per diem basis from the Commencement Date to the end of the month
in which the Commencement Date occurs. Provided that the Subtenant is not in
default beyond any applicable period of grace after notice, the Rent
Commencement Date shall be
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defined as the first day following the third month anniversary of the
Commencement Date.
b. All other sums due and owing to the Sublandlord as
Additional Rent pursuant to this Sublease, including the provisions of the
Master Lease that are herein incorporated by reference pursuant to Paragraph 10
(the "Master Lease Provisions") shall be payable to Sublandlord as Additional
Rent hereunder.
c. All payments for the Rental shall be made in the manner and
amount provided for in this Sublease and the Master Lease directly to the
Sublandlord.
d. All sums which Sublandlord is required to pay to Master
Landlord or others as a consequence of any breach or default by Subtenant under
the covenants, provisions, terms and conditions of the Master Lease Provisions
on the part of the Subtenant to be performed or observed pursuant to the
requirements of this Sublease.
6. Annual Operating Cost Increases and Tax Escalation. Subtenant
shall be liable to pay the following sums due on account of increases in the
real estate taxes and operating costs attributable to the Building as
contemplated by Sections 1.04 and 5.01 of the Master Lease: (i) included in the
Base Rent shall be 1.04% of the previous year's Base Rent for operating expenses
commencing with the first anniversary of the Commencement Date; and (ii)
Subtenants's proportionate share of the increase in real estate taxes for the
entire Building over the Base Year (Subtenant's annual proportionate share of
such increase shall be 16.67% of the increase in real estate taxes for the
entire Building over the Base Year commencing with the real estate tax bill due
and payable January 1, 1999 and continuing semi-annually throughout the Term).
The Base Year shall be the calendar year beginning January 1, 1998 and ending
December 31, 1998. Sublandlord shall send a copy of Sublandlord's Statement of
Real Estate Tax or other increases for which Subtenant is responsible to
Subtenant after receipt thereof from the Master Landlord.
7. Electricity. Subtenant shall be responsible for (i) the payment
directly to the appropriate public utility of all Subtenant's electricity
charges during the Sublease Term (which will be separately metered and directly
billed to Subtenant); and (ii) the establishment (with the reasonable
cooperation of Sublandlord) of Subtenants's own account with Consolidated Edison
or any other applicable utility company.
8. Audiovisual Equipment and Furniture Rental. Subtenant hereby
leases from Sublandlord the equipment and furniture listed on Exhibit B
attached hereto and made a part
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hereof (the "Rental Equipment") throughout the Sublease Term at a fixed monthly
rental of $8,418.37 (allocable $6,122.45 for furniture and $2,295.92 for the
audio-visual equipment) payable on the first day of each calendar month
beginning with the Commencement Date and continuing for the balance of the
Sublease Term. Subtenant shall be responsible for the maintenance and repair of
the Rental Equipment at its sole cost and expense. Subtenant has inspected the
Rental Equipment and agrees to rent same in the condition existing at the time
of such inspection (subject to normal use, wear and tear).
9. Representations and Covenants of Sublandlord. The Sublandlord
represents to the Subtenant that:
a. The Sublet Premises are the same premises referred to in a
the Master Lease dated March 15, 1996 between Sublandlord and Master Landlord;
a copy of the Master Lease and has been previously furnished to the Subtenant,
and is attached hereto and made a part hereof as Exhibit C.
b. There are no amendments to the Master Lease.
c. The Master Lease is now in full force and effect and has
the Fixed Expiration Date of March 31, 2006, subject to the renewal provisions
of Article 37 of the Master Lease.
d. Sublandlord is not now in default in performance of any of
Sublandlord's obligations under the Master Lease; nor has Sublandlord received
any notice of default or claimed default from Master Landlord.
e. The Sublandlord is the owner of the entire interest of
Tenant under the Master Lease and has not in any way encumbered such interest or
granted any other party the right to possess the Sublet Premises.
f. The Sublandlord owns good and marketable title to the
Rental Equipment.
g. To the best of Sublandlord's knowledge, all construction
work performed by Sublandlord to the Sublet Premises complies with all
applicable federal, state and local laws.
h. To the best of Sublandlord's knowledge, there are no
hazardous or asbestos containing materials in the Sublet Premises.
i. Sublandlord covenants and agrees with Subtenant that:
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(1) Sublandlord will not consent to any modification,
amendment or termination of the Master Lease;
(2) Provided that Subtenant hereunder performs its
obligations hereunder, Sublandlord will perform its obligations under the Master
Lease;
(3) If Sublandlord shall receive any notice or writing
from Master Landlord with respect to the Master Lease or the Sublet Premises,
Sublandlord will furnish a copy of such notice or writing to Subtenant within
three (3) business day of Sublandlord's receipt thereof in the manner provided
in paragraph 25 hereunder.
(4) Sublandlord will provide Subtenant with its pro rata
share of listing in the directory located in the Building's lobby.
(5) Subtenant shall have the right to place its
corporate identity/signage within the 3rd and 4th floor elevator lobbies and on
entrance doors, subject to the reasonable approval of Master Landlord.
(6) If at any time Subtenant is advised that Sublandlord
is in default of any of its obligations under the Master Lease, Subtenant, on
notice to Sublandlord, shall have the right (but not the obligation) to remedy
such default by Sublandlord and deduct the cost thereof (plus related costs and
expenses) from Rental payments hereunder.
10. Master Lease.
a. Except as otherwise provided hereunder, as between the
parties hereto, all of the terms, provisions, covenants and conditions of the
Master Lease Provisions are incorporated herein by reference and hereby made a
part of this Sublease. However, for purposes of such incorporation by reference,
all references to Landlord and Tenant shall be deemed references to Sublandlord
and Subtenant, respectively, all references to Health Management Systems, Inc.
shall be deemed references to Shandwick USA, Inc., all references to Premises
shall be deemed references to the Sublet Premises, all references to the term
of the Master Lease shall be deemed references to the Sublease Term and all
references to Commencement Date shall be deemed to refer to the Commencement
Date hereunder. Provided however, references in Section 34.01 to Tenant shall be
deemed references to Sublandlord and Subtenant and references to Landlord shall
be deemed references to Master Landlord. As between Sublandlord and Subtenant,
the limitations of liability contained in Section 34.01 of the Master Lease
shall not be applicable.
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b. Subtenant shall be entitled to the same notice and cure
periods as Sublandlord is afforded pursuant to the relevant Sections of the
Master Lease, less (a) one (1) business day where the notice and cure period in
the Master Lease is five (5) days or less, or (b) three (3) business days when
the notice and cure period in the Master Lease is more than five (5) days.
c. Subtenant shall have all of the rights of the Tenant under
the Master Lease as against Sublandlord and, as between the parties hereto,
Sublandlord agrees to observe and perform all of the terms, covenants and
conditions on Sublandlord's part to be observed and performed under the Master
Lease Provisions, to the extent that they are not inconsistent with the
provisions of this Sublease, as if Subtenant were the Tenant and Sublandlord
were the Landlord.
d. Sublandlord shall have all the rights of the Master
Landlord under the Master Lease as against Subtenant and, as between the parties
hereto, Subtenant agrees to be bound by and to perform and comply with all the
covenants, provisions, terms and conditions of the Master Lease Provisions, to
the extent that they are not inconsistent with the provisions of this Sublease,
as if Sublandlord were the Landlord and Subtenant were the Tenant under the
Master Lease, excluding Sublandlord's covenants to pay rent, Additional Rent and
other charges to the Landlord thereunder, subject to the following:
(i) The aggregate number of square feet of rentable
space referred to in Section 1.02 of the Master Lease, for purposes of this
Sublease, is "34,000".
(ii) The "Term" referred to in the Master lease, for
purposes of this Sublease, is replaced with the Sublease Term set forth in
paragraph 4 hereunder.
(iii) The "Base Rent" payment amount and schedule
referred to in Section 1.04(a) of the Master Lease is replaced with the dates
and amounts set forth in paragraph 5 of this Sublease and the schedule annexed
hereto and made a part hereto as Exhibit D.
(iv) The "Additional Rent" referred to in Section
1.04(b) of the Master Lease shall be paid to Sublandlord in accordance with the
amounts set forth in paragraph 6 of this Sublease.
(v) The "Initial Period" referred to in Section 1.05 of
the Master Lease, for purposes of this Sublease is the first three months from
the Commencement Date hereunder.
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(vi) The per diem sum referred to in Section 1.07 of the
Master Lease, for purposes of this Sublease, shall be computed based on the
monthly Rental amounts set forth in paragraphs 5, 6 and 8 hereunder.
(vii) All references to or in connection with the term
"Landlord's Work" referred to Article 3 and throughout the Master Lease, for
purposes of this Sublease, are deleted and of no force and effect.
(viii) All references to or in connection with the term
"Fourth Floor Delivery Date" referred to in Article 4 and throughout the Master
Lease, for purposes of this Sublease, are deleted and of no force and effect.
(ix) Sections 3.01 and 3.03; Article 4; Sections
12.05(a), 12.05(b), 12.05(c); 12.05(d) and 12.05(e); and Articles 37 and 38 are
deleted in their entirety and Subtenant shall have no rights or obligations
thereunder, except as otherwise set forth in any portion of this Sublease.
(x) Exhibit B to the Master Lease is deleted in its
entirety and replaced with Exhibit B to this Sublease.
(xi) The tax years referred to in Section 5.01(c) of the
Master Lease, for purposes of determining the Base Taxes in this Sublease, shall
mean the calendar year commencing January 1, 1998 and ending December 31, 1998.
11. Representations of Subtenant re: Master Lease. Subtenant
represents to Sublandlord that Subtenant has read the Master Lease and is fully
familiar with all of the terms and conditions therein; specifically,
notwithstanding anything to the contrary contained in this Sublease, Subtenant
acknowledges and agrees that:
a. The effectiveness of this Sublease is subject to the
consent of the Master Landlord and shall not be binding upon the parties until
the Sublandlord receives written consent from the Master Landlord.
b. Neither Sublandlord nor Master Landlord shall be held
liable by the Subtenant for the failure of the Master Landlord to give its
consent to the Sublease; provided that Sublandlord shall use it best efforts to
obtain the Master Landlord's Consent.
12. Heating Ventilation and Air Conditioning ("HVAC") Mechanical
Systems. Sublandlord shall deliver the existing HVAC systems in "good working
order". Maintenance of and repair of such systems shall be the responsibility of
the Subtenant.
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<PAGE> 17
13. Insurance. Subtenant shall obtain and maintain all insurance
types and coverage as specified in the Master Lease to be obtained and
maintained by Sublandlord, as tenant, in amounts not less than those specified
in the Master Lease. All such policies of insurance shall name Master Landlord,
Master Landlord's Managing Agent and Sublandlord as additional insureds
thereunder.
14. Services, Repairs and Supplies.
a. Subtenant shall be entitled to receive from the Master
Landlord all of the services, repairs and supplies which Sublandlord is entitled
to receive under the Master Lease.
b. Notwithstanding anything to the contrary contained in
paragraph 10 of this Sublease, Subtenant agrees to look solely to the Master
Landlord for such services, repairs and supplies and to promptly pay Master
Landlord or Sublandlord, as may be the case, for any such services, repairs or
supplies which Master Landlord is not required to furnish under the Master Lease
without a separate charge.
15. Place for Payments. All payments required to be made by the
Subtenant herein shall be made to Sublandlord, at Sublandlord's office specified
in paragraph 26 of this Sublease, Attention: Vincent C. Hartley, or at such
other place as Sublandlord shall hereafter from time to time direct in writing.
16. Waiver of Rent. Sublandlord hereby waives payment of the first
three months of the rent, subject to the execution and delivery of this Sublease
and consent thereto by the Master Landlord. The waiver of rent includes Base
Rent only and does not include amounts due for: (i) Additional Rent, (ii) Rental
Equipment, (iii) electricity, or (iv) any other charges. The waiver of rent is
reflected in the payment schedule set forth in Exhibit D.
17. Brokers. Sublandlord and Subtenant each hereby represent and
warrant that it has not dealt with any broker other than Jones Lang Wootton, USA
in connection with this Sublease, and that Sublandlord shall pay any brokerage
fees which shall be due in connection therewith pursuant to a separate
agreement. Each party shall indemnify the other against any cost or liability
resulting from the indemnifying party's breach of the foregoing representation
and warranty.
18. Expansion Option. It is understood and agreed that any option to
expand the Sublet Premises must be negotiated directly with the Master Landlord
and Sublandlord makes no warranties or representations in connection therewith.
19. Avoidance of Default of Master Lease. Subtenant represents and
agrees that it will neither do, suffer, nor permit
8
<PAGE> 18
anything to be done which would or reasonably could result in a default under
the Master Lease Provisions.
20. Subtenant's Right to Participate in Enforcement Proceedings
against Master Landlord. If the Master Landlord shall default in any of its
obligations to Sublandlord with respect to the Sublet Premises, Subtenant shall
be entitled to participate with Sublandlord in the enforcement of Sublandlord's
rights against the Master Landlord with respect to the Sublet Premises but,
except as hereinafter expressly provided, Sublandlord shall have no obligation
to bring any action or proceeding or to take any steps to enforce Sublandlord's
rights against Master Landlord. If, after written request from Subtenant,
Sublandlord shall fail or refuse to take appropriate action within five (5)
business days for the enforcement of Sublandlord's rights against Master
Landlord with respect to the Sublease Premises and Subtenant shall be barred
from taking action directly against Master Landlord by reason of lack of privity
of contract, Subtenant shall have the right to take such action in the name of
Sublandlord, but at Subtenant's expense, and for that purpose, and only to such
extent, Subtenant is hereby granted an irrevocable power of attorney to exercise
all of the rights of Sublandlord under the Master Lease with respect to the
Sublet Premises and such rights are hereby conferred upon Subtenant, on a case
by case basis and upon written notice to Sublandlord in each case. If
Sublandlord shall, with Subtenant's consent, take, participate or shall be
requested by Subtenant to participate or assist in any action in the enforcement
of Sublandlord's rights against the Master Landlord, Subtenant agrees to
reimburse Sublandlord for all reasonable expenses incurred by Sublandlord in
connection therewith including, without limitation, attorney's fees and
disbursements. Subtenant hereby agrees to indemnify Sublandlord and hold it
harmless from and against any and all damages, claims and liabilities to others
resulting from any action or proceeding taken or instituted by Subtenant (or by
Sublandlord at Subtenant's request) pursuant to this paragraph, whether or not
Sublandlord joins in the same.
21. Subtenant's Work. In order to accommodate Subtenant's initial
space needs, Subtenant may make the necessary changes, additions, alterations,
repairs, replacements or improvement to the Sublet Premises (the "Subtenant's
Work"). Subtenant's Work shall be performed in accordance with Section of the
Master Lease and paragraph 20 of this Sublease.
22. Tenant Improvement Allowance. Provided that Subtenant is not in
default of any terms of this Sublease beyond any applicable period of grace
after notice, Subtenant shall be entitled to a credit of $140,000, to be
applied against the Base Rent only, as a Tenant Improvement Allowance ("TI") for
Subtenant's Work (whether or not Subtenant has expended same) credited against
the first $140,000.00 due and payable by
9
<PAGE> 19
Subtenant to Sublandlord for Base Rent. The TI is reflected in the payment
schedule set forth on Exhibit D.
23. Indemnities.
a. Sublandlord does hereby agree to indemnify and save
Subtenant harmless to the fullest extent permitted by applicable law from and
against any and all costs, liabilities, expenses, defaults and/or claims
(including legal costs and disbursements) that may arise or be in any way
attributable to or occur as a consequence of:
(i) any acts or omissions of Sublandlord in connection
with its use and occupancy of the Sublet Premises or the performance of its
obligations under the Master Lease that shall have occurred on or prior to the
Commencement Date; and/or
(ii) any default by Sublandlord in the performance of
its obligations or in the accuracy of its representations, warranties and/or
agreements contained in this Sublease Agreement and/or in the provisions of the
Master Lease.
b. Subtenant does hereby agree to indemnify and save
Sublandlord harmless to the fullest extent permitted by applicable law from and
against any and all costs, liabilities, expenses, defaults and/or claims
(including legal costs and disbursements) that may arise or be in any way
attributable to or occur as a consequence of:
(i) any acts or omissions of Subtenant in connection
with its use and occupancy of the Sublet Premises or the performance of its
obligations under the Master Lease Provisions that shall have occurred during
the Sublease Term; and/or
(ii) any default by Subtenant in the performance or
observance of any of its representations, warranties and/or agreements herein
set forth and/or otherwise entered into with Sublandlord.
24. Assigning and Subletting. Notwithstanding anything to the
contrary in Article 8 of the Master Lease, as incorporated herein by reference,
and this paragraph 24, Subtenant covenants and agrees that (a) neither this
Sublease nor the terms hereof and leasehold hereby granted, nor any interest
herein or therein, will be assigned, mortgaged, pledged, encumbered or otherwise
transferred, voluntarily, by operation of law or otherwise, except as permitted
by Article 8 of the Master Lease; (b) neither the Sublet Premises nor any part
thereof will be encumbered in any manner by reason of any act or omission on the
part of Subtenant, or used or occupied, or permitted to be used or occupied, or
utilized for desk space or for mailing
10
<PAGE> 20
privileges, by anyone other than Subtenant or an affiliate of Subtenant
(provided that Subtenant guarantees the performance of such affiliate's
obligations under this Sublease), or for any use or purpose other than as
permitted hereunder, or be sublet or offered or advertised for subletting
without the prior written consent of Sublandlord, in each instance, which
consent shall not be unreasonably withheld, except as permitted by Article 8 of
the Master Lease; and (c) in the event that any assignee or subtenant other than
an approved affiliate of Subtenant pays to Subtenant any amounts in excess of
the annual Base Rent set forth in this Sublease and Additional Rent then payable
hereunder, or pro rata portion thereof on a square footage basis for any portion
of the Sublet Premises, Subtenant shall promptly pay 100% of said excess to
Sublandlord as and when received by Subtenant.
25. Notices. All notices required or permitted hereunder shall be in
writing and addressed as follows:
If to the
Master Landlord: 387 P.A.S. Enterprises
387 Park Avenue South
New York, New York 10022
Attention: John Fletcher, III
Phone: (212) 838-0211
Fax: (212) 755-7386
with a copy to: Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Richard L. Chadakoff, Esq.
Phone: (212) 906-1200
Fax: (212) 751-4864
If to Sublandlord: Health Management Systems, Inc.
401 Park Avenue South
New York, New York 10016
Attention: Vincent C. Hartley
Phone: (212) 685-4545
Fax: (212) 889-8776
with a copy to: Coleman & Rhine LLP
1120 Avenue of the Americas
New York, New York 10036
Attention: Bruce S. Coleman, Esq.
Phone: (212) 840-3330
Fax: (212) 840-3744
11
<PAGE> 21
If to Subtenant: Shandwick USA, Inc.
405 Lexington Avenue, 16th Floor
New York, New York 10174
Attention: Larry Kaplan
Phone: (212) 309-0609
Fax: (212) 983-6426
with a copy to: Lane & Mittendorf LLP
320 Park Avenue
New York, New York 10022
Attention: Harvey Feldschreiber, Esq.
Phone: (212) 508-3286
Fax: (212) 421-2996
or to such other address and attention as any of the above shall notify the
others in writing. Any notice shall have been deemed duly given if mailed to
such address postage prepaid, registered or certified mail, return receipt
requested, when deposited with the U.S. Postal Service, if delivered to such
address by hand, when so delivered, or if faxed upon receipt of a confirmatory
report.
26. Successors and Assigns. This Sublease and everything herein
contained shall extend to and bind and enure to the benefit of the Sublandlord
and its successors and assigns and the Subtenant and its permitted successors
and assigns. No rights shall enure to the benefit of any assignee, subtenant or
occupant unless the provisions of Article 8 of the Master Lease and paragraph 25
of this Sublease are complied with.
27. Miscellaneous. Neither Sublandlord nor any agent or
representative of Sublandlord has made or is making, and Subtenant in executing
and delivering this Sublease is not relying upon, any warranties,
representations, covenants, promises or statements whatsoever, except to the
extent expressly set forth in this Sublease, or (with respect to covenants and
promises only) in the Master Lease Provisions. All understandings and
agreements, if any, heretofore had between the parties are merged into this
Sublease, which alone fully and completely expresses the agreement of the
parties. No surrender of possession of the Sublet Premises or of any part
thereof or of any remainder of the term of this Sublease shall release
Subtenant from any of its obligations hereunder; unless accepted by Sublandlord
in writing. The receipt and retention by Sublandlord of monthly Base Rent or
other Rental payments from anyone other than Subtenant or permitted assignee
shall not in itself be deemed a waiver of the breach by Subtenant of any
covenant, agreement, term or provision of this Sublease, or as the acceptance of
such other person as a tenant, or as a release of Subtenant from the covenants,
agreements, terms, provisions and conditions herein contained. The receipt and
retention by Sublandlord of monthly Base Rent or Additional Rent with
12
<PAGE> 22
knowledge of the breach of any covenant, agreement, term, provision or condition
herein contained shall not in itself be deemed a waiver of such breach.
28. Quiet Enjoyment. So long as Subtenant is not in default (beyond
any applicable notice and cure period) under this Sublease, its quiet enjoyment
of the Sublet Premises shall not be disturbed or interfered with by Sublandlord
or anyone claiming by, through or under Sublandlord.
29. Sublandlord's Consent. Whenever Sublandlord's consent is
required under this Sublease, (a) Sublandlord's rejection of a request made by
Subtenant shall not be deemed unreasonable, in any case, if such rejection is
based on Master-Landlord's rejection of such request, and (b) except as
otherwise set forth herein, Sublandlord's consent shall not be unreasonably
withheld or delayed. Where privity of contract is an issue, Sublandlord agrees
to make any such request on Subtenant's behalf and provide Subtenant with the
reasonable consent necessary to enforce Subtenant's rights and perform
Subtenant's obligations under this Lease.
30. Security Deposit. Contemporaneously with the execution of this
Sublease, Subtenant shall provide to Sublandlord a security deposit in the
amount of Sixty-nine Thousand Seven Hundred Dollars ($69,700.00) (the "Security
Deposit"). The Security Deposit shall be held by the Sublandlord in segregated
interest bearing account in a financial institution located in New York City.
Providing Subtenant is not in default beyond any applicable grace period,
accrued interest on such Security Deposit shall be paid annually in arrears to
Subtenant during the first calendar year commencing January 1, 1999. The
Security Deposit shall secure Subtenant's performance of its obligations under
this Sublease. In the event Subtenant is in default the interest will accrue for
the benefit of the ultimate recipient. The Security Deposit is not an advance
payment of rent or a measure or limit of Sublandlord's damages upon a default or
an event of default.
31. End of Term. In addition to the terms and conditions set forth
in Article 23 of the Master Lease, upon the expiration of this Sublease:
a. Subtenant shall surrender to Sublandlord those items set
forth in Exhibit B in good working order, subject only to reasonable, use, wear
and tear.
b. Subtenant shall remove all of its furniture, furnishings,
trade fixtures and other movable property from the Sublet Premises, if required
by the Master Lease; provided that Subtenant shall have no obligation to remove
and/or restore the
13
<PAGE> 23
connecting door constructed by Sublandlord incident to the Tenant's Work
described in the Master Lease.
c. Unless otherwise consented to in writing by the
Sublandlord, Subtenant shall, at its sole cost and expense, remove all
structural alterations made incident to Subtenant's Work, if such removal shall
be required pursuant to the Master Lease.
32. Capitalized Terms. Any capitalized terms not otherwise defined
in this Sublease shall have the meanings described in the Master Lease.
33. Interpretation. In the event of any conflict or ambiguity
between the terms and conditions of this Sublease and the Master Lease, the
terms and condition of this Sublease shall control.
34. Counterparts. This Sublease may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
35. Facsimile. This Sublease may be executed via facsimile copy with
the original to be delivered to the other party within seven (7) days
thereafter.
36. Severability. It is the intention of the parties that this
Sublease shall be enforceable to the fullest extent permissible under applicable
law, but that the unenforceability (or modification to conform to such law) of
any provision or provisions hereunder shall not render unenforceable, or impair,
the remainder thereof. In the event any one or more of the provisions of this
Sublease shall be deemed invalid or unenforceable, either in whole or in part,
this Sublease shall be deemed amended to delete or modify, as necessary, the
offending provision or provisions and to alter the bounds thereof in order to
render it valid and enforceable to the fullest extent permitted by law.
37. Conflicting Provisions. In the event of any conflict,
inconsistency or ambiguity between the provisions of this Sublease and the
Master Lease Provisions, as between the Sublandlord and the Subtenant provisions
of this Sublease shall control.
14
<PAGE> 24
IN WITNESS WHEREOF, this Sublease has been duly executed by the
parties hereto as of the date and year first set forth above.
SUBLANDLORD:
HEALTH MANAGEMENT SYSTEMS, INC.
By: /s/ Vincent C. Hartley
--------------------------------
Vincent C. Hartley
Director of Administration
SUBTENANT:
SHANDWICK USA, INC.
By: /s/ Larry Kaplan
--------------------------------
Larry Kaplan
Chief Executive Officer
Shandwick Americas
15
<PAGE> 25
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 19th day of December, 1997, before me personally came Larry
Kaplan, to me known, who, being by me duly sworn, did depose and say that he
maintains a place of business at 405 Lexington Avenue, 16th Floor, New York, New
York 10174; that he is the Chief Executive Officer of Shandwick USA, Inc., the
corporation described in and which executed the foregoing instrument, that it
was so executed by order of the Board of Directors of said corporation; and that
he signed his name thereto by like order.
/s/ Maria G. Ketas
-----------------------------
Notary Public
MARIA G KETAS
Notary Public, State of New York
No. 24-5005897
Qualified in Kings County
Commission Expires December 21, 1998
<PAGE> 26
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 23rd day of December, 1997, before me personally came Vincent
C. Hartley, to me known, who, being by me duly sworn, did depose and say that he
resides at 13 Doxey Drive, Glen Cove, New York 11542; that he is the Director
of Administration of Health Management Systems, Inc., a New York, the
corporation described in and which executed the foregoing instrument; and that
he signed his name thereto by order of the board of directors of said
corporation.
/s/ Edith Hamilton
-----------------------------
Notary Public
Edith Miszti Hamilton
NOTARY PUBLIC. State of New York
No. 4905281
Qualified in Nassau County
Commission Expires Sept. 14, 1999
17
<PAGE> 27
EXHIBIT A
[GRAPHIC OMITTED]
[Floor Plan of 387 Park Avenue South, 3rd Floor]
<PAGE> 28
EXHIBIT A Continued
[GRAPHIC OMITTED]
[Floor Plan of 401 Park Avenue South, 9th Floor]
<PAGE> 29
EXHIBIT B
[Letterhead of A. V. Services, Inc.]
HEALTH MANAGEMENT SYSTEMS
VTC CONFERENCE ROOK
ALTINEX MX5608RS CONTROL SOFTWARE
AUTO PATCH 1 YDM DISTRIBUTION MATRIX
DENON DN-770R STEREO CASSETTE TAPE DECK
EXTRON SYSTEM 4 LD SWITCHER SYSTEM
EXTRON RGB 118 UNIVERSIAL INTERFACES
EXTRON MATRIX 200 AUDIO/VIDEO SWITCHER SYSTEM
FSR V-S CHANNEL VIDEO SWITCHERS
FUJINON TV LENS S16x6.7 TV LENS
BMD-D18
GENTNER TI 7200 TELECONFERENCING INTERFACE
IED 4800 AUTOMATIC MIXER
JBL CONTROL 5 CONTROL MONITOR
KODAK EKTAGRAPHIC SLIDE PROJECTOR
NAVITAR KEYSTONE CORRECTION LENSES
PC VIDEO HYPERCONVERTER 1280 COMPUTER GRAPHICS CONVERTER
SONY DXC-950 3CCD COLOR VIDEO CAMERA
SONY CMA-D2 CAMERA ADAPTOR
SONY SVO 1610 VIDEO CASSETTE RECORDER
SONY VPH 1272Q MULTISCAN PROJECTOR
TASCAM CD 301 MK II COMPACT DISC PLAYER
<PAGE> 30
[Letterhead of A. V. Services, Inc.]
HEALTH MANAGEMENT SYSTEM
VTC CONFERENCE ROOM
TOA E-32 DUAL EQUALIZER
TOA 906MK2 POWER AMPLIFIER
TOA P-1030D DUAL POWER AMPLIFIERS
TOA 1000 PLUG-IN MODULES
VICON V6035PT PAN-AND-TILT DRIVE
VIDEOTEK VDA-16 DISTRIBUTION AMPLIFIER
PICTURE TEL VIDEO CONFERENCING
CONDORDE 4500 SYSTEM WITH 2 CAMARAS
<PAGE> 31
Exhibit B
The Lease
<PAGE> 32
================================================================================
387 P.A.S. ENTERPRISES,
Landlord
TO
HEALTH MANAGEMENT SYSTEMS, INC.,
Tenant
LEASE
387 Park Avenue South
New York, New York
The Land affected by the within Instrument lies in Section 3,
Block 883, on the Land Map of the County of
New York (Tax Lot 1).
================================================================================
<PAGE> 33
TABLE OF CONTENTS
Page
----
DEFINITIONS ............................................................... vi
ARTICLE 1 Demised Premises; Term; Rents ................................. 1
ARTICLE 2 Use ........................................................... 4
ARTICLE 3 Tenant's Occupancy of the Demised Premises .................... 4
ARTICLE 4 Delivery of Possession; Right to Terminate for
Failure to Deliver Fourth Floor Premises ...................... 6
ARTICLE 5 Adjustments of Rent ........................................... 6
ARTICLE 6 Subordination; Notice to Lessors and Mortgagees ............... 8
ARTICLE 7 Quiet Enjoyment ............................................... 10
ARTICLE 8 Assignment and Subletting ..................................... 10
ARTICLE 9 Compliance With Laws and Requirements of Public Authorities ... 16
ARTICLE 10 Insurance ..................................................... 18
ARTICLE 11 Rules and Regulations ......................................... 21
ARTICLE 12 Tenant's Changes .............................................. 21
ARTICLE 13 Tenant's Property ............................................. 25
ARTICLE 14 Repairs and Maintenance ....................................... 26
ARTICLE 15 Electricity ................................................... 27
ARTICLE 16 Heat, Ventilation and Air-Conditioning ........................ 28
ARTICLE 17 Other Services ................................................ 29
ARTICLE 18 Access; Changes in Building Facilities; Name .................. 30
ARTICLE 19 Notice of Accidents ........................................... 31
ARTICLE 20 Non-Liability and Indemnification ............................. 31
ARTICLE 21 Destruction or Damage ......................................... 32
ARTICLE 22 Eminent Domain ................................................ 34
ARTICLE 23 Surrender ..................................................... 36
ARTICLE 24 Conditions of Limitation ...................................... 37
ARTICLE 25 Remedies and Damages .......................................... 38
ARTICLE 26 Waivers ....................................................... 41
ARTICLE 27 No Other Waivers or Modifications ............................. 42
ARTICLE 28 Curing Tenant's Defaults; Additional Rent; Reimbursement
of Costs ...................................................... 43
ARTICLE 29 Broker ........................................................ 44
ARTICLE 30 Notices ....................................................... 44
ARTICLE 31 Estoppel Certificate; Memorandum .............................. 45
ARTICLE 32 Arbitration ................................................... 46
ARTICLE 33 No Other Representations; Construction; Governing Law,
Consents ...................................................... 46
ARTICLE 34 Parties Bound ................................................. 47
ARTICLE 35 Certain Definitions and Construction .......................... 48
ARTICLE 36 Adjacent Excavation; Shoring .................................. 51
<PAGE> 34
ARTICLE 37 Tenant's Option to Renew ...................................... 51
ARTICLE 38 Connection to the 401 Premises ................................ 53
Exhibit A DESCRIPTION ................................................... 58
Exhibit B WORKLETTER .................................................... 59
Exhibit C RULES AND REGULATIONS ......................................... 62
<PAGE> 35
DEFINITIONS
"401 Building" has the meaning assigned in Section 38.01.
"401 Ground Lessor" has the meaning assigned in Section 38.01.
"401 Landlord" has the meaning assigned in Section 38.01.
"401 Lease" has the meaning assigned in Section 38.01.
"Additional Rent" has the meaning assigned in Section 1.04.
"After Hours Service" has the meaning assigned in Section 16.02.
"Base Rent" has the meaning assigned in Section 1.04.
"Base Tax Year" has the meaning assigned in Section 5.01.
"Building" has the meaning assigned in Section 1.01.
"Building Systems" means the mechanical, electrical (to the point of the
junction box within the Demised Premises), sanitary, heating, elevator,
plumbing, life-safety and other service systems of the Building.
"Business Days" has the meaning assigned in Section 16.02.
"Changes" has the meaning assigned in Section 12.01.
"Commencement Date" has the meaning assigned in Section 1.03.
"Control" or "control" means ownership of more than thirty-nine percent (39%) of
the outstanding voting stock of a corporation or other majority equity and
control interest if not a corporation and the possession of power to direct or
cause the direction of the management and policy of such corporation or other
entity, whether through the ownership of voting securities, by statute or
according to the provisions of a contract.
"Date of Taking" has the meaning assigned in Section 22.01.
"Deficiency" has the meaning assigned in Section 25.02.
"Demised Premises" has the meaning assigned in Section 1.02.
"Event of Default" has the meaning assigned in Section 24.02.
<PAGE> 36
"Existing Mortgage" has the meaning assigned in Section 6.01.
"Expiration Date" has the meaning assigned in Section 1.03.
"Fixed Expiration Date" has the meaning assigned in Section 1.03.
"Fourth Floor Delivery Date" has the meaning assigned in Section 1.03.
"Fourth Floor Premises" has the meaning assigned in Section 1.02.
"Governmental Authority (Authorities)" has the meaning assigned in Section 9.01.
"HV Service" has the meaning assigned in Section 16.02.
"Indemnitees" has the meaning assigned in Section 20.01.
"Initial Period" has the meaning assigned in Section 1.05.
"Land" has the meaning assigned in Section 1.01.
"Landlord's Work" has the meaning assigned in Section 3.01.
"Lease" has the meaning assigned in the preamble.
"Leaseback Space" has the meaning assigned in Section 8.02.
"Lessor" has the meaning assigned in Section 6.01.
"Non-Disturbance Agreement" has the meaning assigned in Section 6.04.
"Opening" has the meaning assigned in Section 38.01.
"Other Mortgages" has the meaning assigned in Section 6.01.
"Outside Date" has the meaning assigned in Section 4.02.
"Person(s) or person(s)" means any natural person or persons, a partnership, a
corporation and any other form of business or legal association or entity.
"Regular Hours" has the meaning assigned in Section 16.02.
"Renewal Term Commencement Date" has the meaning assigned in Section 37.01.
"Renewal Term" has the meaning assigned in Section 37.01.
<PAGE> 37
"Rental" has the meaning assigned in Section 1.04.
"Rent Commencement Date" has the meaning assigned in Section 1.05.
"Requirements" has the meaning assigned in Section 9.01.
"Revised Rent Notice" has the meaning assigned in Section 37.02.
"Successor Landlord" has the meaning assigned in Section 6.03.
"Superior Leases" has the meaning assigned in Section 6.01.
"Superior Lessor" has the meaning assigned in Section 6.01.
"Superior Mortgages" has the meaning assigned in Section 6.01.
"Superior Mortgagee" has the meaning assigned in Section 6.01.
"Tax Statement" has the meaning assigned in Section 5.02.
"Tax Year" has the meaning assigned in Section 5.01.
"Taxes" has the meaning assigned in Section 5.01.
"Temporary Taking" has the meaning assigned in Section 22 04.
"Temporary Taking Termination Date" has the meaning assigned in Section 22.04.
"Tenant Fund" has the meaning as signed in Section 12.05.
"Tenant Fund Balance" has the meaning assigned in Section 12.05.
"Tenant's Monthly Share of Tax Increase" has the meaning assigned in Section
5.01.
"Tenant's Property" has the meaning assigned in Section 13.02.
"Tenant's Proportionate Share of Tax Increase" has the meaning assigned in
Section 5.01.
"Tenant's Proportionate Share" has the meaning assigned in Section 5.01.
"Tenant's Work" has the meaning assigned in Section 3.01.
"Term" has the meaning assigned in Section 1.03.
<PAGE> 38
"Termination Notice" has the meaning assigned in Section 4.02.
"Third Floor Premises" has the meaning assigned in Section 1.02.
"Units" has the meaning assigned in Section 16.03.
<PAGE> 39
LEASE
Lease, dated as of the 15th day of March, 1996 (this "Lease"), by
and between 387 P.A.S. ENTERPRISES, a New York partnership having an office at
387 Park Avenue South, New York, New York 10016 ("Landlord") and HEALTH
MANAGEMENT SYSTEMS, INC., a New York corporation having corporate headquarters
at 401 Park Avenue South, New York, New York 10022 ("Tenant").
WITNESSETH:
ARTICLE 1
Demised Premises; Term; Rents
1.01 Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, the premises hereinafter described, in the building located at 387
Park Avenue South, in the Borough of Manhattan, City, County and State of New
York (the "Building"), on the parcel of land more particularly described in
Exhibit A (the "Land"), for the term hereinafter stated, for the rents
hereinafter reserved and upon, and subject to, the conditions (including
limitations, restrictions and reservations) and covenants hereinafter provided.
Each party hereby expressly covenants and agrees to observe and perform all of
the conditions and covenants herein contained on its part to be observed and
performed.
1.02 The premises hereby leased to Tenant are the entire third (3rd)
floor (the "Third Floor Premises") and the entire fourth (4th) floor (the
"Fourth Floor Premises") of the Building consisting of approximately 33,320
square feet in the aggregate. Each of the Third Floor Premises and the Fourth
Floor Premises, together with all fixtures and equipment that, at the
commencement or during the term of this Lease, are thereto attached (except
items removable by Tenant as provided in Article 13), constitute and are
hereinafter collectively called the "Demised Premises".
1.03 The term of this Lease (the "Term"), shall commence on the date
on which Landlord delivers possession to Tenant of the Third Floor Premises (the
"Commencement Date"), and shall expire at noon on the last day of the month in
which occurs the day immediately preceding the tenth (10th) anniversary of the
date (the "Fourth Floor Delivery Date") on which Landlord delivers possession to
Tenant of the Fourth Floor Premises (the "Fixed Expiration Date" the Fixed
Expiration Date or such earlier or later date upon which said Term may expire or
be cancelled or terminated pursuant to any of the conditions or covenants of
this Lease or pursuant to law is hereinafter referred to as the "Expiration
Date").
1 04 The rents reserved under this Lease for the Term shall be and
consist of:
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(a) "Base Rent," payable in advance to Landlord on the first day of
each and every calendar month during the Term, as follows:
(i) For the period commencing on the Commencement Date through
and including the last day of the month in which the day immediately
preceding the first (1st) anniversary of the Rent Commencement Date
occurs, in the amount of Six Hundred Seventy-Four Thousand Seven
Hundred Thirty Dollars ($674,730) per annum, which shall be payable
in equal monthly installments of $56,227.50;
(ii) For the period commencing on the first (1st) anniversary
of the Rent Commencement Date through and including the last day of
the month in which the day immediately preceding the second (2nd)
anniversary of the Rent Commencement Date occurs, in the amount of
Seven Hundred One Thousand Seven Hundred Nineteen Dollars ($701,719)
per annum, which shall be payable in equal monthly installments of
$58,476.58;
(iii) For the period commencing on the second (2nd)
anniversary of the Rent Commencement Date through and including the
last day of the month in which the day immediately preceding the
third (3rd) anniversary of the Rent Commencement Date occurs, in the
amount of Seven Hundred Twenty-Nine Thousand Seven Hundred
Eighty-Eight Dollars ($729,788) per annum, which shall be payable in
equal monthly installments of $60,815.67;
(iv) For the period commencing on the third (3rd) anniversary
of the Rent Commencement Date through and including the last day of
the month in which the day immediately preceding the fourth (4th)
anniversary of the Rent Commencement Date occurs, in the amount of
Seven Hundred Fifty-Eight Thousand Nine Hundred Seventy-Nine Dollars
($758,979) per annum, which shall be payable in equal monthly
installments of $63,248.25;
(v) For the period commencing on the fourth (4th) anniversary
of the Rent Commencement Date through and including the last day of
the month in which the day immediately preceding the fifth (5th)
anniversary of the Rent Commencement Date occurs, in the amount of
Seven Hundred Eighty Nine Thousand Three Hundred Thirty-Nine Dollars
($789,339) per annum, which shall be payable in equal monthly
installments of $65,778.25;
(vi) For the period commencing on the fifth (5th) anniversary
of the Rent Commencement Date through and including the last day of
the month in which the day immediately preceding the sixth (6)
anniversary of the Rent Commencement Date occurs, in the amount of
Eight Hundred Twenty Thousand Nine Hundred Twelve Dollars ($820,912)
per annum, which shall be payable in equal monthly installments of
$68,409.33;
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(vii) For the period commencing on the sixth (6th) anniversary
of the Rent Commencement Date through and including the last day of
the month in which the day immediately preceding the seventh (7th)
anniversary of the Rent Commencement Date occurs, in the amount of
Eight Hundred Fifty-Three Thousand Seven Hundred Forty-Nine Dollars
($853,749) per annum, which shall be payable in equal monthly
installments of $71,145.75;
(viii) For the period commencing on the seventh (7th)
anniversary of the Rent Commencement Date through and including the
last day of the month in which the day immediately preceding the
eighth (8th) anniversary of the Rent Commencement Date occurs, in
the amount of Eight Hundred Eighty-Seven Thousand Eight Hundred
Ninety-Nine Dollars ($887,899) per annum, which shall be payable in
equal monthly installments of $73,991.58;
(ix) For the period commencing on the eighth (8th) anniversary
of the Rent Commencement Date through and including the last day of
the month in which the day immediately preceding the ninth (9th)
anniversary of the Rent Commencement Date occurs, in the amount of
Nine Hundred Twenty-Three Thousand Four Hundred Fifteen Dollars
($923,415) per annum, which shall be payable in equal monthly
installments of $76,951.25;
(x) For the period commencing on the ninth (9th) anniversary
of the Rent Commencement Date through and including the Fixed
Expiration Date, in the amount of Nine Hundred Sixty Thousand Three
Hundred Fifty-One Dollars ($960,351) per annum, so much of which
shall be applicable pro rata to the foregoing period shall be
payable in equal monthly installments of $80,029.25; and
(b) "Additional Rent" consisting of all such other sums of money as
shall become due from and payable by Tenant to Landlord hereunder, all to be
paid to Landlord at its office, or at such other place, or to such agent and at
such place, as Landlord may designate from time to time by notice to Tenant, in
lawful money of the United States of America. All Base Rent, Additional Rent and
other items of rent payable under this Lease by Tenant to Landlord are
collectively hereinafter referred to as "Rental".
1.05 Notwithstanding the foregoing, provided no Event of Default has
occurred and is continuing hereunder, Tenant shall not be required to pay Base
Rent for the period commencing on the Commencement Date and ending on the 150th
day following the Fourth Floor Delivery Date, both dates inclusive (the "Initial
Period"; the first day following the expiration of the Initial Period is
hereinafter referred to as the "Rent Commencement Date"). All of the other
terms, provisions and conditions of this Lease shall apply with full force and
effect during the Initial Period.
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1.06 Tenant shall pay Base Rent and Additional Rent herein reserved
promptly as and when the same shall become due and payable, without demand
therefor and without any abatement, deduction, or setoff whatsoever.
1.07 If the Rent Commencement Date falls on a day other than the
first day of a calendar month, then, on the Rent Commencement Date, Tenant shall
pay to Landlord a sum equal to $1,874.25 multiplied by the number of days in the
period from the Rent Commencement Date to the last day of the calendar month in
which the Rent Commencement Date occurs, both dates inclusive.
1.08 Notwithstanding the provisions of Section 1.05, during the
Initial Period, Tenant shall pay all items of Rental otherwise due and payable
hereunder except Base Rent.
ARTICLE 2
Use
2.01 Tenant shall use and occupy the Demised Premises for executive
offices, general offices and uses incidental thereto, including, without
limitation, computer rooms for use by Tenant and its employees, and for no other
purpose. Neither the Demised Premises nor any part thereof shall be used: (i) as
a restaurant, luncheonette, or otherwise for the preparation and/or sale of food
for on or off premises consumption; (ii) as a discount store; (iii) as a
multiple tenancy store; (iv) by a foreign or domestic governmental agency; (v)
as a betting parlor or gambling casino; or (vi) by a utility company.
2.02 If any governmental license or permit, other than a Certificate
of Occupancy, shall be required for the proper and lawful conduct of Tenant's
business in the Demised Premises or any part thereof, Tenant, at its expense,
shall duly procure, and thereafter maintain, such license or permit and submit
the same for inspection by Landlord. Tenant shall, at all times, comply with the
terms and conditions of any such license or permit.
2.03 Tenant shall not, at any time, use or occupy, or suffer or
permit anyone to use or occupy, the Demised Premises, or do or permit anything
to be done in the Demised Premises, in violation of the Certificate of Occupancy
for the Demised Premises or for the Building.
ARTICLE 3
Tenant's Occupancy of the Demised Premises
3.01 Subject to the provisions of Article 4, the Demised Premises
shall be completed and prepared for Tenant's occupancy as provided in Exhibit B
attached hereto and
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made a part hereof. The work to be performed in the Demised Premises by Landlord
at Landlord's sole cost and expense in accordance with Exhibit B is hereinafter
called "Landlord's Work". Any Change undertaken by Tenant to prepare the Demised
Premises for Tenant's occupancy in accordance with Exhibit B is hereinafter
called "Tenant's Work." Tenant's Work shall be performed in accordance with all
provisions of Article 12 hereof as if such work comprised a Change (as such term
is defined in Article 12).
3.02 Landlord and Landlord's agents and representatives have made no
representations or promises with respect to the Building, the Land or the
Demised Premises except as herein expressly set forth, and no rights, easements
or licenses are acquired by Tenant by implication or otherwise except as
expressly set forth herein. Tenant shall accept possession of the Demised
Premises in the condition which shall exist on the Commencement Date "as is",
and Landlord shall have no obligation to perform any work or make any
installations in the Demised Premises except for the items of Landlord's Work
set forth on Exhibit B.
3.03 (a) Landlord shall give Tenant written notice at least ten (10)
days in advance of the date when Landlord expects to deliver to Tenant
possession of each portion of the Demised Premises.
(b) Tenant expressly acknowledges that, in accordance with good
construction practice and scheduling, Landlord's Work will be performed by
Landlord prior to, or simultaneously with, the performance by Tenant of Tenant's
Work (or portions thereof). Landlord and Tenant agree to cooperate with each
other (including, without limitation, coordination of scheduling between the
contractors performing Landlord's Work and the contractors performing Tenant's
Work) to permit Landlord's Work to be performed when required, in accordance
with good construction practice and scheduling simultaneously with Tenant's
Work. As used in this Lease, "substantially complete," "substantial completion"
or other words of like import shall mean completion other than (i) minor or
insubstantial details of construction or demolition and/or mechanical adjustment
and/or decorative items, which remain to be performed and (ii) any long lead
work which remains to be performed.
(c) Landlord shall not be liable in any way to Tenant for any
damages or losses arising by reason of the performance of Landlord's Work and
the same shall not constitute an actual or constructive eviction, in whole or in
part, or entitle Tenant to any abatement or diminution of Rental, or relieve
Tenant from any of its obligations under this Lease, or impose any liability
upon Landlord or its agents by reason of inconvenience or annoyance to Tenant,
or injury to or interruption of Tenant's business or otherwise. Tenant shall
cooperate fully with Landlord so as to not interfere with the completion of any
Landlord's Work.
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ARTICLE 4
Delivery of Possession; Right to Terminate for Failure
to Deliver Fourth Floor Premises
4.01 Landlord shall deliver possession to Tenant of the Third Floor
Premises on the Commencement Date and the Fourth Floor Premises on the Fourth
Floor Delivery Date.
4.02 If Landlord shall be unable to deliver possession to Tenant of
the Fourth Floor Premises on or before the date which is nine (9) months
following the date hereof (the "Outside Date"), either Landlord or Tenant, by
delivering notice (the "Termination Notice") to the other within thirty (30)
days after the Outside Date, may terminate this Lease. Upon the giving of such
notice, this Lease shall terminate on the date set forth in the Termination
Notice, but not sooner than the tenth (10th) day nor later than the thirtieth
(30th) day after such notice is given, and Tenant shall vacate the Third Floor
Premises and surrender the same to Landlord in accordance with the provisions of
Article 23 hereof.
ARTICLE 5
Adjustments of Rent
5.01 Tax Escalation. For purposes of Sections 5.01 to 5.05:
(a) "Taxes" shall mean the aggregate amount of real estate taxes,
assessments and special assessments imposed upon the Building and the Land. If,
at any time during the term of this Lease, the methods of taxation prevailing on
the Commencement Date shall be altered so that, in lieu of, as an addition to,
or as a substitute for the whole or any part of the taxes, assessments, levies,
impositions, or charges now levied, assessed, or imposed on real estate and the
improvements thereon, there shall be levied, assessed, or imposed (i) a tax,
assessment, levy, imposition, or charge wholly or partially as a capital levy or
otherwise on the rents received therefrom, (ii) a tax, assessment, levy,
imposition, or charge measured by, or based in whole or in part upon, the
Demised Premises and imposed upon Landlord, or (iii) a license fee measured by
the rents payable by Tenant to Landlord, then all such taxes, assessments,
levies, impositions, or charges, or the part thereof so measured or based, shall
be deemed to be included within the term Taxes for the purposes hereof. With
respect to any Tax Year, all expenses, including reasonable attorney's fees and
disbursements, experts' and other witnesses' fees, incurred in contesting the
validity or amount of any Taxes or in obtaining a refund of Taxes shall be
considered as part of the Taxes for such Tax Year.
(b) "Tax Year" shall mean the fiscal year commencing July 1 and
ending on the next succeeding June 30 for which Taxes are levied by the
governmental authority.
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(c) "Base Taxes" shall mean the average of (i) the Taxes payable for
the Tax Year commencing July 1, 1995 and ending June 30, 1996 and (ii) the Taxes
payable for the Tax Year commencing July 1, 1996 and ending June 30, 1997.
(d) "Tenant's Proportionate Share" shall mean, for purposes of this
Lease and all calculations in connection herewith, 16.67%, which percentage is
based on a measurement, for purposes of this Article 5 only, of 16,660 square
feet for each floor comprising the Demised Premises.
(e) "Tenant's Proportionate Share of Tax Increase" shall mean
Tenant's Proportionate Share multiplied by the amount by which the Taxes for the
subject Tax Year exceed the Base Taxes, as finally determined.
(f) "Tenant's Monthly Share of Tax Increase" shall mean one-twelfth
(1/12th) of Tenant's Proportionate Share of Tax Increase.
5.02 If the Taxes payable for any Tax Year (any part or all of which
falls within the Term and after the Rent Commencement Date) shall represent an
increase above the Base Taxes, then, within sixty (60) days after Landlord shall
receive its tax bill for such Tax Year, Landlord shall furnish Tenant with a
written statement setting forth Tenant's Proportionate Share of Tax Increase and
Tenant's Monthly Share of Tax Increase for such Tax Year, which statement shall
be sent to Tenant together with a copy of the tax bill received by Landlord.
Each statement furnished under this Section 5.02 is hereinafter called a "Tax
Statement." On the later to occur of (i) the first day of the month following
the furnishing to Tenant of a Tax Statement and (ii) ten (10) days following the
furnishing to Tenant of a Tax Statement, Tenant shall pay to Landlord Tenant's
Monthly Share of Tax Increase and shall continue to make such payments until the
first day of the month following the month in which Landlord shall deliver to
Tenant a new Tax Statement. If Landlord furnishes a Tax Statement for a new Tax
Year subsequent to the commencement thereof, promptly after the new Tax
Statement is furnished to Tenant, Landlord shall give notice to Tenant stating
whether the amount previously paid by Tenant to Landlord for the current Tax
Year was greater or less than the installments of the Tax Payment for the
current tax year in accordance with the Tax Statement, and (a) if there shall be
a deficiency, Tenant shall pay the amount thereof within ten (10) days after
demand therefor, or (b) if there shall have been an overpayment, Landlord shall
credit the amount thereof against the next monthly installments of the Fixed
Rent payable under this Lease. Tax Payments shall be collectible by Landlord in
the same manner as Fixed Rent. Landlord's failure to render a Tax Statement
shall not prejudice Landlord's right to render a Tax Statement during or with
respect to any subsequent Tax Year, and shall not eliminate or reduce Tenant's
obligation to make Tax Payments for such Tax Year.
5.03 Every Tax Statement furnished by Landlord shall be conclusive
and binding upon Tenant, unless Tenant shall notify Landlord within thirty (30)
days after the receipt of such statement that it disputes the correctness of the
computations made thereon, specifying the particular respects in which such
computations are claimed to be incorrect. Pending the
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resolution of such dispute, Tenant shall, within thirty (30) days after receipt
of such disputed Tax Statement, pay any Additional Rent due in accordance
therewith, but such payment shall be without prejudice to Tenant's position. If
the dispute shall be resolved in Tenant's favor, Landlord shall, on demand, pay
Tenant the amount of Tenant's overpayment of rents, if any, resulting from
compliance with the disputed Tax Statement.
5.04 Notwithstanding the fact that the aforesaid increase in rent is
measured by an increase in Taxes over the Base Taxes, such increase is
Additional Rent and shall be paid by Tenant as herein provided regardless of the
fact that Tenant may be exempt, in whole or in part, from the payment of any
taxes by reason of Tenant's diplomatic or other tax exempt status or for any
other reason whatsoever.
5.05 (a) Only Landlord shall be eligible to institute tax reduction
or other proceedings to reduce the assessed valuation of the Land and the
Building. Should Landlord be successful in any such reduction proceedings and
obtain a rebate for periods as to which Tenant has paid its share of increases,
Landlord shall, after deducting its expenses (including reasonable attorneys'
fees and disbursements in connection therewith), return Tenant's Proportionate
Share of such rebate to Tenant or, at Landlord's option, credit Tenant's
Proportionate Share of such rebate against Tenant's payment of Base Rent next
becoming due.
(b) In the event that, after a Tax Statement has been sent to
Tenant, the assessed valuation of the Land and the Building which had been
utilized in computing the Base Taxes is reduced (as a result of settlement,
final determination of legal proceedings or otherwise) then, and in such event:
(i) the Base Taxes shall be retroactively adjusted to reflect such reduction,
and (ii) all retroactive payments of Tenant's Proportionate Share of Tax
Increase resulting from such retroactive adjustment shall be due and payable
when billed by Landlord. Landlord promptly shall send to Tenant a statement
setting forth the basis for such retroactive adjustment and payments of Tenant's
Proportionate Share of Tax Increase.
5.06 Tenant's liability for the amounts due under this Article 5
shall survive the expiration of the term hereof, and any amount due for a
partial period between the expiration of a Tax Year, calendar year, or lease
year and the Expiration Date shall be prorated.
ARTICLE 6
Subordination; Notice to Lessors and
Mortgagees
6.01 This Lease, and all rights of Tenant hereunder, are and shall
be subject and subordinate in all respects to: (a) all ground leases, overriding
leases and underlying leases of the Land and/or the Building now or hereafter
existing (collectively, the "Superior Leases"); (b) that certain mortgage (the
"Existing Mortgage") between Landlord and Chemical Bank, and all other mortgages
that may now or hereafter affect the Land and/or the Building and/or any
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of the Superior Leases, whether or not the Existing Mortgage or any such
mortgages shall also cover other land and/or buildings (the "Other Mortgages"
and, together with the Existing Mortgage, the "Superior Mortgage") (c) each and
every advance made, or hereafter to be made, under the Superior Mortgages; (d)
all renewals, modifications, replacements and extensions of such Superior Leases
and/or Superior Mortgages; and (e) all spreaders and consolidations of the
Superior Mortgages. This Section 6.01 shall be self-operative, and no further
instrument of subordination shall be required. In confirmation of such
subordination, Tenant shall, within ten (10) days after receipt thereof, execute
and deliver any instrument that Landlord, the Lessor of any Superior Lease
(each, a "Superior Lessor"), the holder of any Superior Mortgage (each, a
"Superior Mortgagee") or any of their respective successors in interest may
reasonably request to evidence such subordination.
6.02 In the event of any act or omission of Landlord that would give
Tenant the right, immediately or after lapse of a period of time, to cancel or
terminate this Lease, or to claim a partial or total eviction, Tenant shall not
exercise such right (a) until it has given written notice of such act or
omission to any Superior Mortgagee and any Superior Lessor whose name and
address shall previously have been furnished to Tenant in writing by Landlord
and (b) unless such act or omission shall be one that is not capable of being
remedied by Landlord or such Superior Mortgagee or Superior Lessor within a
reasonable period of time, until a reasonable period for remedying such act or
omission shall have elapsed following the giving of such notice and following
the time when such Superior Mortgagee or Superior Lessor shall have become
entitled under such Superior Mortgage or Superior Lease, as the case may be, to
remedy the same (which reasonable period shall in no event be less than the
period to which Landlord would be entitled under this Lease or otherwise, after
similar notice, to effect such remedy), provided that such Superior Mortgagee or
Superior Lessor shall give Tenant written notice of its intention to remedy such
act or omission and shall, with due diligence, commence and continue to do so.
6.03 If any Superior Mortgagee or Superior Lessor shall succeed to
the rights of Landlord under this Lease, whether through possession or
foreclosure action or delivery of a new lease or deed, then, at the request of
the party so succeeding to Landlord's rights (herein sometimes called the
"Successor Landlord") and upon such Successor Landlord's written agreement to
accept Tenant's attornment, Tenant shall attorn to and recognize such Successor
Landlord as Tenant's landlord under this Lease, and shall promptly execute and
deliver any instrument that such Successor Landlord may reasonably request to
evidence such attornment. Upon such attornment, this Lease shall continue in
full force and effect as, or as if it were, a direct lease between the Successor
Landlord and Tenant, upon all of the terms, conditions and covenants as are set
forth in this Lease and as shall be applicable after such attornment, except
that the Successor Landlord shall not:
(a) be liable for any previous act or omission of any prior landlord
(including Landlord) under this Lease;
(b) be subject to any offset, not expressly provided for in this
Lease, that shall have theretofore accrued to Tenant against Landlord; or
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(c) be bound by any previous modification of this Lease not
expressly provided for in this Lease or by any previous prepayment of more than
one month's Base Rent or any Additional Rent then due, unless such modification
or prepayment shall have been expressly approved in writing by such Superior
Lessor or Superior Mortgagee, as the case may be.
6.04 Landlord agrees that it will use reasonable efforts to obtain
from the holder of the Existing Mortgage, and from any other Superior Mortgagee
and/or Superior Lessor, a non-disturbance agreement or a recognition agreement,
as the case may be (each, a "Non-Disturbance Agreement"), for the benefit of
Tenant, to the effect that as long as Tenant is not in default in the payment of
Rental or of any of the other covenants and conditions of this Lease beyond any
applicable grace period, and provided Tenant shall agree to attorn to and
recognize any such Superior Mortgagee and/or Superior Lessor, as a Successor
Landlord under this Lease and shall promptly execute and deliver any instrument
that such Successor Landlord may reasonably request to evidence such attornment,
that its rights as Tenant hereunder shall not be terminated and the possession
of Tenant shall not be disturbed by any such Superior Mortgagee or Superior
Lessor, and that any sale at foreclosure will be subject to this Lease. The
inability of Landlord to obtain such Non-Disturbance Agreement, despite
reasonable efforts on its part, shall not be deemed a default on Landlord's part
of its obligations hereunder, or impose any claim in favor of Tenant against
Landlord by reason thereof or affect the validity of this Lease in any manner
whatsoever. Landlord's agreement to use reasonable efforts shall not impose any
obligation upon Landlord to incur any cost or expense or to institute any legal
or other proceeding in connection with obtaining such Non-Disturbance Agreement.
ARTICLE 7
Quiet Enjoyment
For so long as Tenant pays all of the Rental due hereunder and performs
all of Tenant's other obligations hereunder, Tenant shall peaceably and quietly
have, hold and enjoy the Demised Premises, subject, nevertheless, to the
obligations of this Lease and, as provided in Article 6, to the Superior Leases
and the Superior Mortgages
ARTICLE 8
Assignment and Subletting
8.01 Tenant, for itself, its heirs, distributees, executors,
administrators, legal representatives, successors and assigns, expressly
covenants that it shall not assign, mortgage, or encumber this Lease or any of
its rights or its estate hereunder or any part thereof, sublet the Demised
Premises or any part thereof, or suffer or permit the Demised Premises, or any
part thereof, to be used or occupied by others, without the prior written
consent of Landlord in each instance. If this Lease be assigned in whole or in
part, or if the Demised Premises or any part
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thereof be sublet or occupied by anybody other than Tenant, Landlord may, after
default by Tenant, collect rent from the assignee, subtenant, or occupant, and
apply the net amount collected to the Rental herein reserved, but no assignment,
subletting, occupancy, or collection shall be deemed a waiver of the provisions
hereof, the acceptance of the assignee, subtenant, or occupant as tenant, or a
release of Tenant from the further performance by Tenant of covenants on the
part of Tenant herein contained. Landlord's consent to an assignment or
subletting shall not, in any way, be construed to relieve Tenant from obtaining
Landlord's express written consent to any further assignment or subletting.
Except as otherwise set forth in Section 8.05 hereof, in no event shall any
permitted sublessee assign or encumber its sublease, further sublet all or any
portion of its sublet space, or otherwise suffer or permit the sublet space, or
any part thereof, to be used or occupied by others, without Landlord's prior
written consent in each instance.
8.02 If Tenant shall, at any time or times during the Term, desire
to assign this Lease in whole or in part, or sublet all or part of the Demised
Premises, Tenant shall give notice thereof to Landlord, which notice shall be
accompanied by: (a) a copy of the proposed assignment or sublease, the effective
or commencement date of which shall be not less than sixty (60) nor more than
one hundred and eighty (180) days after the giving of such notice; (b) a
statement setting forth, in reasonable detail, the identity of the proposed
assignee or subtenant, the nature of its business and its proposed use of the
Demised Premises; and (c) current financial information with respect to the
proposed assignee or subtenant, including its most recent financial report. Such
notice shall be deemed an offer from Tenant to Landlord whereby Landlord (or
Landlord's designee) may, at its option: (i) terminate this Lease (if the
proposed transaction is an assignment of this Lease or a sublease of all or
substantially all of the Demised Premises); or (ii) terminate this Lease with
respect to such space (the "Leaseback Space") (if the proposed transaction is a
sublease of part of the Demised Premises for the remaining portion of the Term).
Said options may be exercised by Landlord by notice to Tenant at any time within
thirty (30) days after such notice has been given by Tenant to Landlord; and
during such thirty (30) day period, Tenant shall not assign this Lease or sublet
such space to any person. If Landlord shall fail to notify Tenant within such
thirty (30) day period of Landlord's intention to exercise any of its options
under this Section 8.02, Landlord shall be deemed to have consented to the
proposed assignment or subletting in accordance with the provisions of Section
8.06.
8.03 If Landlord exercises its option to terminate this Lease in the
event that Tenant desires either to assign this Lease or to sublet all or
substantially all of the Demised Premises, then this Lease shall end and expire
upon the date that such assignment or subletting was to be effective or to
commence, as the case may be, and the Base Rent and Additional Rent shall be
apportioned and paid to such date.
8.04 If Landlord exercises its option to terminate this Lease with
respect to the Leaseback Space in the event that Tenant desires to sublet the
Leaseback Space for the remainder of the Term, then (a) this Lease shall end and
expire, with respect to such part of the Demised Premises, on the date upon
which the proposed sublease was to commence; (b) from and after
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such date, the Base Rent and Additional Rent shall be adjusted, based upon the
proportion that the rentable area of the Demised Premises remaining bears to the
total rentable area of the Demised Premises; and (c) Tenant shall pay to
Landlord, upon demand, the costs (which shall be commercially reasonable)
incurred by Landlord in physically separating such part of the Demised Premises
and in complying with any laws and requirements of any public authorities
relating to such separation.
8.05 In the event that Tenant complies with the provisions of
Section 8.02 and Landlord does not exercise an option provided to it thereunder
within the time provided therefor, and provided that Tenant is not in default of
any of Tenant's obligations under this Lease after notice and the expiration of
any applicable grace period, subject to the provisions of Section 8.02,
Landlord's consent to the proposed assignment or sublease shall not be
unreasonably withheld or delayed, provided and upon condition that:
(a) in Landlord's sole judgment, the proposed assignee or subtenant
is engaged in such a business, and the Demised Premises, or the relevant part
thereof, will be used in such a manner, that: (i) is in keeping with the then
standards of the Building; (ii) is limited to the use expressly permitted under
this Lease; and (iii) will not violate any restrictive covenant as to use
contained in any other lease of space in the Building;
(b) the proposed assignee or subtenant is a reputable person of good
character and with sufficient financial worth considering the responsibility
involved, and Landlord has been furnished with proof thereof acceptable to
Landlord in its sole discretion;
(c) neither (i) the proposed assignee or sublessee nor (ii) any
person that, directly or indirectly, controls, is controlled by, or is under
common control with, the proposed assignee or sublessee, or any person who
controls the proposed assignee or sublessee, is then an occupant of any part of
the Building;
(d) the proposed assignee or sublessee is not a person with whom
Landlord is then negotiating, or has negotiated within the past six (6) months,
to lease space in the Building, provided that at the time of any such proposal
to assign or sublet, Landlord has sufficient available space to let in the
Building to such proposed assignee or subleasee other than the Demised Premises
or that portion of the Demised Premises proposed to be sublet by Tenant;
(e) the proposed sublease shall be in form reasonably satisfactory
to Landlord and shall comply with the applicable provisions of this Article;
(f) there shall not be more than one (1) subtenant per floor of the
Demised Premises;
(g) the amount of the aggregate rent to be paid by the proposed
subtenant is not less than the then current market rent per rentable square foot
for the Demised Premises as though the Demised Premises were vacant, and the
rental and other terms and conditions of the
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sublease are the same as those contained in the proposed sublease furnished to
Landlord pursuant to Section 8.02;
(h) Tenant shall reimburse Landlord on demand for any reasonable
costs that may be incurred by Landlord in connection with said assignment or
sublease, including the costs of making investigations as to the acceptability
of the proposed assignee or subtenant and legal costs incurred in connection
with the granting of any requested consent;
(i) Tenant shall not have: (i) advertised or publicized in any way
the availability of the Demised Premises without prior notice to, and approval
by, Landlord, which approval shall not be unreasonably withheld or delayed, nor
shall any advertisement state the name (as distinguished from the address) of
the Building or the proposed rental or (ii) listed the Demised Premises for
subletting or assignment with a broker, agent or representative, other than the
then managing agent of the Building or other agent designated by Landlord or
approved by Landlord in advance in writing, or at a rental rate less than the
greater of (x) the Base Rent and Additional Rent then payable hereunder for such
space and (y) the prevailing rental rate at which Landlord is then offering to
lease other comparable space in the Building;
(j) the sublease shall not allow use of the Demised Premises or any
part thereof for purposes other than those set forth in Article 2;
(k) the sublease shall not provide for an option on behalf of the
subtenant thereunder to extend or renew the term of such sublease beyond noon of
the day immediately prior to the Expiration Date.
8.06 If, after receipt of Tenant's notice delivered in accordance
with the provisions of Section 8.02, Landlord shall fail to notify Tenant within
thirty (30) days of Landlord's intention to exercise its rights pursuant to
Section 8.02 or of Landlord's consent to or disapproval of the proposed
assignment or subletting pursuant to the provisions of Section 8.05, or if
Landlord shall have consented to such subletting as provided in Section 8.05
hereof, Tenant shall have the right to assign or sublease, as the case may be,
all or part of the Demised Premises to the proposed assignee or subtenant on the
same terms and conditions set forth in the proposed assignment or sublease, as
the case may be, and in Section 8.05, subject to the terms and conditions of
this Lease. In the event that (a) Landlord fails to exercise any of its options
under Section 8.02 and consents or is deemed to have consented to a proposed
assignment or sublease and (b) Tenant fails to execute and deliver the
assignment or sublease to which Landlord consented, or was deemed to have
consented, within ninety (90) days after the giving or deemed giving of such
consent, then Tenant shall again comply with all of the provisions and
conditions of Section 8.02 before assigning this Lease in whole or in part or
subletting all or part of the Demised Premises.
8.07 Each subletting pursuant to this Article 8 shall be subject to
all of the covenants, agreements, terms, provisions and conditions contained in
this Lease. In the event of any subletting to any subtenant and/or acceptance of
rent or additional rent by Landlord from any
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subtenant, Tenant shall and will remain fully liable for the payment of the Base
Rent and Additional Rent due, and to become due, hereunder, for the performance
of all of the covenants, agreements, terms, provisions and conditions contained
in this Lease on the part of Tenant to be performed and for all acts and
omissions of any subtenant or any other person claiming under or through any
subtenant that shall be in violation of any of the obligations of this Lease,
and any such violation shall be deemed to be a violation by Tenant. Tenant
further agrees that, notwithstanding any such subletting, no other and further
subletting of the Demised Premises by Tenant, or any person claiming through or
under Tenant, shall, or will be, made, except upon compliance with, and subject
to, the provisions of this Article 8. If Landlord shall decline to give its
consent to any proposed assignment or sublease, or if Landlord shall exercise
any of its options under Section 8.02, Tenant shall indemnify, defend and hold
Landlord harmless from and against any and all losses, liabilities, damages,
costs and expenses (including reasonable counsel fees) resulting from any claims
that may be made against Landlord by the assignee or subtenant or by any brokers
or other persons claiming a commission or similar compensation in connection
with the proposed assignment or sublease.
8.08 With respect to each and every sublease or subletting, whether
made with Landlord's consent pursuant to Section 8.01 or without Landlord's
consent pursuant to Section 8.11, it is further agreed that:
(a) no subletting shall be for a term ending later than one (1) day
prior to the Expiration Date;
(b) no sublease shall be valid, and no subtenant shall take
possession of the Demised Premises or any part thereof, until an executed
counterpart of such sublease has been delivered to Landlord; and
(c) each sublease shall provide that it is subject and subordinate
to this Lease and to the matters to which this Lease is or shall be subordinate,
and that, in the event of termination, reentry, or dispossession by Landlord
under this Lease, Landlord may, at its option, take over all of the right, title
and interest of Tenant as sublandlord under such sublease, and such subtenant
shall, at Landlord's option, attorn to Landlord pursuant to the then executory
provisions of this Lease, except that Landlord shall not: (i) be liable for any
previous act or omission of Tenant under such sublease; (ii) be subject to any
offset, not expressly provided in such sublease, that theretofore accrued to
such subtenant against Tenant; or (iii) be bound by any previous modification of
such sublease which was not consented to in writing by Landlord or by any
previous prepayment of more than one month's Base Rent or any Additional Rent
then due.
8.09 Any assignment or transfer, whether made with Landlord's
consent pursuant to Section 8.01 or without Landlord's consent pursuant to
Section 8.11 (b), shall be made only if, and shall not be effective until, the
assignee shall execute, acknowledge and deliver to Landlord an agreement, in
form and substance satisfactory to Landlord, whereby the assignee shall assume
all of the obligations of this Lease on the part of Tenant to be performed
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and observed and whereby the assignee shall agree that the provisions contained
in Section 8.01 shall, notwithstanding such assignment or transfer, continue to
be binding upon it in respect of all future assignments and transfers. The
original named Tenant covenants that, notwithstanding any assignment or
transfer, whether or not in violation of the provisions of this Lease, and
notwithstanding the acceptance of Base Rent and/or Additional Rent by Landlord
from an assignee, transferee, or any other party, the original named Tenant
shall remain fully liable for the payment of the Base Rent and Additional Rent
and for the other obligations of this Lease on the part of Tenant to be
performed or observed.
8.10 If Landlord shall give its consent to any assignment of this
Lease or to any sublease, Tenant shall, in consideration therefor, pay to
Landlord, as Additional Rent:
(a) in the case of an assignment, an amount equal to fifty (50%)
percent of (x) all sums and other consideration paid to Tenant by the assignee
for, or by reason of, such assignment (including all sums paid for the sale of
Tenant's fixtures, leasehold improvements, equipment, furniture, furnishings, or
other personal property, less the then net unamortized or undepreciated cost
thereof determined on the basis of Tenant's federal income tax returns) less (y)
the sum of (i) the amounts paid by Tenant for brokerage and legal fees with
respect to such assignment provided such fees are reasonable and Landlord
receives satisfactory verification of the payment of same, and (ii) the amounts
paid by Tenant expressly and solely for the purpose of preparing the Demised
Premises for such assignee's occupancy as determined by Tenant's federal income
tax returns, provided Landlord receives satisfactory verification of payment of
same; and
(b) in the case of a sublease, fifty (50%) percent of any rents,
additional charges, or other cost or consideration payable under the sublease by
the subtenant to Tenant that are in excess of the Base Rent and Additional Rent
accruing during the term of the sublease in respect of the subleased space (at
the rate per square foot payable by Tenant hereunder) pursuant to the terms
hereof (including all sums paid for the sale or rental of Tenant's fixtures,
leasehold improvements, equipment, furniture, or other personal property, less,
in the case of the sale thereof, the then net unamortized or undepreciated cost
thereof determined on the basis of Tenant's federal income tax returns) less (i)
the amounts paid by Tenant for brokerage and legal fees with respect to such
sublease provided such fees are reasonable and Landlord receives satisfactory
verification of the payment of same, and (ii) the amounts paid by Tenant
expressly and solely for the purpose of preparing the Demised Premises or
portion thereof for such sublessee's occupancy if not used by Tenant subsequent
to the expiration of the term of the sublease, provided Landlord receives
satisfactory verification of payment of same;
The sums payable under subsections (a) and (b) above shall be paid to Landlord
as and when payable by the assignee or subtenant, as the case may be, to Tenant.
8.11 (a) Either a transfer (including the issuance of treasury stock
or the creation and issuance of new stock or a new class of stock) of a
controlling interest in the shares of Tenant (if Tenant is a corporation or
trust) or a transfer of a majority of the total interest in
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Tenant (if Tenant is a partnership or other entity) at any one time or over a
period of time through a series of transfers, shall be deemed an assignment of
this Lease and shall be subject to all of the provisions of this Article 8,
including, without limitation, the requirement that Tenant obtain Landlord's
prior consent thereto. The transfer of shares of Tenant (if Tenant is a
corporation or trust) for purposes of this Section 8.11 shall not include the
sale of shares by persons other than those deemed "insiders" within the meaning
of the Securities Exchange Act of 1934, as amended, which sale is effected
through the "over-the-counter market" or through any recognized stock exchange.
(b) As long as Health Management Systems, Inc. is Tenant,
Tenant shall have the privilege, subject to the terms and conditions hereinafter
set forth, without the consent of Landlord and without Landlord having the right
granted in Section 8.02(i) hereof to recapture, to assign its interest in this
Lease (i) to any corporation which is a successor to Tenant either by merger or
consolidation, (ii) to a purchaser of all or substantially all of Tenant's
assets (provided such purchaser shall have also assumed substantially all of
Tenant's liabilities) or (iii) to a Person which shall (1) Control, (2) be under
the Control of, or (3) be under common Control with Tenant. Notwithstanding
anything to the contrary in this Article 8, if the provisions of this Section
8.1l(b)(i), (ii) or (iii) shall be applicable to any assignment of this Lease,
then the provisions of Section 8.10(a) and (b) shall not be applicable.
8.12 The joint and several liability of Tenant and any immediate or
remote successor in interest to Tenant, and the due performance of the
obligations of this Lease on Tenant's part to be performed and observed, shall
not be discharged, released, or impaired in any respect by any agreement or
stipulation made by Landlord extending the time of, or modifying any of the
obligations of, this Lease, or by any waiver or failure of Landlord to enforce
any of the obligations of this Lease
8.13 The listing of the name of a person or entity other than that
of Tenant, whether on the doors of the Demised Premises, on the Building
directory, or otherwise, shall not operate to vest any right or interest in this
Lease or in the Demised Premises in such person or entity, nor shall it be
deemed to be an indication that Landlord has consented to any assignment or
transfer of this Lease, to any sublease of the Demised Premises, or to the use
or occupancy thereof by others.
ARTICLE 9
Compliance With Laws and Requirements of
Public Authorities
9.01 (a) Tenant shall give prompt notice to Landlord of any notice
it receives of the violation of any Requirement (hereinafter defined) and, at
Tenant's sole cost and expense, Tenant shall comply with all Requirements that
shall, with respect to the Demised Premises, the use and occupancy thereof, or
the abatement of any nuisance, impose any violation, order, or
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duty on Landlord or Tenant, arising from: (i) Tenant's use of the Demised
Premises; (ii) the manner of conduct of Tenant's business or operation of its
installations, equipment, or other property therein; (iii) any cause or
condition created by or at the instance of Tenant, including, without
limitation, Tenant's Changes performed by or on behalf of Tenant; or (iv) the
breach of any of Tenant's obligations hereunder. However, Tenant shall not be so
required to make any structural or other substantial change in the Demised
Premises unless the requirement arises from a cause or condition referred to in
subsection (ii), (iii), or (iv) above. Furthermore, Tenant need not comply with
any such Requirement for so long as Tenant shall be contesting the validity
thereof, or the applicability thereof to the Demised Premises, in accordance
with Section 9.02. Landlord, at its expense, shall comply with all Requirements
applicable to the Demised Premises and the Building other than those
Requirements with which Tenant or other tenants of the Building are required to
comply subject to Landlord's right to contest the legality or applicability of
same.
(b) As used herein, "Requirements" shall mean all present and future
laws, rules, orders, ordinances, regulations, statutes, requirements, codes and
executive orders, extraordinary as well as ordinary, of all Governmental
Authorities now existing or hereafter created, and of any and all of their
departments and bureaus, and of any applicable fire rating bureau, or other body
exercising similar functions, affecting the Land, the Building or any portion
thereof, or any street, avenue or sidewalk comprising a part of or in front
thereof or any vault in or under the same, or requiring removal of any
encroachment, or affecting the maintenance, use or occupation of the Land, the
Building or any portion thereof.
(c) As used herein, "Governmental Authority (Authorities)" shall
mean the United States of America, the State of New York, the City of New York,
any political subdivision thereof and any agency, department, commission, board,
bureau or instrumentality of any of the foregoing, or any quasi-governmental
authority, now existing or hereafter created, having jurisdiction over the Land,
the Building or any portion thereof.
9.02 Tenant, at its sole cost and expense and after notice to
Landlord, may contest by appropriate proceedings prosecuted diligently and in
good faith, the legality or applicability of any Requirement affecting the
Demised Premises, provided that (a) Landlord (or any Indemnitee [hereinafter
defined]) shall not be subject to criminal penalty, imprisonment or to
prosecution for a crime, nor shall the Land, the Building or any part thereof
be subject to being condemned or vacated, nor shall the certificate of occupancy
for the Demised Premises or the Building be suspended or threatened to be
suspended by reason of non-compliance or by reason of such contest; (b) before
the commencement of such contest, if Landlord or any Indemnitee may be subject
to any civil fines or penalties or if Landlord may be liable to any independent
third party as a result of such noncompliance, Tenant shall furnish to Landlord
either (i) a bond of a surety company satisfactory to Landlord, in form and
substance reasonably satisfactory to Landlord, and in an amount equal to one
hundred twenty percent (120%) of the sum of (A) the cost of such compliance, (B)
the civil penalties or fines that may accrue by reason of such non-compliance
(as reasonably estimated by Landlord), and (C) the amount of such liability to
independent third parties (as reasonably estimated by Landlord), and shall
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indemnify Landlord (and any Indemnitee) against the cost of such compliance and
liability resulting from or incurred in connection with such contest or
non-compliance (except that Tenant shall not be required to furnish such bond to
Landlord if it has otherwise furnished any similar bond required by law to the
appropriate Governmental Authority and has named Landlord as a beneficiary
thereunder) or (ii) other security reasonably satisfactory in all respects to
Landlord; (c) such non-compliance or contest shall not constitute or result in a
violation (either with the giving of notice or the passage of time or both) of
the terms of any Superior Mortgage or Superior Lease, or if such Superior Lease
or Superior Mortgage shall condition such non-compliance or contest upon the
taking of action or furnishing of security by Landlord, such action shall be
taken or such security shall be furnished at the expense of Tenant; and (d)
Tenant shall keep Landlord regularly advised as to the status of such
proceedings. Without limiting the applicability of the foregoing, Landlord (or
any Indemnitee) shall be deemed subject to prosecution for a crime if Landlord
(or any Indemnitee), a Superior Lessor, a Superior Mortgagee, or any of their
officers, directors, partners, shareholders, agents or employees is charged with
a crime of any kind or degree whatsoever, whether by service of a summons or
otherwise, unless such charges are withdrawn ten (10) days before Landlord (or
any Indemnitee), such Superior Lessor or Superior Mortgagee or such officer,
director, partner, shareholder, agent or employee, as the case may be, is
required to plead or answer thereto.
ARTICLE 10
Insurance
10.01 Tenant shall not violate, or permit the violation of, any
condition imposed by the standard fire insurance policy then issued for office
buildings in the Borough of Manhattan, City of New York, and shall not do,
permit anything to be done, keep, or permit anything to be kept, in the Demised
Premises that would: (a) subject Landlord to any liability or responsibility for
personal injury, death, or property damage; (b) increase the fire or other
casualty insurance rate on the Building or the property therein over the rate
that would otherwise then be in effect (unless Tenant pays the resulting premium
as provided in Section 10.07); or (c) result in insurance companies of good
standing refusing to insure the Building or any of such property in amounts
satisfactory to Landlord.
10.02 Tenant covenants to provide, on or before the Commencement
Date, and to keep in force during the term hereof, the following insurance
coverage:
(a) for the benefit of Landlord and Tenant, a comprehensive policy
of liability insurance protecting Landlord and Tenant against any liability
whatsoever occasioned by accident on or about the Demised Premises or any
appurtenances thereto. Such policy is to be written by good and solvent
insurance companies authorized to do business in the State of New York, and the
limits of liability thereunder shall not be less than the respective amounts of
Three Million ($3,000,000.00) Dollars of combined single limit coverage on a per
occurrence basis in respect of personal injury or death and Five Hundred
Thousand ($500,000.00) Dollars in
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respect of property damage. Such insurance may be carried under a blanket policy
or policies covering the Demised Premises and other locations of Tenant, if any;
and
(b) fire and extended coverage in an amount adequate to cover the
cost of replacement of all personal property, fixtures, furnishing and
equipment, including Tenant's work, located in the Demised Premises. Such policy
shall be written by good and solvent insurance companies authorized to do
business in the State of New York and rated in Best's Insurance Guide, or any
successor thereto (or if there be none, an organization having a national
reputation) as having a general policyholder rating of "A" and a financial
rating of at least "XIII."
Prior to the time that such insurance is first required to be carried by Tenant,
and, thereafter, at least fifteen (15) days prior to the expiration of any such
policies, Tenant agrees to deliver to Landlord certificates evidencing such
insurance, provided that said certificates contain an endorsement that such
insurance may not be modified or cancelled except upon fifteen (15) days' notice
to Landlord, together with evidence of payment of same. Tenant's failure to
provide and keep in force the aforementioned insurance shall be regarded as a
material default hereunder, entitling Landlord to exercise any or all of the
remedies as provided in this Lease in the event of Tenant's default.
10.03 Landlord and Tenant shall each endeavor to secure an
appropriate clause in, or an endorsement upon, each fire or extended coverage
policy obtained by it and covering their respective interests in the Building,
the Demised Premises, or the personal property, fixtures and equipment located
therein or thereon, pursuant to which the respective insurance companies waive
subrogation or permit the insured, prior to any loss, to agree with a third
party to waive any claim it might have against said third party. The waiver of
subrogation or permission for waiver of any claim hereinbefore referred to shall
extend to the agents of each party and its employees and, in the case of Tenant,
shall also extend to all other persons and entities occupying or using the
Demised Premises in accordance with the terms of this Lease. If, and to the
extent that, such waiver or permission can be obtained only upon payment of an
additional charge, then, except as provided in Sections 10.04 and 10.05, the
party benefitting from the waiver or permission shall pay such charge upon
demand, or shall be deemed to have agreed that the party obtaining the insurance
coverage in question shall be free of any further obligations under the
provisions hereof relating to such waiver or permission.
10.04 In the event that Landlord shall be unable at any time to
obtain one of the provisions referred to in Section 10.03 in any of its
insurance policies, Landlord shall, at Tenant's option, cause Tenant to be named
in such policy or policies as one of the assureds, but if any additional premium
shall be imposed for the inclusion of Tenant as such an assured, Tenant shall
pay such additional premium upon demand. In the event that Tenant shall have
been named as one of the assureds in any of Landlord's policies in accordance
with the foregoing, Tenant shall endorse promptly to the order of Landlord,
without recourse, any check, draft, or order for the payment of money
representing the proceeds of any such policy, or any
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other payment growing out of or connected with said policy, and Tenant hereby
irrevocably waives any and all rights in and to such proceeds and payments.
10.05 In the event that Tenant shall be unable at any time to obtain
one of the provisions referred to in Section 10.03 in any of its insurance
policies, Tenant shall cause Landlord to be named in such policy or policies as
one of the assureds, but if any additional premium shall be imposed for the
inclusion of Landlord as such an assured, Landlord shall pay such additional
premium upon demand or Tenant shall be excused from its obligations under
Section 10.03 with respect to the insurance policy or policies for which such
additional premiums would be imposed. In the event that Landlord shall have been
named as one of the assureds in any of Tenant's policies in accordance with the
foregoing, Landlord shall endorse promptly to the order to Tenant, without
recourse, any check, draft, or order for the payment of money representing the
proceeds of any such policy, or any other payment growing out of or connected
with said policy, and Landlord hereby irrevocably waives any and all rights in
and to such proceeds and payments.
10.06 Subject to the provisions of Sections 10.03, 10.04 and 10.05,
and insofar as may be permitted by the terms of the insurance policies carried
by it, each party hereby releases the other with respect to any claim (including
a claim for negligence) that it might otherwise have against the other party for
loss, damages, or destruction with respect to its property by fire or other
casualty (including rental value or business interruption, as the case may be)
occurring during the term of this Lease.
10.07 If, by reason of failure of Tenant to comply with the
provisions of Section 9.01 or Section 10.01, the rate of fire insurance with
extended coverage on the Building or equipment or other property of Landlord
shall be higher than it otherwise would be, Tenant shall reimburse Landlord, on
demand, for that part of the premiums for fire insurance and extended coverage
paid by Landlord because of such failure on the part of Tenant.
10.08 If any dispute shall arise between Landlord and Tenant with
respect to the incurrence or amount of any additional insurance premium referred
to in Section 10.07, the dispute shall be determined by arbitration.
10.09 A schedule or make up of rates for the Building or the Demised
Premises, as the case may be, issued by the New York Fire Insurance Rating
Organization or other similar body making rates for fire insurance and extended
coverage for the premises concerned, shall be conclusive evidence of the facts
therein stated and of the several items and charges in the fire insurance rate
with extended coverage then applicable to such premises.
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ARTICLE 11
Rules and Regulations
11.01 Tenant and its employees and agents shall faithfully observe
and comply with the Rules and Regulations annexed hereto as Exhibit C and with
such reasonable changes thereto (whether by modification, elimination, or
addition) as Landlord, at any time or times hereafter, may make and communicate
in writing to Tenant, provided that such changes do not unreasonably affect the
conduct of Tenant's business in the Demised Premises (except with respect to any
such changes that are required by any governmental law, rule, regulation,
ordinance, or similar decree). In the event, however, that there is any conflict
or inconsistency between the provisions of this Lease and any of the Rules and
Regulations, as originally promulgated or as changed, the provisions of this
Lease shall prevail.
11.02 Nothing in this Lease contained shall be construed to impose
upon Landlord any duty or obligation to Tenant to enforce the Rules and
Regulations, or the terms, covenants, or conditions contained in any other
lease, against any other tenant, and Landlord shall not be liable to Tenant for
violation of the same by any other tenant or such tenant's employees, agents, or
visitors. However, Landlord shall not enforce any of the Rules and Regulations
in such a manner as to discriminate against Tenant or any person claiming under
or through Tenant. Landlord shall not enforce any rule or regulation against
Tenant if Tenant establishes that Landlord is not generally enforcing such rule
or regulation in the Building.
ARTICLE 12
Tenant's Changes
12.01 Tenant may, from time to time during the Term and at its sole
expense, make such alterations, additions, installations, substitutions,
improvements and decorations (collectively, "Changes") in and to the Demised
Premises, excluding structural Tenant's Changes, as Tenant may reasonably
consider necessary for the conduct of its business therein, on the following
conditions:
(a) the outside appearance or strength of the Building, or of any of
its structural parts, shall not be affected;
(b) except as may be expressly permitted by the provisions of
Article 38, no part of the Building outside of the Demised Premises shall be
physically affected;
(c) the proper functioning of any of the Building Systems shall not
be adversely affected, and the usage of such Building Systems by Tenant shall
not be materially increased;
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(d) in performing the work involved in making such Tenant's Changes,
Tenant shall observe, and be bound by, all of the conditions and covenants
contained in this Article 12; and
(e) before proceeding with any Change costing in excess of $25,000
(exclusive of the costs of decorating work and items constituting Tenant's
Property, as defined in Article 13, and of any architect's and engineer's fees),
or any Change to the Building Systems, Tenant shall submit to Landlord, for
Landlord's approval, which approval shall not be unreasonably withheld or
delayed provided the remaining conditions of this Section 12.01 have been
satisfied, plans and specifications for the work to be done. Landlord may, as a
condition of its consent, require Tenant to make revisions in and to the plans
and specifications with respect to any Tenant's Change.
12.02 Tenant shall, at its expense, obtain all necessary
governmental permits and certificates for the commencement and prosecution of
Tenant's Changes, and, upon completion, for final approval thereof, and shall
cause Tenant's Changes to be performed in compliance therewith, as well as with
all applicable Requirements, in a good and workmanlike manner, using new
materials and equipment of a quality and class at least equal to the
installations in the Building existing on the Commencement Date. Tenant's
Changes shall be performed in such a manner as not to unreasonably interfere
with or delay, and (unless Tenant shall indemnify Landlord therefor to the
latter's reasonable satisfaction) as not to impose any additional expense upon
Landlord in the maintenance or operation of the Building. Throughout the
performance of Tenant's Changes, Tenant shall, at its expense, carry, or cause
to be carried, workers' compensation insurance in statutory limits and general
liability insurance for any occurrence in or about the Building as set forth in
Section 10.02 hereof. All such insurance policies shall name Landlord and its
agents as additional insureds, be in such limits as Landlord may reasonably
prescribe and be placed with insurers reasonably satisfactory to Landlord.
Tenant shall furnish Landlord with satisfactory evidence that such insurance is
in effect at or before the commencement of Tenant's Changes and, on request, at
reasonable intervals thereafter during the continuance of Tenant's Changes. If
any of Tenant's Changes shall involve the removal of any fixtures, equipment, or
other property in the Demised Premises that are not Tenant's Property, such
fixtures, equipment, or other property shall be promptly replaced, at Tenant's
expense, with new fixtures, equipment, or other property (as the case may be) of
like utility and at least equal value unless Landlord shall otherwise expressly
consent in writing, and Tenant shall, upon Landlord's request, store and
preserve, at Tenant's sole cost and expense, any such fixtures, equipment, or
property so removed and shall return same to Landlord in good condition, subject
to reasonable wear and tear, upon the expiration or sooner termination of this
Lease. All electrical and plumbing work in connection with Tenant's Changes
shall be performed by contractors or subcontractors licensed therefor by all
governmental agencies having or asserting jurisdiction and acceptable to
Landlord.
12.03 Tenant shall, at its expense and with diligence and dispatch,
procure the cancellation or discharge of all notices of violation arising from,
or otherwise connected with,
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Tenant's Changes that shall be issued by the Department of Buildings or any
other public or quasi-public authority having or asserting jurisdiction on or
before the date that shall be thirty (30) days after Tenant receives notice of
such violation. Tenant shall defend, indemnify and save Landlord harmless from
and against any and all mechanic's and other liens filed in connection with
Tenant's Changes, including the liens of any security interest in, conditional
sales of, or chattel mortgages upon, any materials, fixtures, or articles so
installed in and constituting part of the Demised Premises, and against all
costs, expense and liabilities incurred in connection with any such lien,
security interest, conditional sale, or chattel mortgage or any action or
proceeding brought thereon. Subject to the provisions of the succeeding
sentence, Tenant, at its expense, shall procure the satisfaction or discharge of
all such liens within twenty (20) days after the earlier to occur of (i) the
date on which Tenant receives notice of such lien and (ii) the date Landlord
makes written demand therefor. However, nothing herein contained shall prevent
Tenant from contesting, in good faith and at its own expense, any such notice of
violation, provided that Tenant shall comply with the provisions of Section
9.02.
12.04 Tenant agrees that the exercise of its rights pursuant to the
provisions of this Article 12 shall not be done in a manner that would: (a)
create any work stoppage, picketing, labor disruption, or dispute; (b) violate
Landlord's union contracts affecting the Land and/or Building; or (c) interfere
with the business of Landlord or any tenant or occupant of the Building. In the
event of the occurrence of any condition described above arising from Tenant's
exercise of any of its rights pursuant to the provisions of this Article 12,
Tenant shall, immediately, upon notice from Landlord, cease the manner of
exercise of such right giving rise to such condition. In the event that Tenant
fails to cease such manner of exercise of its rights as aforesaid, Landlord, in
addition to any rights available to it under this Lease and pursuant to law,
shall have the right to injunction without notice. With respect to Tenant's
Changes, Tenant shall make all arrangements for, and pay all expenses incurred
in connection with, use of the freight elevators servicing the Demised Premises.
12.05 (a) Landlord shall contribute an amount not to exceed Five
Hundred Ninety-Nine Thousand Seven Hundred Sixty Dollars ($599,760) in the
aggregate (the "Tenant Fund") toward the cost of (i) Tenant's Work in accordance
with the provisions of Section 12.05(b) and (c) and (ii) other Tenant Changes
throughout the Term in accordance with the provisions of Section 12.05(d) and
(e).
(b) Landlord shall disburse a portion of the Tenant Fund to
Tenant from time to time, within thirty (30) Business Days after receipt of the
items set forth in Section 12.05(c) hereof, provided that on the date of a
request and on the date of disbursement from the Tenant Fund no Event of Default
shall have occurred and be continuing. Disbursements from the Tenant Fund shall
not be made more frequently than monthly, and shall be in an amount equal to the
aggregate amounts theretofore paid or payable (as certified by an officer of
Tenant and Tenant's independent, licensed architect) to Tenant's contractors,
subcontractors and materialmen which have not been the subject of a previous
disbursement from the Tenant Fund multiplied by a fraction, the numerator of
which is 599,760 and the denominator of which is the total cost of Tenant's Work
as estimated by Tenant's independent licensed architect and as
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approved by Landlord (which approval shall not be unreasonably withheld or
delayed), which fraction shall be subject to readjustment as provided by Section
12.05(c) hereof (but in no event shall such fraction be greater than one (1)).
(c) Landlord's obligation to make disbursements from the
Tenant Fund shall be subject to Landlord's verification of the total cost of
Tenant's Work as estimated by Tenant's independent licensed architect and
receipt of: (a) a request for such disbursement from Tenant signed by an officer
of Tenant, together with the certification required by Section 12.05(b) hereof,
(b) copies of all receipts, invoices and bills for the work completed and
materials furnished in connection with Tenant's Work and incorporated in the
Demised Premises which are to be paid from the requested disbursement or which
have been paid by Tenant and for which Tenant is seeking reimbursement, (c)
copies of all contracts, work orders, change orders and other materials relating
to the work or materials which are the subject of the requested disbursement or
reimbursement, (d) if requested by Landlord, waivers of lien from all
contractors, subcontractors and materialmen involved in the performance of
Tenant's Work relating to the portion of Tenant's Work theretofore performed and
materials theretofore provided and for which previous disbursements and/or the
requested disbursement has been or is to be made (except to the extent such
waivers of lien were previously furnished to Landlord upon a prior request), and
(e) a certificate of Tenant's independent licensed architect stating (i) that,
in his opinion, the portion of Tenant's Work theretofore completed and for which
the disbursement is requested was performed in a good and workerlike manner and
substantially in accordance with the final detailed plans and specifications for
such Tenant's Work, as approved by Landlord, (ii) the percentage of completion
of Tenant's Work as of the date of such certificate, and (iii) the revised
estimated total cost to complete Tenant's Work. If the revised estimated total
cost of Tenant's Work increases above the original estimated total cost of
Tenant's Work by more than five percent (5%), then the denominator of the
fraction referred to in Section 12.05(b) hereof shall be adjusted appropriately.
(d) In no event shall the aggregate amount paid by Landlord
to Tenant under this Section 12.05 exceed the amount of the Tenant Fund. Upon
the completion of Tenant's Work and satisfaction of the conditions set forth in
Section 12.05(e) hereof, any amount of the Tenant Fund which has not been
previously disbursed (the "Tenant Fund Balance") may be disbursed by Landlord
toward the cost of Tenant's Changes during the Term in accordance with the
provisions of Section 12.05(b) and (c). Notwithstanding the foregoing, (i) the
provision of Section 12.05(b) requiring that the aggregate amount of a requested
disbursement be multiplied by a fraction to determine the portion of the
disbursement to be paid and (ii) clauses (ii) and (iii) and the last sentence of
Section 12.05(c) shall not be deemed to apply to any requested disbursement from
the Tenant Fund Balance with respect to a Tenant Change which is not part of
Tenant's Work. Upon the disbursement of the entire Tenant Fund, Landlord shall
have no further obligation or liability whatsoever to Tenant for further
disbursement of any portion of the Tenant Fund to Tenant. It is expressly
understood and agreed that, provided no Event of Default shall have occurred and
be continuing, Tenant shall complete, at its sole cost and expense, Tenant's
Work, whether or not the Tenant Fund Balance is sufficient to fund such
completion. Any costs to complete Tenant's Work in excess of the Tenant Fund
shall be the
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sole responsibility and obligation of Tenant. It is further expressly understood
and agreed that, provided no Event of Default shall have occurred and be
continuing, Tenant may assign its right, title and interest in and to the Tenant
Fund Balance to any assignee under an assignment or any sublessee under a
sublease, provided such assignment or sublease has been entered into by Tenant
in accordance with the provisions of Article 8.
(e) Within thirty (30) days after completion of Tenant's Work
and any Tenant Change which is not part of Tenant's Work and for which Tenant
has requested a disbursement from the Tenant Fund in accordance with the
provisions of this Section 12.05, Tenant shall deliver to Landlord general
releases and waivers of lien from all contractors, subcontractors and
materialmen involved in the performance of Tenant's Work or such Tenant's
Change, as the case may be, and the materials furnished in connection therewith
(unless same previously were furnished pursuant to Section 12.05(c) hereof), and
a certificate from Tenant's independent licensed architect certifying that (i)
in his opinion Tenant's Work or such Tenant's Change, has been performed in a
good and workerlike manner and completed in accordance with the final detailed
plans and specifications for such Tenant's Work or Tenant's Change, as approved
by Landlord and (ii) all contractors, subcontractors and materialmen have been
paid for Tenant's Work or such Tenant's Change, and materials furnished through
such date.
ARTICLE 13
Tenant's Property
13.01 All improvements and installations constituting Landlord's
Work, and all other fixtures, improvements and appurtenances attached to or
built into the Demised Premises on the Commencement Date or during the term of
this Lease, whether or not by or at the expense of Tenant, shall be and remain a
part of the Demised Premises, shall be deemed the property of Landlord and shall
not be removed by Tenant, except as hereinafter in this Article 13 expressly
provided.
13.02 Provided the same are not, or were not, included in Landlord's
Work, all paneling, movable partitions, lighting fixtures, special cabinet work,
other business and trade fixtures, machinery and equipment, communications
equipment and office equipment, whether or not attached to or built into the
Demised Premises, which are installed in the Demised Premises by or for the
account of Tenant, without expense to Landlord, and which can be removed without
permanent structural damage to the Building, all furniture, furnishings and
other articles of movable personal property owned by Tenant and located in the
Demised Premises (collectively, "Tenant's Property"), shall be and shall remain
the property of Tenant and may be removed by it at any time during the term of
this Lease, provided that if any of Tenant's Property is removed, Tenant or any
party or person entitled to remove same shall repair or pay the cost of
repairing any damage to the Demised Premises or to the Building resulting from
such removal. Except as expressly provided to the contrary herein, any equipment
or other property for which Landlord shall have granted any allowance or credit
to
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Tenant, or that has replaced such items originally provided by Landlord at
Landlord's expense, shall not be deemed to have been installed by or for the
account of Tenant without expense to Landlord, and shall not be considered
Tenant's Property.
13.03 At or before the Expiration Date, or as promptly as
practicable after the Expiration Date (if same occurs earlier than the Fixed
Expiration Date), Tenant, at its expense, shall remove from the Demised Premises
all of Tenant's Property, except such items thereof as Tenant shall have
expressly agreed in writing with Landlord were to remain and to become the
property of Landlord, and shall fully repair any damage to the Demised Premises
or the Building resulting from such removal. Tenant's obligation herein shall
survive the expiration or earlier termination of this Lease.
13.04 Any other items of Tenant's Property (except money, securities
and other like valuables) that shall remain in the Demised Premises after the
Expiration Date or after a period of fifteen (15) days following an earlier
termination date, may, at the option of Landlord, be deemed to have been
abandoned, and, in such event, either may be retained by Landlord as its
property or may be disposed of, without accountability, at Tenant's expense and
in such manner as Landlord may see fit.
ARTICLE 14
Repairs and Maintenance
14.01 Tenant shall take good care of the Demised Premises. Tenant,
at its expense, shall promptly make all repairs, ordinary or extraordinary,
interior or exterior, structural or otherwise, in and about the Demised Premises
and the Building, as shall be required by reason of: (a) the performance or
existence of Tenant's Work or Tenant's Changes; (b) the installation, use, or
operation of Tenant's Property in the Demised Premises; (c) the moving of
Tenant's Property into or out of the Building; or (d) the misuse or neglect of
Tenant or any of its employees, agents, or contractors. However, Tenant shall
not be responsible for any of such repairs that are required by reason of
Landlord's neglect or other fault in the manner of performing any of Tenant's
Work or Tenant's Changes that may be undertaken by Landlord for Tenant's account
or that are otherwise required by reason of neglect or other fault of Landlord
or its employees, agents, or contractors. Except if required by the neglect or
other fault of Landlord or its employees, agents, or contractors, Tenant, at its
expense, shall: (i) repair or replace all scratched, damaged, or broken doors or
other glass in or about the Demised Premises; (ii) repair, maintain and replace
all wall and floor coverings in the Demised Premises; (iii) repair and maintain
all lighting fixtures therein; and (iv) cause the Demised Premises to be
exterminated from time to time to the satisfaction of Landlord. Tenant will not
clean nor require, permit, suffer or allow any window in the Demised Premises to
be cleaned from the outside in violation of Section 202 of the New York State
Labor Law or any other applicable law or of the Rules of the Board of Standards
and Appeals, or of any other Board or body having or asserting jurisdiction.
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14.02 Landlord shall operate, maintain and make all necessary
repairs (both structural and non-structural) to the part of Building Systems
which provide service to the Demised Premises (including the distribution
portions of such Building Systems located within the Demised Premises) and the
public portions of the Building, both exterior and interior, in conformance with
the standards applicable to non-institutional office buildings in Manhattan,
except for those repairs for which Tenant is responsible pursuant to any other
provisions of this Lease.
14.03 Except as expressly otherwise provided in this Lease, Landlord
shall have no liability to Tenant by reason of any inconvenience, annoyance,
interruption, or injury to business arising from Landlord's making any repairs
or Changes that Landlord is required or permitted by this Lease, or required by
law, to make in or to any portion of the Building or the Demised Premises, or in
or to the fixtures, equipment, or appurtenances of the Building or the Demised
Premises, provided that Landlord shall use due diligence with respect thereto
and shall perform such work, except in case of emergency, at times reasonably
convenient to Tenant and otherwise in such a manner as will not materially
interfere with Tenant's use of the Demised Premises. Notwithstanding the
foregoing, Landlord shall have no obligation to employ contractors or labor at
so-called overtime or other premium pay rates or to incur any other overtime
costs or expenses whatsoever.
ARTICLE 15
Electricity
15.01 Tenant shall obtain and pay for Tenant's entire separate
supply of electric current by direct application to and arrangement with the
public utility company servicing the Building. Landlord will permit its electric
feeders, risers and wiring serving the Demised Premises to be used by Tenant to
the extent available and safely capable of being used for such purpose.
15.02 Any additional risers, feeders or other equipment or service
proper or necessary to supply Tenant's electrical requirements, upon written
request of Tenant, will be installed by Landlord, at the sole cost and expense
of Tenant, if, in Landlord's sole judgment, the same are necessary and will not
cause permanent damage or injury to the Building or the Demised Premises or
cause or create a dangerous or hazardous condition or entail excessive or
unreasonable alterations, repairs or expense or interfere with or disturb other
tenants or occupants. Rigid conduit only will be allowed.
15.03 Landlord shall not in any way be liable or responsible to
Tenant for any loss or damage or expense which Tenant may sustain or incur if
either the quantity or character of electric service is changed or is no longer
available or suitable for Tenant's requirements.
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15.04 Tenant agrees not to connect any electrical equipment of any
type to the Building electric distribution system, beyond that shown on Tenant's
approved plans for initial occupancy, other than lamps, typewriters and other
small business machines which consume comparable amounts of electricity, without
Landlord's prior written consent which consent shall not be unreasonably
withheld or delayed. In no event shall Tenant use or install any fixtures,
equipment or machines the use of which in conjunction with other fixtures,
equipment and machines in the Demised Premises would result in an overload of
the electrical circuits servicing the Demised Premises.
15.05 Tenant covenants and agrees that at all times its use of
electric current shall never exceed the capacity of the then existing feeders to
the Building or the risers or wiring installation. Tenant shall furnish, install
and replace, as required, all lighting tubes, lamps, bulbs and ballasts required
in the Demised Premises, at Tenant's sole cost and expense. All lighting tubes,
lamps, bulbs and ballasts so installed shall become Landlord's property upon the
expiration or sooner termination of this Lease.
ARTICLE 16
Heat, Ventilation and Air-Conditioning
16.01 Any use of the Demised Premises, or any part thereof, or
rearrangement of partitioning in a manner that interferes with normal operation
of the heat, ventilation and air-conditioning systems servicing the same, may
require Changes in such systems. Such Changes, so occasioned, shall be made by
Tenant, at its expense, as Tenant's Changes pursuant to Article 12.
16.02 Landlord shall maintain and operate the heat system servicing
the Demised Premises including the radiators presently existing in the Demised
Premises and shall, subject to the design specifications of the system and to
energy conservation requirements of, and voluntary energy conservation programs
sponsored by, governmental authorities, furnish heat ("HV Service") in the
Demised Premises. HV Service shall be provided, as may be required for
comfortable occupancy of the Demised Premises, during "Regular Hours" (which
shall mean between the hours of 8:00 a.m. and 6:00 p.m.) of "Business Days"
(which shall mean all days except Sundays, those days that are observed by the
state or federal government as legal holidays and those days designated as
holidays by the applicable building service union employees' contract)
throughout the year. If Tenant shall require HV Service during hours other than
Regular Hours or on days other than Business Days ("After Hours Service"),
Landlord shall furnish such After Hours Service to the Demised Premises upon
reasonable advance notice from Tenant, and Tenant shall pay, on demand,
Landlord's cost therefor plus five (5%) percent. In the event additional
tenant(s) of the Building request After Hours Service during the same periods of
time for which Tenant has requested such service, Landlord shall allocate the
foregoing charges for After Hours Service among Tenant and such additional
tenant(s).
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16.03 Tenant shall, to the extent same exist or if Tenant installs
same pursuant to this Section 16.03, maintain and operate, at its sole cost, any
air-conditioning unit(s) (the "Units") located in the Demised Premises. Landlord
shall, at its sole cost and expense, provide chilled water to the Units. All
electricity used in connection with the Units shall be arranged for by Tenant in
accordance with and upon, and subject to, all of the terms, covenants and
conditions contained in Article 15 hereof. Tenant shall perform, at its sole
cost and expense, any and all necessary repairs thereto and replacements
thereof. All of the Units (and any replacements thereof) installed by Landlord
pursuant to Exhibit B hereof or otherwise pursuant to the terms of this Lease
shall, upon the expiration or sooner termination of this Lease, be surrendered
to Landlord in good working order and condition. Any Units (or replacements
thereof) not required to be surrendered to Landlord may, at Tenant's sole cost
and expense, be removed from the Demised Premises at the expiration or sooner
termination of this Lease provided Tenant repairs any damage caused by such
removal. Landlord shall (i) deliver the Units presently located in the Demised
Premises to Tenant in good working order and (ii) assign to Tenant at the
commencement of the term of this Lease any warranties with respect to the Units
which Landlord has obtained.
ARTICLE 17
Other Services
17.01 Landlord, at its expense, shall provide public elevator
service, passenger and freight, by elevators serving the floors on which the
Demised Premises are situated during Regular Hours on Business Days, and shall
have at least one passenger elevator subject to call at all other times.
Notwithstanding anything to the contrary in this Article 12, Landlord agrees
that, subject to the rights of other tenants, there shall be no charge to Tenant
for the use of the freight elevators servicing the Demised Premises during
Regular Hours of Business Days during the Term.
17.02 Tenant shall, at Tenant's sole cost and expense, keep the
Demised Premises clean and in order, to the reasonable satisfaction of Landlord
and, for that purpose, may (i) hire a cleaning contractor approved in writing by
Landlord, such approval not to be unreasonably withheld or (ii) engage its own
employees, provided such employees shall enter and exit the Demised Premises
through the 401 Building. Tenant shall remove Tenant's refuse and rubbish from
the Demised Premises in closed plastic bags or other closed disposal receptacles
reasonably satisfactory to Landlord and shall deliver such containerized refuse
and rubbish to a location on the floors upon which the Demised Premises are
situated designated by Landlord. Such delivery shall be accomplished during such
hours of the day and in accordance with such rules and regulations as, in the
reasonable judgment of Landlord, are necessary for the proper operation of the
Building. Landlord shall, at its sole cost and expense, arrange with a carting
company for the removal of such containerized refuse and rubbish from the
aforesaid locations.
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17.03 Landlord, at its expense, shall furnish adequate hot and cold
water to the Demised Premises for drinking, lavatory and cleaning purposes to
the extent piping and fixtures at present exist therein. If Tenant uses water
for any other purpose, Landlord, at Tenant's expense, shall install meters to
measure Tenant's consumption of cold water and/or hot water and/or steam for
such other purposes, as the case may be. Tenant shall pay for the quantities of
cold water and hot water shown on such meters, at Landlord's cost therefor, on
the rendition of Landlord's bills therefor.
17.04 Landlord reserves the right, without any liability to Tenant
(except as otherwise expressly provided in this Lease), to stop operating any of
the heating, ventilation, air-conditioning, electric, sanitary, elevator or
other Building Systems serving the Demised Premises, and to stop the rendition
of any of the other services required of Landlord under this Lease, whenever and
for so long as may be necessary by reason of accidents, emergencies, strikes, or
the making of repairs or Changes that Landlord is required by this Lease or by
law to make or in good faith deems necessary, by reason of difficulty in
securing proper supplies of fuel, steam, water, electricity, labor, or supplies,
or by reason of any other cause beyond Landlord's reasonable control.
ARTICLE 18
Access; Changes in Building Facilities; Name
18.01 Excepting the inside surfaces of all walls, windows and doors
bounding the Demised Premises (including exterior Building walls, core corridor
walls and doors and any core corridor entrances) all areas in the Building
including, without limitation, any space in or adjacent to the Demised Premises
used for shafts, stacks, pipes, conduits, fan rooms, ducts, electric or other
utilities, sinks, or other Building facilities, and the use thereof, as well as
access thereto through the Demised Premises for the purpose of operation,
maintenance, decoration and repair, are reserved to Landlord.
18.02 Tenant shall permit Landlord access to the Demised Premises
(subject to the provisions of Section 18.03) to install, use, replace and
maintain pipes, ducts and conduits within the demising walls, load-bearing
columns and ceilings of the Demised Premises.
18.03 Landlord or Landlord's agent shall have the right, upon
reasonable advance notice (except in the case of an emergency where no such
notice shall be required), to enter and/or pass through the Demised Premises or
any part thereof, at reasonable times during reasonable hours except in an
emergency when it can be at any time (a) to examine the Demised Premises and to
show them to Superior Lessors, Superior Mortgagees, or prospective purchasers,
mortgagees, or lessees of the Building as an entirety and (b) for the purpose of
making such repairs or Changes in or to the Demised Premises, or in or to its
facilities as may be provided for by this Lease, as may be mutually agreed upon
by the parties, or as Landlord may be required to make by law or in order to
repair and maintain the Building or its fixtures
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or facilities. Landlord shall be allowed to take all materials into and upon the
Demised Premises that may be required for such repairs, Changes, or maintenance,
without liability to Tenant, but Landlord shall use reasonable efforts not to
unreasonably interfere with Tenant's business operations. No damages,
compensation or claim shall be payable by Landlord for inconvenience, loss of
business or annoyance arising from any repair or restoration of any portion of
the Demised Premises or of the Building pursuant to this Section 18.03
18.04 Subject to the provisions of Section 18.03, during the period
of nine (9) months prior to the Expiration Date, Landlord may exhibit the
Demised Premises to prospective tenants.
18.05 Landlord reserves the right, at any time and without incurring
any liability to Tenant therefor, to redesign or to make such Changes in or to
the Building and the fixtures and equipment thereof, as well as in or to the
street entrances, halls, passages, elevators, escalators and stairways thereof,
as it may deem necessary or desirable, provided that Tenant shall at all times
have access to the Demised Premises.
18.06 Landlord may adopt any name for the Building. Landlord
reserves the right to change the name or address of the Building at any time.
18.07 For the purposes of this Article 18, the term Landlord shall
include Superior Lessors and Superior Mortgagees.
ARTICLE 19
Notice of Accidents
Tenant shall give notice to Landlord, promptly after Tenant learns
thereof, of: (a) any accident in or about the Demised Premises for which
Landlord might be liable; (b) all fires in the Demised Premises; (c) all damage
to, or defects in, the Demised Premises, including the fixtures, equipment and
appurtenances thereof, for the repair of which Landlord might be responsible;
and (d) all damage to, or defects in, any parts or appurtenances of the Building
Systems located in or passing through the Demised Premises or any part thereof.
ARTICLE 20
Non-Liability and Indemnification
20.01 Neither Landlord nor any of the partners comprising Landlord
and its and their partners, shareholders, officers, directors, employees, agents
and contractors, lessors and mortgagees (collectively, "Indemnitees") shall be
liable to Tenant for any injury or damage to
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Tenant or to any other person, or for any damage to, or loss (by theft or
otherwise) of, any property of Tenant or of any other person, regardless of the
cause of such injury, damage, or loss, unless caused by or due to the negligence
of Landlord, its agents or employees, occurring within the scope of their
respective employments. It is expressly understood that no property, other than
such as might normally be brought upon or kept in the Demised Premises as an
incident to the reasonable use of the Demised Premises for the purpose herein
permitted, will be brought upon or be kept in the Demised Premises.
20.02 Tenant shall indemnify and save Indemnitees harmless from and
against (a) any and all claims arising from (i) the conduct or management of the
Demised Premises or of any business therein, (ii) any work or thing whatsoever
done or any condition created (other than by Landlord for Landlord's or Tenant's
account) in or about the Demised Premises during the term of this Lease or
during any period of time prior to the Commencement Date during which Tenant may
have been given access to the Demised Premises or (iii) any negligent or
otherwise wrongful act or omission of Tenant, of any of its subtenants or
licensees, or of its or their employees, agents, or contractors, and (b) all
costs, expenses and liabilities (including reasonable attorneys' fees and
disbursements) incurred in, or in connection with, each such claim, action or
proceeding brought thereon. In case any action or proceeding is brought against
Landlord by reason of any such claim, Tenant, upon notice from Landlord, shall
resist and defend such action or proceeding by counsel selected by Landlord.
20.03 Except as otherwise expressly provided in this Lease, this
Lease and the obligations of Tenant hereunder shall be in no way affected,
impaired, or excused because Landlord is unable to fulfill, or is delayed in
fulfilling, any of its obligations under this Lease by reason of strike or other
labor trouble, governmental pre-emption, priorities, or other controls in
connection with a national or other public emergency, shortages of fuel,
supplies, or labor resulting therefrom, act of God, or other like cause beyond
Landlord's reasonable control.
ARTICLE 21
Destruction or Damage
21.01 If the Building or the Demised Premises shall be partially or
totally damaged or destroyed by fire or other cause, then, whether or not the
damage or destruction shall have resulted from the fault or neglect of Tenant or
its employees, agents or visitors (and if this Lease shall not have been
terminated as in this Article hereinafter provided), Landlord shall repair the
damage and restore and rebuild the Building and/or the Demised Premises, at its
expense, with reasonable dispatch after notice to it of the damage or
destruction; provided, however, that Landlord shall not be required to repair or
replace any of Tenant's Property or to restore any of Tenant's Work.
21.02 If the Building or the Demised Premises shall be partially
damaged or partially destroyed by fire or other cause, the rents payable
hereunder shall be abated to the
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extent that the Demised Premises shall have been rendered untenantable (as a
result of damage to the Demised Premises or to the Building) and for the period
from the date of such damage or destruction to the date the damage shall be
repaired or restored by Landlord. If the Demised Premises or a major part
thereof shall be totally (which shall be deemed to include substantially
totally) damaged or destroyed or rendered completely (which shall be deemed to
include substantially completely) untenantable on account of fire or other
cause, the rents shall abate as of the date of the damage or destruction and
until Landlord shall repair, restore and rebuild the Building and the Demised
Premises, provided, however, that, should Tenant reoccupy a portion of the
Demised Premises for the conduct of its business during the period in which the
restoration work is taking place and prior to the date that the same are made
completely tenantable, rents allocable to such portion shall be payable by
Tenant from the date of such occupancy.
21.03 If the Building or the Demised Premises shall be totally
damaged or destroyed by fire or other cause, or if the Building shall be so
damaged or destroyed by fire or other cause (whether or not the Demised Premises
are damaged or destroyed) as to require a reasonably estimated expenditure of
more than forty percent (40%) of the full insurable value of the Building
immediately prior to the casualty, then, in either such event, Landlord may
terminate this Lease by giving Tenant notice to such effect within ninety (90)
days after the date of the casualty. In case of any damage or destruction
mentioned in this Article, Tenant may terminate this Lease by notice to Landlord
if such damage or destruction has occurred during the last year of the term of
this Lease or if Landlord has not completed the making of the required repairs
and restored and rebuilt the Building and the Demised Premises within two
hundred ten (210) days from the date of such damage or destruction, or within
such period after such date (not exceeding one hundred twenty (120) days as
shall equal the aggregate period during which Landlord may have been delayed in
doing so by reason of adjustment of insurance, labor trouble, governmental
controls, act of God, or any other cause beyond Landlord's reasonable control.
21.04 No damages, compensation, or claim shall be payable by
Landlord for inconvenience, loss of business, or annoyance arising from any
repair or restoration of any portion of the Demised Premises or of the Building
pursuant to this Article 21. Landlord shall use reasonable efforts to effect
such repair or restoration promptly and in such a manner as to not unreasonably
interfere with Tenant's use and occupancy.
21.05 Notwithstanding any of the foregoing provisions of this
Article 21, if Landlord or any Superior Lessor or Superior Mortgagee shall be
unable to collect all of the insurance proceeds applicable to damage or
destruction of the Demised Premises or the Building by fire or other cause, by
reason of some action or inaction on the part of Tenant or any of its employees,
agents, or contractors, then, without prejudice to any other remedies that may
be available against Tenant, there shall be no abatement of Tenant's rents, but
the total amount of such rents not abated (which would otherwise have been
abated) shall not exceed the amount of the uncollected insurance proceeds.
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21.06 Landlord will not carry insurance of any kind on Tenant's
Property or Tenant's Work, and, except as provided by law or by reason of its
fault or its breach of any of its obligations hereunder, shall not be obligated
to repair any damage thereto or to replace the same.
21.07 The provisions of this Article 21 shall be considered an
express agreement of the parties governing in the event of any damage to, or
destruction of, the Demised Premises by fire or other casualty, and Section 227
of the Real Property Law of the State of New York, providing for such a
contingency in the absence of an express agreement, and any other law of like
import, now or hereafter in force, shall have no application thereto.
ARTICLE 22
Eminent Domain
22.01 If the whole of the Building shall be lawfully acquired or
condemned by eminent domain or in any other manner for any public or
quasi-public use or purpose, this Lease and the term and estate hereby granted
shall forthwith terminate as of the date of vesting of title in such taking (the
"Date of Taking"), and the rents shall be prorated and adjusted as of such date.
22.02 If only a part of the Building shall be so taken, this Lease
shall be unaffected by such taking, except that Tenant may elect to terminate
this Lease in the event of a partial taking if the remaining area of the Demised
Premises shall not be reasonably sufficient for Tenant to continue feasible
operation of its business. Tenant shall give notice of such election to Landlord
not later than thirty (30) days after (a) notice of such taking is given by
Landlord to Tenant or (b) the Date of Taking, whichever occurs sooner. Upon the
giving of such notice by Tenant, this Lease shall terminate on the Date of
Taking, and the rents shall be prorated as of such termination date. In the
event, however, that this Lease shall continue in force after such partial
taking as to any portion of the Demised Premises, then the rents then payable
hereunder shall be apportioned between the portions of the Demised Premises
taken and remaining, on the basis of the rentable areas of the same. The portion
of such rents attributable to the portion taken shall be prorated and adjusted
as of the Date of Taking, and the portion of such rents attributable to the
portion remaining, as the same may thereafter be increased or decreased pursuant
to the terms of this Lease, shall continue to be paid by Tenant to Landlord as
provided in Article 1.
22.03 Landlord shall be entitled to receive the entire award in any
proceeding with respect to any taking provided for in this Article 22 without
deduction therefrom for any estate vested in Tenant by this Lease, and Tenant
shall receive no part of such award, except as hereinafter expressly provided in
this Article 22. Tenant hereby expressly assigns to Landlord all of its right,
title and interest in or to every such award. Notwithstanding anything herein to
the contrary, Tenant may, at its sole cost and expense, make a claim with the
condemning
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authority for Tenant's moving expenses and for the value of Tenant's Property or
Tenant's Changes that do not become part of the Building or the property of
Landlord, provided, however, that Landlord's award is not thereby reduced or
otherwise adversely affected.
22.04 If the temporary use or occupancy of all or any part of the
Demised Premises (each, a "Temporary Taking") shall be lawfully acquired or
condemned by eminent domain or in any other manner for any public or
quasi-public use or purpose during the term of this Lease, Tenant shall be
entitled, except as hereinafter set forth, to receive that portion of the award
for such taking that represents compensation for the use and occupancy of the
Demised Premises and, if so awarded, for the taking of Tenant's Property and for
moving expenses, and Landlord shall be entitled to receive that portion that
represents reimbursement for the cost of restoration of the Demised Premises.
This Lease shall be and remain unaffected by such taking, and Tenant shall
continue to be responsible for all of its obligations hereunder insofar as such
obligations are not affected by such taking and shall continue to pay in full
the Base Rent and Additional Rent when due. If the period of temporary use or
occupancy shall extend beyond the Expiration Date, that part of the award that
represents compensation for the use or occupancy of the Demised Premises (or a
part thereof) shall be divided between Landlord and Tenant so that Tenant shall
receive so much thereof as represents the period prior to the Expiration Date
and Landlord shall receive so much thereof as represents the period subsequent
to the Expiration Date. All monies received by Tenant as, or as part of, an
award for temporary use and occupancy for a period beyond the date to which the
rents hereunder have been paid by Tenant shall be received, held and applied by
Tenant as a trust fund for payment of the rents falling due hereunder.
Notwithstanding anything to the contrary set forth in this Section 22.04, if any
Temporary Taking shall continue for a period in excess of 150 days, Tenant may
terminate this Lease by delivery of notice to Landlord on or after the date
which shall be 150 days after the Date of Taking but in no event later than 210
days after the Date of Taking (the "Temporary Taking Termination Date"). Upon
the giving of such notice by Tenant, this Lease shall terminate on the Temporary
Taking Termination Date, and the rents shall be prorated as of such date. If
Tenant shall fail to timely give such notice, Tenant's right to terminate this
Lease pursuant to this Section 22.04 shall be deemed waived and this Lease shall
continue in full force and effect.
22.05 In the event of any taking of less than the whole of the
Building that does not result in a termination of this Lease, or in the event of
a taking for a temporary use or occupancy of all or any part of the Demised
Premises that does not extend beyond the Expiration Date, Landlord shall, at its
expense (but only to the extent that any award or awards granted for
consequential damage to the portion of the Building that is not taken shall be
sufficient for such purpose), proceed with reasonable diligence to repair, alter
and restore the remaining parts of the Building and the Demised Premises to
substantially a building standard condition (to the extent that the same may be
feasible) and so as to constitute a complete and tenantable Building and Demised
Premises.
22.06 Should any part of the Demised Premises be taken to effect
compliance with any law or requirement of public authority other than in the
manner hereinabove provided
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in this Article 22, then (a) if such compliance is the obligation of Tenant
under this Lease, Tenant shall not be entitled to any diminution or abatement of
rent or other compensation from Landlord therefor, but (b) if such compliance is
the obligation of Landlord under this Lease, the rents hereunder shall be
apportioned, and, as so apportioned, prorated, adjusted and remain payable, as
provided in Section 22.02.
22.07 Any dispute that may arise between the parties with respect to
the meaning or application of any of the provisions of this Article 22 shall be
determined by arbitration in the manner provided in Article 32.
ARTICLE 23
Surrender
(a) On the Expiration Date or upon any re-entry by Landlord upon the
Demised Premises in accordance with the provisions of this Lease, Tenant shall
quit and surrender the Demised Premises to Landlord broom clean, in good order,
condition and repair, including, without limitation, restoring Demised Premises
to close the Openings (hereinafter defined), if any, except for ordinary wear
and tear and for those repairs which are the obligation of Landlord hereunder,
and Tenant shall remove all of Tenant's Property therefrom except as otherwise
expressly provided in this Lease and shall restore the Demised Premises wherever
such removal results in damage thereto. Tenant's obligation to observe or
perform this covenant shall survive the expiration or other termination of this
Lease.
(b) Through and including the sixth month anniversary of the Fourth
Floor Delivery Date, Tenant expressly waives, for itself and for any person
claiming through or under Tenant, any rights which Tenant or any such person 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 holdover summary proceedings which Landlord may institute to enforce the
foregoing provisions of this Article 23. Thereafter throughout the remainder of
the Term, Tenant expressly waives, for itself and for any person claiming
through or under Tenant, any rights which Tenant or any such person 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 holdover summary proceedings which Landlord may institute to enforce the
foregoing provisions of this Article 23, arising out of an Event of Default
under Section 24.02(a). Tenant acknowledges that possession of the Demised
Premises must be surrendered to Landlord on the Expiration Date. Tenant agrees
to indemnify and save Landlord harmless from and against all claims, losses,
damages, liabilities, costs and expenses (including, without limitation,
attorneys' fees and disbursements) resulting from delay by Tenant in so
surrendering the Demised Premises, including, without limitation, any claims
made by any succeeding tenant founded on such delay. The parties recognize and
agree that the damage to Landlord resulting from any failure by Tenant to timely
surrender possession of the Demised Premises as aforesaid will be extremely
substantial, will exceed the amount of the monthly
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installments of the Base Rent and Rental theretofore payable hereunder, and will
be impossible to accurately measure. Tenant therefore agrees that if possession
of the Demised Premises is not surrendered to Landlord within twenty-four (24)
hours after the Expiration Date, in addition to any other rights or remedies
Landlord may have hereunder or at law, and without in any manner limiting
Landlord's right to demonstrate and collect any damages suffered by Landlord and
arising from Tenant's failure to surrender the Demised Premises as provided
herein, Tenant shall pay to Landlord on account of use and occupancy of the
Demised Premises for each month and for each portion of any month during which
Tenant holds over in the Demised Premises after the Expiration Date, a sum equal
to the greater of (i) one and one half (1.5) times the aggregate of that portion
of the Base Rent, and Rental which was payable under this Lease during the last
month of the Term, and (ii) the then fair market rental value for the Demised
Premises. Nothing herein contained shall be deemed to permit Tenant to retain
possession of the Demised Premises after the Expiration Date or to limit in any
manner Landlord's right to regain possession of the Demised Premises through
summary proceedings, or otherwise, and no acceptance by Landlord of payments
from Tenant after the Expiration Date shall be deemed to be other than on
account of the amount to be paid by Tenant in accordance with the provisions of
this Article 23. The provisions of this Article 23 shall survive the Expiration
Date.
ARTICLE 24
Conditions of Limitation
24.01 To the extent permitted by applicable law, this Lease, and the
term and estate hereby granted, are subject to the limitation that, whenever
Tenant shall be unable to pay its debts generally as they become due, or shall
make an assignment of the property of Tenant for the benefit of creditors, or
shall consent to, or acquiesce in, the appointment of a liquidator, receiver,
trustee, or other custodian of itself or the whole or any part of its properties
or assets, or shall commence a voluntary case for relief under the United States
Code or file a petition or take advantage of any bankruptcy or insolvency act or
applicable law of like import, or whenever an involuntary case under the United
States Bankruptcy Code shall be commenced against Tenant, or if a petition shall
be filed against it seeking similar relief under any bankruptcy or insolvency or
other applicable law of like import, or whenever a receiver, liquidator,
trustee, or other custodian of Tenant, or of, or for, substantially all of the
property of Tenant, shall be appointed without Tenant's consent or acquiescence,
then, Landlord (a) at any time after receipt of notice of the occurrence of any
such event, or (b) if such event occurs without the acquiescence of Tenant, at
any time after the event continues for sixty (60) days, may give Tenant a notice
of intention to end the term of this Lease at the expiration of five (5) days
from the date of service of such notice of intention, and, upon the expiration
of said five (5) day period, this Lease and the term and estate hereby granted
shall terminate with the same effect as if that day were the Expiration Date,
but Tenant shall remain liable for damages as provided in Article 25. As used in
this Section 24.01 the term "Tenant" shall mean the then owner and holder of the
interest and estate of the tenant under this Lease.
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24.02 This Lease, and the term and estate hereby granted, are
subject to the further limitation that:
(a) whenever Tenant shall default in the payment of any item of
Rental on any day upon which the same ought to be paid, and such default shall
continue for ten (10) Business Days after Landlord shall have given Tenant a
notice specifying such default;
(b) whenever Tenant shall do or permit anything to be done, whether
by action or inaction, contrary to any of Tenant's obligations hereunder, and if
such situation shall continue and shall not, subject to delays beyond Tenant's
reasonable control, be remedied by Tenant within thirty (30) days after Landlord
shall have given to Tenant a notice specifying the same, or, in the case of a
happening or default that cannot, with due diligence, be cured within a period
of thirty (30) days and the continuance of which for the period required for
cure will not subject Landlord to the risk of criminal liability (as more
particularly described in Section 9.02) or termination of any Superior Lease or
foreclosure of any Superior Mortgage, if Tenant shall not (i) advise Landlord,
within the said thirty (30) day period of Tenant's intention to duly institute
all steps necessary to remedy such situation, (ii) duly institute, within the
said thirty (30) day period, and, thereafter, diligently prosecute to
completion, all steps necessary to remedy the same and (iii) complete such
remedy within such time after the date of the giving of said notice by Landlord
as shall reasonably be necessary;
(c) whenever any event shall occur, or any contingency shall arise,
whereby this Lease, the estate hereby granted, or the unexpired balance of the
term hereof would, by operation of law or otherwise, devolve upon or pass to any
person other than Tenant, except as expressly permitted by Article 8;
(d) whenever Tenant shall abandon the Demised Premises; or
(e) whenever Tenant shall default in the performance or observance
of any of the terms, covenants, or conditions on its part to be observed or
performed pursuant to the terms of (i) any other lease of space in the Building,
whether now in existence or hereafter entered into, or (ii) after construction
of any Opening, the 401 Lease, and shall fail, after the giving of any notice
provided for therein, to cure the same within any applicable grace period
provided for therein,
then, in any of said cases set forth in the foregoing subsections (a), (b), (c),
(d) and (e), Landlord may give to Tenant a notice of intention to end the term
of this Lease at the expiration of five (5) days from the date of the service of
such notice of intention, and, upon the expiration of said five (5) days, this
Lease and the term and estate hereby granted, whether or not the term shall
theretofore have commenced, shall terminate with the same effect as if that day
were the Expiration Date, but Tenant shall remain liable for damages as provided
in Article 25. Each of the conditions of limitation described in Section 24.01
and in this Section 24.02 shall be an "Event of Default."
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ARTICLE 25
Remedies and Damages
25.01 (a) If there shall occur any Event of Default, and this Lease
and the term thereof shall expire and come to an end as provided in Article 24
hereof:
(1) Tenant shall quit and peacefully surrender the Demised
Premises to Landlord, and Landlord and its agents may immediately, or at any
time after such default or after the date upon which this Lease and the term
thereof shall expire and come to an end, re-enter the Demised Premises or any
part thereof, without notice, either by summary proceedings, or by any other
applicable action or proceeding, or by force or otherwise (without being liable
to indictment, prosecution or damages therefor), and may repossess the Demised
Premises and dispossess Tenant and any other persons from the Demised Premises
and remove any and all of their property and effects from the Demised Premises;
and
(2) Landlord, at Landlord's option, may relet the whole or any
portion or portions of the Demised Premises from time to time, either in the
name of Landlord or otherwise, to such tenant or tenants, for such term or terms
ending before, on or after the Expiration Date, at such rental or rentals and
upon such other conditions, which may include concessions and free rent periods,
as Landlord, in its sole discretion, may determine; provided, however, that
Landlord shall have no obligation to relet the Demised Premises or any part
thereof and shall in no event be liable for refusal or failure to relet the
Demised Premises or any part thereof, or, in the event of any such reletting,
for refusal or failure to collect any rent due upon any such reletting, and no
such refusal or failure shall operate to relieve Tenant of any liability under
this Lease or otherwise affect any such liability, and Landlord, at Landlord's
option, may make such repairs, replacements, alterations, additions,
improvements, decorations and other physical changes in and to the Demised
Premises as Landlord, in its sole discretion, considers advisable or necessary
in connection with any such reletting or proposed reletting, without relieving
Tenant of any liability under this Lease or otherwise affecting any such
liability.
(b) Tenant hereby waives the service of any notice of
intention to re-enter or to institute legal proceedings to that end which may
otherwise be required to be given under any present or future law. Tenant, on
its own behalf and on behalf of all persons claiming through or under Tenant,
including all creditors, does further hereby waive any and all rights which
Tenant and all such persons might otherwise have under any present or future law
to redeem the Demised Premises, or to re-enter or repossess the Demised
Premises, or to restore the operation of this Lease, after (i) Tenant shall have
been dispossessed by a judgment or by warrant of any court or judge, or (ii) any
re-entry by Landlord, or (iii) any expiration or termination of this Lease and
the term thereof, whether such dispossess, re-entry, expiration or termination
shall be by operation of law or pursuant to the provisions of this Lease. The
words "re-enter," "re-entry" and "re-entered" as used in this Lease shall
not be deemed to be restricted to their technical legal meanings and the right
to invoke any other remedy allowed by law or in
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equity as if re-entry, summary proceedings and other special remedies were not
provided in this Lease for such breach. The right to invoke the remedies
hereinbefore set forth are cumulative and shall not preclude Landlord from
invoking any other remedy allowed at law or in equity.
25.02 (a) If this Lease and the term thereof shall expire and come
to an end as provided in Article 24 hereof, or by or under any summary
proceeding or any other action or proceeding, or if Landlord shall re-enter the
Demised Premises as provided in Section 25.01, or by or under any summary
proceeding or any other action or proceeding, then, in any of said events:
(1) Tenant shall pay to Landlord all Rental to the date upon
which this Lease and the term thereof shall have expired and come to an end or
to the date of re-entry upon the Demised Premises by Landlord, as the case may
be;
(2) Tenant also shall be liable for and shall pay to Landlord,
as damages, any deficiency ("Deficiency") between the Rental for the period
which otherwise would have constituted the unexpired portion of the term of this
Lease and the net amount, if any, of rents collected under any reletting
effected pursuant to the provisions of clause (2) of Section 25.01(a) for any
part of such period (first deducting from the rents collected under any such
reletting all of Landlord's expenses in connection with the termination of this
Lease, Landlord's re-entry upon the Demised Premises and with such reletting,
including, but not limited to, all repossession costs, brokerage commissions,
legal expenses, attorneys' fees and disbursements, alteration costs,
contribution to work and other expenses of preparing the Demised Premises for
such reletting); any such Deficiency shall be paid in monthly installments by
Tenant on the days specified in this Lease for payment of installments of Base
Rent; Landlord shall be entitled to recover from Tenant each monthly Deficiency
as the same shall arise, and no suit to collect the amount of the Deficiency for
any month shall prejudice Landlord's right to collect the Deficiency for any
subsequent month by a similar proceeding; and
(3) whether or not Landlord shall have collected any monthly
Deficiency as aforesaid, Landlord shall be entitled to recover from Tenant, and
Tenant shall pay to Landlord, on demand, in lieu of any further Deficiency as
and for liquidated and agreed final damages, a sum equal to the amount by which
the Rental for the period which otherwise would have constituted the unexpired
portion of the term of this 1ease (commencing on the date immediately
succeeding the last date with respect to which a Deficiency, if any, was
collected) exceeds the then fair and reasonable rental value of the Demised
Premises for the same period, both discounted to present worth at the rate of
interest publicly announced from time to time by The Chase Manhattan Bank, N.A.,
or its successor, as its "prime lending rate" (or such other term as may be used
by The Chase Manhattan Bank, N.A., from time to time, for the rate presently
referred to as its "prime lending rate").
(b) If the Demised Premises, or any part thereof, shall be
relet together with other space in the Building, the rents collected or reserved
under any such reletting and the expenses of any such reletting shall be
equitably apportioned for the purposes of this Section
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25.02. Tenant shall in no event be entitled to any rents collected or payable
under any reletting, whether or not such rents shall exceed the Base Rent
reserved in this Lease. Nothing contained in Article 24 hereof or this Article
25 shall be deemed to limit or preclude the recovery by Landlord from Tenant of
the maximum amount allowed to be obtained as damages by any statute or rule of
law, or of any sums or damages to which Landlord may be entitled in addition to
the damages set forth in this Section 25.02.
ARTICLE 26
Waivers
26.01 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, that 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 being dispossessed or ejected therefrom by process of law, under the terms
of this Lease, or after the termination of this Lease as herein provided.
26.02 In the event that Tenant is in arrears in the payment of Base
Rent or Additional Rent hereunder, Tenant waives Tenant's right, if any, to
designate the item(s) against which any payments made by Tenant are to be
credited, and Tenant hereby agrees that Landlord may apply any payments made by
Tenant to any item(s) Landlord sees fit, regardless of, and notwithstanding any,
designation or request by Tenant as to the terms against which any such payments
shall be credited.
26.03 Landlord and Tenant each hereby waive trial by jury in any
action, proceeding, or counterclaim brought by either against the other on any
matter whatsoever arising out of, or in any way connected with, this Lease, the
relationship of Landlord and Tenant, Tenant's use or occupancy of the Demised
Premises, including any claim of injury or damage, or any emergency or other
statutory remedy with respect thereto. If Landlord commences any summary
proceeding against Tenant, Tenant will not interpose any counterclaim of
whatever nature or description in any such proceeding (unless failure to impose
such counterclaim would preclude Tenant from asserting in a separate action the
claim which is the subject of such counterclaim), and will not seek to
consolidate such proceeding with any other action which may have been or will be
brought in any other court by Tenant.
26.04 The provisions of Articles 16 and 17 shall be considered
express agreements governing the services to be furnished by Landlord, and
Tenant agrees that any laws and/or requirements of public authorities, now or
hereafter in force, shall have no application in connection with any enlargement
of Landlord's obligations with respect to such services unless Tenant agrees, in
writing, to pay to Landlord, as Additional Rent, Landlord's reasonable charges
for any additional services provided.
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ARTICLE 27
No Other Waivers or Modifications
27.01 The failure of either party to insist, in any one or more
instances, upon the strict performance of any one or more of the obligations of
this Lease, or to exercise any election herein contained, shall not be construed
as a waiver or relinquishment of the future performance of such one or more
obligations of this Lease, or of the right to exercise such election, but the
same shall continue and remain in full force and effect with respect to any
subsequent breach, act, or omission. No executory agreement hereafter made
between Landlord and Tenant shall be effective to change, modify, waive,
release, discharge, terminate, or effect an abandonment of this Lease, in whole
or in part, unless such executory agreement is in writing, refers expressly to
this Lease and is signed by the party against whom enforcement of the change,
modification, waiver, release, discharge, termination, or effectuation of the
abandonment is sought.
27.02 The following specific provisions of this Section 27.02 shall
not be deemed to limit the generality of any of the provisions of Section 27.01:
(a) no act or thing done by Landlord or Landlord's agents during the
term of this Lease shall be deemed an acceptance of a surrender of the Demised
Premises, and no agreement to accept a surrender of all or any part of the
Demised Premises shall be valid, unless in writing and signed by Landlord. The
delivery of keys to an employee of Landlord or of its agent shall not operate as
a termination of this Lease or a surrender of the Demised Premises. If Tenant
shall, at any time, request Landlord to sublet the Demised Premises for Tenant's
account, Landlord or its agent is authorized to receive said keys for such
purpose without releasing Tenant from any of its obligations under this Lease,
and Tenant hereby releases Landlord from any liability for loss or damage to any
of Tenant's property in connection with such subletting;
(b) the receipt by Landlord of rent with knowledge of breach of any
obligation of this Lease shall not be deemed a waiver of such breach; and
(c) no payment by Tenant, or receipt by Landlord, of a lesser amount
than the correct Base Rent or Additional Rent due hereunder shall be deemed to
be other than a payment on account, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment be deemed an accord
and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord's right to recover the balance or pursue any other remedy
in this Lease or at law provided.
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ARTICLE 28
Curing Tenant's Defaults; Additional Rent;
Reimbursement of Costs
28.01 If Tenant shall default in the performance of any of Tenant's
obligations under this Lease, Landlord, without thereby waiving such default,
may (but shall not be obligated to) perform the same for the account and at the
expense of Tenant, without notice, in a case of emergency, and in any other
case, only if such default continues after the expiration of (a) five (5)
Business Days from the date upon which Landlord gives Tenant notice of intention
to do so or (b) the applicable grace period provided in Section 24.02 or
elsewhere in this Lease for cure of such default, whichever occurs later.
28.02 If Tenant is late in making any payment due to Landlord under
this Lease for ten (10) or more days, then interest shall become due and owing
to Landlord on such payment from the date upon which it was due, which interest
shall be computed at the following rates:
(a) for an individual or partnership tenant, computed at the maximum
lawful rate of interest;
(b) for a corporate tenant, computed at the greater of (i) one and
25/100 percent (1.25%) per month or (ii) two percent (2%) per annum over the
then prime rate of The Chase Manhattan Bank, N.A., but in no event in excess of
the maximum lawful rate of interest chargeable to corporations in the State of
New York.
28.03 Bills for any expenses incurred by Landlord in connection with
any performance by it for the account of Tenant, and bills for all costs,
expenses and disbursements of every kind and nature whatsoever, including
reasonable counsel fees, involved in collecting successfully the Base Rent or
Additional Rent or any part thereof or enforcing any rights against Tenant,
under or in connection with this Lease, or pursuant to law, including any such
cost, expense and disbursement involved in instituting and prosecuting summary
proceedings, as well as bills for any property, material, labor, or services
provided, furnished, or rendered, by Landlord or at its instance to Tenant,
together with a reasonably detailed description of such expenses, may be sent by
Landlord to Tenant monthly, or immediately, at Landlord's option, and shall be
due and payable in accordance with the terms of such bills promptly upon receipt
by Tenant.
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ARTICLE 29
Broker
Tenant covenants, warrants and represents to Landlord that Tenant
has not dealt with any broker or finder with respect to this Lease, and that no
conversations or negotiations were had by Tenant with any broker or finder
concerning the renting of the Demised Premises to Tenant. Tenant hereby agrees
to indemnify and hold Landlord harmless from any and all losses, costs, damages
or defenses (including, without limitation, attorneys' fees and disbursements)
incurred by Landlord by reason of any claim of or liability to any broker or
finder who claims to have dealt with Tenant in connection with this Lease.
ARTICLE 30
Notices
Any notice, statement, demand, or other communication required or
permitted to be given, rendered, or made by either party to the other, pursuant
to this Lease or pursuant to any applicable law or requirement of public
authority, shall be in writing (whether or not so stated elsewhere in this
Lease) and shall be deemed to have been properly given, rendered, or made if
sent by registered or certified mail, return receipt requested, addressed to the
other party at the address set forth below, and shall be deemed to have been
given, rendered, or made on the day so mailed. Either party may, by notice as
aforesaid, designate a different address or addresses for notices, statements,
demands, or other communications intended for it.
If to Landlord:
387 P.A.S. Enterprises
387 Park Avenue South
New York, New York 10022
Attention: John Fletcher, III
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: Richard L. Chadakoff, Esq.
If to Tenant:
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Health Management Systems, Inc.
401 Park Avenue South
New York, New York 10022
Attention: Vincent C. Hartley, II
with a copy to:
Coleman & Rhine
1120 Avenue of the Americas, 19th floor
New York, N.Y. 10036
Attention: Bruce Coleman, Esq.
ARTICLE 31
Estoppel Certificate; Memorandum
31.01 Each party agrees, at any time and from time to time without
cost or charge, as requested by the other party, upon not less than ten (10)
days' prior notice, to execute and deliver to the other a statement (a)
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) and whether any options granted to
Tenant pursuant to the provisions of this Lease have been exercised; (b)
certifying the dates to which the Base Rent and Additional Rent have been paid
and the amounts thereof; (c) stating whether or not, to the best knowledge of
the signer, the other party is in default in performance of any of its
obligations under this Lease, and, if so, specifying each such default of which
the signer may have knowledge; and (d) setting forth any additional information
which the other party may reasonably request.
31.02 It is agreed by the parties that the certificate referenced in
Section 31.01 may be relied upon by anyone with whom the party requesting such
certificate may be dealing.
31.03 At the request of Landlord, Tenant shall promptly execute,
acknowledge and deliver to Landlord a memorandum with respect to this Lease
sufficient for recording. Such memorandum shall not in any circumstances be
deemed to change or otherwise affect any of the obligations or provisions of
this Lease.
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ARTICLE 32
Arbitration
32.01 Either party may request arbitration of any matter in dispute
with respect to which arbitration is expressly provided in this Lease as the
appropriate remedy. The party requesting arbitration shall do so by giving
notice to that effect to the other party, and both parties shall promptly
thereafter jointly apply to the American Arbitration Association (or any
organization successor thereto) in the City and County of New York for the
appointment of a single arbitrator.
32.02 The arbitration shall be conducted in accordance with the then
prevailing rules of the American Arbitration Association (or any organization
successor thereto) in the City and County of New York and, subject to the terms
of the immediately succeeding sentence, judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. In rendering
such decision and award, the arbitrator shall not add to, subtract from, or
otherwise modify the provisions of this Lease.
32.03 If, for any reason whatsoever, a written decision and award of
the arbitrator shall not be rendered within sixty (60) days after the
appointment of such arbitrator, then, at any time thereafter before such
decision and award shall have been rendered, either party may apply to the
Supreme Court of the State of New York or to any other court having jurisdiction
and exercising the functions similar to those now exercised by such court, by
action, proceeding, or otherwise (but not by a new arbitration proceeding), as
may be proper to determine the question in dispute consistent with the
provisions of the lease.
32.04 All the expenses of the arbitration relating to the fees of
the American Arbitration Association and/or arbitration fees shall be borne by
the parties equally; all other expenses shall be borne by the party incurring
same.
ARTICLE 33
No Other Representations; Construction;
Governing Law; Consents
33.01 Tenant expressly acknowledges and agrees that Landlord has not
made and is not making, and Tenant, in executing and delivering this Lease, is
not relying upon, any warranties, representations, promises, or statements,
except to the extent that the same are expressly set forth in this Lease. It is
understood and agreed that all understandings and agreements heretofore had
between the parties are merged in this Lease, which alone fully and completely
expresses their agreements, and that the same is entered into after full
investigation, neither party relying upon any statement or representation not
embodied in this Lease, made by the other.
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33.02 If any of the provisions of this Lease, or the application
thereof to any person or circumstances, shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such provision
or provisions to persons or circumstances other than those as to whom or which
it is held invalid or unenforceable, shall not be affected thereby, and every
provision of this Lease shall be valid and enforceable to the fullest extent
permitted by law.
33.03 This Lease shall be governed in all respects by the laws of
the State of New York.
33.04 If Tenant shall request Landlord's consent or approval
pursuant to any of the provisions of this Lease or otherwise, and Landlord shall
fail or refuse to give, or shall delay beyond a reasonable period of time in
giving, such consent or approval, Tenant shall in no event make, or be entitled
to make, any claim for damages (nor shall Tenant assert, or be entitled to
assert, any such claim, by way of defense, set-off, or counterclaim) based upon
any claim or assertion by Tenant that Landlord unreasonably withheld or delayed
its consent or approval, and Tenant hereby waives any and all rights that it may
have, from whatever source derived, to make or assert any such claim. Tenant's
sole remedy for any such failure, refusal, or delay shall be an action for a
declaratory judgment, specific performance, or injunction, and such remedies
shall be available only in those instances where Landlord has expressly agreed
in writing not to unreasonably withhold or delay its consent or approval or
where, as a matter of law, Landlord may not unreasonably withhold or delay the
same.
ARTICLE 34
Parties Bound
34.01 The obligations of this Lease shall bind and benefit the
successors and assigns of the parties, with the same effect as if mentioned in
each instance where a party is named or referred to, except that (a) no
violation of the provisions of Article 8 shall operate to vest any rights in any
successor or assignee of Tenant and (b) the provisions of this Article 34 shall
not be construed as modifying the conditions of limitation contained in Article
24. However, the obligations of Landlord under this Lease shall not be binding
upon Landlord herein named with respect to any period subsequent to the transfer
of its interest in the Building as owner or lessee thereof, and, in event of
such transfer, said obligations shall thereafter be binding upon each transferee
of the interest of Landlord herein named as such owner or lessee of the
Building, but only with respect to the period ending with a subsequent transfer
within the meaning of this Article 34.
34.02 Tenant shall look only to Landlord's equity in the estate and
property in the Building (or the proceeds thereof) and, where expressly so
provided in this Lease, to offset against the rents payable under this Lease,
for the satisfaction of Tenant's remedies for the collection of a judgment (or
other judicial process) requiring the payment of money by Landlord
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in the event of any default by Landlord hereunder, and no other property or
assets of Landlord or any partner, member, officer, or director thereof,
disclosed or undisclosed, shall be subject to levy, execution, or other
enforcement procedure for the satisfaction of Tenant's remedies under or with
respect to this Lease, the relationship of Landlord and Tenant hereunder, or
Tenant's use or occupancy of the Demised Premises.
34.03 If there shall be more than one person named as tenant herein,
than all such persons shall be deemed to be joint tenants in the leasehold
estate demised hereby, with joint and several liability hereunder.
ARTICLE 35
Certain Definitions and Construction
35.01 For the purposes of this Lease and all agreements supplemental
to this Lease, the definitions set forth in herein shall be utilized unless the
context shall otherwise require.
35.02 Terms contained in quotation marks and defined in other
Articles of this Lease, or that are so defined in Exhibits annexed hereto, shall
have the meanings specified in such other Articles and such Exhibits for all
purposes of this Lease and all agreements supplemental thereto, unless the
context shall otherwise require.
35.03 This Lease is offered for signature by Tenant and it is
understood that this Lease shall not be binding upon Landlord or Tenant unless
and until Landlord and Tenant shall have executed and unconditionally delivered
a fully executed copy of this Lease to each other.
35.04 Notwithstanding anything contained in this Lease to the
contrary, all amounts payable by Tenant to or on behalf of Landlord under this
Lease, whether or not expressly denominated Base Rent or Additional Rent, shall
constitute rent for the purposes of Section 502(b)(7) of the Bankruptcy Code.
35.05 Tenant's liability for all items of Rental shall survive the
Expiration Date.
35.06 (a) The term "mortgage" shall include an indenture of mortgage
and deed of trust to a trustee to secure an issue of bonds, and the term
"mortgagee" shall include such a trustee.
(b) The terms "include," "including" and "such as" shall each be
construed as if followed by the phrase "without being limited to."
(c) The term "obligations of this Lease," and words of like import,
shall mean the covenants to pay Rental under this Lease and all of the other
covenants and conditions con-
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tained in this Lease. Any provision in this Lease that one party or the other,
or both, shall do, or not do, or shall cause or permit, or not cause or permit,
a particular act, condition, or circumstance shall be deemed to mean that such
parry so covenants or both parties so covenant, as the case may be.
(d) The term "Tenant's obligations hereunder," and words of like
import, and the term Landlord's obligations hereunder, and words of like import,
shall mean the obligations of this Lease that are to be performed or observed by
Tenant, or by Landlord, as the case may be. Reference to "performance" of either
party's obligations under this Lease shall be construed as "performance and
observance."
(e) Reference to Tenant being or not being "in default hereunder,"
or words of like import, shall mean that Tenant is in default in the performance
of one or more of Tenant's obligations hereunder, or that Tenant is not in
default in the performance of any of Tenant's obligations hereunder, or that a
condition of the character described in Section 24.01 has occurred and continues
or has not occurred or does not continue, as the case may be.
(f) References to Landlord as "having no liability to Tenant" or
being "without liability to Tenant," shall mean that Tenant is not 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 its other obligations hereunder, or to be compensated for
loss or injury suffered or to enforce any other 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 except as otherwise expressley provided
herein.
(g) The term "laws and/or requirements of public authorities" and
words of like import shall mean laws and ordinances of any or all of the
Federal, state, city, county and borough governments and rules, regulations.
orders and/or directives of any or all departments, subdivisions, bureaus,
agencies or offices thereof, or of any other governmental, public or
quasi-public authorities, having jurisdiction in the premises, and/or the
direction of any public officer pursuant to law.
(h) The term "requirements of insurance bodies" and words of like
import shall mean rules, regulations, orders and other requirements of the New
York Board of Fire Underwriters and/or the New York Fire Insurance Rating
Organization and/or any other similar body performing the same or similar
functions and having jurisdiction or cognizance of the Building and/or the
Demised Premises.
(i) The term "repair" shall be deemed to include restoration and
replacement as may be necessary to achieve and/or maintain good working order
and condition.
(j) Reference to "termination of this Lease" includes expiration or
earlier termination of the term of this Lease or cancellation of this Lease
pursuant to any of the provisions of this Lease or by law. Upon a termination of
this Lease, the term and estate
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granted by this Lease shall end at noon of the date of termination as if such
date were the Expiration Date and neither party shall have any further
obligation or liability to the other after such termination (i) except as shall
be expressly provided for in this Lease, or (ii) except for such obligation as
by its nature or under the circumstances can only be, or by the provisions of
this Lease, may be, performed after such termination, and, in any event, unless
expressly otherwise provided in this Lease, any liability for a payment that
shall have accrued to or with respect to any period ending at the time of
termination shall survive the termination of this Lease.
(k) The term in "full force and effect," when herein used in
reference to this Lease as a condition to the existence or exercise of a right
on the part of Tenant, shall be construed in each instance as including the
further condition that, at the time in question, no default on the part of
Tenant exists, and no event has occurred that has continued to exist for such
period of time (after the notice, if any, required by this Lease), as would
entitle Landlord to terminate this Lease or to dispossess Tenant.
(1) The term "Tenant" shall mean Tenant herein named or any
assignee or other successor in interest (immediate or remote) of Tenant herein
named, while such Tenant or such assignee or other successor in interest, as the
case may be, is in possession of the Demised Premises as owner of the Tenant's
estate and interest granted by this Lease and also, if Tenant is not an
individual or a corporation, all of the persons, firms and corporations then
comprising Tenant.
(in) The term "person," or words of like import, shall mean a
natural person, partnership, corporation, trust, estate, fiduciary,
unincorporated association, syndicate, joint venture, organization, or any other
manner of entity.
(n) Words and phrases used in the singular shall be deemed to
include the plural and vice versa, and nouns and pronouns used in any particular
gender shall be deemed to include any other gender.
(o) A general statement following or referable to an enumeration of
specific matters shall not be limited to matters similar to the matters
specifically mentioned.
(p) All references in this Lease to numbered Articles, numbered
Sections and lettered Exhibits are references to Articles and Sections of this
Lease, and Exhibits annexed to (and thereby made part of) this Lease, as the
case may be, unless expressly otherwise designated in the context.
(q) Any contradiction between the terms contained in the body of
this Lease and the Rules and Regulations attached hereto as Exhibit C shall be
resolved in favor of the terms contained in the body of this Lease.
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ARTICLE 36
Adjacent Excavation; Shoring
If an excavation or other substructure work shall be made upon land
adjacent to the Demised Premises, or shall be authorized 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
shall be necessary to preserve the wall of or 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.
ARTICLE 37
Tenant's Option to Renew
37.01 Tenant shall have an option to extend the term of this Lease
for one (1) additional term of five (5) years (the "Renewal Term") commencing on
the first day next succeeding the Expiration Date (the "Renewal Term
Commencement Date"), and expiring at 12 noon on the day immediately preceding
the fifth (5th) anniversary of the Renewal Term Commencement Date, unless
terminated at an earlier date pursuant to the terms and conditions of this Lease
or by applicable law. Tenant shall notify Landlord of its intention to exercise
its option at least one (1) year prior to the Expiration Date, time being of the
essence as to Tenant's obligation to so notify Landlord. Upon Tenant's
notification to Landlord of its intention to exercise its option, this Lease
shall be deemed extended without the requirement of further action by either of
the parties hereto and all of the terms and conditions of this Lease (excluding,
however, this Article 37) shall govern the tenancy during the Renewal Term
including the obligation of Tenant to pay Additional Rent, except that the Base
Rent for the Renewal Term shall be equal to the greater of (a) the annual Base
Rent payable by Tenant for the twelve (12) months prior to the Expiration Date
or (b) the fair market rent of the Demised Premises as of the Expiration Date,
determined as hereinafter provided. If Tenant shall not give Landlord the
aforesaid notice within the time period indicated, the right to such Renewal
Term shall terminate and shall be deemed to have been waived by Tenant.
37.02 Within thirty (30) days after receipt by Landlord of Tenant's
notification referred to in Section 37.01 hereof, and if in Landlord's opinion
an increase in the Base Rent for the Renewal Term is warranted because the fair
market rent for the Demised Premises has increased, Landlord shall send Tenant a
notice (the "Revised Rent Notice") stating the amount which, in Landlord's good
faith opinion, shall constitute the fair market rent for the Demised Premises as
of the Expiration Date. The increased Base Rent set forth in the Revised Rent
Notice shall be effective as of the Renewal Term Commencement Date.
37.03 (a) If Landlord gives a Revised Rent Notice, then at any time
within thirty (30) days after the giving of such Revised Rent Notice, Tenant may
dispute the fair market rent
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of the Demised Premises as determined by Landlord by giving notice to Landlord
that it is initiating the appraisal process provided for herein and specifying
in such notice the name and address of the arbitrator designated by Tenant to
act on its behalf. If Tenant does not give Landlord the aforesaid notice within
the time period above specified, the rent set forth in the Revised Rent Notice
shall be binding and conclusive on both parties. Within fifteen (15) days after
the designation of Tenant's arbitrator, Landlord shall give notice to Tenant
specifying the name and address of Landlord's arbitrator. The two arbitrators so
chosen shall meet within ten (10) days after the second arbitrator is appointed
and if, within twenty (20) days after the second arbitrator is appointed, the
two arbitrators shall not agree upon a determination in accordance with
Paragraph (c) of this Section 37.03 they shall together appoint a third
arbitrator. If said two arbitrators cannot agree upon the appointment of a third
arbitrator within ten (10) days after the expiration of such twenty (20) day
period, then either party, on behalf of both, and on notice to the other, may
request such appointment by the American Arbitration Association (or any
successor organization) in accordance with its then prevailing rules. If the
American Arbitration Association shall fail to appoint said third arbitrator
within ten (10) days after such request is made, then either party may apply, on
notice to the other, to the Supreme Court, New York County, New York (or any
other court having jurisdiction and exercising functions similar to those now
exercised by the foregoing court) for the appointment of such third arbitrator.
(b) Each of the arbitrators selected as herein provided shall have
at least five years experience in the leasing or management of office space in
the Borough of Manhattan and the third arbitrator shall have no business
relationship with either party. Each party shall pay the fees and expenses of
the arbitrator selected by it. The fees and expenses of the third arbitrator and
all other expenses (not including the attorneys' fees, witness fees and similar
expenses of the parties which shall be borne separately by each of the parties)
of the arbitration shall be borne equally by the parties hereto.
(c) The majority of the arbitrators shall determine the fair market
rent of the Demised Premises as of the Expiration Date and render a decision and
award as to their determination to both Landlord and Tenant within twenty (20)
days after the appointment of the third arbitrator. In rendering such decision
and award, the arbitrators shall assume or take into consideration as
appropriate the following: (i) Landlord and Tenant are typically motivated; (ii)
Landlord and Tenant are well-informed and well-advised and each is acting in
what it considers its own best interest; (iii) the rent is unaffected by
concessions, special financing amounts and/or terms, or unusual services, fees,
costs or credits in connection with the leasing transaction; (iv) the Demised
Premises are fit for immediate occupancy and use "as is", and require no
additional work by Landlord, and no work has been carried out therein by Tenant,
its subtenant, or their predecessors in interest during the term of this Lease
which has diminished the rental value of the Demised Premises; (v) in the event
the Demised Premises have been destroyed or damaged by fire or other casualty,
the same have been fully restored; (vi) the Demised Premises are to be let
subject to the provisions of this Lease for a five-year term; and (vii) the rent
is to be determined in accordance with market rents then being charged for
comparable space in similar office buildings in the same area. In rendering such
decision and award, the arbitrators shall not modify the provisions of this
Lease. The decision and award of the arbitrators shall be in
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writing and be final and conclusive on all parties and counterpart copies
thereof shall be delivered to each of said parties. Judgment may be had on the
decision and award of the arbitrators so rendered in any court of competent
jurisdiction.
(d) Prior to the determination of the arbitrators, Tenant shall pay
as the Base Rent it is obligated to pay under this Lease the amount set forth in
the Revised Rent Notice and in the event the arbitrators determine that the
Base Rent payable pursuant to this Article 37 is greater than that set forth in
the Revised Rent Notice, then Tenant shall promptly pay to Landlord the amount
of its underpayment of Base Rent for the period commencing on the Renewal Term
Commencement Date; or, if the arbitrators determine that the fixed annual rent
payable pursuant to this Article is less than that set forth in the Revised Rent
Notice, then Tenant shall be entitled to a credit in the amount of its
overpayment for the period commencing on the Renewal Term Commencement Date
against subsequent payments of Base Rent due hereunder.
37.04 Notwithstanding the foregoing provisions of this Article 37,
if on the date that Tenant exercises its option by notification to Landlord, or
if on any subsequent date up to and including the Expiration Date, Tenant is in
default in the performance of any of the terms, conditions or provisions of this
Lease and such default has continued beyond any applicable grace period, then
Tenant's exercise of its option and the extension of the term of this Lease
contemplated thereby shall, at the option of Landlord exercised by notice to
Tenant, be rendered null and void and shall be of no further force and effect
and Tenant shall have no further or additional right to exercise the option set
forth in this Article 37.
37.05 From and after the Renewal Term Commencement Date the term
"Expiration Date" shall mean the day immediately preceding the fifth (5th)
anniversary of the Renewal Term Commencement Date.
ARTICLE 38
Connection to the 401 Premises
38.01 (a) Reference is made to that certain lease agreement, dated
as of September 24, 1981, as amended by Amendment of Lease, dated October
9, 1981, as further amended by Amendment of Lease, dated September 24, 1982, as
further amended by Second Amendment of Lease, dated January 6, 1986 and as
further amended by Third Amendment of Lease, dated February 28, 1990 and as same
may thereafter be amended (collectively, the "401. Lease"), between Tenant, as
tenant, and 401 Park Avenue South Associates as landlord (the "401 Landlord"),
pursuant to which Tenant leased a certain part of the fourth (4th) floor of the
building commonly known as 401 Park Avenue South, New York, New York (the "401
Building") and located immediately adjacent to the Building.
(b) Landlord hereby agrees that, in connection with the performance
of Tenant's Work, Tenant may construct an opening connecting the fourth (4th)
floor of the
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Demised Premises to the fourth (4th) floor of the 401 Premises in accordance
with the Plans (as finally approved by Landlord), at Tenant's sole cost and
expense and under the supervision and direction of consultants and engineers
designated and paid for by Tenant and approved by Landlord. Landlord hereby
approves: Irwin Associates as engineers; Structural Engineers and Practical
Design Associates, Inc. as structural engineer and Robert Levine, P.C. as
architect. Furthermore, provided that this Lease shall be in full force and
effect at the time Tenant occupies any portion of the third (3rd) floor of the
401 Premises and provided no default shall have occurred and be continuing at
such time under this Lease or the 401 Lease, Landlord hereby agrees that Tenant
may construct an opening connecting the third (3rd) floor of the Demised
Premises to the third (3rd) floor of the 401 Premises (each such opening, an
"Opening") in accordance with plans and specifications to be delivered to and
approved by Landlord in accordance with the provisions of Article 12 hereof, at
Tenant's sole cost and expense and under the supervision and direction of
consultants and engineers designated by Landlord and paid for by Tenant,
provided:
1) Prior to the Expiration Date, Tenant at its sole cost and
expense shall restore the Demised Premises by sealing each Opening and repairing
any damage to the Demised Premises caused thereby in a manner satisfactory to
Landlord;
2) In addition to the indemnity set forth in Article 20
hereof, Tenant agrees to and hereby does indemnify, defend and hold harmless
Landlord and the Indemnitees from and against any and all liabilities, claims,
costs and expenses whatsoever (including, without limitation, reasonable
attorneys' fees and disbursements) arising out of or otherwise in connection
with (i) Tenant's construction, use and subsequent restoration of the Openings
and (ii) Tenant's use and occupancy of the Demised Premises and the 401 Premises
as contiguous spaces;
3) Landlord's insurance carrier will continue to insure the
Building, without increased premium to Landlord, notwithstanding the
construction and use of the Opening(s).
4) The holder of any Superior Mortgage and any lessor under a
Superior Lease shall have consented to the construction and use of such Opening;
5) Tenant shall deliver to Landlord, no later than the date
which is ten (10) Business Days prior to commencement of construction of an
Opening, the following documents in form and substance satisfactory to Landlord
and its counsel and executed by the parties thereto:
(i) a certificate of insurance addressed to Landlord
from Tenant's insurance agent stating that all coverage provided by
such carrier with respect to the Demised Premises in accordance
with Article 10 hereof shall continue in full force and effect
notwithstanding the construction and existence of
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such Opening and the use and occupancy by Tenant of the Demised
Premises and the 401 Premises as contiguous spaces;
(ii) a letter addressed to Landlord from each of (a)
the ground lessor under that certain ground lease, dated September
14, 1979 between the 401 Landlord, as the ground lessee, and such
ground lessor, and (b) the holder of each mortgage on the 401
Building, whereby each such holder of a superior interest consents
to the construction and use of such Opening and the use and
occupancy by Tenant of the 401 Premises connected to the Demised
Premises as contemplated in this Article 38; and
(iii) to the extent Landlord and/or its counsel deems
it necessary or desirable, an agreement among Landlord, Tenant and
the 401 Landlord setting forth the respective rights, liabilities
and obligations, consistent with this Article 38, of the parties
with respect to the construction and use of the Openings,
including, without limitation, the obligation of the 401 Landlord
to deliver notice of any default by Tenant under the 401 Lease to
Landlord concurrently with its delivery of any such notice to
Tenant.
6) Upon the expiration or sooner termination of the 401 Lease
for any reason, including as a result of a casualty to or condemnation of all or
any part of the 401 Premises, if one or both of the Openings have been
constructed, Tenant shall close up such Opening(s) in accordance with the
provisions of Section 38.01(b). From and after the date on which Tenant
commences construction of an Opening, a default by Tenant beyond applicable
notice and cure periods under the 401 Lease shall give Landlord, upon ten (10)
days' notice to Tenant, the right to require Tenant to close up such Opening(s)
in accordance with the provisions of Section 38.01(b).
(c) Tenant acknowledges and agrees that Landlord shall have the right, from and
after the commencement of construction of any Opening, to enter upon the 401
Premises in order to inspect the construction and/or the restoration of any
Opening, and to insure that neither the Demised Premises nor the Building is
being adversely affected by the use by Tenant of the Opening.
(d) Nothing contained herein shall be deemed to grant to Tenant or any other
occupant of the Demised Premises or the 401 Premises an easement or other real
property interest in, on or over an Opening constructed pursuant to the
provisions of this Article. The rights granted to Tenant pursuant to this
Article 38 constitute a mere license to construct the Openings in accordance
with the terms hereof and to use the same as a means of ingress and egress to
and from the 401 Premises from and to the Demised Premises, which license shall
be revocable by Landlord at any time. Notwithstanding the foregoing, Landlord
agrees that, for so long as no default shall have occurred and be continuing
under this Lease or the 401 Lease, and for so long as the construction and use
of the Opening(s) are not contrary to any applicable Requirements, Landlord
shall not revoke the license granted to Tenant hereby.
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IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease as
of the day and year first above written.
387 P.A.S. ENTERPRISES
By: Twenty-Seventh and Park, Inc., a
General Partner
By: /s/ John Fletcher
-----------------------------------------
John Fletcher, Vice President
HEALTH MANAGEMENT SYSTEMS, INC.
By: /s/ Vincent C. Hartley
-----------------------------------------
Name: Vincent C. Hartley
Title: Director of Administration
-56-
<PAGE> 95
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came John
Fletcher, to me known, who being by me duly sworn, did depose and say that he
resides at 641 Lexington Avenue, New York, New York; that he is the Vice
President of TWENTY-SEVENTH AND PARK, INC., a General Partner of 387 P.A.S.
ENTERPRISES, the partnership described in and that, by said corporation,
executed the within instrument as a general partner; and that he signed his name
thereto by order of the Board of Directors of such corporation and on behalf of
the partnership.
THERESA GORDON
Notary Public, State of New York
No. 01G05015733 /s/ Theresa Gordon
Qualified in New York County ---------------------------
Commission Expires Aug 23, 1997 Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 15th day of March, 1996, before me personally came Vincent
C. Hartley, to me known, who being by me duly sworn, did depose and say that he
resides at 401 Park Avenue South, New York, New York; that he is the Director of
Administration of HEALTH MANAGEMENT SYSTEMS, INC., the corporation described in
and that, by said corporation, executed the foregoing instrument; and that he
signed his name thereto by order of the Board of Directors of such corporation.
/s/ Ellen O'Brien
---------------------------
Notary Public
Ellen O'Brien
Notary Public, State of New York
No. 4843042
Qualified in Nassau County
Commission Expires 5/31/97
<PAGE> 96
Exhibit A
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 the corner formed by the intersection of the northerly
side of 27th Street with the easterly side of Fourth Avenue:
Running THENCE northerly, along the easterly side of Fourth Avenue,
98 feet 9 inches to the centre line of the block between 27th and 28th Streets;
THENCE easterly, along said centre line 166 feet 8 inches;
THENCE southerly, parallel with Fourth Avenue, 98 feet 9 inches to
the northerly side of 27th Street;
THENCE westerly, along the northerly side of 27th Street, 166 feet
8 inches to the point or place of BEGINNING.
Fourth Avenue above is now known as Park Avenue South.
<PAGE> 97
Exhibit B
WORKLETTER
1. Commencing on the Commencement Date, Landlord shall perform the
following work ("Landlord's Work") in the Demised Premises:
A. Demolition of existing interior installation in accordance
with the Plans and as directed by Tenant.
B. Landlord shall remove from the Third Floor Premises the
stairway connecting the second floor and restore the floor of
the third floor to a floor load level equal to or greater
than the presently existing floor load on the third floor.
C. Tenant shall perform Tenant's Work in accordance with the
Plans to be submitted by Tenant to Landlord in accordance
with this Exhibit B.
D. Landlord shall deliver to Tenant five (5) copies of an ACP-5
for the Third Floor Premises on or before the Commencement
Date and five (5) copies of an ACP-5 for the Fourth Floor
Premises on or before the Fourth Floor Delivery Date.
2. Tenant shall submit to Landlord for Landlord's approval (which
approval shall not be unreasonably withheld), on or before March 15, 1996,
complete architectural and engineering drawings and specifications (hereinafter,
as the same may be revised from time to time, the "Plans") showing the proposed
subdivision, layout and finish of the Demised Premises, including the proposed
Openings connecting (a) the third (3rd) floor of the Demised Premises to the
third floor of the 401 Premises and (b) the fourth (4th) floor of the Demised
Premises to the fourth (4th) floor of 401 Premises, which Plans shall be
consistent with the design, construction and equipment of the Building and in
conformity with its standards, all in such form and detail as may be reasonably
required by Landlord. The Plans shall be prepared by an architect reasonably
satisfactory to Landlord who shall be engaged by Tenant and who, at Tenant's
expense, shall assist Tenant in securing such approvals which, because of the
nature of the work shown on the Plans, may be required by the Department of
Buildings of the City of New York and any other governmental authority.
3. If Landlord shall not approve the Plans as submitted by Tenant,
Landlord shall notify Tenant thereof, and of the particulars of such revisions
as are reasonably required by Landlord for the purpose of obtaining its
approval, within seven (7) days of receipt of the Plans and, within seven (7)
days after being so informed by Landlord, Tenant shall submit to
<PAGE> 98
Landlord, for Landlord's approval (which approval shall not be unreasonably
withheld), revised Plans, incorporating such revisions or incorporating such
modifications as are suggested by Tenant and approved by Landlord. Any such
approval by Landlord shall not be deemed to be a representation or warranty that
the same is properly designed to perform the function for which it is intended
or complies with any applicable law, ordinance, rule, order or regulation of any
governmental authority or insurance body, but only that the work required
thereby will not interfere with the Building Systems and is compatible with the
design and structure of the Building.
4. Upon final approval of the Plans, Landlord, through Landlord's
contractor or contractors, shall proceed with due diligence, subject to delay
for causes beyond its reasonable control and Tenant Delays to perform Landlord's
Work during regular working hours.
5. If Landlord shall be delayed in substantially completing
Landlord's Work as a result of any act, neglect, failure or omission of Tenant,
its agents, servants, architects, or employees, including without limitation any
of the following, such delay shall be deemed to be a "Tenant Delay":
(a) Tenant's failure to furnish the Plans in accordance with
Paragraphs 2 and 3 of this Exhibit B; or
(b) Tenant's changes in or substitutions to the Plans, the number
of days of such delay to be determined by the contractor, upon
request therefor by Tenant, and communicated in advance of
such change or substitution to Landlord in writing, but if
such determination by the contractor with respect to the delay
caused by such change or substitution is not submitted to
Landlord in advance of commencement of construction of same,
the resulting delay, if any, shall be determined by Landlord;
or
(c) the performance or delays in completion of work by a person,
firm or corporation employed by Tenant.
Failure by Landlord to obtain any certification required by
Local Law No. 76 of the City of New York, Laws of 1985, and
the regulations pertaining thereto, with respect to the
presence or absence of asbestos in the Demised Premises shall
not be a Tenant Delay.
6. There shall be no charge to Tenant for use of the freight
elevator in the Building during the performance of Landlord's Work or for
Tenant's move-in at the commencement of the term of this Lease, provided
Tenant's move-in occurs during Regular Hours of Business Days, as set forth in
Section 16.02 hereof.
<PAGE> 99
7. Landlord shall permit Tenant and its agents to enter upon the
Demised Premises prior to the completion of Landlord's Work in order that Tenant
may perform through its architect and contractors such other work for
installation and decoration which Tenant may desire at the same time as
Landlord's contractors are working therein, but only at such time or times as
Landlord shall reasonably deem feasible in the circumstances. This right to
enter before completion of Landlord's Work is conditioned upon Tenant's
architect, workmen, mechanics, and contractors working in harmony and without
interference with the workmen, mechanics and contractors of Landlord and in
accordance with applicable insurance requirements. In case disharmony or
interference occurs, or insurance requirements are violated, this right may be
temporarily revoked by Landlord upon twenty-four (24) hours' written notice to
Tenant.
<PAGE> 100
Exhibit C
RULES AND REGULATIONS
1. The rights of tenants in the entrances, corridors and elevators
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, or elevators for any other
purpose. 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 entrances, corridors, 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 sidewalks,
entrances, corridors, elevators, fire exits or stairways of the Building.
Landlord reserves the right to control and operate the public portions of the
Building and the public facilities, as well as facilities furnished for the
common use of the tenants, in such manner as it deems best for the benefit of
the tenants generally.
2. Landlord may refuse admission to the Building, outside of
ordinary business hours, to any person not known to the watchman in charge, not
having a pass issued by the Landlord or the tenant whose premises are to be
entered, or not otherwise properly identified, and may require all persons
admitted to or leaving the Building outside of ordinary business hours to
register. Any person whose presence in the Building at any time shall, in the
judgment of Landlord, be prejudicial to the safety, character, reputation and
interests of the Building or of its tenants may be denied access to the Building
or may be ejected therefrom. In case of invasion, riot, public excitement, or
other commotion, Landlord may prevent all access to the Building during the
continuance of the same, by closing the doors or otherwise, for the safety of
the tenants and protection of property in the Building. Landlord may require 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 the Landlord for the protection of any tenant against the
removal of property from the premises of the tenant. Landlord shall, in no way,
be liable to any tenant for damages or loss arising from the admission,
exclusion, or ejection of any person to or from the tenant's premises or the
Building under the provisions of this rule. Canvassing, soliciting or peddling
in the Building is prohibited, and every tenant shall cooperate to prevent the
same.
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 or other similar services from any
persons reasonably disapproved by Landlord in
<PAGE> 101
writing. Such services shall be furnished only at such hours, in such places
within the tenant's premises and under such reasonable regulations as may be
fixed by Landlord.
4. The cost of repairing any damage to the public portions of the
Building or the public facilities or to any facilities used in common with other
tenants, caused by a tenant, or the employees, licensees, or invitees of a
tenant, shall be paid by such tenant.
5. No lettering, sign, advertisement, notice, or object shall be
displayed in or on the windows or doors, or on the outside of any tenant's
premises, or at any point inside any tenant's premises where the same might be
visible outside of such premises, except that the name of the tenant may be
displayed on the entrance door of the tenant's premises, and in the elevator
lobbies of the floors which are occupied entirely by such tenant, subject to the
approval of Landlord as to the size, color and style of such display, such
approval not to be unreasonably withheld. The inscription of the name of the
tenant on the door of the tenant's premises shall be done by Landlord at the
expense of the tenant. Listing of the name of the tenant on the directory board
in the Building shall be done by Landlord at its expense; any other listings
shall be in the discretion of Landlord.
6. No awnings or other projections over or around the windows shall
be installed by any tenant, and only such window blinds as are supplied or
permitted by Landlord shall be used in a tenant's premises. Linoleum, tile, or
other floor covering shall be laid in a tenant's premises only in a manner
approved by Landlord.
7. Landlord shall have the right, not to be unreasonably exercised,
to prescribe the weight and position of safes and other objects of excessive
weight, and no safe or other object whose weight exceeds the lawful load for the
area upon which it would stand shall be brought into or kept upon a tenant's
premises. If, in the judgment of Landlord, it is necessary to distribute the
concentrated weight of any heavy object, the work involved in such distribution
shall be done at the expense of the tenant and in such manner as Landlord shall
determine. The moving of safes and other heavy objects shall take place only
outside of ordinary business hours upon previous notice to Landlord, and the
persons employed to move the same in and out of the Building shall be reasonably
acceptable to Landlord and, if so required by law, shall hold a Master Rigger's
license. Freight, furniture, business equipment, merchandise and bulky matter of
any description shall be delivered to and removed from the premises only in the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Landlord. Arrangements will be made by
landlord with any tenant for moving large quantities of furniture and equipment
into or out of the Building.
8. No machines or mechanical equipment of any kind, other than
typewriters and other ordinary portable business machines, may be installed or
operated in any tenant's premises without Landlord's prior written consent, such
consent not to be unreasonably withheld, and in no case (even where the same are
of a type so excepted or as so consented to by landlord) shall any machines or
mechanical equipment be so placed or operated as to disturb
<PAGE> 102
other tenants, but machines and mechanical equipment that may be permitted to be
installed and used in a tenant's premises shall be so equipped, installed and
maintained by such tenant as to prevent any disturbing noise, vibration, or
electrical or other interference from being transmitted from such premises to
any other area of the Building.
9. No noise, including the playing of any musical instruments,
radio or television, that, in the judgment of Landlord, might disturb other
tenants in the Building, shall be made or permitted by any tenant, and no
cooking, except for microwave ovens and coffee units, shall be done in the
tenant's premises, except as expressly approved by Landlord. Nothing shall be
done or permitted in any tenant's premises, and nothing shall be brought into or
kept in any tenant's premises, that would materially 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
that, in the reasonable 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. 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.
10. No acids, vapors or other materials shall be discharged, or
permitted to be discharged, into the waste lines, vents, or flues of the
Building if the same 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 purposes for which they were designed or constructed, and
no sweepings, rubbish, rags, acids, or other foreign substances shall be
deposited therein.
11. No additional locks or bolts of any kind shall be placed upon
any of the doors or windows in any tenant's premises, and no lock on any door
therein shall be changed or altered in any respect, except upon the prior
written approval of Landlord, such approval not to be unreasonably withheld.
Additional keys for a tenant's premises and toilet rooms shall be procured only
from Landlord, and a reasonable charge may be levied therefor. Upon the
termination of a tenant's lease, all keys of the tenant's premises and toilet
rooms shall be delivered to Landlord.
12. All entrance doors in each tenant's premises shall be left
locked, and all windows shall be left closed by the tenant, when the tenant's
premises are not in use. Entrance doors shall not be left open at any time.
13 Hand trucks not equipped with rubber tires and side guards shall
not be used within the Building.
14. All windows in each tenant's premises shall be kept closed, and
all blinds therein, if any, above the ground floor shall be lowered when and as
reasonably required
<PAGE> 103
because of the position of the sun, during the operation of the Building
air-conditioning system to cool or ventilate the tenant's premises.
15. Landlord reserves the right to rescind, alter or waive any rule
or regulation at any time prescribed for the Building when, in its judgment, it
deems it necessary, desirable, or proper for its best interest and for the best
interests of the tenants, and no alteration or waiver of any rule or regulation
in favor of one tenant shall operate as an alteration or waiver in favor of any
other tenant. Landlord shall not be responsible to any tenant for the
non-observance or violation by any other tenant of any of the rules and
regulations at any time prescribed for the Building.
<PAGE> 104
EXHIBIT D
Base Rent, including annual increases in the sum of 1.04% of the prior
year's Base Rent, shall be payable in advance to Sublandlord on the first day of
each and every calendar month during the Term, as follows:
(i) For the period beginning on the Commencement Date through and
including the last day of the month immediately preceding the first (1st)
anniversary of the Commencement Date, the amount of $819,399.96 per annum,
which shall be payable as follows: (x) Provided that Subtenant is not in
default, Sublandlord hereby waives any payments of Base Rent for the first
five months of the Sublease; Beginning on the Rent Commencement Date
Subtenant shall pay $64,789.00 on the Rent Commencement Date (subject to
any applicable pro-rations); and (z) thereafter equal monthly installments
of $68,283.33. The Sublandlord hereby agrees to waive the monthly
installments during the Initial Period.
(ii) For the period beginning on the first (1st) anniversary of the
Commencement Date through and including the last day of the month
immediately preceding the second (2nd) anniversary of the Commencement
Date, the amount of $852,175.92 per annum, which shall be payable in equal
monthly installments of $71,014.66;
(iii) For the period beginning on the second (2nd) anniversary of
the Commencement Date through and including the last day of the month
immediately preceding the third (3rd) anniversary of the Commencement
Date, the amount of $886,263.00 per annum, which shall be payable in equal
monthly installments of $73,855.25;
(iv) For the period beginning on the third (3rd) anniversary of the
Commencement Date through and including the last day of the month
immediately preceding the fourth (4th) anniversary of the Commencement
Date, the amount of $921,713.52 per annum, which shall be payable in equal
monthly installments of $76,809.46;
(v) For the period beginning on the fourth (4th) anniversary of the
Commencement Date through and including the last day of the month
immediately preceding the fifth (5th) anniversary of the Commencement
Date, the amount of $992,582.04 per annum, which shall be payable in equal
monthly installments of $82,715.17;
<PAGE> 105
(vi) For the period beginning on the fifth (5th) anniversary of the
Commencement Date through and including the last day of the month
immediately preceding the sixth (6th) anniversary of the Commencement
Date, the amount of $1,032,285.24 per annum, which shall be payable in
equal monthly installments of $86,023.77;
(vii) For the period beginning on the sixth (6th) anniversary of the
Commencement Date through and including the last day of the month
immediately preceding the seventh (7th) anniversary of the Commencement
Date, the amount of $1,073,576.64 per annum, which shall be payable in
equal monthly installments of $89,464.72;
(viii) For the period beginning on the seventh (7th) anniversary of
the Commencement Date through and including the last day of the month
immediately preceding the eighth (8th) anniversary of the Commencement
Date, the amount of $1,116,519.72 per annum, which shall be payable in
equal monthly installments of $93,043.31;
(ix) For the period beginning on the eighth (8th) anniversary of the
Commencement Date through and including the last day of the month
immediately preceding the Termination Date, the amount of $290,295.12 per
calendar quarter remaining during the Term, which shall be payable in
equal monthly installments of $96,765.04; and
(x) All other amounts due and owing pursuant to the Master Lease and
this Sublease including but not limited to (a) payments for Rental
Equipment; and (b) Real Estate Tax increases shall be paid when due.
2
<PAGE> 1
HEALTH MANAGEMENT SYSTEMS, INC. AND SUBSIDIARIES
EXHIBIT 11--COMPUTATIONS OF EARNINGS PER SHARE
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three months ended
January 31,
------------------
1998 1997
------- -------
<S> <C> <C>
Basic and Diluted Earnings Per Share:
Earnings data:
Net income $ 879 1,803
======= =======
Weighted average shares outstanding:
Average shares of common stock outstanding 17,347 17,632
Net effect of dilutive stock options--based on the
treasury stock method using average market price 172 604
------- -------
Weighted average common shares and common
share equivalents outstanding 17,519 18,236
======= =======
Earnings per common share:
Basic earnings per share $ 0.05 0.10
======= =======
Diluted earnings per share $ 0.05 0.10
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets at January 31, 1998 (unaudited) and 1997 (unaudited)
and the Consolidated Statement of Operations for the three months ended January
31, 1998 (unaudited) and 1997 (unaudited) and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> OCT-31-1998 OCT-31-1997
<PERIOD-START> NOV-01-1997 NOV-01-1996
<PERIOD-END> JAN-31-1998 JAN-31-1997
<CASH> 15,790 18,008
<SECURITIES> 19,347 17,299
<RECEIVABLES> 43,493 44,983
<ALLOWANCES> 1,270 (1,665)
<INVENTORY> 0 0
<CURRENT-ASSETS> 80,625 86,854
<PP&E> 25,542 7,649
<DEPRECIATION> (17,969) (14,781)
<TOTAL-ASSETS> 107,472 109,613
<CURRENT-LIABILITIES> 26,509 25,652
<BONDS> 0 0
0 0
0 0
<COMMON> 178 177
<OTHER-SE> 79,163 80,619
<TOTAL-LIABILITY-AND-EQUITY> 107,472 109,613
<SALES> 25,037 22,272
<TOTAL-REVENUES> 25,037 22,272
<CGS> 23,506 18,945
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 (17)
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 1,470 3,206
<INCOME-TAX> 591 1,403
<INCOME-CONTINUING> 1,470 3,206
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 879 1,803
<EPS-PRIMARY> 0.05<F1> 0.10<F1>
<EPS-DILUTED> 0.05 0.10
<FN>
<F1>THE AMOUNT IS REPORTED AS EPS BASIC AND NOT EPS PRIMARY.
</FN>
</TABLE>
