<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15 (d) of the Securities Exchange Act of
1934
For the Quarterly period from April 1, 1998 to June 30, 1998
------------- -------------
Commission file number 0-19997
-------
College Television Network, Inc.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 13-3557317
-------- --------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5784 Lake Forrest Drive. Suite 275 Atlanta, GA 30328
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(Address of Principal Executive Offices)
(404) 256-9630
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(Issuer's Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
--- ---
Number of shares of common stock outstanding as of August 13, 1998: 8,015,153
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE>
ITEM 1. Financial Statements
College Television Network, Inc.
BALANCE SHEET
June 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents................................................... $ 5,997,511
Accounts receivable, net of allowance of $25,000............................ 1,501,019
Prepaid expenses............................................................ 196,086
Other current assets........................................................ 101,949
------------
Total current assets...................................................... 7,796,565
Property and equipment, net................................................... 3,395,943
Other assets.................................................................. 172,351
Intangible assets, net........................................................ 359,218
------------
Total assets.............................................................. $ 11,724,077
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................................ $ 888,839
Accrued expenses............................................................ 811,010
Capital lease obligation.................................................... 124,030
Total current liabilities................................................. 1,823,879
------------
Accrued severance, net of current portion................................. 491,188
Total liabilities......................................................... $ 2,315,067
------------
STOCKHOLDERS' EQUITY
Capital stock:
Preferred stock-$.001 par; authorized 2,000,000 shares, no shares
issued and outstanding....................................................
Common stock - $.005 par; authorized 50,000,000 shares;
issued and outstanding 8,015,153 shares.................................... $ 40,076
Additional paid in capital.................................................. 30,241,537
Accumulated deficit......................................................... (20,872,603)
------------
Total stockholders' equity................................................ 9,409,010
------------
Total liabilities and stockholders' equity................................ $ 11,724,077
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
COLLEGE TELEVISION NETWORK, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
--------------------------------------------------
<S> <C> <C> <C> <C>
Revenue............................................. $1,903,990 $521,875 $3,674,968 $1,394,258
--------------------------------------------------
Expenses
Operating......................................... 667,364 390,614 1,278,838 569,274
Selling, general and administrative............... 2,411,426 927,340 5,674,747 1,529,069
Depreciation and amortization..................... 800,454 198,985 1,007,263 388,722
--------------------------------------------------
3,879,244 1,516,939 7,960,848 2,487,065
--------------------------------------------------
Other income
Interest.......................................... 124,711 159,697 270,003 162,429
Net loss............................................ $(1,850,543) $(835,367) $(4,015,877) $(930,378)
==================================================
Loss per share (1997 share information restated
for one-for-five stock split occurring on
October 6, 1997).................................. (0.23) (0.13) (0.50) (0.22)
Weighted average number of common shares
outstanding....................................... 8,015,153 6,416,752 8,015,153 4,306,862
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
COLLEGE TELEVISION NETWORK, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................................................ $(4,015,877) $ (930,378)
Adjustments to reconcile net loss to net cash used in by
operating activities:
Depreciation and amortization..................................................... 1,007,263 388,722
Fixed asset impairment loss....................................................... 122,207 0
Changes in operating assets and liabilities, net of acquisition...................
(Increase) decrease in accounts receivable...................................... (328,051) 256,035
(Increase) decrease in prepaid expenses......................................... (120,525) 27,155
(Increase) decrease in other assets............................................. (221,163) 4,619
Increase (decrease) in accounts payable......................................... 325,750 (4,509)
Increase (decrease) in accrued expenses......................................... 458,482 (33,247)
Decrease in deferred revenue.................................................... (236,252) --
---------- -----------
Net cash used in operating activities........................................ (3,008,166) (291,603)
---------- -----------
Cash flows used in investing activities:
Purchases of property and equipment................................................. (2,410,348) (189,271)
Cash acquired through acquisition................................................... 109,209 --
Proceeds from issuance of common stock.............................................. -- 15,400,672
----------- ----------
Net cash (used in) provided by investing activities........................... (2,301,139) 15,211,401
----------- ----------
Cash flows used in financing activities:
Payments under capital lease obligation............................................. (125,664) --
Redemption of preferred stock ...................................................... (5,809) --
----------- -----------
Net cash used in financing activities......................................... (131,473) --
----------- -----------
Net (decrease) increase in cash and cash equivalents.................................. (5,440,778) 14,919,798
Cash and cash equivalents, beginning of period........................................ 11,438,289 734,353
----------- -----------
Cash and cash equivalents, end of period.............................................. 5,997,511 15,654,151
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
COLLEGE TELEVISION NETWORK, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These financial statements should be read in conjunction
with the Company's financial statements for the fiscal year ended October 31,
1997 included in the Annual Report as filed on Form 10-KSB with the United
States Securities and Exchange Commission.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position as of June 30, 1998 and the
results of operations and of cash flows for the six months ended June 30, 1998
and 1997.
The results of operations for the three and six-month periods ended June
30, 1998 and 1997 are not necessarily indicative of the results of operations
for a full fiscal year of the Company.
NOTE (A) - THE COMPANY
- ----------------------
College Television Network, Inc. ("the Company"), is a broadcasting company
which owns and operates the College Television Network ("CTN"), a proprietary
commercial television network operating on college and university campuses,
through single channel television systems placed primarily in campus dining
facilities and student unions. Substantially all of the Company's revenue is
derived from advertising displayed on CTN. At June 30, 1998 and 1997, CTN was
installed or contracted for installation at approximately 419 and 238 locations,
respectively, at various colleges and universities throughout the United States.
The Company's revenue is affected by the pattern of seasonality common to
most school-related businesses. Historically, the Company has generated a
significant portion of its revenue during the period from September through May
and substantially less revenue during the summer months when colleges and
universities do not hold regular classes.
NOTE (B) - CONVERSION OF DELIVERY PLATFORM
- --------------------------------------------
During the second quarter, the Company finalized a plan to convert the
current delivery platform of CTN from the send and store method to the Direct
Video Broadcast (DVB) method. The Company believes that the new System is
similar to the delivery systems used by other networks, such as the CNN Airport
Network, and will improve the quality of programming, quality of signal and
reliability of the System.
As a result of the change in delivery technology, certain of the Company's
current delivery system components will be rendered obsolete or impaired in
value. Accordingly, the Company has reported an impairment charge of
approximately $122,000 during the current period. This charge represents the
unrecoverable net book value of assets which will not be required to operate the
new system, and as a result of certain modifications in the current delivery
system, are not currently being used in operations. Certain other system
components are currently being used in the original send and store delivery
system but will not be required to operate the delivery system. Accordingly, the
Company has reevaluated the useful lives of these components to more accurately
match future revenue with operational expenses associated with these depreciable
assets. The change in useful lives of these assets resulted in additional
depreciation for the quarter of approximately $460,000. These assets will be
fully depreciated upon the launch of the new delivery platform which is
scheduled to occur during the third quarter of 1998.
NOTE (C) COMMITMENTS AND CONTINGENCIES
- ----------------------------------------
The Company executed an Equipment Rental Agreement with Hughes Network
Systems on November 6, 1996. The agreement called for the installation of 200
systems for receiving satellite transmissions with payments aggregating $328,032
over a three-year period. The Company terminated the agreement with Hughes in
May, 1998 and, in connection with such termination, will be required to pay
Hughes a termination fee which is still being negotiated. The Company
terminated the contract with Hughes in order to convert the system to a new
Real-Time, Digital Satellite Distribution System.
The Company entered into a contract with Crawford Communications Inc.
("Crawford") whereby Crawford commenced the conversion of the Broadcast Delivery
System to Satellite Distribution by installing new satellite dishes and
preparing the systems at various locations for this conversion. The initial
conversion ("Phase I") has been completed by Crawford.
The Company is currently negotiating with Crawford for the execution of an
Installation Agreement (Phase II) (the "Phase II Installation Agreement"),
which will provide
<PAGE>
that Crawford complete the retrofit of the Company's existing equipment in all
locations, remove old equipment and install new equipment in order to allow the
equipment to meet the requirements of the new broadcast platform. The Company
has also entered into an Origination Services Contract with Crawford. In
accordance with this contract, Crawford will be responsible for the transmission
via satellite of CTN's ongoing daily programming, including encoding signals,
testing, maintaining CTN's programming library, and obtaining programming from
Turner Private Networks, Inc. ("Turner") pursuant to the Company's programming
agreement with Turner, as well as other programming from other CTN sources.
Pursuant to this agreement, Crawford will also be responsible for the uplink of
the programming to a satellite as well as the downlink or receipt of the signal
from the satellite at each installation site. The Origination Services Contract
has a five-year term.
On March 21, 1998, the Company entered into a severance agreement with one
of its Senior Executives. The Agreement provides for payments of approximately
$870,000 over a three year period ending in April 2001. A provision for this
obligation is included in the Company's statement of operations for the six
months ended June 30, 1998. As of June 30, 1998, the Company has paid
approximately $95,000 of this obligation.
On March 27, 1998, the Company signed an agreement with Turner Private
Networks, Inc. to provide news and sports programming on CTN through December
31, 2002. The total license fee is approximately $2,900,000. This agreement
supersedes the prior programming agreement entered into on November 5, 1996.
In connection with the delivery platform conversion, the Company entered
into a Transponder Use Agreement with Public Broadcasting Service ("PBS") on
April 30, 1998. The Company has subleased capacity on a satellite owned and
operated by GE American Communications, Inc. ("GE") and leased to PBS by GE.
This contract terminates on July 31, 2003. The Company has protected status on
this satellite, where in the event of a satellite failure or performance
problem, the Company's programming will preempt transmissions of other users on
this satellite or on another satellite.
In May 1998, the Company entered into a lease for new space to be occupied
in October 1998 at 32 East 57th Street in the borough of Manhattan in New York,
New York. The lease term is for ten (10) years and the initial annual rental is
$249,900, subject to annual increases based upon certain economic factors. The
landlord is required to pay for certain tenant improvements in accordance with
the lease. The Company currently has two locations in the New York City area,
one for CTN and one for the Link Magazine operations. The Company intends to
consolidate these operations in the new space.
NOTE (D)- SUBSEQUENT EVENTS
- ---------------------------
The Company distributed to holders of record as of the close of business on
July 17, 1998 (the "Record Date"), of its common stock, $.005 par value per
share (the "Common Stock"), one non transferable right for each 1.2825 shares of
common stock held on the record date. Each right entitles the holder to
subscribe for and purchase one share of common stock for a price of $1.60 per
share. The rights offering prospectus was dated July 28, 1998. The net proceeds
to the Company after expenses associated with this offering are estimated to be
approximately $10,000,000. The proceeds of this offering will be used by the
Company for general corporate purposes.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Company's financial statements appearing elsewhere in this report.
Information contained or incorporated by reference in this report contains
"forward looking statements" which can be identified by the use of forward-
looking terminology such as "believes," "expects," "may," "will," "should" or
"anticipates" or the negative thereof or other variations thereon or comparable
terminology, or by discussions of strategy. No assurance can be given that the
future results covered by the forward-looking statements will be achieved.
RESULTS OF OPERATION
The Company is a broadcasting company which owns and operates the College
Television Network ("CTN"), a proprietary commercial television network
operating on college and university campuses, through single-channel television
systems (collectively, the "Systems" and individually, a "System") placed
primarily in campus dining facilities and student unions. Substantially all of
the Company's revenue is derived from advertising displayed on CTN. At June
30, 1998, CTN was installed or contracted for installation at approximately 419
locations at various colleges and universities throughout the United States.
The Company believes CTN currently reaches a viewership of approximately 800,000
daily impressions.
The Company's revenue is affected by the pattern of seasonality common to
most school-related businesses. Historically, the Company has generated a
significant portion of its revenue during the period of September through May
and substantially less revenue during the summer months when colleges and
universities do not hold regular classes.
The following table sets forth certain financial data derived from the
Company's statement of operations for the three and six months ended June 30,
1998 and June 30, 1997:
<TABLE>
<CAPTION>
Three Months Ended
------------------
June 30, 1998 June 30, 1997
------------- -------------
%of %of
$ Revenues $ Revenues
---------------------- ---------------------
<S> <C> <C> <C> <C>
Revenues............................. 1,903,990 100% 521,875 100%
Operating expenses................... 667,364 35 390,614 75
Selling, general and administrative.. 2,411,426 127 927,340 178
Depreciation and amortization........ 800,454 42 198,985 38
Interest income...................... 124,711 7 159,697 31
Net loss............................. 1,850,543 97 835,367 160
</TABLE>
<PAGE>
<TABLE>
Six Months Ended
------------------
June 30, 1998 June 30, 1997
------------- -------------
%of %of
$ Revenues $ Revenues
---------------------- ---------------------
<S> <C> <C> <C> <C>
Revenue.............................. 3,674,968 100% 1,394,258 100%
Operating expenses................... 1,278,838 35 569,274 41
Selling, general and administrative.. 5,674,747 154 1,529,069 110
Depreciation and amortization........ 1,007,263 27 388,722 28
Interest income...................... 270,003 7 162,429 12
Net loss............................. 4,015,877 109 930,378 67
</TABLE>
Revenue increased to $1,903,990 and $3,674,968 for the three and six month
periods ended June 30, 1998, respectively, versus $521,875 and $1,394,258 for
the comparable periods in the prior year. Increased advertising sales to
existing customers combined with sales to new customers and the addition of Link
Magazine revenue was the primary source of this increase. In addition, the
Company increased its advertising rates charged during the fiscal year ended
October 31, 1997 ("Fiscal 1997"). The Company anticipates continued sales growth
throughout the fiscal year ending December 31, 1998 by continuing to expand its
advertiser base and by increasing the rates charged for its advertising spots to
reflect the anticipated increase in viewership.
Although the Company has agreements with national advertisers and has held
discussions or had prior agreements with other national advertisers, no
assurance can be given that these or other advertisers will continue to purchase
advertising time from the Company, or that future significant advertising
revenue will ever be generated. A failure to significantly increase advertising
revenue could have a material impact on the operations of the Company.
Operating expenses increased to $667,364 and $1,278,838 for the three and
sixmonth periods ended June 30, 1998, respectively, as compared to $390,614 and
$569,274 for the comparable periods in the prior year. The increase over the
comparable prior year period is primarily attributable to increased programming
costs for improved programming for CTN. Furthermore, the Company incurred
expenses in 1998 directly related to the commencement of satellite transmission
of the network. In addition, the 1998 operating expenses include amounts
associated with publishing Link Magazine which was purchased on January 1,
1998.
Selling, general and administrative expenses increased to $2,411,426 and
$5,674,747 for the three and six-month periods ended June 30, 1998, respectively
versus $927,340 and $1,529,069 for the comparable periods in the prior year. A
significant portion of this increase is directly attributable to severance
obligations for a Senior Executive of the Company. (See Note C for additional
information). Other reasons for this increase are attributable to the Company's
efforts to increase market awareness for the network. This is being achieved by
expanding the Company's management team, advertising and affiliate sales forces,
opening additional regional sales offices, and instituting a more aggressive
advertising and marketing campaign for CTN. In addition, the 1998 selling
general, and administrative expenses reflect various costs associated with Link
Magazine.
<PAGE>
Depreciation and amortization expense totaled $800,454 and $1,007,263 for
the three and six month periods ended June 30, 1998, respectively, as compared
to $198,985 and $388,722 for the comparable prior year periods. The increases in
1998 are primarily attributable to the acceleration of depreciation taken on the
current delivery system, coupled with increased depreciation on office
equipment. (See Note B)
Interest income amounted to $124,711 and $270,003 for the three and six
month periods ended June 30, 1998, respectively, versus $159,697 and $162,429
for the comparable periods in the prior year. The income figures are reflective
of higher interest rates and greater average cash balances directly related to
the April 1997 purchase of a majority of the Company's common stock by U-C
Holdings, L.L.C. The decrease in the current quarter is attributable to the
Company's cash expenditures directly related to the equipment required for the
new direct broadcast satellite delivery system.
The Company has incurred substantial losses since commencement of its
operations and anticipates that such losses will continue in Fiscal 1998. The
net loss amounted to $1,850,543 and $4,015,877 for the three and six month
periods ended June 30, 1998, respectively, versus $835,367 and $930,378 for
comparable periods in the prior year. Approximately twenty percent of the net
loss for the six-month period is directly attributable to the severance
obligation discussed in Note C. The increase in the 1998 net loss for the three
and six-month period is reflective of the Company's continued efforts to expand
the advertising and affiliate bases. The Company has incurred significant costs
on programming, system installation, maintenance and overhead expenses as the
number of employees has increased. Management of the Company believes this
expansion is necessary in order to grow the advertising and affiliate levels to
a point where the Company will achieve profitability.
FINANCIAL CONDITION AND LIQUIDITY
At June 30, 1998, the Company had working capital of $5,972,686. At such
date, the Company's cash and cash equivalents totaled $5,997,511.
Cash used in operations increased to $3,008,166 during the six months ended
June 30, 1998 from $291,603 for the comparable period in the prior year. The
impact of increased sales during the six month period ended June 30, 1998 was
more than offset by additional expenditures related to equipment and personnel
in connection with the Company's effort to expand its network and advertiser
base. A portion of this increase was also attributable to the timing of
collections of accounts receivable and payments of accounts payable.
Purchases of property and equipment increased to $2,410,348 during the six
months ended June 30, 1998 from $189,271 for the comparable period in the prior
year due to the purchase of additional network systems, equipment associated
with the commencement of the DVB broadcast platform, coupled with the purchase
of furniture and equipment needed for the addition of new regional offices and
additional employees hired during the fiscal year. The Company estimates that
the conversion of 500 Systems will cost approximately $6,000,000, of which
approximately $1,900,000 has been paid. The Company intends to fund the
additional conversion costs through current working capital.
The Company has incurred substantial losses since commencement of its
operations and anticipates that such losses will continue in Fiscal 1998. In
order to reach the stage where the Company is profitable, it is expected that
additional expenditures will be required to increase the affiliate base and to
market the network properly to attract more advertisers.
The Company distributed to holders of record as of the close of business on
July 17, 1998 (the "Record Date"), of its common stock, $.005 par value per
share (the "Common Stock"), one non transferable right for each 1.2825 shares of
common stock held on the record date. Each right entitles the holder to
subscribe for and purchase one share of common stock for a price of $1.60 per
share. The rights offering prospectus was dated July 28, 1998. The net proceeds
to the Company after expenses associated with this offering are estimated to be
approximately $10,000,000. The proceeds of this offering will be used by the
Company for general corporate purposes.
Although to this point the Company has not achieved profitability, the
Company believes it has sufficient working capital available to continue
operating as a going concern through the end of Fiscal 1998.
<PAGE>
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. Beginning in the year
2000, these date code fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, over the
next two years, computer systems and/or software used by many companies may need
to be upgraded to comply with such "Year 2000" requirements. The Company relies
on computer applications provided by third parties to deliver and track its
programming on CTN as well as to manage and monitor its accounting, advertising
sales and administrative functions. Because the Company is dependent on vendor
compliance, its ability to assure Year 2000 compliance is limited. The Company
has obtained representations from its most significant computer system and
software vendors that the services and products provided are, or will be, Year
2000 compliant, with the exception that it has not obtained any such
representations from Public Broadcasting Service under its Transponder Use
Agreement, dated April 30, 1998 (as described in the preceding Notes to
Financial Statements under Note (C) - Commitments and Contingencies). The
----------------------------------------
Company has obtained insurance for certain of the costs associated with a
failure of the satellite transmission equipment upon which CTN's programming
delivery is based, including the cost of redirecting satellite dishes, securing
a new satellite transponder, and lost advertising revenue resulting from an
interruption in programming. However, this business interruption insurance
would not cover all costs associated with a satellite failure. Despite the
Company's efforts to address the Year 2000 impact on its business operations and
internal systems, there can be no assurance that such impact will not result in
a material disruption of its business or have a material adverse effect on the
Company's business, financial condition or results of operations.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security-Holders.
(a) On April 24, 1998 the Company held its annual meeting of shareholders.
At the annual meeting, the shareholders elected the following individuals
to the Board of Directors of the Company:
(1) Jason Elkin For: 7,511,181; Against: 24,520; Abstained: 0
(2) Joseph D. Gersh For: 7,515,081; Against: 20,620; Abstained: 0
(3) Peter Kauff For: 7,516,081; Against: 19,620; Abstained: 0
(4) Avy H. Stein For: 7,516,081; Against: 19,620; Abstained: 0
(5) Beth F. Johnston For: 7,516,081; Against: 19,620; Abstained: 0
(6) Stephen Roberts For: 7,516,081; Against: 19,620; Abstained: 0
(7) Hollis W. Rademacher For: 7,515,081; Against: 20,620; Abstained: 0
(8) James Wood For: 7,516,081; Against: 19,620; Abstained: 0
The shareholders also selected Price Waterhouse, L.L.P. as the Company's
independent accountants for the current year: For: 7,518,181; Against: 8,560;
Abstained: 8,960
(b) By Written Consent on May 4, 1998, of U-C Holdings, L.L.C., the
majority stockholder which holds 5,818,181 shares of common stock of the
Company, representing approximately 72.6% of the total shares of common stock
then outstanding, the shareholders approved the following corporate actions: (i)
fixed the number of the members of the Board of Directors of the Company at
eleven; (ii) amended the Company's Outside Directors' 1996 Stock Option Plan and
1996 Stock Incentive Plan; and (iii) amended the Company's Restated Certificate
of Incorporation to decrease the number of authorized shares of common stock of
the Company from 100,000,000 shares to 50,000,000 shares. The Company mailed a
Schedule 14C Information Statement to beneficial holders of the Company's common
stock on or about May 14, 1998 in connection with such actions.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 3(i) Articles of Amendment to Restated Certificate of Incorporation
Exhibit 10.1 Second Amendment to Outside Directors' 1996 Stock Option Plan
Exhibit 10.2 Second Amendment to 1996 Stock Incentive Plan
Exhibit 10.3 Transponder Use Agreement between Registrant and Public
Broadcasting Service dated April 30, 1998
Exhibit 10.4 Standard Form of Office Lease by and between 32 East 57th
Street, LLC and Registrant
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COLLEGE TELEVISION NETWORK INC.
Registrant
Date: August 14, 1998 /s/ Jason Elkin
---------------
Jason Elkin
Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
Date: August 14, 1998 /s/ Patrick Doran
-----------------
Patrick Doran
Chief Financial Officer, Secretary and
Treasurer (Principal Accounting
and Financial Officer)
<PAGE>
EXHIBIT 3(i)
ARTICLES OF AMENDMENT TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
COLLEGE TELEVISION NETWORK, INC.
College Television Network, Inc., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), pursuant to the
provisions of the General Corporation Law of the State of Delaware, does hereby
certify as follows:
1.
The Restated Certificate of Incorporation of the Corporation is hereby
amended by deleting in its entirety the first paragraph of Article Four of the
Restated Certificate of Incorporation in its present form and substituting in
lieu thereof a new first paragraph of Article Four in the following form:
"FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is Fifty Two Million
(52,000,000) shares, of which Fifty Million (50,000,000) shares shall
be Common Stock, par value $0.005, and Two Million (2,000,000) shares
will be Preferred Stock, par value $0.001 per share."
2.
The amendment to the Restated Certificate of Incorporation set forth in
these Articles of Amendment has been duly adopted in accordance with the
applicable provisions of Section 242 of the General Corporation Law of the State
of Delaware, (a) in lieu of a meeting and vote of directors, all of the
directors having duly consented in writing to the adoption of such amendment,
and (b) in lieu of a meeting and vote of the shareholders, a majority of the
shareholders of the Corporation who would have been entitled to vote upon such
amendment if a meeting of shareholders were called and held having duly
consented in writing to the adoption of such amendment.
3.
The effective date of these Articles of Amendment shall be June 3, 1998.
In witness whereof, the undersigned, a duly authorized officer of the
Corporation, has executed these Articles of Amendment and does hereby declare
and certify, under the penalties of perjury, that this is his act and deed and
the facts herein are true, as of this 29th day of May, 1998.
COLLEGE TELEVISION NETWORK, INC.
By: /s/ Jason Elkin
---------------------
Jason Elkin, Chief Executive Officer
<PAGE>
EXHIBIT 10.1
SECOND AMENDMENT TO
OUTSIDE DIRECTORS' 1996 STOCK OPTION PLAN
The Outside Directors' 1996 Stock Option Plan (the "Plan") of College
Television Network, Inc. (the "Company") (formerly Laser Video Network, Inc.) is
hereby amended as follows:
1.
Section 3(a) of the Plan is amended by deleting the second sentence thereof
in its entirety and substituting therefor the following new second sentence:
"Subject to Section 3(b), the aggregate number of shares of Common Stock of the
Company which may be transferred pursuant to the Plan shall be 240,000."
2.
Section 6(b) of the Plan is amended by deleting the second sentence thereof
in its entirety and substituting therefor the following new second sentence:
"Each Option granted under the Plan shall contain such vesting terms as
determined by the Board and included in the applicable stock option agreement."
3.
The foregoing amendment shall be effective as of the later of (i) June 3,
1998 or (ii) the date which is 20 days after mailing an Information Statement to
Shareholders disclosing the approval of the amendment by the holder of a
majority of the outstanding common stock of the Company, in the manner required
by Section 14(c) of the Securities Exchange Act of 1934, as amended.
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EXHIBIT 10.2
SECOND AMENDMENT TO
1996 STOCK INCENTIVE PLAN
The 1996 Stock Incentive Plan (the "Plan") of College Television Network,
Inc. (the "Company") (formerly Laser Video Network, Inc.) is hereby amended as
follows:
1.
Section 1.5.1 of the Plan is amended by deleting the first sentence thereof
in its entirety and substituting therefor the following new first sentence: "The
total number of shares of common stock of the Company, par value $.005 per share
("Common Stock"), with respect to which awards may be granted pursuant to the
Plan shall be 333,334 shares, which amount shall be increased by 33,333 shares
on January 1, 1999 and shall be increased by another 33,333 shares on January 1,
2000, so that the total amount of shares issuable under the Plan shall be
400,000 shares."
2.
The foregoing amendment shall be effective as of the later of (i) June 3,
1998 or (ii) the date which is 20 days after mailing an Information Statement to
Shareholders disclosing the approval of the amendment by the holder of a
majority of the outstanding common stock of the Company, in the manner required
by Section 14(c) of the Securities Exchange Act of 1934, as amended.
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Exhibit 10.3
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TRANSPONDER USE AGREEMENT
THIS TRANSPONDER USE AGREEMENT ("Agreement"), made and executed this 30th
day of April, 1998, by and between College Television Network, Inc., a
corporation organized under the laws of the State of Delaware with offices
located at 5784 Lake Forrest Drive, Suite 275, Atlanta, Georgia 30328 ("User"),
and the Public Broadcasting Service, a District of Columbia nonprofit
corporation with offices located at 1320 Braddock Place, Alexandria, Virginia
22314 ("PBS").
WITNESSETH:
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WHEREAS, PBS desires to make available to User, and User desires to receive
from PBS, use of PBS Ku-band transponder service located on GE-3 in accordance
with the terms and conditions set forth herein;
WHEREAS, GE-3 is the in-orbit back-up satellite to service on GE-2, and in
the event of catastrophic failure of the GE-2 satellite, (i) GE-3 would be moved
over to the GE-2 satellite orbital location, (ii) transponder service provided
by GEA to PBS on GE-3 may be relocated by GEA to another transponder on another
satellite, and (iii) the provision of Transponder Service to User would be
governed by the terms of this Agreement;
NOW, THEREFORE, in consideration of the foregoing, and the respective
covenants and obligations hereinafter provided, the parties hereby agree as
follows:
1. Definitions.
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Capitalized terms used in this Agreement shall have the meanings set forth
in this Section 1.
1.1. Agreement shall mean this Transponder Use Agreement.
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1.2. Available means, (a) with respect to any service or equipment, that
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as of the commencement of the Initial Service Term such service or equipment is
operational, and technically capable of being used by GEA or an affiliate of
GEA, if applicable, to provide service to PBS under the GE-3 Transponder Service
Agreement; and (b) that GEA or an affiliate of GEA, if applicable, has access to
such service or equipment, and such service or equipment may be provided by GEA
or an affiliate of GEA, if applicable, to PBS in accordance with the GE-3
Transponder Service Agreement without resulting in (x) a violation by GEA or an
affiliate of GEA, if applicable, of any law or regulation to which GEA or an
affiliate of GEA, if applicable, is subject, or (y) any violation of any
contractual obligation of GEA or any affiliate of GEA, if applicable, to any
third party other than one entered into in conflict with or violation of the
GE-3 Transponder Service Agreement.
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1.3. Class of Service shall mean the identical category of service,
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including full-time or part-time, amount of bandwidth, power and duration of
contracted service.
1.4. End-of-Life means the date on which, in GEA's reasonable judgment, a
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satellite, other than in the case of a Satellite Failure, should be taken out of
service because the fuel remaining on board is insufficient to maintain such
satellite's geosynchronous orbital position within requirements established by
the FCC, from time to time, regarding stationkeeping of satellites in
geosynchronous orbit.
1.5 FCC shall mean the Federal Communications Commission, or any successor
---
agency or governmental body having jurisdiction over the Satellite, the
Transponders, service thereon or the use thereof.
1.6 Failed Satellite or Satellite Failure means a satellite:
---------------- -----------------
(a) on which one or more of the basic subsystems of the satellite
fail, rendering the use of the satellite for its intended
purposes impractical, as determined by GEA in its reasonable
business judgment, or on which more than one-half of the
transponders on the Ku-band payload are transponder failures; and
(b) that GEA has declared a failure. For purposes of this definition,
a hybrid satellite with both C-band and Ku-band payloads shall be
treated, at GEA's option, either (i) as a single satellite, or
(ii) as though the C-band and Ku-band payloads were located on
separate satellites.
1.7. Failed Transponder or Transponder Failure shall mean, with respect to
------------------ -------------------
any Transponder used to provide service to User under this Agreement, any of the
following events:
a. such Transponder fails to meet the Specifications in any material
respect for a period of twenty-four (24) consecutive hours; or
b. twenty (20) or more Outage Units shall occur within any ninety
(90) consecutive days; or
c. PBS and GEA determine that such Transponder shall fail to meet
the Specifications in any material respect for any period of time
under circumstances that make such failure clearly ascertainable
or predictable, based on satellite industry engineering
standards.
1.8 GE-1 shall mean the communications spacecraft that is currently
----
located at 103 W.L., except if such spacecraft becomes a Failed Satellite, or
any successor spacecraft thereto or replacement spacecraft thereof other than
the Satellite, located and operating in an orbital location at or between 85
W.L. and 125 W.L..
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1.9 GE-3 Transponder Service Agreement shall mean the GE-3 Satellite Ku-
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Band Transponder Service Agreement and the attachments thereto, dated as of
April 8, 1997, by and between PBS and GEA, as amended through the term of this
Agreement.
1.10 GEA shall mean GE American Communications, Inc., a Delaware
---
corporation, as agent for GE American Communications California, Inc., its
successors and assigns, and any successor entity to or assignee of GEA's
obligations under the GE-3 Transponder Service Agreement.
1.11. Initial Service Term shall mean the period commencing on the Service
--------------------
Commencement Date and continuing until the Service Termination Date as further
defined in Section 7.2 of this Agreement.
1.12. Interruption shall mean any period during which a Transponder fails
------------
to meet the Specifications and such circumstances preclude the use of the
Transponder for its intended purpose.
1.13. Monthly Service Fee shall mean the amount payable to PBS monthly
-------------------
referred to in Section 2.3 hereof.
1.14. Moveable Protected Service or Moveable Protected Transponder has the
-------------------------- ------------------------------
meaning set forth in Section 2.2 of this Agreement.
1.15. Non-Preemptible Service or Non-Preemptible Transponder means a
----------------------- ---------------------------
satellite service or transponder that may not be preempted to restore another
service or transponder and that is not itself entitled to be restored by
preempting a Preemptible Service, but that will be restored using an on-board
Replacement Transponder on board the same satellite as the Non-Preemptible
Service that failed is located if Available.
1.16. Outage Unit shall mean an Interruption of a Transponder for a period
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of five (5) minutes or more.
1.17. PBS shall mean the Public Broadcasting Service, a District of
---
Columbia nonprofit corporation, any successor entity thereto and its permitted
assigns.
1.18. Preemptible Service or Preemptible Transponder means a satellite
------------------- -----------------------
service or transponder that may, subject to the GE-3 Transponder Service
Agreement, be preempted at any time to restore (i) a Satellite Failure, (ii) a
Protected Service or Protected Transponder that becomes a Transponder Failure,
or (iii) or other service offerings of GEA, including but not limited to,
construction and launch delay protection and launch failure protection.
1.19. Protected Service or Protected Transponder means a service or
----------------- ---------------------
transponder that is entitled to preempt a Preemptible Service or Preemptible
Transponder. A Protected Service may be a Moveable Protected Service.
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1.20. Protection Satellite means either (i) GE-1, or (ii) an in-orbit
--------------------
satellite with Ku-Band transponders that is (a) located at an orbital location
at or between 85 W.L. and 125 W.L. or some other orbital location that may be
agreed upon by PBS and GEA (so long as such satellite could provide
substantially similar transponder performance specifications as the
Specifications for the Satellite), and (b) with at least the same bandwidth and
power levels and otherwise with substantially similar transponder performance
specifications as the Specifications for the Satellite, and that is designated
by GEA as the satellite to be used to restore Moveable Protected Services as
described in Section 2.2.
1.21. Protection Transponder means in the following order: a Replacement
----------------------
Transponder, an unassigned Transponder or a Preemptible Transponder, used to
restore a Protected Service. Where a Protection Transponder is provided on a
Protection Satellite, it will perform to the technical specifications of that
Protection Satellite and such specifications shall be substituted for those in
Exhibit A.
1.22. Replacement Transponder means a spare Transponder amplifier and its
-----------------------
associated components, which is accessible for purposes of restoration and which
is capable of carrying communications traffic within the parameters as described
in the transponder performance specifications for the Transponder to be
restored.
1.23. Satellite shall mean GE-3, a communications satellite owned and
---------
operated by GEA located at 87 degrees W.L., pursuant to the GE-3 Transponder
Service Agreement, as amended through the term of this Agreement, and any back-
up satellite made available by PBS to User under the terms of this Agreement.
1.24. Service Commencement Date shall have the meaning set forth in
-------------------------
Section 7.1 hereof.
1.25. Service Termination Date shall mean the date on which this Agreement
------------------------
terminates in accordance with its terms.
1.26. Specifications shall mean the Transponder Performance Specifications
--------------
attached to the GE-3 Transponder Service Agreement, and attached hereto as
Exhibit A, as amended from time to time.
1.27. TT&C Services shall mean the tracking, telemetry and control
-------------
services to be provided by GEA to PBS pursuant to the GE-3 Transponder Service
Agreement and in accordance with the applicable FCC satellite operator's license
and all applicable FCC regulations.
1.28. Transponder or Transponders shall mean one or more of the Ku-band
---------------------------
Transponders referred to in the GE-3 Transponder Service Agreement. (The
specific Transponder assigned to User shall be Transponder K-20 as described in
the Specifications, as amended.)
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1.29. Transponder Service shall mean 10 MHz of service provided on one (1)
-------------------
60 Watt, 36 MHz Moveable Protected Transponder on a 24-hour-per-day basis, as
further described in Section 2.
1.30. User shall mean College Television Network, Inc., a corporation
----
organized under the laws of the State of Delaware, or any successor entity
thereto and its permitted assigns.
1.31. Users Guide shall mean the Commercial Operations System Users Guide
-----------
attached to the GE-3 Transponder Service Agreement, as such may be amended from
time to time by GEA for any technical or operational reasons necessary or
appropriate for the proper operation of the Satellite, and attached hereto as
Exhibit B.
2. Transponder Service; Protection; Payment of Monthly Service Fee.
---------------------------------------------------------------
2.1. Transponder Service.
-------------------
(a) Subject to the provisions, terms and conditions of this Agreement, PBS
agrees to provide Transponder Service to User, and User agrees to accept and pay
for Transponder Service from PBS. Except as set forth in 2.5 regarding the
Testing Period, Transponder Service shall consist of access to 10 MHz of a 36
MHz, 60 Watt Transponder (designated as Transponder K-20 in the Specifications)
on a 24-hour basis. Notwithstanding anything to the contrary contained herein,
including references to Replacement Transponders and Protection Transponders, in
no event shall User be entitled to more than 10 MHz of any Transponder. The
associated power at the Woodbine, Maryland satellite access center will be 40.44
dBW at 11059 watts. PBS shall not be obligated to provide any other services to
User (such as uplinking or uplink management control) except as PBS and User may
otherwise mutually agree.
(b) User agrees to complete Exhibit C to this Agreement, "Uplink Data
Information Form" for each uplink accessing Transponder Service and return the
completed form(s) to PBS prior to the Service Commencement Date.
(c) Any such other services shall be subject to such terms, conditions and
charges as may be mutually agreed upon by PBS and User.
(d) User agrees that any implementation of uplink power control must be
approved by PBS and GE prior to any such use.
(e) User acknowledges that GE-3 is the in-orbit back-up satellite to
service on GE-2, and in the event of catastrophic failure of the GE-2 satellite,
(i) GE-3 would be moved over to the GE-2 satellite orbital location, (ii)
transponder service provided by GEA to PBS on GE-3 may be relocated by GEA to
another transponder on another satellite, and (iii) the provision of Transponder
Service to User would be governed by the terms of this Agreement.
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2.2. Protection.
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(a) Moveable Protected Service. A "Moveable Protected Transponder" or
--------------------------
"Moveable Protected Service" means a Transponder Service that, if restoration
thereof is needed as a result of a Satellite Failure, or as a result of a
Transponder Failure under circumstances in which no Protection Transponder is
Available on the Satellite on which such Transponder Service is located, is
entitled to restoration, subject to such facilities being Available, on another
satellite at an orbital location at or between 85 W.L. and 125 W.L., or some
other orbital location that may be agreed upon by PBS and GEA; provided,
however, that in the event that GE-2 becomes a Satellite Failure, such
Transponder or Service shall be relocated to another transponder on the
Protection Satellite, if Available.
(i) Intra-Satellite Protection. Pursuant to the GE-3 Transponder
--------------------------
Service Agreement, if the Transponder on which Transponder Service
is provided to User becomes a Transponder Failure, GEA has agreed
that it will immediately initiate and take all reasonable measures,
consistent with protecting the Satellite and all services provided
thereon, to restore the Transponder Failure as quickly as is
practicable. Restoration shall be effected utilizing any Protection
Transponder on the Satellite, if Available. If no such Protection
Transponder is Available on the Satellite, User's service shall be
restored on the Protection Satellite, if Available, in accordance
with Section 2.2(a)(ii) below.
(ii) Inter-Satellite Protection. In the event that (x) the Satellite on
which Transponder Service is provided to User becomes a Satellite
Failure, (y) a Transponder on which Transponder Service is provided
becomes a Transponder Failure that cannot be restored using a
Protection Transponder, or (z) GE-2 becomes a Satellite Failure,
then PBS shall provide to User and User shall take from PBS Non-
Preemptible Service on one (1) Transponder on the Protection
Satellite, if Available, in accordance with this Section 2.2.
(b) Non-Preemptible Service on the Protection Satellite. Pursuant to the
---------------------------------------------------
GE-3 Transponder Service Agreement, if any Non-Preemptible Transponder on which
User is taking service on the Protection Satellite becomes a Transponder
Failure, GEA has agreed that it shall immediately initiate and take all
reasonable measures, consistent with protecting the Protection Satellite and all
services provided thereon, to restore the Transponder Failure as quickly as is
practicable. Restoration shall be effected by utilizing any Replacement
Transponder Available on the Protection Satellite. If no such Replacement
Transponder is Available on the Protection Satellite, User's service shall not
be restored and this Agreement shall terminate immediately pursuant to Section
10(f). The Non-Preemptible Transponder on which service is provided to User on
the Protection Satellite may not be preempted to restore another service or
transponder.
(c) Term on Protection Satellite. The Service on the Protection Satellite
----------------------------
as set forth above shall be provided to User until the earliest of the following
dates:
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(i) the End-of-Life of the Protection Satellite, or the date that the
Protection Satellite becomes a Satellite Failure; or
(ii) the date the Transponder on which service is provided becomes a
Transponder Failure and cannot be restored in accordance with Section
2.2(b); or
(iii) the Service Termination Date, or through the First Extended Service
Term or Second Extended Service Term, if User has exercised the First
Extension Option or Second Extension Option, respectively.
2.3. Monthly Service Fee.
-------------------
(a) In consideration of the Transponder Service provided by PBS to
User pursuant to this Agreement, User shall pay to PBS on the first day of each
month a service fee of $65,400.00 (US dollars), except as set forth in Section
2.5 regarding the Testing Period. If the Initial Service Term does not commence
on the first day of a month or end on the last day of a month, the monthly rate
shall be pro-rated for the fractional part of the month using a daily rate of
one-thirtieth (1/30) of the monthly rate.
(b) User shall pay to PBS the Monthly Service Fees without any
deduction or offset whatsoever. Such payments shall be delivered to PBS at the
following address unless otherwise indicated in writing:
Public Broadcasting Service
P.O. Box 751550
Charlotte, N.C. 28275
2.4. Late Payment. Interest will be charged to User at a monthly rate of
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1.5% on all Monthly Service Fees not paid by User within thirty (30) days of the
due date thereof. This penalty does not waive any termination or other rights
PBS may have under this Agreement.
2.5. Testing Period. For the period commencing on June 1, 1998, or
--------------
earlier, upon mutual agreement of the parties, through July 31, 1998 (the
"Testing Period"), PBS shall provide User access to 2.7 MHz of a 36 MHz, 60 Watt
Transponder on a 24-hour basis. During the Testing Period, the associated power
at the Woodbine, Maryland satellite access center will be 34.75 dBW at 2986
watts. During the Testing Period, the Monthly Service Fee shall be $32,900.00
(US Dollars). All other terms and conditions of this Agreement shall be
applicable during the Testing Period.
3. Certain Representations and Warranties of PBS. PBS hereby represents and
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warrants to User that PBS is a nonprofit corporation duly organized, validly
existing and in good standing under the laws of the District of Columbia, with
full corporate power, right and authority (i) to
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execute and to deliver this Agreement; and (ii) to enter into and to consummate
the transactions contemplated hereby. PBS further represents and warrants to
User that the execution and delivery of this Agreement by the officer so doing,
and the consummation of the transactions contemplated hereby, will, upon
ratification of this Agreement by the PBS Board of Directors and the public
television Interconnection Committee have been duly authorized by all necessary
corporate action on the part of PBS, and that this Agreement is a valid and
binding obligation of PBS enforceable against PBS in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights in general and by
general principles of equity. PBS hereby represents and warrants to User that
the execution, delivery and performance of this Agreement, and the consummation
of the transactions contemplated hereby, will not constitute a breach, violation
or default of, or create a lien under, or be prevented by (i) the articles of
incorporation or bylaws of PBS; (ii) any contract, partnership agreement,
indenture, deed of trust, loan note, lease, service agreement or other
instrument to which PBS is subject or is a party; or (iii) any law, rule,
regulation, ordinance, judgment, decree, order, governmental permit or license
to which PBS is subject. PBS further represents and warrants to User that the
GE-3 Transponder Service Agreement is in full force and effect as of the date
hereof.
4. Certain Representations and Warranties of User. User hereby represents and
----------------------------------------------
warrants to PBS that User is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware with full corporate
power, right and authority (i) to execute and to deliver this Agreement; and
(ii) to enter into and to consummate the transactions contemplated hereby. User
further represents and warrants to PBS that the execution and delivery of this
Agreement by the officer so doing, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate action
on the part of User, and this Agreement is a valid and binding obligation of
User, enforceable against User in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity. User hereby represents and warrants to PBS that the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, will not constitute a breach, violation or
default of, or create a lien under, or be prevented by: (i) any contract,
partnership agreement, indenture, deed of trust, loan note, lease, service
agreement or other instrument to which User is subject or is a party; (ii) any
law, rule, regulation, ordinance, judgment, decree, order, governmental permit
or license to which User is subject; or (iii) the articles of incorporation or
bylaws of User. User further represents and warrants to PBS that the Transponder
provided hereunder will be used primarily for the delivery of television
programming to educational institutions.
5. Conditions Precedent to Commencement of PBS's Obligation To Provide
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Transponder Service.
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PBS shall be under no obligation to provide User with Transponder Service,
or otherwise to consummate this Agreement, and the Initial Service Term shall
not commence, unless, as of the Service Commencement Date, each of the
conditions precedent (which shall not be deemed covenants except as otherwise
expressly provided herein) set forth below in this Section 5 is
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satisfied, or waived by PBS. PBS may, in its sole discretion, waive the
satisfaction of any of the conditions set forth in this Section 5, except to the
extent that such condition is also a condition to User's obligation to accept
Transponder Service pursuant to this Agreement, as set forth in Section 6
hereof.
5.1. Tender of One Month Deposit. User shall have tendered to PBS a sum
---------------------------
equal to the Monthly Service Fee, which will be a deposit in the amount of
$65,400.00 (US) that PBS will place in an interest-bearing account upon
execution of this Agreement. Following expiration or early termination of this
Agreement, PBS will return the deposit, with all interest earned in such
account, to User less any amounts that are reasonably necessary to remedy any of
User's defaults in the payment of fees, or, at PBS's option, apply the deposit
to the final Monthly Service Fee. In the event that PBS elects to apply the
deposit to the final Monthly Service Fee, PBS will remit to User all interest
earned on the deposit.
5.2. Availability of Satellite and Transponders. The Satellite and the
------------------------------------------
Transponders shall be in service in the orbital location designated in the GE-3
Transponder Service Agreement and shall be operating in accordance with the
Specifications.
5.3 GEA Not in Breach. GEA shall not be in material breach or material
------------------
default of any of its obligations under the GE-3 Transponder Service Agreement.
5.4. User Not in Breach. User shall not be in material breach of any of
------------------
its obligations under this Agreement, provided that PBS shall have notified User
promptly of any such breach or default of which PBS has actual knowledge and
User shall have had a reasonable opportunity to cure such breach or default.
5.5 Governmental Approvals. All FCC and other governmental approvals,
-----------------------
authorizations or consents necessary for the valid and legal commencement of
Transponder Service pursuant to this Agreement or the GE-3 Transponder Service
Agreement shall have been obtained and shall be in full force and effect.
5.6. Final Board Approval. The execution of this Agreement shall have been
--------------------
ratified and approved by the PBS Board of Directors and public television's
Interconnection Committee, if such approvals are deemed necessary by PBS. PBS
agrees to promptly notify User upon request if such approvals will be required.
5.7. No Injunctions Etc. No order, writ, injunction or decree of any
------------------
court, governmental authority or arbitrator, then in effect, shall restrain,
prohibit or invalidate the provision of Transponder Service to User by PBS
pursuant to this Agreement, or by GEA pursuant to the GE-3 Transponder Service
Agreement or in any other respect the performance by PBS contemplated by this
Agreement.
5.8. Representations and Warranties of User Correct as of Service
------------------------------------------------------------
Commencement Date. Each representation and warranty of User set forth in Section
- -----------------
4 hereof shall be true and
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correct when made and as of the Service Commencement Date. Upon request, User
shall deliver to PBS a written statement to this effect, certified by an
authorized officer of User.
5.9 Contingency Regarding Amendment to GE-3 Transponder Service Agreement.
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PBS and GEA shall have entered into an amendment to the GE-3 Transponder Service
Agreement providing for the upgrade of one Moveable Transponder Protected
Transponder to Moveable Protected.
6. Conditions Precedent to Commencement of User's Obligation To Accept
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Transponder Service.
- -------------------
User shall be under no obligation to accept from PBS service on the
Transponders, to pay to PBS the initial Monthly Service Fee, or otherwise to
consummate this Agreement, and the Initial Service Term shall not commence,
unless, as of the Service Commencement Date, each of the conditions precedent
(which shall not be deemed covenants except as otherwise expressly provided
herein) set forth below in this Section 6 is satisfied, or waived by User. User
may, in its sole discretion, waive the satisfaction of any of the conditions set
forth in this Section 6, except to the extent that such condition is also a
condition to PBS's obligation to provide Transponder Service pursuant to this
Agreement, as set forth in Section 5 hereof.
6.1. Availability of Satellite. The Satellite and the Transponders
--------------------------
assigned to User shall be in service in the orbital location designated in the
GE-3 Transponder Service Agreement and shall be operating in accordance with the
Specifications.
6.2. PBS Not in Breach. PBS shall not be in material breach or material
------------------
default of any of its obligations under this Agreement; provided that User shall
have notified PBS promptly of any breach or default on the part of PBS under
this Agreement of which User had actual knowledge and PBS shall have had a
reasonable opportunity to cure such breach or default.
6.3. Governmental Approvals. All FCC and other governmental approvals,
----------------------
authorizations or consents necessary for the valid and legal commencement of
Transponder Service pursuant to this Agreement or the GE-3 Transponder Service
Agreement shall have been obtained and shall be in full force and effect.
6.4. No Injunctions Etc. No order, writ, injunction or decree of any
------------------
court, governmental authority or arbitrator, then in effect, shall restrain,
prohibit or invalidate the provision of transponder service by PBS to User
pursuant to this Agreement, or GEA pursuant to the GE-3 Transponder Service
Agreement, or in any other respect the performances contemplated by this
Agreement.
6.5. Representations and Warranties of PBS Correct as of Service
-----------------------------------------------------------
Commencement Date. Each representation and warranty of PBS set forth in Section
- -----------------
3 hereof shall be true and correct when made and as of the Service Commencement
Date. Upon request, PBS shall deliver to User a written statement to that
effect, certified by an authorized officer of PBS.
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6.6 Contingency Regarding Amendment to GE-3 Transponder Service Agreement.
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PBS and GEA shall have entered into an amendment to the GE-3 Transponder Service
Agreement providing for the upgrade of one Moveable Transponder Protected
Transponder to Moveable Protected.
7. Service Commencement Date; Initial Service Term; Extended Service Terms;
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Monthly Status Reports.
- -----------------------
7.1. Service Commencement Date. Assuming all conditions precedent to
--------------------------
commencement of the Initial Service Term have been satisfied or waived by the
appropriate party, the provision of Transponder Service to User shall commence
at 12:01 a.m. (ET) on June 1, 1998, or earlier upon mutual agreement of the
parties.
7.2. Initial Service Term. This Agreement shall remain in effect from the
--------------------
Service Commencement Date until and including July 31, 2003, unless earlier
terminated in accordance with Section 10.
7.3. Extended Service Terms.
-----------------------
(a) Unless this Agreement is earlier terminated in accordance with
Section 10, User shall have the one-time option (the "First
Extension Option") to extend the Initial Service Term for the
services described in Section 2 above on the same terms and
conditions for an additional two (2) years (the "First Extended
Service Term") until and including July 31, 2005 upon mutual
agreement of PBS and User, including availability of capacity
and upon written notice delivered to PBS on or before July 31,
2002 (12 month's notice).
(b) Unless this Agreement is earlier terminated in accordance with
Section 10, User shall have the one-time option (the "Second
Extension Option") to extend the First Extended Service Term for
the services described in Section 2 above on the same terms and
conditions for one (1) additional year (the "Second Extended
Service Term") until and including July 31, 2006 upon mutual
agreement of PBS and User, including availability of capacity
and upon written notice delivered to PBS on or before July 31,
2004 (12 month's notice).
8. Additional Transponder Service Terms and Conditions.
---------------------------------------------------
8.1. No Warranties As to Transponders or Satellite. PBS MAKES NO
---------------------------------------------
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OF THE SATELLITE OR ANY OF THE TRANSPONDERS, OR
AS TO THE CURRENT OR FUTURE PERFORMANCE, OR THE USEFUL LIFE, OF THE TRANSPONDERS
OR THE SATELLITE OR ANY COMPONENTS THEREOF. PBS shall not be responsible for
11
<PAGE>
any failure, partial or total, of the Transponders or of the Satellite, or for
any partial or total interruption in Transponder Services, or otherwise with
respect to the technical aspects of the Satellite or the Transponders, and shall
have no duties or obligations with respect thereto, unless such failure or
interruption is caused by the gross negligence or intentional misconduct of PBS,
and User hereby releases and will indemnify PBS and hold PBS harmless from any
liability or responsibility arising from or with respect thereto, except in the
event of PBS's gross negligence or intentional misconduct, or breach of its
representations and warranties under Section 3.
8.2 PBS Substitution Rights.
-----------------------
(a) PBS shall have the right, but not the obligation, in the event of (i)
the failure of one or more Transponders (ii) interference with other
Transponders (including adjacent satellite interference) caused by User's
transmission, and/or interference caused by others to Users' transmission, (iii)
the unavailability of the designated Transponder provided by GEA, or (iv) the
relocation by GEA of any Transponder Service provided by GEA to PBS on GE-3 to
another transponder on the same or on another satellite, upon reasonable prior
notice to User and in the sole discretion of PBS, to substitute the
Transponder(s) upon which Transponder Service is provided for any other
Transponder(s) upon which comparable Transponder Service may be provided, and,
provided User was given reasonable prior notice, User shall be obliged to accept
Transponder Service on such substituted Transponder(s); provided, however, that
-------- -------
in exercising its right under this Section 8(a), PBS will use reasonable efforts
to provide Transponder Service on a Transponder in the same orbital location and
with the same polarity to the extent that PBS is able to do so without adversely
affecting PBS's operations.
(b) Upon sixty (60) days written notice to User, PBS shall have the right
to substitute another Transponder on the Satellite for the Transponder upon
which Transponder Service is provided, in order for PBS to maximize transponder
loading and utilization. Provided that User was given sixty (60) days' written
notice, User shall be obligated to accept Transponder Service on such
substituted Transponder. PBS shall not exercise its substitution right under
this Section 8.2(b) more than once per calendar year.
8.3 GE-3 Transponder Service Agreement. User acknowledges and agrees that
-----------------------------------
PBS is not by this Agreement assigning any of its rights under the GE-3
Transponder Service Agreement to User, including, without limitation, any of
GEA's warranties or PBS's remedies with respect to the Transponders or the
Satellite.
8.4 Resale, Sublease or Shared Use. User may resell, sublet or share,
-------------------------------
in whole or in part, Transponder Service to or with any third party for
educational television purposes, including other instructional material,
provided, however, that User shall remain responsible to PBS under this
- --------
Agreement for any act or failure to act of any person or entity utilizing the
Transponder Service and shall indemnify and hold harmless PBS in such event in
accordance with Section 13.
8.5 Action to Protect Satellite. Service to User may be discontinued or
---------------------------
suspended upon such notice as practical under the circumstances if GEA takes
action to protect the Satellite,
12
<PAGE>
including discontinuance or suspension of operation of the Satellite, the
Transponder(s) on which User is taking service or any other transponder. In the
event of any discontinuance or suspension by GEA under this Section 8.5, PBS
shall not be liable to User, provided, however, that User may receive a credit
-------- -------
computed as provided in Section 11 of this Agreement.
8.6 Compliance with GEA Procedures. Earth station requirements,
------------------------------
satellite access specifications and operating procedures are set forth in the
Users Guide. User agrees to conform its uplink earth station transmissions, if
any, to the access specifications and comply with the operating procedures set
forth herein and in the Users Guide. Prior to commencing use of any service
provided hereunder, User, at its expense, shall provide GEA with any de-
scrambling or decoding devices which may be required for signal monitoring. At
a mutually agreed time, and prior to transmitting from a User-provided earth
station, User or its designee will contact the GEA Technical Operations Center
designated by GEA and demonstrate the earth station's ability to perform in
accordance with access specifications.
8.7 Improper Operation. In the event of any failure of User to comply
------------------
with the satellite access specifications or operating procedures set forth in
the Users Guide, or if operation by User interferes materially with GEA's other
satellite services or with the use of other transponders, User agrees to correct
such improper operation immediately upon discovery or receiving notice from PBS
or GEA of the occurrence of any such improper operation. In the event of User's
failure to discontinue, PBS may take such action as is reasonable and necessary
in the circumstances to eliminate such improper operation, including suspending
User's use of the service provided hereunder, without any liability for loss or
damage whatsoever. In addition to PBS's right to terminate under Section 10(h),
User will pay to PBS, as liquidated damages, Two Hundred Dollars ($200) for each
minute improper operation continues after User has been notified by PBS of the
improper operation. If User's services are suspended in accordance with this
Section 8.7, then PBS may, at its option, immediately assume operational control
of User's use of the service until such time as User has been recertified by GEA
to properly operate and access the Satellite. Notwithstanding the foregoing or
anything to the contrary contained herein, in the event of improper operation by
User and termination of service to User by GEA, PBS shall not be liable to User
as a result of termination of service to User by GEA.
8.8 Testing. Service to User may be suspended upon such notice as is
-------
reasonable under the circumstances for the purpose of testing in connection with
a failure or suspected failure of a component or subsystem of the Satellite or
any transponder thereon, or in response to an order of a court or governmental
agency, or to determine the cause or source of any interference. User shall be
granted a credit computed in accordance with Section 11 of this Agreement for
any suspension of service pursuant to this Section 8.8. PBS reserves the right
to permit GEA to periodically transmit essential station-keeping signals to
selected transponders, including User's Transponder(s) on the Satellite.
8.9 PBS's Rights under GE-3 Transponder Service Agreement. PBS shall not
-----------------------------------------------------
modify or waive any of its rights under the GE-3 Transponder Service Agreement
in a way that would materially and adversely affect the Transponder Service
provided to User hereunder, unless PBS determines in its reasonable judgment
that such modification or waiver is necessary in order to
13
<PAGE>
protect and maintain PBS's service under the GE-3 Transponder Service Agreement,
in which case, PBS shall use its best efforts, consistent with the protection
and maintenance of PBS's service, to not modify, alter or terminate the rights,
privileges, or services being provided to User hereunder. In addition, PBS
agrees that it shall comply with the terms, conditions, and agreements of the
GE-3 Transponder Service Agreement and that PBS shall notify User in writing
within two (2) days of a default by GE under the GE-3 Transponder Service
Agreement or that GE is modifying or reducing the rights of PBS. Such notice of
a default to User shall include a copy of any correspondence or other
communications relating to the default.
8.10 Sun Transit Outage Reports. PBS will provide User with advance
--------------------------
notice in the spring and fall of expected sun transit outages, upon PBS's
receipt of such notice from GEA.
9. Covenants of User.
------------------
User hereby agrees and covenants with PBS that User will faithfully and
diligently perform each of the covenants set forth in this Section 9.
9.1. Satisfaction of Conditions to Commencement of User's Obligation To
------------------------------------------------------------------
Receive Transponder Service. User shall endeavor to ensure that all the
- ---------------------------
conditions set forth in Section 6 of this Agreement are satisfied to the extent
that action by User is necessary therefor or contemplated in connection
therewith.
9.2. Operating Restrictions of GEA and PBS. User shall comply with all
-------------------------------------
operating conditions and restrictions imposed upon users of Transponders on the
Satellite by GEA, including without limitation any anti-interference
obligations, and in accordance with the Users Guide. User agrees to promptly
correct any problems of a technical nature that PBS or GEA determines are caused
by User and, if so directed by PBS, shall cease or modify transmission to the
Transponders in order to remedy any interference caused by User. In the event
User is utilizing a Transponder(s) for multiple transmissions, User shall be
responsible for coordinating such use with GEA in advance and shall be solely
responsible for any additional operating fees GEA may require.
9.3. Ground Equipment. User shall be solely responsible for the design,
----------------
engineering, and provision of all uplink, downlink and terrestrial transmission
facilities employed by User and for their compatibility with the Transponders.
9.4. Compliance with Law. User shall comply during the Service Term with
-------------------
all applicable laws and all requirements of the FCC, or any other US, state or
local authority of competent jurisdiction, with respect to the use of the
Transponders. User shall support the validity of and shall not challenge any
provisions in this Agreement or the GE-3 Transponder Service Agreement in
connection with any attempts by PBS or GEA to obtain any approvals by the FCC or
any other regulatory body, and agrees to furnish such documents and to take all
such actions as may be required by GEA or PBS to assist in obtaining such
approvals.
14
<PAGE>
9.5 Objectionable Material. User hereby represents and warrants to PBS
----------------------
that it will not, and that it will not permit others to, use the services, the
Satellite, Transponders, facilities or equipment provided hereunder for any
unlawful purpose, or to transmit obscene or sexually explicit communications or
unlawful communications of any nature or otherwise in violation of any
applicable law. User understands and agrees that any such use shall be grounds
for immediate termination in accordance with Section 10(g), or, at PBS's sole
option, suspension of service.
10. Termination.
------------
This Agreement shall immediately terminate and henceforth be of no force
and effect whatsoever, except as otherwise expressly provided herein, upon the
occurrence of any of the following:
(a) If, as of May 1, 1998, all conditions precedent to commencement of
Transponder Service have not been satisfied or waived by the appropriate party;
(b) The GE-3 Transponder Service Agreement shall have been terminated in
accordance with its terms;
(c) There shall have occurred a material breach or default of any
obligation hereunder (including non-payment of any sums due PBS), which material
breach or default remains uncured ten (10) days after notice of the occurrence
thereof to the breaching party, and the party not in breach or default elects to
terminate this Agreement. For purposes of determining termination rights only,
any failure of PBS to furnish service for in excess of a period of twenty-four
(24) consecutive hours regardless of whether such service failure is caused by
PBS, shall, unless service is restored within ten (10) days be deemed to be a
material breach of this Agreement by PBS;
(d) Any court or governmental authority, including without limitation the
FCC, shall determine that User's use of the Transponders is unlawful;
(e) At PBS's option, immediately upon notice to User, if (i) User shall
become insolvent, or shall make a transfer or assignment for the benefit of
creditors; (ii) User shall file a voluntary petition for relief under the U.S.
Bankruptcy Code or other law relating to bankruptcy, insolvency, reorganization
or liquidation or an order for relief shall be entered against User in any
involuntary case under U.S. or any other law relating to bankruptcy, insolvency,
reorganization or liquidation; (iii) a receiver or trustee shall be appointed
for all or substantially all of the assets of User; or (iv) User shall attempt
to pledge, hypothecate, encumber or create any lien with respect to any
Transponder;
(f) In accordance with Section 2.2(b), in the event that any Non-
Preemptible Transponder on which User is taking service on the Protection
Satellite becomes a Transponder Failure that cannot be restored;
15
<PAGE>
(g) At PBS's option, upon notice to User, in the event that User or any
person authorized to use the Transponder(s) by User uses the Transponder(s) for
any unlawful purpose, or transmits obscene or sexually explicit communications
or unlawful communications of any nature or otherwise in violation of applicable
law;
(h) At PBS's option, upon notice to User, in the event of any failure of
User to correct any improper operation immediately upon discovery or receiving
notice from PBS or GEA of the occurrence of any such improper operation; or
(i) At PBS's option, upon notice to User, if User or its successor or
assignee ceases to use the Transponder primarily to broadcast to educational
institutions.
If this Agreement is terminated during the Service Term, PBS shall
immediately suspend Transponder Service and User shall immediately cease all use
of the Transponder(s) upon which Transponder Service had been provided.
11. Remedies.
--------
Each party hereto shall be entitled only to such remedies for breach of any
covenant or other provision hereof, or for any misrepresentation contained in
any representation and warranty, as are set forth in this Section 11. The
provisions of this Section 11 shall survive the termination of this Agreement.
11.1. Actions by Satellite Operator. Neither party hereto shall be liable
-----------------------------
to the other solely as a result of (i) the Transponders failing to function in
accordance with the Specifications; (ii) GEA or any other operator of the
Satellite failing to provide adequate TT&C Services; (iii) GEA moving the
Satellite from its current assigned operating position, or GEA's decision to
retire or replace the Satellite; or (iv) any other act or omission by GEA,
including without limitation breach by GEA of any covenant contained in the GE-3
Transponder Service Agreement, or any misrepresentation of any matter contained
in any representation or warranty made by GEA and contained in the GE-3
Transponder Service Agreement.
11.2. Interruption Credits.
---------------------
(a) PBS's sole obligation to User in the event service is interrupted or is
terminated due to any technical failure or any conduct by GEA shall be to refund
that portion of the applicable Monthly Service Fee paid by User for which
service was not provided. For any Interruption, PBS will give User a credit
allowance as described below. A Transponder Failure does not constitute an
Interruption when due to any of the following causes:
(i) The failure or non-performance of any User-provided
facilities or equipment, including failures resulting from any
out-of-tolerance earth station conditions;
16
<PAGE>
(ii) The fault, negligent act, or failure to act of User, its
employees, or agents;
(iii) Sun outages, rain fade, or externally caused interference,
other than interference caused by PBS, or by its other customers,
in their use of the Satellite;
(iv) The failure or unavailability of satellites, transponders,
facilities, services or equipment furnished to User by any other
entity which may be used in conjunction with GEA's satellites,
transponders, facilities, services or equipment, or any act or
omission of such other entity; or
(v) Suspensions of service made in accordance with this
Agreement, unless the applicable provision of this Agreement
expressly provides for granting of a credit hereunder.
(b) The duration of an Interruption is measured from the earlier of the
time that PBS is notified by User of a suspected Interruption or PBS otherwise
becomes aware of an Interruption, until the time the affected Transponder again
meets the Specifications, or until the Service is otherwise restored on a
Transponder meeting the Specifications. For the purpose of calculating the
credit, a month is considered to have thirty (30) days.
(c) Credits for Interruptions in the service for each Transponder
provided to User under this Agreement shall be granted as follows:
(i) Interruptions of 24 Hours or Less. Credit for Interruptions
---------------------------------
will be allowed as follows:
Length of Interruption Credit
---------------------- ------
Less than 5 minutes None
5 minutes up to but not including 3 hours 1/10 day
3 hours up to but not including 6 hours 1/5 day
6 hours up to but not including 9 hours 2/5 day
9 hours up to but not including 12 hours 3/5 day
12 hours up to but not including 15 hours 4/5 day
15 hours up to 24 hours inclusive One day
Two or more Interruptions of five (5) minutes or more, during any
period up to but not including three (3) hours, shall be
considered as one Interruption.
(ii) Interruptions Over 24 Hours. Credit will be allowed in one-
---------------------------
fifth (1/5) day multiples for each three (3) hour period of
Interruption or
17
<PAGE>
fraction thereof. No more than one full day's credit will be
allowed for any period of twenty-four (24) hours.
(d) Credits will be provided within ninety (90) days of the event giving
rise to the right to such credit. If, after the expiration of this Agreement,
User has not utilized credits granted pursuant to this Section, subject to
payment of all sums due PBS under this Agreement and all other agreements
between User and PBS, PBS will refund to User the balance of such credits.
11.3. Force Majeure. Neither party shall be liable to the other for any
--------------
failure of or delay in performance hereunder due to causes beyond its
commercially reasonable control. These causes include but are not limited to:
acts of God; fire, flood or other natural catastrophes; the need to comply with
any law or any rule, order, regulation or direction of the United States
Government, or of any other government, including state and local governments
having jurisdiction over either party, or of any department, agency, commission,
bureau, court or other instrumentality thereof, or of any civil or military
authority; national emergencies; insurrections; riots; acts of war; quarantine
restrictions; embargoes; or strikes, lockouts, work stoppages or labor
difficulties.
11.4. Exclusion of Consequential Damages. In no event shall either party
----------------------------------
have the right to recover indirect or consequential damages (including loss of
profits or business opportunities), for breach of this Agreement, or under any
other form or cause of action (including, but not limited to, negligence), in
any way relating to the subject matter hereof, or for the partial or total
failure of the Transponders except as expressly provided herein.
11.5. Other Remedies. Subject to the provisions of this Section 11, in the
--------------
event of the breach of this Agreement each party shall have the right to
exercise any and all remedies that it may have at law or in equity, including in
the case of a breach of Section 9.5, the right to injunctive relief.
12. Brokers' Fees.
--------------
User represents and warrants to PBS that it has dealt with no broker, agent
or other person, other than One World Technologies, Inc. ("One World"), in
connection with this transaction and that no broker, agent or other person
acting on its behalf brought about this transaction other than One World. User
agrees to indemnify and hold PBS harmless from and against any claims by any
other broker, agent or other person acting on its behalf claiming a commission
or other form of compensation by virtue of having dealt with regard to this
Agreement.
13. Indemnification.
----------------
Each party hereto shall indemnify the other party and hold it harmless from
and against any claim or allegation, whether civil or criminal, liability,
damage, loss or expense (including reasonable attorneys fees) (each a "Claim")
arising from or in connection with (i) any use of any
18
<PAGE>
of the Transponders by the other party or any person authorized to use any of
the Transponders by the other party, including, without limitation, any
assignee, licensee, lessee, purchaser, or person to whom use or service rights
are granted, which claims may include, without limitation, any claim or
allegation of libel, slander or other defamation, invasion of privacy,
infringement of copyright or other intellectual property right, or any other
claim arising out of the content or subject matter of any communication which is
being transmitted using the service provided hereunder, or violation of any
governmental law, rule or regulation relating to program content, or any other
claim arising from any use of service on any transponder furnished to User and
not based on the content of the communication transmitted using the service; and
(ii) any breach by such latter party of any of its representations, warranties
and covenants under this Agreement, and the indemnifying party shall, at its own
expense, and with counsel reasonably satisfactory to the indemnified party,
defend the indemnified party against any such Claim. The provisions of this
Section 13 shall survive the termination of this Agreement.
14. Confidentiality.
----------------
14.1. Confidential Information. Except to the extent necessary to perform
-------------------------
this Agreement, User agrees not to use or disclose to any third party and agrees
to hold in strict confidence, unless compelled to disclose by judicial or
administrative process or, in the opinion of counsel, by other requirements of
law, all research results, documents, information, knowledge, or other data (the
"Confidential Information") obtained by User with respect to PBS or GEA in
connection with the services provided under this Agreement, except to the extent
that the Confidential Information was known to User prior to the date of
disclosure of such Confidential Information by PBS, entered the public domain
other than as a result of a disclosure by User, is public knowledge in the field
or trade, or otherwise ceases to be confidential or proprietary through no fault
of User. All Confidential Information shall be used only for the purposes set
forth in this Agreement and shall be protected from unauthorized disclosure with
the same degree of care, which shall be no less than reasonable care, as User
uses to protect its own confidential and proprietary business information.
14.2. GEA Confidential Information. User acknowledges and agrees that the
----------------------------
confidentiality obligation in this Section 14 shall extend to all information,
knowledge, or other data provided to PBS by GEA, including information provided
to User related to the design and performance characteristics of the Satellite,
the Specifications and Users Guide (collectively the "GEA Confidential
Information"). User hereby acknowledges and agrees that the GEA Confidential
Information is confidential and is not to be disclosed to any other party or
publicized except as set forth herein.
14.3. Duration. Notwithstanding any other provision hereof, the
---------
confidentiality obligation in this Section 14 shall survive for a period of
three (3) years from the date hereof.
19
<PAGE>
15. Miscellaneous.
-------------
15.1 Notification to PBS Satellite Operations Center. User agrees to
--------------------------------------------------
notify the PBS Satellite Operations Center of the person or person(s) who will
be available on a 24-hour basis for PBS to contact in the event of a required
adjustment or problem.
15.2. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the Commonwealth of Virginia applicable to contracts
made and to be performed therein without giving effect to the principles of
conflicts of laws.
15.3. Waiver. Any waiver by either party hereto of any breach of any term
------
or condition of this Agreement shall not constitute a waiver of any other breach
of the same or any other term or condition.
15.4. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
15.5. Captions. The captions and headings herein are inserted for
--------
convenience and reference only and in no way define or limit the scope or
content of this Agreement or in any way affect its provisions.
15.6. Assignment. No party may assign any of its rights, interests,
----------
claims or obligations under this Agreement, except to its parent company or
another company with substantially identical ownership, without the prior
written consent of the other party, which consent shall not be unreasonably
withheld or delayed. No such assignment will release the assigning party from
its obligations hereunder.
15.7. Amendment. This Agreement may be amended only in a writing signed
---------
by the parties.
15.8. Exhibits. Any Exhibits shall be deemed to be a part of this
--------
Agreement as if set forth fully herein.
15.9. Survival of Rights Duties and Obligations. To the extent that the
-----------------------------------------
terms of this Agreement provide for rights, duties and obligations of the
parties subsequent to the termination hereof, the terms of this Agreement shall
survive the termination thereof.
15.10. Entire Agreement. This Agreement represents the entire
----------------
understanding between the parties and supersedes all prior oral and written
understandings and agreements of the parties with respect to the subject matter
hereof.
15.11. Notices. Any notice contemplated by this Agreement shall be in
-------
writing and addressed as indicated below and, except as otherwise expressly
provided herein, shall be deemed given when mailed by registered or certified
mail, return receipt requested, or sent by overnight delivery service
maintaining records of receipt; or when received if notice is personally
delivered.
20
<PAGE>
As to User: College Television Network, Inc.
5784 Lake Forrest Drive
Suite 275
Atlanta, Georgia 30328
With a copy to:
---------------------------------
---------------------------------
---------------------------------
---------------------------------
As to PBS:
Public Broadcasting Service
1320 Braddock Place
Alexandria, Virginia 22314
Attention: Vice President, Distribution Services
With a copy to:
Public Broadcasting Service
1320 Braddock Place
Alexandria, Virginia 22314
Attention: Office of the General Counsel
Provided that either party may, by written notice, designate from time to time a
substitute address for such notice.
15.12. Severability. If any covenant, term, provision, agreement, or
------------
obligation contained in this Agreement, or the application thereof to any person
or circumstances, shall be determined to be invalid or unenforceable, the
remainder of this Agreement shall remain in full force and effect.
15.13. Successors and Assigns. The terms, conditions, and covenants
----------------------
contained in this Agreement shall apply to, inure to the benefit of, and are
binding upon the parties hereto and their respective successors and permitted
assigns.
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
PUBLIC BROADCASTING SERVICE COLLEGE TELEVISION NETWORK, INC.
/s/ Robert G. Ottenhoff /s/ Joseph D. Gersh
- ----------------------- -------------------
Robert G. Ottenhoff Name: Joseph D. Gersh
Executive Vice President Title: Chief Operations Officer
and Chief Operating Officer
Date: 5/7/98 Date: 4/30/98
------ -------
22
<PAGE>
EXHIBIT A
TRANSPONDER PERFORMANCE SPECIFICATIONS
23
<PAGE>
EXHIBIT B
COMMERCIAL OPERATIONS SYSTEM USERS GUIDE
24
<PAGE>
EXHIBIT C
GEA UPLINK DATA SHEET
25
<PAGE>
EXHIBIT 10.4
STANDARD FORM OF OFFICE LEASE
The Real Estate Board of New York, Inc.
Agreement of Lease made as of this 1st day of June, 1998,
32 EAST 57TH STREET LLC, by Joseph P. Day Realty Corp., Agent, having its
office at 9 East 40th Street, New York, New York, 10016 party of the first part,
hereinafter referred to as OWNER, and
THE COLLEGE TELEVISION NETWORK INC., a Delaware Corporation currently
located at 909 Third Avenue, New York, New York 10022 party of the second part,
hereinafter referred to as TENANT,
WITNESSETH:
Owner hereby leases to Tenant and Tenant hereby hires from Owner the entire
11th and 12th Floors in the building known as 32 East 57th Street in the Borough
of Manhattan, City of New York, for a term of Ten Years (or until such term
shall sooner cease and expire as hereinafter provided) to commence on execution
and delivery of this Lease by the parties hereto (the "Commencement Date", and
to end on the date 10 years after the Commencement Date, both dates inclusive,
at an annual rental rate of Two Hundred Forty-Nine Thousand Nine Hundred and
No/100 ($249,000.00) Dollars per annum, subject to adjustment as provided in
this Lease and the Rider Agreement annexed hereto, which Tenant agrees to pay in
lawful money of the United States which shall be legal tender in payment of all
debts and dues, public and private, at the time of payment, in equal monthly
installments in advance on the first day of each month during said term, at the
office of Owner or such other place as Owner may designate, without any set off
or deduction whatsoever, except as otherwise set forth herein or allowed by law,
except that Tenant shall pay the first full monthly installment on execution of
this Lease.
The parties hereto, for themselves, their heirs, distributees, executors,
administrators, legal representatives, successors and assigns, hereby covenant
as follows:
1. RENT:
Tenant shall pay the rent as above and as hereinafter provided.
2. OCCUPANCY:
Tenant shall use and occupy the demised premises for general offices and for no
other purpose without Owner's prior written consent.
3. TENANT ALTERATIONS:
Tenant shall make no changes in or to the demised premises of any nature without
Owner's prior written consent. Subject to the prior written consent of Owner,
and to the provisions of this
<PAGE>
article, Tenant, at Tenant's expense, may make alterations, installations,
additions or improvements which are non-structural and which do not affect
utility services or plumbing and electrical lines, in or to the interior of the
demised premises by using contractors or mechanics first approved in each
instance by Owner. Tenant shall, before making any alterations, additions,
installations or improvements, at its expense, obtain all permits, approvals and
certificates required by any governmental or quasi-governmental bodies and (upon
completion) certificates of final approval thereof and shall deliver promptly
duplicates of all such permits, approvals and certificates to Owner and Tenant
agrees to carry and will cause Tenant's contractors and sub-contractors to carry
such workman's compensation, general liability, personal and property damage
insurance as Owner may reasonably require. If any mechanic's lien is filed
against the demised premises, or the building of which the same forms a part,
for work claimed to have been done for, or materials furnished to, Tenant,
whether or not done pursuant to this article, the same shall be discharged by
Tenant within thirty days after Tenant receives written notice of such lien, at
Tenant's expense, by payment or filing the bond required by law. All fixtures
and all paneling, partitions, railings and like installations, installed in the
premises at any time, either by Tenant or by Owner on Tenant's behalf, shall,
upon installation, become the property of Owner and shall remain upon and be
surrendered with the demised premises. If tenant requests in writing that Owner
do so, Owner will state at the time Owner consents to such installations whether
Owner elects to have such installations removed by Tenant. Owner will not
require Tenant to remove Tenant's initial installation except Tenant shall
remove any staircase Tenant installs between the 11th and 12th Floors and tenant
shall slab over the opening. If Owner requires the installations to be removed
by Tenant, the same shall be removed from the premises by Tenant prior to the
expiration of the lease, at Tenant's expense. Nothing in this Article shall be
construed to give Owner title to or to prevent Tenant's removal of trade
fixtures, moveable office furniture and equipment, but upon removal of any such
from the premises or upon removal of other installations as may be required by
Owner, Tenant shall immediately and at its expense, repair and restore the
premises to the condition existing prior to installation and repair any damage
to the demised premises or the building due to such removal. All property
permitted or required to be removed, by Tenant at the end of the term remaining
in the premises after Tenant's removal shall be deemed abandoned and may, at the
election of Owner, either be retained as Owner's property or may be removed from
the premises by Owner, at Tenant's expense.
4. MAINTENANCE AND REPAIR:
Tenant shall, throughout the term of this lease, take good care of the demised
premises and the fixtures and appurtenances therein. Tenant shall be
responsible for all damage or injury to the demised premises or any other part
of the building and the systems and equipment thereof, whether requiring
structural or nonstructural repairs to the extent caused by or resulting from
negligence or intentional acts of Tenant, Tenant's subtenants, agents,
employees, invitees or licensees, or which arise out of any work, labor, service
or equipment done for or supplied to Tenant or any subtenant or arising out of
the installation, use or operation of the property or equipment of Tenant or any
subtenant. Tenant shall also repair all damage to the building and the demised
premises caused by the moving of Tenant's fixtures, furniture and equipment.
Tenant shall promptly make, at Tenant's expense, all repairs in and to the
demised premises for which Tenant is responsible, using only the contractor for
the trade or trades in question,
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selected from a list of at least two contractors per trade submitted by Owner.
Any other repairs in or to the building or the facilities and systems thereof
for which Tenant is responsible shall be performed by Owner at the Tenant's
expense. Owner shall maintain in good working order and repair the exterior and
the structural portions of the building, including the structural portions of
its demised premises, and the public portions of the building interior and the
building plumbing, electrical, heating and ventilating systems (to the extent
such systems presently exist) serving the demised premises. Tenant agrees to
give prompt notice of any defective condition in the premises for which Owner
may be responsible hereunder. Except as expressly set forth in this Lease there
shall be no allowance to Tenant for diminution of rental value and no liability
on the part of Owner by reason of inconvenience, annoyance or injury to business
arising from Owner or others making repairs, alterations, additions or
improvements in or to any portion of the building or the demised premises or in
and to the fixtures, appurtenances or equipment thereof. It is specifically
agreed that Tenant shall not be entitled to any setoff or reduction of rent by
reason of any failure of Owner to comply with the covenants of this or any other
article of this Lease. Tenant agrees that Tenant's sole remedy at law in such
instance will be by way of an action for damages for breach of contract. The
provisions of this Article 4 shall not apply in the case of fire or other
casualty which are dealt with in Article 9 hereof. Owner shall maintain and
repair the main lobby area, the roof, foundations, exterior walls and glass of
the building. Tenant shall give notice to Owner of any defect or need for repair
and Owner shall repair or cure the same within a reasonable time.
5. WINDOW CLEANING:
Tenant will not clean nor require, permit, suffer or allow any window in the
demised premises to be cleaned from the outside in violation of Section 202 of
the Labor Law or 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.
6. REQUIREMENTS OF LAW, FIRE INSURANCE, FLOOR LOADS:
Prior to the commencement of the lease term, if Tenant is then in possession,
and at all times thereafter, Tenant, at Tenant's sole cost and expense, shall
promptly comply with all present and future laws, orders and regulations of all
state, federal, municipal and local governments, departments, commissions and
board and any direction of any public officer pursuant to law, and all orders,
rules and regulations of the New York Board of Fire Underwriters, Insurance
Services Office, or any similar body which shall impose any violation, order or
duty upon Owner or Tenant with respect to the demised premises, arising out of
Tenant's particular use or manner of use thereof, (excluding Tenant's permitted
use) or, with respect to the building if arising out of Tenant's particular use
or manner of use of the premises or the building (excluding the use permitted
under the lease). Nothing herein shall require Tenant to make structural
repairs or alterations unless Tenant has, by its manner of use of the demised
premises or method of operation therein, violated any such laws, ordinances,
orders, rules, regulations, or requirements with respect thereto. Tenant may,
after securing Owner to Owner's satisfaction against all damages, interest,
penalties and expenses, including, but not limited to, reasonable attorney's
fees, by cash deposit or by surety bond in an amount and in a company
satisfactory to Owner,
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contest and appeal any such laws, ordinances, orders, rules, regulations or
requirements provided same is done with all reasonable promptness and provided
such appeal shall not subject Owner to prosecution for a criminal offense or
constitute a default under any lease or mortgage under which owner may be
obligated, or cause the demised premises or any part thereof to be condemned or
vacated. Tenant shall not do or permit any act or thing to be done in or to the
demised premises which is contrary to law, or which will invalidate or be in
conflict with public liability, fire or other policies of insurance at any time
carried by or for the benefit of Owner with respect to the demised premises or
the building of which the demised premises form a part, or which shall subject
Owner to any liability or responsibility to any person or for property damage.
Tenant shall not keep anything in the demised premises except as now or
hereafter permitted by the Fire Department, Board of Fire Underwriters, Fire
Insurance Rating Organization or other authority having jurisdiction, and then
only in such manner and such quantity so as not to increase the rate for fire
insurance applicable to the building, nor use the premises in a manner which
will increase the insurance rate for the building or any property located
therein over that in effect prior to the commencement of Tenant's occupancy.
Tenant shall pay all costs, expenses, fines, penalties, or damages, which may be
imposed upon Owner by reason of Tenant's failure to comply with the provisions
of this Article and if by reason of such failure the fire insurance rate shall,
at the beginning of this Lease or at any time thereafter, be higher that it
otherwise would be, then Tenant shall reimburse Owner, as additional rent
hereunder, for that portion of all fire insurance premiums thereafter paid by
Owner which shall have been charged because of such failure by Tenant. In any
action or proceeding wherein Owner and Tenant are parties, a schedule or "make-
up" of rate for the building or demised premises issued by the New York Fire
Insurance Exchange, or other body making fire insurance rates applicable to said
premises shall be conclusive evidence of the facts therein stated and of the
several items and charges in the fire insurance rates then applicable to said
premises. Tenant shall not place a load upon any floor of the demised premises
exceeding the floor load per square foot area which it was designed to carry and
which is allowed by law. Owner reserves the right to prescribe the weight and
position of all safes, business machines and mechanical equipment. Such
installations shall be placed and maintained by Tenant, at Tenant's expense, in
settings sufficient, in Owner's judgment, to absorb and prevent vibration, noise
and annoyance.
7. SUBORDINATION:
This Lease is subject and subordinate to all mortgages which may now or
hereafter affect such leases or the real property of which demised premises are
a part and to all renewals, modifications, consolidations, replacements and
extensions of any such underlying leases and mortgages. This clause shall be
self-operative and no further instruments of subordination shall be required by
any ground or underlying lessor or by any mortgagee, affecting any lease or the
real property of which the demised premises are a part. In confirmation of such
subordination, Tenant shall from time to time execute promptly any certificate
that Owner's lender may request.
8. PROPERTY LOSS, DAMAGE REIMBURSEMENT INDEMNITY:
Owner or its agents shall not be liable for any damage to property of Tenant or
of others entrusted to employees of the building, nor for loss of or damage to
any property of Tenant by
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theft or otherwise, nor for any injury or damage to persons or property
resulting from any cause of whatsoever nature, unless caused by or due to the
negligence of Owner, its agents, servants or employees. Owner or its agents will
not be liable for any such damage caused by other tenants or persons in, upon or
about said building or caused by operations in construction of any private,
public or quasi public work. If at any time any windows of the demised premises
are temporarily closed, darkened or bricked up (or permanently closed, darkened
or bricked up, if required by applicable law) for any reason whatsoever, beyond
Owner's control Owner shall not be liable for any damage Tenant may sustain
thereby and Tenant shall not be entitled to any compensation therefor nor
abatement or diminution of rent nor shall the same release Tenant from its
obligations hereunder nor constitute an eviction. Tenant shall indemnify and
save harmless Owner against and from all liabilities, obligations, damages,
penalties, claims, costs and expenses for which Owner shall not be reimbursed by
insurance, including reasonable attorneys fees, paid, suffered or incurred as a
result of any breach by Tenant, Tenant's agents, contractors, employees,
invitees, or licensees, of any covenant or condition of this lease, or the
negligence or willful misconduct of the Tenant, Tenant's agents, contractors,
employees, invitees or licensees. Tenant's liability under this lease extends to
the acts and omissions of any sub-tenant, and any agent, contractor, employee,
invitee or licensee of any sub-tenant. In case any action or proceeding is
brought against Owner by reason of any such claim, Tenant, upon written notice
from Owner, will, at Tenant's expense, resist or defend such action or
proceeding by counsel approved by owner in writing, such approval not to be
unreasonably withheld.
9. DESTRUCTION, FIRE AND OTHER CASUALTY:
(a) If the demised premises or any part thereof shall be damaged by fire or
other casualty, Tenant shall give immediate notice thereof to Owner and this
Lease shall continue in full force and effect except as hereinafter set forth.
(b) If the demised premises are partially damaged or rendered partially
unusable by fire or other casualty, the damages thereto shall be repaired by and
at the expense of Owner and the rent and other items of additional rent, until
such repair shall be substantially completed and possession of the demised
premises returned to Tenant shall be apportioned from the day following the
casualty according to the part of the premises which is usable.
(c) If the demised premises are totally damaged or rendered wholly unusable
by fire or other casualty, then the rent and other items of additional rent as
hereinafter expressly provided shall be proportionately paid up to the time of
the casualty and thenceforth shall cease until the date when the premises shall
have been repaired and restored by Owner (or sooner reoccupied in part by Tenant
then rent shall be apportioned as provided in subsection (b) above), subject to
Owner's right to elect not to restore the same as hereinafter provided.
(d) If the demised premises are rendered wholly unusable or (whether or not
the demised premises are damaged in whole or in part) if the building shall be
so damaged that Owner shall decide to demolish it or to rebuilt it, then, in any
of such events, Owner may elect to terminate this lease by written notice to
Tenant, given within 90 days after such fire or casualty, or 30 days after
adjustment of the insurance claim for such fire or casualty, whichever is
sooner,
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specifying a date for the expiration of the lease, which date shall not be more
than 60 days after the giving of such notice, and upon the date specified in
such notice the term of this Lease shall expire as fully and completely as if
such date were the date set forth above for the termination of this lease and
Tenant shall forthwith quit, surrender and vacate the premises without prejudice
however, to Landlord's rights and remedies against Tenant under the Lease
provisions in effect prior to such termination, and any rent owing through the
date of the casualty shall be paid up to such date and any payments of rent made
by Tenant which were on account of any period subsequent to such date shall be
returned to Tenant. Unless Owner shall serve a termination notice as provided
for herein, Owner shall make the repairs and restorations to the demised
premises and the building under the conditions of (b) and (c) hereof, with all
reasonable expedition, subject to delays due to adjustment of insurance claims,
labor troubles and causes beyond Owner's control. After any such casualty,
Tenant shall cooperate with Owner's restoration by removing from the premises as
promptly as reasonably possible, all of Tenant's salvageable inventory and
moveable equipment, furniture, and other property. Tenant's liability for rent
shall resume five (5) days after written notice from Owner that the premises are
substantially ready for Tenant's occupancy and Owner is delivering possession of
the demised premises to Tenant.
(e) Nothing contained hereinabove shall relieve Tenant from liability that
may exist as a result of damage from fire or other casualty. Notwithstanding
the foregoing, including Owner's obligation to restore under subparagraph (b)
above, each party shall look first to any insurance in its favor before making
any claim against the other party for recovery for loss or damage resulting from
fire or other casualty, and to the extent that such insurance is in force and
collectible and to the extent permitted by law. Owner and Tenant each hereby
releases and waives all right of recovery with respect to subparagraphs (b), (d)
and (e) above, against the other or any one claiming through or under each of
them by way of subrogation or otherwise. The release and waiver herein referred
to shall be deemed to include any loss or damage to the demised premises and/or
to any personal property, equipment, trade fixtures, goods and merchandise
located therein. The foregoing release and waiver shall be in force only if
both releasors' insurance policies contain a clause providing that such a
release or waiver shall not invalidate the insurance. If, and to the extent,
that such waiver can be obtained only by the payment of additional premiums,
then the party benefiting from the waiver shall pay such premium within ten days
after written demand or shall be deemed to have agreed that the party obtaining
insurance coverage shall be free of any further obligation under the provisions
hereof with respect to waiver of subrogation. Tenant acknowledges that Owner
will not carry insurance on Tenant's furniture and/or furnishings or any
fixtures or equipment, improvements, or appurtenances removable by Tenant and
agrees that Owner will not be obligated to repair any damage thereto or replace
the same.
(f) Tenant hereby waives the provisions of Section 227 of the Real Property
Law and agrees that the provisions of this article shall govern and control in
lieu thereof. If the demised premises are totally damaged or rendered wholly
unusable by fire or other casualty and repair and restoration of the same is not
substantially completed within 150 days after such fire or other casualty,
Tenant may give Owner written notice that unless the repair and restoration of
said demised premises is substantially completed within 30 days after the date
of such notice, Tenant
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will end the term of this Lease. In the event such repair and restoration is not
substantially completed within 30 days after the date of such notice, Tenant may
at any time thereafter and prior to substantial completion of such repair and
restoration give Owner a second notice ending the term of this Lease, whereupon
the term of this Lease shall end on the date of such second notice as if such
date was the date set forth in this Lease for the end of the term of this Lease.
10. EMINENT DOMAIN:
If the whole or any part of the demised premises shall be acquired or condemned
by Eminent Domain for any public or quasi public use or purpose, then and in
that event, the term of this lease shall cease and terminate from the date of
title vesting in such proceeding and Tenant shall have no claim for the value of
any unexpired term of said Lease and assigns to Owner, Tenant's entire interest
in any such award. Tenant shall have the right to make an independent claim to
the condemning authority for the value of Tenant's moving expenses and personal
property, trade fixtures and equipment, provided Tenant is entitled pursuant to
the terms of the Lease to remove such property, trade fixture and equipment at
the end of the term and provided further such claim does not reduce Owner's
award.
11. ASSIGNMENT, MORTGAGE, ETC.:
-------------------------
Tenant, for itself, its heirs, distributees, executors, administrators, legal
representative, successor and assigns, expressly covenants that it shall not
assign, mortgage or encumber this agreement, nor underlet, or suffer or permit
the demised premises or any part thereof to be used by others, without the prior
written consent of Owner in each instance. Transfer of the majority of the
stock of a corporate Tenant or the majority partnership interest of a
partnership Tenant shall be deemed an assignment. If this lease be assigned, or
if the demised premises or any part thereof be underlet or occupied by anybody
other than Tenant, Owner may, after default by Tenant, collect rent from the
assignee, under-tenant or occupant and apply the net amount collected to the
rent herein reserved but no such assignment underletting occupancy or collection
shall be deemed a waiver of this covenant, or the acceptance of the assignee,
under-tenant or occupant as tenant, or a release of Tenant from the further
performance by Tenant of covenants on the part of tenant herein contained. The
consent by Owner to an assignment or underletting shall not in any wise be
construed to relieve Tenant from obtaining the express consent in writing or
Owner to any further assignment or underletting. See Article 61 of this Lease.
12. ELECTRIC CURRENT:
Rates and conditions in respect to submetering or rent inclusion, as the case
may be, to be added in RIDER attached hereto. Tenant covenants and agrees that
at all times its use of electric current shall not exceed the capacity of
existing feeders to the building or the risers or wiring installation and Tenant
may not use any electrical equipment which, in Owner's opinion, reasonably
exercised, will overload such installations or interfere with the use thereof by
other tenants of the building. The change at any time of the character of
electric service shall in no wise make Owner liable or responsible to Tenant,
for any loss, damages or expenses which Tenant may sustain. In the event
electrical service to the demised premises is discontinued for five consecutive
business days and as a result thereof the demised premises become untenantable
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and Tenant ceases to occupy the demised premises for the conduct of Tenant's
business, then rent and escalations shall be abated commencing on the sixth such
business day and continuing until the earlier of the date the demised premises
become tenantable or Tenant resumes the conduct of Tenant's business in the
demised premises.
13. ACCESS TO PREMISES.
Owner or Owner's agents shall have the right (but shall not be obligated) to
enter the demised premises in any emergency at any time, and, at other
reasonable times on reasonable prior notice, which may be oral, to examine the
same and to make such repairs, replacements and improvements as Owner may deem
necessary and reasonably desirable to the demised premises or to any other
portion of the building or which Owner may elect to perform. Tenant shall
permit Owner to use and maintain and replace pipes and conduits in and through
the demised premises and to erect new pipes and conduits therein provided they
are concealed within the walls, floor, or ceiling. Owner may, during the
progress of any work in the demised premises, take all necessary materials and
equipment into said premises without the same constituting an eviction nor shall
the Tenant be entitled to any abatement of rent while such work is in progress
nor to any damages by reason of loss or interruption of business or otherwise.
Owner agrees to use good faith, reasonable efforts to minimize interference with
Tenant's business. Throughout the term hereof Owner shall have the right to
enter the demised premises at reasonable hours for the purpose of showing the
same to prospective purchasers or mortgagees of the building, and during the
last six months of the term for the purpose of showing the same to prospective
tenants. If Tenant is not present to open and permit an entry into the demised
premises, Owner or Owner's agents may enter the same whenever such entry may be
necessary or permissible by master key or forcibly and provided reasonable care
is exercised to safeguard Tenant's property, such entry shall not render Owner
or its agents liable therefor, nor in any event shall the obligations of Tenant
hereunder be affected.
14. VAULT, VAULT SPACE, AREA:
No vaults, vault space or area, whether or not enclosed or covered, not within
the property line of the building is leased hereunder, anything contained in or
indicated on any sketch, blue print or plan, or anything contained elsewhere in
this Lease to the contrary notwithstanding. Owner makes no representation as to
the location of the property line of the building. All vaults and vault space
and all such areas not within the property line of the building, which Tenant
may be permitted to use and/or occupy, is to be used and/or occupied under a
revocable license, and if any such license be revoked, or if the amount of such
space or area be diminished or required by any federal, state or municipal
authority or public utility, Owner shall not be subject to any liability nor
shall Tenant be entitled to any compensation or diminution or abatement of rent,
nor shall such revocation, diminution or requisition be deemed constructive or
actual eviction. Any tax, fee or charge of municipal authorities for such vault
or area shall be paid by Tenant.
15. OCCUPANCY:
Tenant will not at any time use or occupy the demised premises in violation of
the certificate of occupancy issued for the building of which the demised
premises are a part Owner hereby
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represents and warrants to Tenant that the use of the demised premises for
general office purposes shall not violate the certificate of occupancy issued
for the building of which the demised premises are a part. Tenant has inspected
the premises and accepts them as is, subject to the riders annexed hereto with
respect to Owner's work, if any and any latent defects. In any event, Owner
makes no representation as to the condition of the premises and Tenant agrees to
accept the same subject to violations, whether or not of record; provided in no
event shall Tenant have any liability for or obligation to cure any violations
of record on the date of execution of this Lease; Owner hereby agrees promptly
to cure any violations of record on the date of execution of this lease which
prevent the permitted use of the demised premises.
16. BANKRUPTCY:
(a) Anything elsewhere in this lease to the contrary notwithstanding, this
lease may be cancelled by Owner by the sending of a written notice to Tenant
within a reasonable time after the happening of any one or more of the following
events: (1) the commencement of a case in bankruptcy or under the laws of any
state naming Tenant as the debtor and failure of Tenant to cause such case (if
involuntary) to be dismissed within 60 days of the date of the filing thereof,
or (2) the making by Tenant of an assignment or any other arrangement for the
benefit of creditors under any state statute. Neither Tenant nor any person
claiming through or under Tenant, or by reason of any statute or order of court,
shall thereafter be entitled to possession of the premises demised but shall
forthwith quit and surrender the premises. If this lease shall be assigned in
accordance with its terms, the provisions of this Article 16 shall be applicable
only to the party then owning Tenant's interest in this Lease.
(b) It is stipulated and agreed that in the event of the termination of
this lease pursuant to (a) hereof, Owner shall forthwith, notwithstanding any
other provisions of this Lease to the contrary, be entitled to recover from
Tenant as and for liquidated damages an amount equal to the difference between
the rent reserved hereunder for the unexpired portion of the term demised and
the fair and reasonable rental value of the demised premises for the same
period. In the computation of such damages the difference between any
installment of rent becoming due hereunder after the date of termination and the
fair and reasonable rental value of the demised premises for the period for
which such installment was payable shall be discounted to the date of
termination at the rate of interest on U.S. Treasury obligations maturing at or
about the date such installment of rent is due. If such premises or any part
thereof be re-let by the Owner for the unexpired term of said lease, or any part
thereof, before presentation of proof of such liquidated damages to any court,
commission or tribunal, the amount of rent reserved upon such re-letting shall
be deemed to be the fair and reasonable rental value for the part or the whole
of the premises so re-let during the term of the re-letting. Nothing herein
contained shall limit or prejudice the right of the owner to prove for and
obtain as liquidated damages by reason of such termination, an amount equal to
the maximum allowed by any statute or rule of law in effect at the time when,
and governing the proceedings in which, such damages are to be proved, whether
or not such amount be greater, equal to, or less than the amount of the
difference referred to above.
17. DEFAULT:
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(1) If Tenant defaults in fulfilling any of the covenants of this lease
other than the covenants for the payment of rent or additional rent; or if the
demised premises become vacant or deserted; or if any execution or attachment
shall be issued against Tenant or any of Tenant's property whereupon the demised
premises shall be taken or occupied by someone other than Tenant; or if this
lease be rejected under (S)235 of Title 11 of the U.S. Code (bankruptcy code);
or if Tenant shall fail to move into or take possession of the premises within
thirty (30) days after the commencement of the term of this lease, then, in any
one or more of such events, upon Owner serving a written fifteen (15) days,
notice upon tenant specifying the nature of said default and upon the expiration
of said fifteen (15) days if Tenant shall have failed to comply with or remedy
such default, or if the said default or omission complained of shall be of a
nature that the same cannot be completely cured or remedied within said fifteen
(15) day period, and if tenant shall not have diligently commenced curing such
default within such fifteen (15) day period, and shall not thereafter with
reasonable diligence and in good faith, proceed to remedy or cure such default,
then Owner may serve a written five (5) days' notice of cancellation of this
Lease upon Tenant, and upon the expiration of said five (5) days this Lease and
the term thereunder shall end and expire as fully and completely as if the
expiration of such five (5) day period were the day herein definitely fixed for
the end and expiration of this lease and the term thereof and Tenant shall then
quit and surrender the demised premises to Owner but Tenant shall remain liable
as hereinafter provided.
(2) If the notice provided for in (1) hereof shall have been given, and the
term shall expire as aforesaid; or if Tenant shall make default in the payment
of the rent reserved herein or any item of additional rent herein mentioned or
any part of either or in making any other payment herein required and such
default shall continue for 10 days after the same is due (which 10 days may run
concurrently with any statutory notice period), then and in any of such events
Owner may without further notice, re-enter the demised premises either by force
or otherwise, and dispossess Tenant by summary proceedings or otherwise, and the
legal representative of Tenant or other occupant of demised premises and remove
their effects and hold the premises as if this Lease had not been made, and
Tenant hereby waives the service of notice of intention to re-enter or to
institute legal proceedings to that end.
18. Remedies of Owner and Waiver of Redemption: In case of any such default,
------------------------------------------
re-entry, expiration and/or dispossess by summary proceedings or otherwise, (a)
the rent shall become due thereupon and be paid up to the time of such re-entry,
dispossess and/or expiration, (b) Owner may re-let the premises or any part or
parts thereof, either in the name of Owner or otherwise, for a term or terms,
which may at Owner's option be less than or exceed the period which would
otherwise have constituted the balance of the term of this lease and may grant
concessions or free rent or charge a higher rental than that in this lease,
and/or (c) Tenant or the legal representatives or Tenant shall also pay Owner as
liquidated damages for the failure of Tenant to observe and perform said
Tenant's covenants herein contained, any deficiency between the rent hereby
reserved and/or covenanted to be paid and the net amount, if any, of the rents
collected on account of the lease or leases of the demised premises for each
month of the period which would otherwise have constituted the balance of the
term of this lease. The failure of Owner to re-let the premises or any part of
parts thereof shall not release or affect Tenant's liability for damages. In
computing such liquidated damages there shall be added to the said deficiency
such expenses,
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as owner may incur in connection with reletting, such as legal expenses,
reasonable attorneys' fees, brokerage, advertising and for keeping the demised
premises in good order or for preparing the same for re-letting. Any such
liquidated damages shall be paid in monthly installments by Tenant on the rent
day specified in this lease and any suit brought to collect the amount of the
deficiency for any month shall not prejudice in any way the rights of Owner to
collect the deficiency for any subsequent month by a similar proceeding. Owner,
in putting the demised premises in good order or preparing the same for re-
rental may, at Owner's option, make such alterations, repairs, replacements,
and/or decorations in the demised premises as Owner, in Owner's sole judgment,
considers advisable and necessary for the purpose of re-letting the demised
premises, and the making of such alterations, repairs, replacements, and/or
decorations shall not operate or be construed to release Tenant from liability
hereunder as aforesaid. Owner shall in no event be liable in any way whatsoever
for failure to re-let the demised premises, or in the event that the demised
premises are re-let, for failure to collect the rent thereof under such
reletting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rents collected over the sums payable by Tenant to Owner
hereunder. In the event of a breach or threatened breach by Tenant of any of the
covenants or provisions hereof, Owner shall have the right of injunction and the
right to invoke any remedy allowed at law or in equity as if re-entry, summary
proceedings and other remedies were not herein provided for. Mention in this
lease of any particular remedy, shall not preclude Owner from any other remedy,
in law or in equity. Tenant hereby expressly waives any and all rights of
redemption granted by or under any present or future laws in the event of Tenant
being evicted or dispossessed for any cause, or in the event of Owner obtaining
possession of demised premises, by reason of the violation by Tenant of any of
the covenants and conditions of this lease, or otherwise.
19. FEES AND EXPENSES.
If Tenant shall default in the observance or performance of any term or covenant
on Tenant's part to be observed or performed under or by virtue of any of the
terms or provisions in any article of this lease, after notice if required and
upon expiration of any applicable grace period if any, (except in an emergency),
then, unless otherwise provided elsewhere in this lease, Owner may immediately
or at any time thereafter and without further notice perform the obligation of
Tenant thereunder. If Owner, in connection with the foregoing or in connection
with any default by Tenant in the covenant to pay rent hereunder, makes any
expenditures or incurs any obligations for the payment of money, including but
not limited to reasonable attorneys' fees, in instituting, prosecuting or
defending any action or proceeding, and prevails in any such action or
proceeding then Tenant will reimburse Owner for such sums so paid or obligations
incurred with interest and costs. The foregoing expenses incurred by reason of
Tenant's uncured defaults shall be deemed to be additional rent hereunder and
shall be paid by Tenant to Owner within ten (10) days of rendition of any bill
or statement to Tenant therefor. If Tenant's lease term shall have expired at
the time of making of such expenditures or incurring of such obligations, such
sums shall be recoverable by Owner, as damages.
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20. BUILDING ALTERATIONS AND MANAGEMENT:
Owner shall have the right at any time without the same constituting an eviction
and without incurring liability to Tenant therefor to change the arrangement
and/or location of public entrances, passageways, doors, doorways, corridors,
elevators, stairs, toilets or other public parts of the building and to change
the name, number or designation by which the building may be known. There shall
be no allowance to Tenant for diminution of rental value and no liability on the
part of Owner by reason of inconvenience, annoyance or injury to business
arising from Owner or other Tenants making any repairs in the building or any
such alterations, additions and improvements. Furthermore, Tenant shall not
have any claim against Owner by reason of Owner's imposition of such controls of
the manner of access to the building by Tenant's social or business visitors as
the Owner may deem necessary for the security of the building and its occupants.
Such controls shall not be applied in a discriminatory manner against Tenant or
Tenant's invitees.
21. No Representations by Owner. Neither Owner nor Owner's agents have made
---------------------------
any representations or promises with respect to the physical condition of the
building, the land upon which it is erected or the demised premises, the rents,
leases, expenses of operation or any other matter or thing affecting or related
to the premises except as herein expressly set forth and no rights, easements or
licenses are acquired by Tenant by implication or otherwise except as expressly
set forth in the provisions of this lease. Tenant has inspected the building
and the demised premises and is thoroughly acquainted with their condition and
agrees to take the same "as is" and acknowledges that the taking of possession
of the demised premises by Tenant shall be conclusive evidence that the said
premises and the building of which the same form a part were in good and
satisfactory condition at the time such possession was so taken, except as to
latent defects. All understandings and agreements heretofore made between the
parties hereto are merged in this contract, which alone fully and completely
expresses the agreement between Owner and Tenant and any executory agreement
hereafter made shall be ineffective to change, modify, discharge or effect an
abandonment of it in whole or in part, unless such executory agreement is in
writing and signed by the party against whom enforcement of the change,
modification, discharge or abandonment is sought.
22. END OF TERM:
Upon the expiration or other termination of the term of this lease, Tenant shall
quit and surrender to Owner the demised premises, broom clean, in good order and
condition, ordinary wear and tear and other damages which Tenant is not required
to repair as provided elsewhere in this lease excepted, and Tenant shall remove
all its property. Tenant's obligation to observe or perform this covenant shall
survive the expiration or other termination of this lease. If the last day of
the term of this Lease or any renewal thereof, falls on Sunday, this lease shall
expire at noon on the preceding Saturday unless it be a legal holiday in which
case it shall expire at noon on the preceding business day.
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23. QUIET ENJOYMENT:
Owner covenants and agrees with Tenant that upon Tenant paying the rent and
additional rent and observing and performing all the terms, covenants and
conditions, on Tenant's part to be observed and performed, Tenant may peaceably
and quietly enjoy the premises hereby demised, subject, nevertheless, to the
terms and conditions of this lease including, but not limited to, Article 31
hereof and to the ground leases, underlying leases and mortgages hereinbefore
mentioned.
24. FAILURE TO GIVE POSSESSION:
If permission is given to Tenant to enter into the possession of the demises
premises or to occupy premises other than the demised premises prior to the date
specified as the commencement of the term of this lease, Tenant covenants and
agrees that such possession and/or occupancy shall be deemed to be under all the
terms, covenants, conditions and provisions of this lease except the obligation
to pay the fixed annual rent set forth in the preamble to this lease. The
provisions of this article are intended to constitute "an express provision to
the contrary" within the meaning of Section 223-a of the New York Real Property
Law.
25. NO WAIVER:
The failure of Owner to seek redress for violation of, or to insist upon the
strict performance of any covenant or condition of this lease or of any of the
Rules or Regulations, set forth or hereafter adopted by Owner, shall not prevent
a subsequent act which would have originally constituted a violation from having
all the force and effect of an original violation. The receipt by Owner of rent
and/or additional rent with knowledge of the breach of any covenant of this
lease shall not be deemed a waiver of such breach and no provision of this lease
shall be deemed to have been waived by Owner unless such waiver be in writing
signed by Owner. No payment by Tenant or receipt by Owner of a lesser amount
than the monthly rent herein stipulated shall be deemed to be other than on
account of the earliest stipulated rent, nor shall any endorsement or statement
of any check or any letter accompanying any check or payment as rent be deemed
an accord and satisfaction, and Owner may accept such check or payment without
prejudice to Owner's right to recover the balance of such rent or pursue any
other remedy in this Lease provided. No act or thing done by Owner or Owner's
agents during the term hereby demised shall be deemed an acceptance of a
surrender of said premises, and no agreement to accept such surrender shall be
valid unless in writing signed by Owner. No employee of Owner or Owner's agent
shall have any power to accept the keys of said premises prior to the
termination of the lease and the delivery of keys to any such agent or employee
shall not operate as a termination of the lease or a surrender of the premises.
26. WAIVER OF TRIAL BY JURY:
It is mutually agreed by and between Owner and Tenant that the respective
parties hereto shall and they hereby do waive trial by jury in any action
proceeding or counterclaim brought by either of the parties hereto against the
other (except for personal injury or property damage) on any
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matters whatsoever arising out of or in any way connected with this lease, the
relationship of Owner and Tenant, Tenant's use of or occupancy of said premises,
and any emergency statutory or any other statutory remedy. It is further
mutually agreed that in the event Owner commences any proceeding or action for
possession including a summary proceeding for possession of the premises, Tenant
will not interpose any counterclaim of whatever nature or description in any
such proceeding including a counterclaim under Article 4 except for statutory
mandatory counterclaims. Nothing in this Article shall preclude Tenant from
commencing a separate plenary action.
27. INABILITY TO PERFORM:
This Lease and the obligation of Tenant to pay rent hereunder and perform all of
the other covenants and agreements hereunder on part of Tenant to be performed
shall in no wise be affected, impaired or excused because Owner is unable to
fulfill any of its obligations under this lease or to supply or is delayed in
supplying any service expressly or impliedly to be supplied or is unable to
make, or is delayed in making any repair, addition, alterations or decorations
or is unable to supply or is delayed in supplying any equipment, fixtures, or
other materials if Owner is prevented or delayed from so doing by reason of
strike or labor troubles or any cause whatsoever including, but not limited to,
government preemption or restrictions or by reason of any rule, order or
regulation of any department or subdivision thereof of any government agency or
by reason of the condition which have been or are affected, either directly or
indirectly, by war or other emergency.
28. BILLS AND NOTICES:
Except as otherwise in this lease provided, a bill, statement, notice or
communication which Owner may desire or be required to give to Tenant, shall be
deemed sufficiently given or rendered if, in writing, delivered to Tenant
personally or sent by registered or certified mail or recognized overnight
courier addressed to Tenant at the building of which the demised premises form a
part or at the last known business address of Tenant and the time of the
rendition of such bill or statement and of the giving of such notice or
communication shall be deemed to be the time when the same is delivered to
Tenant or mailed, as herein provided. Any notice by Tenant to Owner must be
served by registered or certified mail or recognized overnight courier addressed
to Owner at the address first hereinabove given or at such other address as
Owner shall designate by written notice. All notices sent to Tenant pursuant to
the terms of this Lease shall also be copied to Tenant at the following address:
5784 Lake Forrest Drive
Suite 275
Atlanta, Georgia 30328
Attention: Pat Doran
with copy to:
Neil H. Dickson, Esq.
Morris, Manning & Martin
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1600 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326
29. SERVICES PROVIDED BY OWNERS:
Owner shall provide: (a) elevator facilities on business days from 8 a.m. to 6
p.m. and have one elevator subject to call at all other times; (b) heat to the
demised premises when and as required by law, on business days from 8 a.m. to 6
p.m.; (c) water for ordinary lavatory and drinking purposes, but if Tenant uses
or consumes water for any other purposes or in unusual quantities (of which fact
Owner shall be the sole judge), Owner may install a water meter at Tenant's
expense which Tenant shall thereafter maintain at Tenant's expense in good
working order and repair to register such water consumption and Tenant shall pay
for water consumed as shown on said meter as additional rent as and when bills
are rendered; (d) cleaning service for the demised premises on business days at
Owner's expense provided that the same are kept in order by Tenant. No one
other than persons approved by Owner shall be permitted to enter said premises
or the building of which they are a part for such purpose. Tenant shall pay
Owner the cost of removal of any of Tenant's refuse and rubbish from the
building. If Tenant requires air conditioning/cooling or ventilation for more
extended hours or on Saturdays, Sundays or on holidays, as defined under Owner's
contract with Operating Engineers Local 94-94A, Owner will furnish the same at
Tenant's expense. Rider to be added in respect to rates and conditions for such
additional service; (f) Owner reserves the right to stop services of the
heating, elevators, plumbing, air-conditioning, electric, power systems or
cleaning or other services if any, when necessary by reason of accident or for
repairs, alterations, replacements or improvements necessary or desirable in the
judgment of Owner for as long as may be reasonably required by reason thereof.
If the building of which the demised premises are a part supplies manually
operated elevator service, Owner at any time may substitute automatic control
elevator service and proceed diligently with alterations necessary therefor
without in any wise affecting this lease or the obligation of Tenant hereunder.
In the event the demised premises become untenantable for five or more
consecutive business days as a result of the failure to provide any of the
foregoing services and as a result thereof Tenant ceases to occupy the demised
premises for the conduct of Tenant's business, then rent and escalation's shall
abate commencing on the sixth such business day and continuing until the earlier
of the date the demised premises become tenantable or the date Tenant resumes
the conduct of Tenant's business in the demised premises.
30. CAPTIONS:
The Captions are inserted only as a matter of convenience and for reference and
in no way define, limit or describe the scope of this lease nor the intent of
any provisions thereof.
31. DEFINITIONS:
The term "office" or "offices", wherever used in this lease, shall not be
construed to mean premises used as a store or stores, for the sale or display,
at any time, of goods, wares or merchandise, of any kind, or as a restaurant,
shop, booth, bootblack or other stand, barber shop, or for other similar
purposes or for manufacturing. The term "Owner" means a landlord or
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lessor, and as used in this lease means only the owner, or the mortgagee in
possession, for the time being of the land and building (or the owner of a lease
of the building or of the land and building) of which the demised premises form
a part, so that in the event of any sale or sales of said land and building or
of said lease, or in the event of a lease of said building, or of the land and
building, the said Owner shall be and hereby is entirely freed and relieved of
all covenants and obligations of Owner hereunder arising subsequent to a sale
and it shall be deemed and construed without further agreement between the
parties or their successors in interest, or between the parties and the
purchaser, at any such sale, or the said lessee of the building, or of the land
and building, that the purchaser or the lessee of the building has assumed and
agreed to carry out any and all covenants and obligations of Owner, hereunder.
The words "re-enter" and "re-entry" as used in this lease are not restricted to
their technical legal meaning. The term "business days" as used in this lease
shall exclude Saturdays, Sundays and all days as observed by the State or
Federal Government as legal holidays and those designated as holidays by the
applicable building service union employees service contract or by the
applicable Operating Engineers contract with respect to HVAC service. Wherever
it is expressly provided in this lease that consent shall not be unreasonably
withheld, such consent shall not be unreasonably delayed.
32. ADJACENT EXCAVATION-SHORING:
If an excavation 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 said person shall deem necessary to
preserve the wall or the building of which demised premises form a part from
injury or damage and to support the same by proper foundations without any claim
for damages or indemnity against Owner, or diminution or abatement of rent.
33. RULES AND REGULATIONS:
Tenant and Tenant's servants, employees, agents, visitors, and licensees shall
observe faithfully, and comply strictly with, the Rules and Regulations and such
other and further reasonable rules and Regulations as Owner or Owner's agents
may from time to time adopt. Notice of any additional rules or regulations
shall be given in such manner as Owner may elect. In case Tenant disputes the
reasonableness of any additional Rule or Regulation hereafter made or adopted by
Owner or Owner's agents, the parties hereto agree to submit the question of he
reasonableness of such Rule or Regulation for decision to the New York office of
the American Arbitration Association, whose determination shall be final and
conclusive upon the parties hereto. The right to dispute the reasonableness of
any additional Rule or Regulation upon Tenant's part shall be deemed waived
unless the same shall be Asserted by service of a notice, in writing upon Owner
within thirty (30) days after the giving of notice thereof. Nothing in this
lease contained shall be construed to impose upon Owner any duty or obligation
to enforce the Rules and Regulations or terms, covenants or conditions in any
other lease, as against any other tenant and Owner shall not be liable to Tenant
for violation of the same by any other tenant, its servants, employees, agents,
visitors or licensees. Owner shall enforce the rules and regulations in a
manner which shall not be discriminatory against Tenant.
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34. SECURITY:
Tenant has deposited with Owner the sum of $83,300.00 as security for the
faithful performance and observance by Tenant of the terms, provisions and
conditions of this lease; it is agreed that in the event Tenant defaults in
respect of any of the terms, provisions and conditions of this lease, including,
but not limited to, the payment of rent and additional rent, Owner may use,
apply or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent and additional rent or any other sum as to
which Tenant is in default or for any sum which Owner may expend or may be
required to expend by reason of Tenant's default in respect of any of the terms,
covenants and conditions of this lease, including but not limited to, any
damages or deficiency in the re-letting of the premises, whether such damages or
deficiency accrued before or after summary proceedings or other re-entry by
Owner. In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants, and conditions of this lease, the security
shall be returned promptly to Tenant after the date fixed at the end of the
Lease and after delivery of entire possession of the demised premises to Owner.
In the event of a sale of the land and building or leasing of the building, of
which the demised premises form a part, Owner shall have the right to transfer
the security to the vendee or lessee and Owner shall thereupon be released by
Tenant from all liability for the return of such security, and Tenant agrees to
look to the new Owner solely for the return of said security, and it is agreed
that the provisions hereof shall apply to every transfer or assignment made of
the security to a new Owner. Tenant further covenants that it will not assign
or encumber or attempt to assign or encumber the monies deposited herein as
security and that neither Owner nor its successors or assigns shall be bound by
any such assignment, encumbrance, attempted assignment or attempted encumbrance.
On or after the date five years after the Commencement Date, provided that
Tenant is not then in default or if tenant is in default provided hat Tenant
shall have cured such default, owner shall return to tenant $41,650 of the
security then held Owner provided that Owner shall continue to hold at least
$41,650 of security.
35. ESTOPPEL CERTIFICATE:
Tenant, at any time, and from time to time, upon at least 10 days' prior notice
by Owner, shall execute, acknowledge and deliver to Owner, and/or to any other
person, firm or corporation specified by Owner, a statement certifying that this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that the same is in full force and effect as modified and stating
the modifications), stating the dates to which the rent and additional rent have
been paid, and stating whether or not there exists any default by owner under
this Lease, and, if so, specifying each such default. On Tenant's request,
Owner will furnish a similar certificate.
36. SUCCESSORS AND ASSIGNS:
The covenants, conditions and agreements contained in this lease shall bind and
inure to the benefit of Owner and Tenant and their respective heirs,
distributees, executors, administrators, successors, and except as otherwise
provided in this lease, their assigns. Tenant shall look only to Owner's estate
and interest in the land and building, the rents with respect thereto and all
insurance and condemnation proceeds for the satisfaction of Tenant's remedies
for the collection
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of a judgment (or other judicial process) against Owner in the event of any
default by Owner hereunder, and no other property or assets of such Owner (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 Owner and Tenant hereunder, or Tenant's use and occupancy of the
demised premises.
IN WITNESS WHEREOF, Owner and Tenant have respectively signed and sealed this
lease as of the day and year first above written.
32 EAST 57TH STREET LLC
Witness for Owner: by Joseph P. Day Realty Corp., Agent
(Owner)
- ------------------------------ By: ----------------------------------
THE COLLEGE TELEVISION NETWORK, INC.
(Tenant)
Witness for Tenant:
- ------------------------------- By: -----------------------------------
ACKNOWLEDGMENTS
CORPORATE OWNER
STATE OF NEW YORK, ss.:
County of
On this ____ day of ____________________, 199__, before me personally came
_________________, to me known, who being by me duly sworn, did depose and say
that he resides in _________________________ ; that he is the
________________________ of ________________________________ the corporation
described in and which executed the foregoing instrument, as OWNER; that he
knows the seal of said corporation; the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of
said corporation, and that he signed his name thereto by like order.
--------------------------------
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CORPORATE TENANT
STATE OF NEW YORK, ss.:
County of
On this ____ day of ____________________, 199__, before me personally came
_________________, to me known, who being by me duly sworn, did depose and say
that he resides in _________________________ ; that he is the
________________________ of ________________________________ the corporation
described in and which executed the foregoing instrument, as TENANT; that he
knows the seal of said corporation; the seal affixed to said instrument is such
corporate seal; that it was so affixed by order of the Board of Directors of
said corporation, and that he signed his name thereto by like order.
-------------------------------------------
INDIVIDUAL OWNER
STATE OF NEW YORK
County of
On this ____ day of ____________________, 199__, before me personally came
_________________, to be known and known to me to be the individual described in
and who, as OWNER, executed the foregoing instrument and acknowledged to me that
he executed the same.
-------------------------------------------
INDIVIDUAL TENANT
STATE OF NEW YORK
County of
On this ____ day of ____________________, 199__, before me personally came
_________________, to be known and known to me to be the individual described in
and who, as TENANT, executed the foregoing instrument and acknowledged to me
that he executed the same.
------------------------------------------
IMPORTANT - PLEASE READ
RULES AND REGULATIONS ATTACHED TO AND MADE A PART OF THIS LEASE IN ACCORDANCE
WITH ARTICLE 33.
1. The sidewalks, entrances, driveways, passages, courts, elevators,
vestibules, stairways, corridors or halls shall not be obstructed or encumbered
by any Tenant or used for any purpose other than for ingress or egress from the
demised premises and for delivery of merchandise and equipment in a prompt and
efficient manner using elevators and passageways designated for such delivery by
Owner. There shall not be used in any space, or in the public hall of the
building, either by any Tenant or by jobbers or others in the delivery or
receipt of merchandise, any hand trucks, except those equipped with rubber tires
and sideguards. If said premises are situated on the ground floor of the
building, Tenant thereof shall further, at Tenant's expense, keep the sidewalk
and curb in front of said premises clean and free from ice, snow, dirt and
rubbish.
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2. The water and wash closets and plumbing fixtures shall not be used for any
purposes other than those for which they were designed or constructed and no
sweepings rubbish, rags, acids or other substances shall be deposited therein,
and the expense of any breakage, stoppage, or damage resulting from the
violation of this rule shall be borne by the Tenant who, or whose clerks,
agents, employees or visitors, shall have caused it.
3. No carpet, rug or other article shall be hung or shaken out of any window of
the building and no Tenant shall sweep or throw or permit to be swept or thrown
from the demised premises any dirt or other substances into any of the corridors
or halls, elevators, or out of the doors or windows or stairways of the building
and Tenant shall not use, keep or permit to be used or kept any foul or noxious
gas or substance in the demised premises, or permit or suffer the demised
premises to be occupied or used in a manner offensive to Owner or other
occupants of the building by reason of noise, odors, and/or vibrations, or
interfere in any way with other Tenants or those having business therein, nor
shall any bicycles, vehicles, animals, fish, or birds be kept in or about the
building. Smoking or carrying lighted cigars or cigarettes in the elevators of
the building is prohibited.
4. No awnings or other projections shall be attached to the outside walls of
the building without the prior written consent of Owner.
5. No sign, advertisement, notice or other lettering shall be exhibited,
inscribed, painted or affixed by any Tenant on any part of the outside of the
demised premises or the building or on the inside of the demised premises if the
same is visible from the outside or the premises without the prior written
consent of Owner, except that the name of Tenant may appear on the entrance door
of the premises. In the event of the violation of the foregoing by any Tenant,
Owner may remove same without any liability, and may charge the expense incurred
by such removal to Tenant or Tenants violating this rule. Interior signs on
doors and directory tablet shall be inscribed, painted or affixed for each
Tenant by Owner at the expense of such Tenant, and shall be of a size, color and
style acceptable to Owner. Owner shall furnish Tenant with 10 listings per
floor on the building directory in the lobby for the building.
6. Except in connection with Tenant's work (hereinafter defined), no Tenant
shall mark, paint, drill into, or in any way deface any part of the demised
premises or the building of which they form a part. No boring, cutting or
stringing of wires shall be permitted, except with the prior written consent of
Owner, and as Owner may direct. No Tenant shall lay linoleum, or other similar
floor covering, so that the same shall come in direct contact with the floor of
the demised premises, and, if linoleum or other similar floor covering is
desired to be used an interlining of builder's deadening felt shall be first
affixed to the floor, by a paste or other material, soluble in water, the use of
cement or other similar adhesive material being expressly prohibited.
7. No additional locks or bolts of any kind shall be placed upon any of the
doors or windows by any Tenant, nor shall any changes be made in existing locks
or mechanism thereof. Each Tenant must, upon the termination of his Tenancy,
restore to Owner all keys of stores, offices and toilet rooms, either furnished
to, or otherwise procured by, such Tenant, and in the event of the loss of any
keys, so furnished, such Tenant shall pay to Owner the cost thereof.
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8. Freight, furniture, business equipment, merchandise and bulky matter of any
description shall be delivered to and removed from the premises only on the
freight elevators and through the service entrances and corridors, and only
during hours and in a manner approved by Owner. Owner reserves the right to
inspect all freight to be brought into the building and to exclude from the
building all freight which violates any of these rules and Regulations of the
lease or which these rules and regulations are a part.
9. Canvassing, soliciting and peddling in the building is prohibited and each
Tenant shall cooperate to prevent the same.
10. Owner reserves the right to exclude from the building all persons who do
not present a pass to the building signed by Owner. Owner will furnish passes
to persons for whom any Tenant requests same in writing. Each Tenant shall be
responsible for all persons for whom he requests such pass and shall be liable
to Owner for all acts of such persons. Tenant shall not have a claim against
Owner by reason of Owner excluding from the building any person who does not
present such pass.
11. Owner shall have the right to prohibit any advertising by any Tenant which
in Owner's opinion, tends to impair the reputation of the building or its
desirability as a building for officers, and upon written notice from Owner,
Tenant shall refrain from or discontinue such advertising.
12. Tenant shall not bring or permit to be brought or kept in or on the demised
premises, any inflammable, combustible, explosive, or hazardous fluid, material,
chemical or substance, or cause or permit any odors of cooking or other
processes, or any unusual or other objectionable odors to permeate in or emanate
from the demised premises.
13. If the building contains central air conditioning and ventilation, Tenant
agrees to keep all windows closed at all times and to abide by all rules and
regulations issued by Owner with respect to such services. If Tenant requires
air conditioning or ventilation after the usual hours, Tenant shall give notice
in writing to the building superintendent prior to 3:00 p.m. in the case of
after hours services required on weekdays' and prior to 3:00 p.m. the day prior
in case of after hours service required on weekends or on holidays Tenant shall
cooperate with Owner in obtaining maximum effectiveness of the cooling system by
lowering and closing venetian blinds and/or drapes and curtains when the sun's
rays fall directly on the windows of the demised premises.
14. Tenant shall not move any safe, heavy machinery, heavy equipment, bulky
matter, or fixtures into or out of building without Owner's prior written
consent. If such safe, machinery, equipment, bulky matter or fixtures requires
special handling, all work in connection therewith shall comply with the
Administrative Code of the City of New York and all other laws and regulations
applicable thereto and shall be done during such hours as Owner may designate.
15. Refuse and Trash, (1) Compliance by Tenant. Tenant covenants and agrees,
at its sole costs and expense, to comply with all present and future laws,
orders, and regulations of all state,
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federal, municipal, and local governments, departments, commissions and boards
regarding the collection, sorting, separation and recycling of waste products,
garbage, refuse and trash. Tenant shall sort and separate such waste products,
garbage refuse and trash into such categories as provided bylaw. Each separately
sorted category of waste products, garbage, refuse and trash shall be placed in
separate receptacles provided by the building cleaners. Such separate
receptacles may, at Owner's option, be removed from the demised premises in
accordance with a collection schedule prescribed by law. Tenant shall remove, or
cause to be removed by a contractor acceptable to Owner, at Owner's sole
discretion, such items as Owner may expressly designate. (2) Owner's Rights in
Event of Noncompliance. Owner has the option to refuse to collect or accept from
Tenant as waste products, garbage, refuse or trash (a) that is not separated and
sorted as required bylaw or (b) which consists of such items (other than
standard office rubbish) as Owner may expressly designate for Tenant's removal,
and to require Tenant to arrange for such collection at Tenant's sole cost and
expense, utilizing a contractor satisfactory to Owner. Tenant shall pay all
costs, expenses, fines, penalties, or damages that may be imposed on Owner or
Tenant by reason of Tenant's failure to comply with the provisions of this
Building Rule 15, and, at Tenant's sole costs and expense, shall indemnity,
defend and hold Owner harmless (including reasonable legal fees and expenses)
from and against any actions, claims and suits arising from such noncompliance,
utilizing counsel reasonably satisfactory to Owner.
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STANDARD LEASE RIDER
37. RIDER PROVISIONS PARAMOUNT. If and to the extent that any of the
provisions of this Rider conflict or are otherwise inconsistent with any of the
preceding printed provisions of this Lease, whether or not such inconsistency is
expressly noted in this Rider, the provisions of this Rider shall prevail, and
in a case of inconsistency with the Rules and Regulations, shall be deemed a
waiver of such Rules and Regulations with respect to this Tenant to the extent
of such inconsistency.
38. BINDING EFFECT. It is specially understood and agreed that this Lease is
offered to Tenant for signature by the managing Agent of the Building solely in
its capacity as such Agent and subject to Owner's acceptance and approval, and
that Tenant shall have affixed its signature hereto with the understanding that
such act shall not, in any way, bind Owner or its Agent until such time as this
Lease shall have been approved and executed by the managing Agent or the Owner
and delivered to Tenant.
39. REAL ESTATE TAX ESCALATION. Tenant shall pay Owner as additional rents the
amounts set forth in this Article 39.
A. The following definitions shall apply:
1. "Taxes" shall mean the real estate taxes and assessments and special
assessments imposed upon the Building by any governmental bodies or authorities
for any purpose whatsoever or any other governmental charges whether general or
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special, ordinary or extraordinary, foreseen or unforeseen, which may be levied
or assessed with respect tot he Building during the term of this Lease or any
renewal thereof whether the increase results from a higher tax rate or an
increase in the assessed value of the Building or both or other means of
increase. If at any time after the date hereof the methods of taxation
prevailing on the date hereof shall be altered so that in lieu of, or as an
addition to or as a substitute for the whole or any part of the taxes,
assessments, levies, impositions or charges now levied, assessed or imposed on
real estate and the improvements thereof, there shall be levied, assessed,
imposed (i) a tax, assessment, levy or otherwise on the rents received
therefrom, or (ii) a license fee measured by the rent payable by Tenant to
Owner, or (iii) any other additional or substitute tax, assessment, levy,
imposition or charge, then all such taxes, assessments, levies, impositions to
charges or the part thereof so measured or based shall be deemed to be included
within the term "Taxes" for the purpose hereof. Taxes shall not include any
inheritance, estate, succession, transfer, gift, franchise, corporation, income
or profit tax or excess profits that is or may be imposed upon Owner. Tenant
agrees to pay Tenant's Share of the actual costs incurred by Owner in any tax
protest or reduction proceedings, including attorneys, accountants and
appraiser's fees and any filing or court fee or other costs, disbursements or
expenses incurred with relation to each Tax Year during the term of this Lease.
2. "Base Tax" shall mean Taxes, as finally determined by settlement,
court decision or otherwise, for the fiscal Tax Yea ending June 30, 1998.
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3. "Tax Year" shall mean the fiscal year for which Taxes are levied by
the governmental authority.
4. "Tenant's Share" shall be 11 percent (11%) throughout the term of
this Lease irrespective of the bulk of the Building and the Demised Premises and
any additions or demolition at any time during the term hereof.
5. "Building" shall mean the land and building known as 32 East 57th
Street in the borough of Manhattan, city and state of New York of which the
Demised Premises form a part.
B. 1. If, for any reason, the Taxes for any Tax Year shall be more that
the Base Tax, tenant shall pay as additional rent for such Tax Year an amount
equal to Tenant's Share of the amount by which the Taxes for such Tax Year are
greater than the Base Tax. (The amount payable by Tenant is hereinafter called
the "Tax Payment"). Owner or Agent shall furnish Tenant with a statement
showing the calculations for any year in which a Tax Payment is due and if
requested with copies of the tax bills.
2. In the event the Base Tax is reduced as a result of settlement,
court decision or of any other appropriate proceeding or agreement, Owner shall
have the right to adjust the amount of Tax Payment due from tenant for any Tax
Year in which Tenant is o was obligated to pay a Tax Payment hereunder to
reflect the new Base Tax, and Tenant agrees to pay the amount of said adjustment
on the next rental installment day immediately following receipt of a rent
statement from owner setting forth the amount of said adjustment.
C. With respect to any period at the commencement or expiration of the
term, which shall constitute a partial Tax Year, Owner's statement shall
apportion the amount of Tax Payment due hereunder.
D. Beginning with the first Tax Year in which Taxes are greater that the
Base Tax, the Tax Payment for that year and subsequent years shall be paid the
same manner of installments as Taxes are paid by Owner to the taxing authority,
such payments to be required when billed but no earlier than 30 days before each
such installment is due to be paid to the taxing authority.
E. Owner shall be under no obligation to contest the Taxes or the assessed
valuation of the land and the Building for any Tax Year or to refrain from
contesting the same, and may settle any such contest on such terms as owner in
its sole judgment considers proper.
F. Owner's failure during the Lease term to prepare and deliver any
statements or bill for Tax Payment, or Owner's failure to make a demand under
this Article 39 or under any other provisions of this Lease shall not in any way
be deemed to be a waiver of or cause Owner to forfeit or surrender its right to
collect any items of additional rent which may have become due pursuant to this
Article 39 so long as Owner delivers to Tenant a bill for a Tax Payment within
one year after the expiration of the Tax Year for which such Tax Payment is due,
or any other
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article of this Lease during the term of this Lease. Tenant's liability for the
additional rent due under this Article 39 shall survive the expiration or sooner
termination of this Lease.
G. In no event shall any adjustment of Tax Payments, hereunder result in a
decrease of the fixed rent or additional rent payable pursuant to any other
provisions of this Lease, it being agreed that the payment of additional rent
under this Article 39 is an obligation supplemental and in addition to Tenant's
obligation to pay fixed rent.
H. It is understood by Tenant that Owner may obtain and accept reductions
in the proposed assessed valuation of the Building in a settlement in a Tax Year
during the term of this Lease before the Owner has paid the Taxes and such
reduction will substantially reduce the real estate tax escalation for the Tax
Year due from Tenant under this Article. Tenant therefore agrees the expenses
of the Owner in obtaining such reduction, including reasonable legal fees,
accounting fees, appraisal fees and other expenses shall be deemed o be Taxes
paid for the Tax Year of said reduction.
In the event the Taxes for any Tax Year during the term of this Lease shall
be reduced after Tenant shall have paid Tenant's share of any excess thereof in
respect of such Tax Year pursuant to this Article, Owner shall allow Tenant a
credit against future rent, or issue a refund to Tenant (if the term of this
Lease shall have expired) in the amount of Tenant's Share of the refund
(including any interest paid on such refund by the taxing authority) of such
Taxes received by Owner (after deductions of expenses, including legal fees,
accounting fees, appraisal fees and other expense incurred by Owner in obtaining
such refund).
40. WAGE FORMULA INCREASE. If the Labor Rate for any Operation Year shall be
greater than the Base Labor Rate the Tenant shall, in case of such an excess,
pay to Owner as additional rent for the Demised Premises for such Operation Year
an amount equal to the product obtained by multiplying (i) the Wage Rate
multiplied by (ii) one cent per annum for each one cent that such Labor Rate is
over the Base rate. Any such annual adjustment payable by reason of the
provisions of the preceding sentence shall be due and payable in equal monthly
installment as of the first day of the first month of the relevant Operation
Year, and Owner or Agent shall furnish Tenant with an Escalation Statement
relating to such Operation Year. The aforesaid monthly installments shall
continue until a new adjustment becomes effective pursuant to the terms of this
Article 40. If said Escalation Statement is furnished to Tenant after the
commencement of any such Operations Year there shall be promptly paid by Tenant
to Owner an amount equal to the portion of such adjustments allocable to the
part of such Operation Year which shall have elapsed prior to the first day of
the calendar month next succeeding the calendar month in which said Escalation
Statement is furnished to Tenant. Any such adjustment billed to Tenant shall be
deemed additional rent.
As used in this Article 40, the words and terms which follow mean and include
the following:
(a) "Operation Year" shall men each calendar year in which occurs any part
of the term of this Lease.
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(b) "Wage Rate Multiple" shall be 7140.
(c) "Hourly Wage Rate" as used herein shall mean the minimum regular hourly
wage rate, social security and welfare fund contribution paid for the porters
(Others) engaged in the general maintenance and operation of Class A office
buildings pursuant to a collective bargaining agreement between Owner or Owner's
association and Local 32B of the Building Serviced Employees International Union
AFL-CIO (or any successor thereto). The Hourly Wage Rate shall include but not
limited to sums paid for fringe benefits for vacations, holidays, sick days,
birthdays, jury duty, medical check-ups, lunch hours, relief time and other paid
time off, bonuses, pensions, unemployment, disability, benefits, health, life,
accident, and other types of insurance, and other employee benefits. If any
such agreement is not entered into or such parties or their successors shall
cease to bargain collectively, the Hourly Wage Rate shall be the average of the
regular hourly wage rate and other sums aforesaid payable to or for the benefit
of porters engaged in the maintenance and operation of the Building and payable
by either Owner or the contractor furnishing such services, but not in excess of
the hourly minimum rate of wages and other sums as aforesaid for porters engaged
in the general maintenance and operations of building of the same type and in
the same vicinity as the Building and, provided further, that if there is no
such agreement as of any since January 1 by which the Hourly Wage Rate for
porters is determinable, computations and payments shall thereupon be made the
basis of the Hourly Wage Rate being paid by Owner or by the contractor
performing the cleaning for Owner on such January 1 for said porters and
appropriate retroactive adjustment shall thereafter be made when the Hourly Wage
Rate to be paid as of such January 1 pursuant to such agreement for porters is
finally determined and, provided further that, if as of the last day of such
Operation Year, no such agreement covering January 1 occurring in such Operation
Year shall have been in effect, the Hourly Wage Rate paid by Owner or by the
contractor performing the cleaning services for Owner on such January 1 for said
porters as the case may be shall be for all purposes hereof deemed to be such
Hourly Wage Rate prescribed by such agreement and in effect as of such January
1.
(d) "Base Labor Rate" shall mean the Labor Rate at December 31, 1998.
(e) "Labor Rate" for any Operation Year shall mean the Hourly Wage Rate for
porters.
(f) "Escalation Statement" shall mean a statement in writing submitted by
Owner or Agent, setting forth the amount payable by Tenant for a specified
Operation Year pursuant to this Article 40.
With respect to any period at the commencement or expiration of the term, which
shall constitute a partial Operation Year, Owner's statement shall apportion the
amount of the Wage Formula Increase due hereunder.
Owner's failure during the Lease term to prepare and deliver any notice,
statement or bill, or Owner's failure to make a demand, shall not in any way
cause Owner to forfeit or surrender
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Owner's right to collect any additional rent which may have become due during
the term of this Lease under this Article 40 so long as Owner shall bill Tenant
for the Wage Formula Increase under this Article within one year after the
expiration of the Operation Year for which such increase is due, and Tenant's
liability for amounts due under this Article 40 shall survive the termination of
this Lease.
The above Article 40 which pertains to "Wage Formula Increase" utilizes the
Hourly Wage Rate of employees as part of a formula for adjusting rent as agreed
by the parties and is not intended to reflect or be based upon the actual labor
costs or other expenses of the Building which are not relevant to the formula.
In no event shall any rent adjustment hereunder result in a decrease of the
fixed annual rent provided herein.
This Hourly Wage Rate attribute to "others" a/k/a porters under the Union
contract shall be used in computations under this Article whether or not porter
wages are actually paid by or, for Owner and, shall be the only rate used, even
if n outside cleaning contractor is employed which has a Local 32B labor
contract providing for a lower or higher rate.
41. OPERATING EXPENSE ESCALATION
Owner shall have the option in any Operation Year to impose an "Operating
Expense" increase for such Operation Year pursuant to this Article 41 in lieu of
the Wage Formula Increase for such year. As used herein, the term "Operating
Expense" shall mean all costs and expenses incurred by the Owner in connection
with the operation, servicing and the maintenance of the Building, except real
estate taxes, mortgage amortization and interest payments; expenses incurred in
leasing or procuring new tenants, including leasing commissions, advertising
expenses, legal fees and expenses of renovating space for new tenants; legal
expenses for enforcing the terms of any ground lease or any mortgage; wages,
salaries and other compensation paid to any executive employee above the grade
of building manager and the wages of any building manager shall be apportioned
to the extent the building manager supervises more than one building; capital
replacements, improvements and alterations for the building above the amount
amortized by Owner or Owner's tax return for that year; expenses for which Owner
has received insurance proceeds; electricity to the extent that the cost is
reimbursed to Owner by tenants. In the event that the Owner should eliminate
the payment of any ages to other labor costs as a result of the installation of
labor saving devices or by any other means, then in computing the additional
rent payable for Operating Expenses as provided hereunder, the corresponding
item or items of such wages to other labor costs shall be deducted from the
Operating Expenses for the Base Year. As used in this Article 41, the term
"Base Year" shall mean the calendar year 1998. In the event that the Operating
Expenses incurred by the Owner during any Operation Year following the Base Year
shall exceed the Operating Expenses incurred by Owner during the Base Year, the
Tenant shall pay to the Owner as additional rent for such Operating Year an
amount equal to 11 percent (11%) of such excess. Within six months subsequently
to the Operation Year following the Base Year, and within six months after each
Operation Year thereafter, the Owner shall endeavor to furnish to the Tenant a
statement of the Operating Expenses for the preceding Operation Year and a
statement of the Operation Expenses for the Base Year, and any additional rent
due the owner by reason of any increase in Operating Expenses for the Operation
Year over the
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Operating Expenses for the Base Year shall be paid by the Tenant within thirty
(30) days after receipt of the aforesaid statement. The statement of Operating
Expenses to be furnished by the Owner shall consist of data prepared for the
Owner by a firm of Certified Public Accountants (who may be the firm currently
employed by the Owner in connection with its accounts), and the statements thus
furnished to the Tenant shall constitute a final determination as between the
Owner and the Tenant of Operating Expenses for the periods represented thereby.
Anything in this Article 41 to the contrary notwithstanding, Tenant, within 60
days after receipt of an annual Statement of Operating Expenses from Owner,
shall have the right to contest, at Tenant's cost and expense, such
determination by retaining an accountant of Tenant's selection (to be paid by
Tenant) who shall have the right to audit at Tenant's expense Owner's books and
records with respect to Operating Expenses of the Building for the year or years
in question. If Owner's accountant and Tenant's accountant shall be unable to
reach agreement, then such two accountants shall designate a third accountant to
make the determination in accordance with this Article 41 and the determination
of such third accountant shall be binding and conclusive on both Owner and
Tenant. In the event that Owner's accountant and Tenant's accountant shall be
unable to agree upon the designation of a third accountant within twenty (20)
days, then either party shall have the right to request the Real Estate Board of
New York, Inc. to designate a third accountant whose decision shall be
conclusive and binding upon the parties. The costs of such third accountant
shall be borne equally by the Owner and Tenant. Notwithstanding the foregoing
provisions of this subparagraph, Tenant, pending the resolution of any contest
pursuant to the terms hereof shall continue to pay the increase in Operating
Expense Escalation as determined in the first instance by Owner's accountant and
upon the resolution of such contest, the same shall be adjusted in accordance
therewith with appropriate refund made to Tenant if required thereby. The
failure of Owner to submit bills in accordance with this Article 41 shall not be
deemed a waiver of Owner's right to bill for such periods nor release Tenant of
Tenant's obligations to pay these charges. so long as Owner delivers to Tenant a
bill for Operating Expenses within one year after the expiration of the
Operation year for which such Operating Expenses. The obligation to make any
payment pursuant to this Article 41 shall survive the expiration or sooner
termination for this Lease.
42. HEATING COSTS
Anything to the contrary notwithstanding and in addition to billing pursuant to
Articles 40 and 41 of this Lease, Tenant agrees that in the event Heating Costs
for any calendar year shall be greater that the Heating Costs for the calendar
year 1997 as a result of but not limited to increases in or additions to the
number of unites used, rate, fuel adjustments, taxes, surcharges, energy charges
or charges of any kind, Tenant agrees to pay to Owner within thirty (30) days
after receipt of Owner's statements, 11 percent (11%) of such excess for the
particular calendar year. In the event that Owner exercises its options
pursuant to Article 41 herein then during such Lease years, this Article 42
shall not apply. Heating Costs as used in this Article 42 shall; mean fuel
costs if Owner continues to use its own heating plant or the costs of outside
heating or steam of the Owner uses an off-premises heating service.
43. LOCAL LAWS
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If any alterations, installations, changes or improvements to the Building,
including, but not limited to, the Demised Premises are made by Owner in order
to comply with New York City Local Law No. 5 (fire protection) and New York City
Law No. 10 (building condition) as each may be amended to any successor or law
of like import, at any time after the date of this Lease and prior to the
expatiation date of this Lease the cost of any such alterations shall, for the
purpose of this Article 43, be deemed amortized by Owner in accordance with an
amortization schedule with a reasonable interest factor included therein,
determined by Owner in Owner's judgment, and during each calendar year which
shall include any part of the demised term for which such amortization shall be
applicable, Tenant shall pay to Owner a sum equal to 11 percent (11%) of such
amortization and interest applicable to such calendar year. Tenant shall not be
required to make any payment under this Article by reason of alterations
required to be made by laws in effect as of the date of execution of this Lease.
44. ADDITIONAL RENT
All escalation rents, additional rent and any and all other payments, charges
and sums due buy the Tenant to the Owner under this Lease whether or not
designated as such shall be deemed rent for all purposes thereunder and by law,
and the failure to pay any such amount shall subject the Tenant to the same
rights and remedies of the Owner including the right to commence summary
proceedings for nonpayment of rent as if such escalation rent, additional rent
and other payments, charges and sums due were Fixed Annual Base Rent hereunder.
45. ACCEPTANCE OF RENT
If Tenant is in arrears in the payment of fixed rent or additional rent, Tenant
waives its rights, if any, to designate the items in arrears against which any
payments made by Tenant are to be credited, and Owner may apply any of such
payments to any such items in arrears as Owner, in its sole discretion, shall
determine, irrespective of any designation or request by Tenant as to the items
against which any such payment shall be credited. No payment by Tenant nor
receipt by Owner of a lesser amount than may be required to be paid hereunder
shall be deemed to be other than on account of any payment nor shall any
endorsement or statement on any check or any letter accompanying any check
tendered as payment be deemed an accord and satisfaction and Owner may accept
such check or payment without prejudice to Owner's right to recover the balance
of such payment due or pursue any other remedy in this Lease provided or at law.
No receipt of monies by Owner from Tenant, after any reentry or after the
cancellation or termination of this Lease in any lawful manner shall reinstate
this Lease; and after the service of notice to terminate this Lease, or after
the commencement of any action, proceeding or other remedy, Owner may demand,
receive and collect any monies due and apply this on account of Tenant's
obligations under this Lease but without in any respect affecting such notice,
action, proceeding or remedy, except that if a money judgment is being sought in
any such action or proceeding, the amount of such judgment shall be reduced by
such payment. All checks rendered to the Owner as and for the rent of the
Demised Premises shall be deemed payments for the account of the Tenant.
Acceptance by the Owner of rent from anyone other than the Tenant shall not be
deemed to operate as an attornment to the Owner by the payor of such rent or as
a
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consent by the Owner to an assignment or subletting by the Tenant to the Demised
Premises to such payor, or as a modification of the provisions of this Lease.
46. LATE PAYMENT
If Tenant shall fail to pay any installment of rent, additional rent or other
charges when first due hereunder (irrespective of any grace period as may be
applicable thereto) and such payment was not received in the office of the
Owner's Agent on or before the tenth (10th) day after such payment was first
due, then interest at the rate of one and one half percent (1-1/2%) per month
for each month or portion of a month may be charged on such sum not paid or
portion of a month may be charged on such sum not paid when first due and
payable hereunder, and such interest shall be deemed to accrue as additional
rent hereunder and shall be paid to Owner upon demand made from time to time,
but in any event no later than the time of payment of the delinquent sum. If
such interest from time to time shall exceed the rate permitted under the laws
of the State of New York to be charged on late payments of sums money due
pursuant to a lease, then the interest shall be reduced to said legal maximum
rate. Such late charge shall be without prejudice to any of Owner's rights and
remedies hereunder for nonpayment of rent and shall be in addition thereto.
47. RENT CONTROL
If the annual base rental or any additional rent shall be or become
uncollectible, reduced or required to be refunded by virtue of any law,
governmental order or regulation, or direction of any public officer or body
pursuant to law, Tenant shall within ten (10) days of request enter into an
agreement or agreements and take such other action as Owner may request, as may
be legally permissible, to permit Owner to collect the maximum annual base rent
and additional rent which may from time to time during the continuance of such
rent restriction be legally permissible, but not in excess of the amounts of
annual base rent or additional rent payable under this Lease. Upon the
termination of such rent restriction prior to the termination of the term of
this Lease, (a) the annual base rent and additional rent, after such
termination, shall become payable under this Lease in the amount of the annual
base rent and additional rent set forth in this Lease for the period following
such termination, and (b) Tenant shall pay to Owner, to the maximum extent
legally permissible, and amount equal to (i) the annual base rent and additional
rent which would have been paid pursuant to this Lease but for such rent
restriction less (ii) the annual base rent and additional rent paid by Tenant to
Owner during the period that such rent restriction was in effect. This
provision shall survive the expiration or earlier termination of this Lease to
the maximum enforceable extent.
48. TENANT'S SECURITY
Owner shall unless prohibited by law or by the general policies of lending
institutions in New York City deposit the security in an interest-bearing
account with a bank selected by Owner. All interest which shall accrue on the
security shall be held as additional security in accordance with this Lease.
Owner shall be entitled to an administrative fee of 1% per year upon the
security
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deposited by the Tenant. On request of Tenant at the end of each calendar year,
Owner will furnish Tenant with a statement of security then held by Owner and
interest accrued thereon.
49. AIR CONDITIONING
It is understood and agreed that there has been installed in said Demised
Premises an air conditioning unit complete with ducts and registers. The air
conditioning system shall be operated and maintained during the term of this
Lease by the Tenant at the sole expense of the Tenant and at the expiration or
sooner termination of this Lease, the Tenant agrees to surrender said air
conditioning system to the Owner in good order and condition, reasonable wear
and tear and insured casualty and Owner's repairs excepted. The Tenant agrees
to enter into and keep in full force and effect at all times during the term of
this Lease a contract for the proper servicing and maintenance of said air
conditioning system with a contractor approved by the Owner and to pay the
charges for said maintenance contract and the air conditioning permit fees. Any
air conditioning units, ducts and registers installed by Tenant (other than
window units which do not replace existing window units) shall, upon
installation, become the property of Owner and be left in the Demised Premises
upon the termination of this Lease, and Tenant shall maintain said units as set
forth aforesaid in this Article. Any window air conditioners if permitted
pursuant to this Lease shall be installed so as not to project beyond the
Building line. It is further understood and agreed that the installation and
operation of any such window air conditioning unit or units in the Demised
Premises by the Tenant shall be in accordance with governmental regulations that
apply thereto and in accordance with building regulations, and that all costs
and expense in connection therewith shall be borne by the Tenant. Provided that
Tenant maintains the air conditioning maintenance contract required by this
Article with a contractor approved by Owner, Owner shall at Owner's cost and
expense repair or replace major components of the air conditioning system, if
necessary.
50. TENANT'S CLEANING
The Tenant for extra cleaning to be performed at Tenant's option agrees to
employ such office cleaning and maintenance contractor as the Owner may from
time to time designate for all waxing, polishing and maintenance work in the
Demised Premises above any cleaning services which shall be provided by Owner
pursuant to this Lease. The Tenant shall not employ any other contractor or
individual without the Owner's prior written consent which consent shall be in
Owner's sole discretion. Tenant recognizes that this provision is for the
security if the Building. The foregoing shall not preclude Tenant or its
employees from performing any of the foregoing work. In connection with all
refuse, Tenant agrees to comply with all governmental rules and regulations and
rules of the building carter as to separation of refuse and other refuse
recycling requirements and in connection therewith to pay for any required
refuse bags.
51. RESTRICTIONS ON USAGE
A. Tenant covenants and agrees that during the term of this Lease neither
Tenant, assignee not any subtenant (if the same are permitted pursuant to this
Lease) will use as its name or as part of its name (under which it conducts
business) any name which, regardless of the spelling
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thereof, has the same or similar sound or meaning as the words "MEDICAL CENTER",
"MEDICAL GROUP" or "MEDICAL TREATMENT CENTER".
B. Notwithstanding anything to the contrary contained in this Lease, Tenant
covenants and agrees that Tenant will not use the Demised Premises or any part
thereof or permit the Demised Premises or any part thereof to be used:
(a) for banking, trust company or safe deposit business;
(b) as or by a commercial or savings bank, as or by a trust company, as or
by a savings and loan association, as or by a loan company or as or by
a credit union;
(c) for the sale of traveler's checks and/or foreign exchange;
(d) as a restaurant and/or bar, and/or for the sale of soda and/or
beverages and/or food or sandwiches and/or ice cream and/or baked
goods;
(e) as a diagnostic medical center and/or for the practice of medicine or
health services;
(f) as a school of any kind including but not limited to the teaching of
or instructions or giving courses in either secretarial skills, and/or
languages and/or the operation of office equipment and/or business
machines;
(g) for telephone answering, messenger, photocopying, express mail
services for other than Tenant;
(h) as an employment, placement or recruiting agency or similar activity.
52. INDEMNIFICATION AND INSURANCE
Tenant agrees to indemnify and save Owner harmless from and against all
damages, liabilities, claims, costs and expenses, including reasonable
attorneys' fees, arising out of the use of the Demised Premises or the Building
or the adjacent sidewalks by Tenant, its employees, licensees, invitees, agents
and contractors, or any work or thing done, or any condition created by Tenant
or its employees, licensees, Agents or contractors whether or not caused by
negligence or breach of an obligation by Tenant. This provision shall survive
the termination of this Lease. The Tenant shall, at full replacement cost,
insure its alterations, improvements, inventory, trade fixtures, personal
property and equipment against property damage for the Tenant and the Owner's
benefit, as their respective interest may appear.
Tenant covenants to provide (and deliver proof thereof) on or before the
commencement date of the term hereof and to keep in force during the whole time
period Tenant occupies Demised Premises a fully paid comprehensive general
liability insurance policy covering but not limited to all the above mentioned
items in respect of the Demises Premises and the conduct and
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operation of business therein (and the sidewalks adjacent thereto) naming the
Owner as an additional insured with limits of $2,000,000 for bodily injury and
$250,000 property damage including water damage and sprinkler leakage legal
liability. At least 15 days prior to the expiration date of such policy, Tenant
shall deliver to owner a full paid renewal policy or insurance certificate.
Tenant agrees to deliver certificates of the insurance required by Article
3 of this Lease from contractors or subcontractors in reasonable amounts unless
otherwise required pursuant to Article 3.
All such policies shall be issued by companies of recognized responsibility
licensed to do business in the State of New York and shall contain a provision
whereby the same cannot be canceled or modified unless Owner is given at least
thirty (30) days' prior written notice by certified or registered mail of such
cancellation or modification.
If Tenant defaults in obtaining or delivering any such policy or policies
or fails to pay the premiums therefor, Owner may (but shall not be required to)
secure or pay for any such policy or policies and charge Tenant as additional
rent therefor. Such additional rent shall be payable by Tenant to Owner with
the fixed rent then next accruing. If Tenant defaults in paying the same with
interest to date of payment, Owner shall have the same rights and remedies on
account thereof as it has with respect to a default in the payment of the fixed
rent, including summary proceedings.
Owner represents that Owner maintains casualty and liability insurance on
the Building.
53. COST AND EXPENSES
All costs and expenses, including attorneys' fees incurred by Owner in and
about enforcing any of the covenants and conditions of this Lease shall be paid
by Tenant as additional rent, and if not previously paid, shall be included in
any judgment rendered in Owner's favor in any court of competent jurisdiction
and against Tenant herein.
54. SERVICE CART
Tenant expressly agrees that it shall not permit or obtain or accept the
delivery of any food or beverage by any vendor operating a service cart or
similar means of conveyance to the Demised Premises, except by any vendor as
shall be approved in advance by Owner in writing.
55. BROKER
Owner and Tenant each covenants, warrants and represents that there was no
broker except the managing Agent JOSEPH P. DAY REALTY CORP. instrumental in
consummating this lease and that no conversation or negotiations were had with
any broker except JOSEPH P. DAY REALTY CORP. concerning the renting of the
premises. Owner and Tenant each agrees to hold the other harmless against any
claims for a brokerage commission arising out of any
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conversations or negotiations had by the indemnifying party with any broker
except JOSEPH P. DAY REALTY CORP. Owner agrees to pay the brokerage commission
of JOSEPH P. DAY REALTY CORP. pursuant to separate agreement.
56. CONSTRUCTION: GOVERNING LAW
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.
This Lease shall be governed in all respects by the laws of the State of New
York.
57. ATTORNMENT
Tenant agrees that if a superior lessor or a mortgagee shall enter into and
become possessed of the real property of which the Demised Premises form a part,
or any part or parts of such real property either through possession or
foreclosure action or proceedings, or through the issuance and delivery of a new
lease of the premises covered by the Lease to the mortgagee, then, if this Lease
is in full force and effect at such time, Tenant shall attorn to the superior
lessor or the mortgagee, as its owner, if such superior lessor or such mortgagee
requests Tenant to do so. In such event, such lessor or mortgagee shall not be
liable to Tenant for any defaults theretofore committed by Owner, and no such
default shall give rise to any rights or offset or deduction against the rents
payable under this Lease. If any superior lessor or any mortgagee to which
Tenant agrees to attorn, as aforesaid, reasonably requests a further instrument
expressing such attornment, Tenant agrees to execute the same promptly.
58. TENANT'S CERTIFICATE
A. At any time and from time to time upon at least ten (10) days' prior
written notice by the Owner to the Tenant, the Tenant shall without charge
execute, acknowledge and deliver to the Owner a statement in writing, in
recordable form, addressed to such party as the Owner may designate prepared by
the Owner or in form satisfactory to the Owner certifying any of the following
information as may be requested (a) 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), (b) whether the
term of the Lease has commenced and the rent and additional rent have become
payable hereunder and, if so, the dates to which they have been paid, (c)
whether or not, to the best knowledge of the Tenant, the Owner is in default in
the performance of any of the terms of this Lease and, if so, specifying each
such default of which the Tenant may have knowledge, (d) whether the Tenant has
accepted possession of the Demised Premises, (e) whether the Tenant has made any
uncollected claims against the Owner under this Lease and, if so, the nature
thereof and the dollar amount, if any, of such claims, (f) whether there exist
any offsets or defenses against enforcement of any of the terms of this Lease
upon the part of the Tenant to be performed and, if so, specifying the same and
(g) such further information with respect to the Lease or the Demised Premises
as the Owner may reasonably
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request, it being intended that any such statement delivered pursuant hereto may
be relied upon by any prospective purchaser of the Building or any part thereof
or of the interest of the Owner in any part thereof, by any mortgagee or
prospective mortgagee thereof, by any lessor or prospective lessor thereof, by
any lessee or any prospective lessee thereof or by any prospective assignee of
any mortgage thereof. On Tenant's request, Owner agrees to furnish a similar
certificate.
59. TENANT'S REMEDIES
With respect to any provision of this Lease whereby Owner's consent or
approval is required or as to any other matter where Owner's consent is
requested, Tenant in no event shall be entitled to make nor shall Tenant make,
any claim (and Tenant hereby waives any such claim) for money damages; nor shall
Tenant claim any money damages by way of set off, counterclaim or defense, based
upon any claim or assertion by Tenant that Owner has unreasonably withheld or
unreasonably delayed any consent or approval, but Tenant's sole remedy shall be
an action or proceeding in equity to enforce any such provision or for specific
performance, injunction or declaratory judgment. Tenant will not seek to
consolidate any claim or counterclaim in any summary proceeding brought by Owner
for possession of the premises. In the case of a claim by Tenant that Owner
unreasonably withheld or delayed consent to a request to perform any alterations
or approve plans and specifications therefor or for any sublease or assignment,
Owner and Tenant hereby agree that the following provisions shall apply: upon
the written request of Tenant, the dispute either (i) shall be submitted to the
American Arbitration Association (the "Association") for disposition pursuant to
the "Expedited Procedures" of the Association, if available, or (ii) shall be
submitted to the president of the Real Estate Board of New York, Inc. who shall
appoint a single arbitrator to decide the dispute; in the event said president
refuses to do so, the dispute shall be resolved in accordance with clause (i).
If the President of the Real Estate Board agrees to appoint an arbitrator, he
shall appoint the arbitrator within three days and the arbitrator will hold a
hearing and decide the dispute within seven days of his appointment. The
decision of the arbitrator shall be final, and all actions necessary to
implement the decision of the arbitrator shall be undertaken as soon as
possible, but in no event later than ten (10) business days after the rendering
of such decision. Judgment upon the decision or any award rendered may be
entered in any court having jurisdiction thereof. All fees payable to the
Association or the Real Estate board or the arbitrator for services rendered in
connection with the resolution of the dispute shall be paid for by the party
suffering the adverse decision of the Association. For purposes of this
Article, the phrase "Expedited Procedures of the Association" shall mean those
procedures set forth in paragraphs 53 through 58 of that certain booklet
published by the Association and titled "Commercial Arbitration Rules," as
amended and in effect March 1, 1986.
61. ASSIGNMENT AND SUBLETTING
(a) Tenant shall not, by operation of law or otherwise, assign, mortgage or
encumber this Lease, nor sublet all or any part of the Demised Premises or
permit the Demised Premises or any part thereof to be used by others, without
Owner's prior written consent in each instance. The consent by Owner to any
assignment or subletting in no way shall be construed to relieve
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<PAGE>
Tenant from obtaining Owner's express written consent to any other or further
assignment or subletting.
(b) If Tenant requests Owner's consent to the assignment of this Lease or
the subletting of all of the Demised Premises, or one full floor thereof it
shall submit in writing to Owner, at the time it requests such consent the
following material relating to the proposed assignee or subtenant:
(i) the name and address;
(ii) the terms and conditions of the proposed assignment or
subletting;
(iii) the nature and character of the business to be conducted in the
Demised Premises;
(iv) financial statement for the preceding two (2) years if it has
been a business for that period;
(v) banking, financial and other credit information reasonably
sufficient to enable owner to determine the proposed assignee's
or subtenant's financial responsibility; and
(vi) such other business or financial information reasonably requested
by Owner.
(c) Owner shall have the following options, exercisable by written notice
to Tenant within thirty (30) business days after Tenant's aforesaid request for
Owner's consent and the furnishing of all requested information:
(i) Owner may require Tenant to execute an assignment or sublease to
Owner or to anyone designated by Owner of the same space on the
same terms as the proposed assignment or sublease without payment
of any premium therefor; in the event of such assignment, Tenant
shall be released from any obligation under this Lease accruing
after the effective date of such an assignment; in the event of a
sublease, Tenant shall not be required to pay to Owner any rent
or additional rent required to be paid by subtenant and not
received by Tenant from subtenant;
(ii) Owner may elect to terminate Tenant's Lease on the effective date
of the proposed assignment or sublease, and Owner shall execute
and deliver an instrument releasing and discharging the Tenant
from all obligations under this Lease accruing after the
effective date of such proposed assignment or sublease, and
Tenant shall vacate and surrender possession of the entire
Demised Premises in accordance with the Lease on or before said
effective
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date. In the event Tenant proposes to sublet only one floor of
the demised premises and Owner exercises either of the options
set forth in this paragraph, Tenant agrees prior to the effective
date of such sublease or the termination of this Lease with
respect to such floor, to remove any staircase Tenant has
previously installed between the 11th and 12th Floors and Tenant
will slab over the opening.
(d) If the Owner shall not exercise either of its foregoing options in
subparagraph (c) hereinabove within the time set forth above, its consent to the
proposed assignment or subletting of all of the Demised Premises shall not be
unreasonably withheld, provided, however, that it may withhold consent therein
if in the reasonable exercise of its judgment it determines that:
1. The proposed use of the Demised Premises is not appropriate for
the Building or in keeping with the character of the existing
tenancies or permitted by the Tenant's Lease.
2. The nature of the occupancy of the proposed assignee or subtenant
is not in accordance with the use provision of the Lease or will
cause excessive density of employees or traffic or make excessive
demands on the Building's services or facilities or be an
assignment or sublease to a school or employment or placement
agency.
3. The Tenant proposed to assign or sublet to one who at the time is
a Tenant in possession of premises in the Building of which the
Demised Premises are a part.
4. Such proposed assignee or Subtenant would lower the value on the
dignity of the Building or adversely affect the interest of
Owner.
5. Such proposed assignee or Subtenant would lower the value of the
dignity of the Building or adversely affect the interest of
Owner.
6. The sublet is not for either one full floor of the Demised
Premises or for the entire Demised Premises.
(e) If Owner shall not exercise an option set forth in subparagraph (c)
above within the time limit provided therefor and if Owner shall not have
withheld its consent pursuant to subparagraph (d) above, its consent to the
proposed assignment or subletting shall not be withheld provided, however, that
each of the following conditions first are complied with:
(i) Tenant then shall not be in default under this Lease;
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(ii) The assignee shall execute an agreement, in form reasonably
satisfactory to the Owner, whereby such proposed assignee assumes
performance of Tenant's obligations under this Lease and shall
become jointly and severally liable with the Tenant for the
performance thereof. The Subletting Agreement shall provide that
it is expressly subject to the terms and provisions of the Lease.
(iii) A duplicate original of the instrument of assignment and
assumption agreement or sublease duly executed by the appropriate
party, shall be delivered to the Owner before the assignee or
subtenant shall be let into possession of the Demised Premises.
(iv) Tenant shall pay any expense, including, but not limited,
attorneys' fees and fees for financial investigation incurred in
connection with the review and/or preparation and/or execution of
any documents submitted to Owner relating to the proposed
assignment or subletting including preparation of the consent.
This provision shall not apply if Owner elects to terminate the
Lease pursuant to subparagraph (c) herein.
(f) If the Owner shall give its consent to any assignment of this Lease or
to any sublease, Tenant, in consideration therefor, shall pay to Owner, as
additional rent:
(i) In the case of an assignment, an amount equal to all sums and
other considerations paid to Tenant by the assignee for or by
reason of such assignment (including, but not limited to, sums
paid for the sale of Tenant's fixtures, leasehold improvements,
equipment, furniture, furnishings or other personal property,
less, in the case of a sale thereof, the then net undepreciated
cost thereof determined on the basis of Tenant's Federal income
tax returns); and
(ii) In the case of a sublease, any rents, additional charges or other
consideration payable under the sublease and related agreements
to Tenant by the subtenant which is in excess of the fixed annual
rent and additional rent accruing during the term of the sublease
pursuant to the terms of this Lease (including, but not limited
to, 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
undepreciated cost thereof determined on the basis of Tenant's
Federal income tax returns).
The sums payable under this subparagraph (f) shall be paid by Tenant to Owner as
and when paid by the assignee or subtenant to Tenant.
(g) Each of the foregoing provisions and conditions shall apply to each and
every further assignment or subletting. An assignment of Lease or a subletting
as above provided shall
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not discharge or release from liability under the Lease the Tenant or any other
person, firm or corporation which previously shall have assumed Tenant's
obligations hereunder, such liability to remain and continue for the balance of
the term and any option to renew contained in the Lease with the same force and
effect as though no assignment had been effected.
(h) In the event that Owner exercised either of its options under
subparagraph (c) above, Owner shall have the absolute right to, and in no way
shall be liable to Tenant if it shall, Lease or further sublease the Demised
Premises to Tenant's prospective assignee or subtenant, as the case may be.
(i) If Owner does not exercise its option and also withholds its consent to
the proposed assignment or subletting and it is established by a court or body
having final jurisdiction thereover that Owner has been unreasonable, the only
effect of such finding shall be that Owner shall be deemed to have given its
consent; but Owner shall not be liable to Tenant in any respect for money or
compensatory damages by reason of withholding its consent.
(j) In the event that Tenant or any assignee or sublessee desires to assign
or sublet, it hereby designates the managing Agent as Tenant's sole and
exclusive Agent to effect such assignment or subletting and agrees to pay said
managing Agent upon the consent to assignment or sublease a commission computed
in accordance with the commission rates then in effect. Tenant acknowledges
that it is aware that the managing Agent represents the Owner and may also act
with respect to other competing space in the building and Tenant waives any
right to make claim for conflict of interest or for other damages. The exclusive
set forth in this Article 61(k) shall continue for 30 days and if within 90 days
after the expiration of the aforesaid 30 day period there is an assignment or
sublease to a party introduced by the managing Agent within the exclusive 30 day
period, then the managing Agent shall be entitled to a commission in accordance
with its usual rates. In the event that Tenant assigns or subleases without
advertising (except in trade and professional journals) and without utilizing
the services of a broker, finder or consultant, then the provisions of this
Article 61(k) shall not apply.
(k) No action or consent by Owner to listing of names on the Building
directory nor acceptance of rent from any party other than Tenant shall be
deemed a consent to any assignment or sublease of the Demised Premises nor a
waiver of any of the provisions hereof.
(l) Anything herein to the contrary notwithstanding, conversion of Tenant
or any successor tenant to a limited liability partnership or company during the
term of this Lease constitutes an assignment of the Lease which required the
Owner's consent in its sole discretion.
(o) Provided that Tenant shall not then be in default under this Lease,
Tenant may without Owner's consent and without complying with the other
provisions of this Article sublet all or any part of the demised premises
(without further demising the demised premises) or assign this Lease to an
affiliate of Tenant or in connection with a merger or consolidation of Tenant
provided further that Tenant shall give Owner prior notice thereof, shall
furnish Owner with a copy of any instrument of subletting, assignment, merger or
consolidation and in the event of an assignment that assignee shall assume the
obligations of Tenant under this Lease. For the
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purposes of this provision, an affiliate of Tenant shall be deemed to be an
entity controlling, controlled by or under common control with Tenant. A merger
shall be deemed to include the sale of all or substantially all the assets or
stock of Tenant.
62. END OF TERM
A. Tenant hereby agrees to indemnify and save Owner harmless against all
costs, expenses, claims, losses or liability resulting from delay by Tenant in
surrendering the Demised Premises upon the expiration or earlier termination of
this Lease, (Tenant's Holdover) including without limitation (i) any payment or
rent concession which Landlord may be required to make to any tenant obtained by
Landlord for all or any part of the Premises in order to induce such tenant not
to terminate its lease by reason of the holding-over by Tenant and (ii) the loss
of the benefit of the bargain if any such tenant shall terminate its lease by
reason of the holding-over Tenant and (iii) any claims made by any succeeding
tenant founded on such delay. Such indemnity shall survive the expiration or
earlier termination of this Lease.
B. Tenant agrees that losses to Owner resulting from Tenant's Holdover
will be very substantial, exceed the amount of Fixed Annual Base Rent as
adjusted and additional rent payable hereunder and be difficult of accurate
measurement. Therefore, if Tenant shall fail to vacate and surrender the
Demised Premises as required hereunder, it shall be deemed a holdover Tenant on
a month-to-month basis at a fixed monthly rent equal to one and one half (1 1/2)
times the monthly rate of all Fixed Annual Base Rent as adjusted and additional
rent payable for the last month of the term hereof. The collection of the
aforesaid rent shall not act to limit Owner's rights to institute summary
proceedings to obtain possession or pursuant to this Article 62 or in the Lease
or at law, but any such rent collected will be non-refundable and shall be
applied against any such damages.
63. EXHIBIT
Tenant acknowledges and agrees that the diagram of the Demised Premises
annexed hereto as Exhibit A has not been drawn to scale, is an approximation of
the actual size and location of the space involved and is not meant to be a
representation of the actual size and location of the space involved. Tenant
has had the opportunity to and has made such inspection of the leased premises
as Tenant deems necessary.
64. HEAD NOTES
The Article headings herein are only for convenience and are in no way to
be construed as a part of the agreement or as a limitation on the scope of any
provision thereof.
65. RULE OF CONSTRUCTION
This Lease and the other documents incidental hereto or any provision
therein shall be construed without regard to any presumption or other rule
requiring construction against the party causing such instrument to be drafted.
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<PAGE>
66. ELECTRIC CURRENT
There is a meter serving the premises for the measuring of direct electric
service. Tenant agrees at Tenant's cost and expense, to contract for the
furnishing of electricity directly from the utility company, and Tenant shall
pay all electrical and other charges billed by the utility company in connection
with the furnishing of electricity to the Demised Premises.
Tenant shall make no alternations or additions to the electric equipment,
and/or appliances without first obtaining written consent from the Owner in each
instance. This provision is to prevent the Tenant from possible overloading of
the Building's electrical distribution facilities. The Owner, his Agent or
consultant, is given the right to make surveys from time to time in the Tenant's
premises covering the electrical equipment and fixtures and use of current.
provided in the exercise of such right, Owner will use good faith, reasonable
efforts to minimize interference with Tenant's business. Owner 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 quality of character of electric
service is changed or is no longer available or suitable for Tenant's
requirements. Tenant covenants and agrees that at all times its use of electric
current shall never exceed the capacity of existing leaders to the Building, or
the risers or wiring installation. Owner shall install at Tenant's expense any
riser or risers to supply Tenant's electrical requirements, upon written request
of the Tenant if, in Owner's sole judgment, the same are necessary and will not
cause or create dangerous or hazardous condition or entail excessive or
unreasonable alternations, repairs or expense or interfere with or disturb other
tenants or occupants. In addition to the installation of such riser or risers
Owner will also, at the sole cost and expense of the Tenant, install all other
equipment proper and necessary in connection therewith subject to the aforesaid
terms and conditions.
68. TENANT'S WORK
Owner acknowledges that Tenant intends to build out the demised premises in
order to facilitate Tenant's use thereof. Tenant shall prepare and submit to
Owner for its approval plans and specifications for the build-out of the demised
premises ("Tenant's Work") and Owner shall have 10 days after receipt of such
plans and specifications in order to approve the same; provided in the event
Owner shall not object to such plans and specifications within such 10-day
period, then Owner's approval of such plans shall be deemed given if Owner does
not object for five days after Tenant gives Owner a second notice referring to
this Article. Owner will consent to the installation by Tenant of a staircase
between the 11th and 12th Floors. Tenant shall enter into a contract with a
general contractor for Tenant's Work and Tenant agrees to submit the name of
such contractor to Owner for its approval, which shall be deemed given if no
objection is made within 10 days of receipt of request for approval of the
contractor. Owner agrees to pay for the cost of Tenant's Work in an amount not
to exceed $249,900. Owner shall make such payment on delivery to Owner of a
completed requisition for payment signed and certified as true by Tenant and
Tenant's architect, stating the amount requested for payment, which shall
include an itemized break down of the costs and expenses incurred by Tenant,
stating the percentage of
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Tenant's Work that has been completed and indicating a minimum of 10% retainage
of payments by Tenant to its contractors (it being understood that any request
for payment hereunder prior to final payment on completion of Tenant's Work
shall not be on account of such required retainage), accompanied by copies of
invoices, bills or receipts (or other evidence reasonably satisfactory to Owner)
for the costs with respect to which such request for payment is being made.
Alternatively, Owner will reimburse Tenant for such costs on presentation by
Tenant to Owner of paid invoices for Tenant's Work. At the time of final
payment, Owner shall receive executed lien waivers from all contractors and
subcontractors respecting work performed.
69. RENT COMMENCEMENT
Provided that Tenant is not then in default under this Lease Tenant shall
not be required to pay the annual rental set forth on page 1 of this Lease for
the period beginning on the Commencement Date and ending October 14, 1998.
Commencing on October 15, 1998, Tenant shall pay the annual rental set forth on
page 1 of this Lease.
70. Owner grants Tenant the license to place a satellite dish on the roof of
the building at such place on the roof as Owner may designate provided that
Tenant shall obey all laws, rules and regulations relating thereto, pay any
license and permit fees applicable thereto and maintain the same in good order
and condition and remove the same when this license shall be revoked or shall
terminate and repair any damage in connection with such removal. Owner agrees
not to revoke said license during the term of this Lease. Tenant agrees the use
of such dish shall not cause any interference with other satellite dishes or
electronic equipment on the roof of the building or in or near the building.
-42-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS CONTAINED IN THE JUNE 30, 1998 REPORT FILED ON
FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,997,511
<SECURITIES> 0
<RECEIVABLES> 1,526,019
<ALLOWANCES> 25,000
<INVENTORY> 0
<CURRENT-ASSETS> 7,796,565
<PP&E> 6,942,884
<DEPRECIATION> 3,546,941
<TOTAL-ASSETS> 11,724,077
<CURRENT-LIABILITIES> 2,315,067
<BONDS> 0
0
0
<COMMON> 40,076
<OTHER-SE> 9,368,934
<TOTAL-LIABILITY-AND-EQUITY> 11,724,077
<SALES> 3,674,968
<TOTAL-REVENUES> 3,944,971
<CGS> 0
<TOTAL-COSTS> 7,960,848
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,015,877)
<EPS-PRIMARY> (.50)
<EPS-DILUTED> (.50)
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